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EO12866_RFS 2013 Annual Rule 2060-AR43 FRM FRN_20130702.docx

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2012-0546; FRL-XXXX-X]

RIN 2060-AR43

Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

is required to set the renewable fuel percentage standards each November for the following year. 

Today’s action sets the annual percentage standards for cellulosic biofuel, biomass-based diesel, 

advanced biofuel, and renewable fuels that apply to all motor vehicle gasoline and diesel 

produced or imported in the year 2013. In general the standards are designed to ensure that the 

applicable national volumes of renewable fuel specified in the statute are used. For cellulosic 

biofuel, the statute specifies that EPA is to project the volume of production and must base the 

cellulosic biofuel standard on that projected volume if it is less than the applicable volume set 

forth in the Act. Today EPA is finalizing a cellulosic biofuel volume for 2013 that is below the 

applicable volume specified in the Act. EPA is also leaving the applicable volumes of advanced 

biofuel and total renewable fuel at the statutory levels for 2013 based on its assessment of the 

availability of renewable fuel for compliance purposes.

DATES: This final rule is effective on [insert date of publication in the Federal Register].

ADDRESSES: EPA has established a docket for this action under Docket ID No. EPA-HQOAR-2012-0546. All documents in the docket are listed in the www.regulations.gov index. 

Although listed in the index, some information is not publicly available, e.g., CBI or other 

information whose disclosure is restricted by statute. Certain other material, such as copyrighted 

material, will be publicly available only in hard copy. Publicly available docket materials are 

available either electronically in www.regulations.gov or in hard copy at the Air and Radiation 

Docket and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW, 

Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday 

through Friday, excluding legal holidays. The telephone number for the Public Reading Room is 

(202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Julia MacAllister, Office of Transportation 

and Air Quality, Assessment and Standards Division, Environmental Protection Agency, 2000 

Traverwood Drive, Ann Arbor MI 48105; Telephone number: 734-214-4131; Fax number: 734-

214-4816; E-mail address: macallister.julia@epa.gov, or the public information line for the 
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Office of Transportation and Air Quality; telephone number (734) 214-4333; E-mail address 

OTAQ@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information

A. 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 and biodiesel. Potentially regulated categories include: 

Category NAICS1

Codes

SIC2

Codes

Examples of Potentially Regulated Entities

Industry

Industry 

Industry 

Industry 

Industry 

Industry

Industry

324110

325193

325199

424690

424710

424720

454319

2911

2869

2869

5169

5171

5172

5989

Petroleum Refineries

Ethyl alcohol manufacturing

Other basic organic chemical manufacturing

Chemical and allied products merchant wholesalers

Petroleum bulk stations and terminals

Petroleum and petroleum products merchant 

wholesalers

Other fuel dealers

1 North American Industry Classification System (NAICS)

2

Standard Industrial Classification (SIC) system code.

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

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

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

listed in the table could also be regulated. To determine whether your activities will be regulated 

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

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

person listed in the preceding section. 

Outline of this preamble

I. EXECUTIVE SUMMARY .................................................................................................... 5

A. Purpose of This Action ........................................................................................................... 6

B. Summary of Major Provisions in This Notice ........................................................................ 7

1. Cellulosic Biofuel Volume for 2013................................................................................... 7

2. Advanced Biofuel and Total Renewable Fuel in 2013....................................................... 9

3. Applicable Volumes Used to Set the Annual Percentage Standards for 2013 ................. 10

4. Applicable Percentage Standard for Cellulosic Biofuel in 2012 ...................................... 11

5. Administrative Actions..................................................................................................... 12

C. Effective Date ....................................................................................................................... 13
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D. Impacts of Final Actions....................................................................................................... 15

II. PROJECTION OF CELLULOSIC BIOFUEL VOLUME FOR 2013 ................................. 17

A. Statutory Requirements......................................................................................................... 17

B. Status of the Cellulosic Biofuel Industry.............................................................................. 18

C. Cellulosic Biofuel Volume Assessment for 2013................................................................. 21

1. Comments on the Proposed Rule...................................................................................... 23

2. Projections from the Energy Information Administration................................................ 25

3. Current Status of Cellulosic Biofuel Production Facilities............................................... 27

4. Other Potential Sources of Domestic Cellulosic Biofuel.................................................. 33

5. Imports of Cellulosic Biofuel............................................................................................ 33

6. Summary of Volume Projections...................................................................................... 34

D. Cellulosic Biofuel Volume for 2013..................................................................................... 37

III. ASSESSMENT OF ADVANCED BIOFUEL AND TOTAL RENEWABLE FUEL FOR 

2013 38

A. Statutory Authorities for Reducing Volumes ....................................................................... 38

1. Cellulosic Waiver Authority............................................................................................. 38

2. General Waiver Authority................................................................................................. 41

3. Modification of Applicable Volumes for 2016 and Beyond ............................................ 42

B. Available Volumes of Advanced Biofuel in 2013................................................................ 43

1. Biomass-based Diesel....................................................................................................... 45

a. Feedstocks..................................................................................................................... 47

b. Limitations in the use of biodiesel................................................................................ 50

2. Domestic Production of Advanced Biofuel Other Than Biomass-based Diesel and 

Cellulosic Biofuel ..................................................................................................................... 50

3. Imported Sugarcane Ethanol............................................................................................. 53

a. Brazilian Ethanol Export Capacity ............................................................................... 53

i. Brazilian Sugarcane and Ethanol Production Capacity ............................................ 53

ii. Brazilian Domestic Demand for Ethanol.................................................................. 55

iii. Additional Market Factors........................................................................................ 55

b. United States- Brazil Ethanol Trade ............................................................................. 56

i. Direct Transportation Emissions............................................................................... 57

ii. Indirect Emissions..................................................................................................... 58

C. Compliance with the Total Renewable Fuel Standard in 2013............................................. 60

D. Final Applicable Volume Requirements for 2013................................................................ 65

E. Volume Requirements for 2014............................................................................................ 66

IV. APPLICABLE PERCENTAGE STANDARDS FOR 2013 ........................................... 68

A. Background........................................................................................................................... 68

B. Calculation of Standards....................................................................................................... 68

1. How Are the Standards Calculated? ................................................................................. 68

2. Small Refineries and Small Refiners................................................................................ 71

3. Final Standards.................................................................................................................. 73

V. ANNUAL ADMINISTRATIVE ANNOUNCEMENTS ..................................................... 75

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A. 2013 Price for Cellulosic Biofuel Waiver Credits................................................................ 75

B. Assessment of the Domestic Aggregate Compliance Approach .......................................... 76

C. Assessment of the Canadian Aggregate Compliance Approach........................................... 77

D. Vacatur of 2012 Cellulosic Biofuel Standard....................................................................... 78

VI. COMMENTS OUTSIDE THE SCOPE OF THIS RULEMAKING................................ 79

VII. PUBLIC PARTICIPATION............................................................................................. 80

VIII. STATUTORY AND EXECUTIVE ORDER REVIEWS ................................................ 81

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: 

Improving Regulation and Regulatory Review ............................................................................ 81

B. Paperwork Reduction Act..................................................................................................... 81

C. Regulatory Flexibility Act .................................................................................................... 81

D. Unfunded Mandates Reform Act.......................................................................................... 82

E. Executive Order 13132: Federalism ..................................................................................... 82

F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments. 83

G. Executive Order 13045: Protection of Children from Environmental Health Risks and 

Safety Risks .................................................................................................................................. 83

H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy 

Supply, Distribution, or Use ......................................................................................................... 83

I. National Technology Transfer and Advancement Act ......................................................... 83

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

Populations and Low-Income Populations................................................................................... 84

K. Congressional Review Act.................................................................................................... 84

IX. STATUTORY AUTHORITY .......................................................................................... 85

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I. Executive Summary

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

in Clean Air Act (CAA) section 211(o) which were added through the Energy Policy Act of 2005 

(EPAct). The statutory requirements for the RFS program were subsequently modified through 

the Energy Independence and Security Act of 2007 (EISA), resulting in the publication of major 

revisions to the regulatory requirements on March 26, 20101. 

The national 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 

for 2013 are shown in Table I-1.

Table I-1

Required Applicable Volumes in the Clean Air Act for 2013 (bill gal)

Cellulosic biofuel 1.0a

Biomass-based diesel ≥1.0b

Advanced biofuel 2.75a

Renewable fuel 16.55a

a

Ethanol-equivalent volume

b Actual volume. The ethanol-equivalent volume would be 1.5 if biodiesel is used to 

meet this requirement.

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

standards for each compliance year by November 30 of the previous year.2 The percentage 

standards are used by obligated parties (refiners and importers) to calculate their individual 

compliance obligations. The percentage standards are applied to the volume of gasoline and/or 

diesel fuel that each obligated party produces or imports during the specified calendar year to 

determine the volumes of renewable fuel that must be used as transportation fuel, heating oil or 

qualifying fuel oil, or jet fuel. The percentage standards are calculated so as to ensure use in 

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

biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel) that are either set forth 

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

The cellulosic biofuel industry is transitioning from research and development (R&D) 

and pilot scale to commercial scale facilities, leading to increases in production capacity. 

Construction has begun on several facilities with multiple facilities having progressed to the 

start-up phase. Based on information from the Energy Information Administration (EIA), 

detailed information from biofuel production companies and a consideration of various potential 

uncertainties, as well as the comments we received on the Notice of Proposed Rulemaking 

(NPRM)3, we are projecting that 6 million ethanol-equivalent gallons of cellulosic biofuel will be 

available in 2013.

 

1

75 FR 14670

2

The delay in the release of this final rule is addressed in more detail in Section I.C below.

3

78 FR 9282, February 7, 2013

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We have evaluated the types of advanced biofuels that can be produced or imported in 

2013. While that there is some uncertainty in the projected availability of advanced biofuel in 

2013, we have determined that volumes to meet the statutory applicable volume of 2.75 bill gal 

should be sufficiently available. In addition, the combination of available volumes of advanced 

and non-advanced biofuel, the ability of the transportation sector to consume some quantity of 

ethanol in blend levels higher than E10, and carryover RINs from 2012 has led us to conclude 

that the statutory volumes for both advanced biofuel and total renewable fuel can be met in 2013. 

As a result, we are not reducing the national applicable volumes in the statute for either advanced 

biofuel or total renewable fuel volume of 16.55 bill gal. 

A. Purpose of This Action

EPA is today setting annual percentage requirements for obligated parties for cellulosic 

biofuel, advanced biofuel, and total renewable fuel for 2013. Table I.A-1 lists the statutory 

provisions and associated criteria relevant to determining the national applicable volumes used to 

set the annual percentage standards in today’s final rule.

Table I.A-1

Statutory Provisions for Determination of Applicable Volumes

Applicable volumes Clean Air Act 

reference

Criteria provided in statute for determination 

of applicable volume

Cellulosic biofuel in 

2013

211(o)(7)(D)(i) Required volume must be lesser of volume 

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

EPA’s projected volume.

Advanced biofuel in 

2013

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

reduced to the projected volume, EPA may 

reduce advanced biofuel and total renewable 

fuel by the same or lesser volume. No other 

criteria specified.

Total renewable fuel in 

2013

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

reduced to the projected volume, EPA may 

reduce advanced biofuel and total renewable 

fuel by the same or lesser volume. No other 

criteria specified.

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 available during the year. In today's final rule, we present our analysis of 

cellulosic biofuel production and final projected volume for 2013. The analyses that led to the 

2013 applicable volume requirement were based on our evaluation of EIA’s projection for 2013, 

individual producers’ production plans and progress to date, and comments received in response 

to the NPRM.

Comment [A1]: It would be helpful to provide a 

footnote that describes generally what falls into the 

“advanced” category here and what falls in to the 

“non-advanced” category. 

Comment [A2]: Suggest spelling out and 

defining the first use of the term.

Comment [A3]: It is projected that the standard 

levels proposed in this draft rule would require the 

importation of fuel. What concerns or uncertainties 

might the agency have concerning setting a standard 

that drives imports? Does it further the goals of the 

RFS? If so, how?

Comment [A4]: Suggest adding a footnote here 

describing that the 2013 biomass-based diesel 

standard was set through a separate rulemaking and 

providing FR citation. 
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Page 7 of 87

When we lower the applicable volume of cellulosic biofuel below the volume specified in 

CAA 211(o)(2)(B)(i)(III), we also have the authority to reduce the applicable volumes of 

advanced biofuel and total renewable fuel by the same or a lesser amount. Today's action

includes our consideration of the 2013 volume requirements for these biofuels.

In today's final rule we have also set the annual percentage standards (shown in Section 

I.B.3 below) that will apply to all producers and importers of gasoline and diesel in 2013. The 

percentage standards are based on the 2013 applicable volumes for the four types of renewable 

fuel and a projection of volumes of gasoline and diesel consumption in 2013 from the Energy 

Information Administration (EIA). 

B. Summary of Major Provisions in This Notice

1. Cellulosic Biofuel Volume for 2013

The cellulosic biofuel industry in the United States continues to make advances in its 

progress towards large scale commercial production. Ongoing research and development work 

has resulted in increasing product yields, while at the same time lowering enzyme and catalyst 

costs. New supply chains have been developed, and several companies have reached contract 

agreements to provide the necessary feedstock for large scale cellulosic biofuel production 

facilities. Companies are continuing to invest significant sums of money to further refine 

cellulosic biofuel production technology and to construct the first commercial scale facilities. 

From 2007 through the second quarter of 2011 over $3.4 billion was invested in advanced 

biofuel production companies by venture capitalists alone.4 For more information on the current 

status of the cellulosic biofuel industry in the United States and the advances being made, see 

Section II.B.

2013 is also expected to be a year of transition for the cellulosic biofuel industry, as 

several companies are shifting their focus from technology development to commercialization. 

This transition began in 2012 with the production of the first cellulosic RINs under the current 

regulations and the completion of construction at commercial scale production facilities from 

INEOS Bio and KiOR. KiOR announced the shipment of the first renewable transportation fuel 

produced from their Columbus, MS facility on March 18, 2013. INEOS Bio is expected to begin 

producing fuel from their Vero Beach, FL facility in the summer of 2013. Abengoa, one of the 

largest producers of ethanol in the United States, is planning to begin producing cellulosic 

ethanol at commercial scale later in 2013 or early 2014. Several others companies, including 

DuPont and Poet, expect to be constructing their first commercial scale facilities in 2013, with 

the intention of beginning production in 2014. If these facilities are able to operate as 

anticipated, it would represent significant further progress in the commercial viability of 

cellulosic biofuel production.

 

4

Solecki M, Dougherty A, Epstein B. Advanced Biofuel Market Report 2012: Meeting U.S. Fuel Standards. 

Environmental Entrepreneurs. September 6, 2012. Available Online 

<http://www.e2.org/ext/doc/E2AdvancedBiofuelMarketReport2012.pdf>.
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As part of estimating the volume of cellulosic biofuel that would be made available in the 

U.S. in 2013, we researched all potential production sources by company and facility. This 

included sources that were still in the planning stages, those that were under construction, and 

those that are already producing some volume of cellulosic ethanol, cellulosic diesel, or some 

other type of cellulosic biofuel. Facilities primarily focused on research and development 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 

already produced. From this universe of potential cellulosic biofuel sources we identified the 

subset that could be producing commercial volumes of qualifying cellulosic biofuel for use in 

2013. To arrive at a projected volume for each facility, we took into consideration EIA’s 

projections and factors such as the current and expected state of funding, the status of the 

technology utilized, progress towards construction and production goals, and other significant 

factors that could potentially impact fuel production or the ability of the produced fuel to qualify 

for cellulosic biofuel Renewable Identification Numbers (RINs) in 2013. Further discussion of 

these factors can be found in Section II.B.

In our assessment we focused on domestic sources of cellulosic biofuel. At the time of 

this final rule no internationally-based cellulosic biofuel production facilities have registered 

under the RFS program and therefore no volume from international producers has been included 

in our projections for 2013. Of the domestic sources, we estimated that up to four facilities may 

produce commercial scale volumes of cellulosic biofuel available for use as renewable fuel in the 

U.S. in 2013. Two of these four facilities have made sufficient progress to project that 

commercial scale production from these two facilities will occur in 2013, and we have therefore 

included production from them in our projected available volume for 2013. All four facilities are 

listed in Table I.B.1-1 along with our estimate of the projected 2013 volume for each.

Table I.B.1-1

Projected Available Cellulosic Biofuel Plant Volumes for 2013

Company Location Fuel type

Capacity (mill 

gal per year)

First 

Production 

Projected 2013 

available volumea

Abengoa Hugoton, KS Ethanol 24 1Q 2014

b

0

Fiberight Blairstown, IA Ethanol 6 1Q 2014

b

0

INEOS Bio Vero Beach, FL Ethanol 8 Mid 2013 0 – 1

KiOR Columbus, MS Gasoline and 

Diesel

11 March 18, 

2013

5 – 6

Poet Emmetsburg, IA Ethanol 25 3Q 2014b0

Total 49 6

a Volumes listed in million ethanol-equivalent gallons

b

Start-up dates for these facilities are projections

The EIA projections, variation in expected start-up times, along with the facility production 

capacities, company production plans, the progress made in the first half or 2013, and a variety 

of other factors have all been taken into account in predicting the actual volume of cellulosic 

biofuel that will be available for use in 2013. For more detailed information on our projections 

of cellulosic biofuel in 2013 and the companies we expect to produce this volume see Section II.

Deleted: company-specific 

Comment [A5]: Suggest clarifying that the May 

2013 DOE letter did not have official companyspecific projections; only capacities. 

Comment [A6]: Is EPA aware of the Poet 

project? Would the agency consider adding it to the 

list of projects?

Comment [A7]: Since the table above is titled 

“Projected Available...” it seems like the table 

shows EIA’s projections. But it’s more than that. 

Could EPA mention here the two letters from EIA 

with reduced transportation fuels and cellulosic 

biofuels projections for 2013.
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2. Advanced Biofuel and Total Renewable Fuel in 2013

The statute authorizes EPA to reduce the applicable volume of advanced biofuel and total 

renewable fuel specified in the statute if we reduce the applicable volume of cellulosic biofuel 

for a given year below the statutory applicable volume specified in Section 211(o)(2)(B)(i)(III). 

As shown in Table I.B.1-1, for 2013 we have projected cellulosic biofuel production at 6 million 

ethanol-equivalent gallons, significantly less than the applicable volume of 1.0 bill gal set forth 

in the statute. Therefore, we have also evaluated whether to lower the applicable volumes for 

advanced biofuel and total renewable fuel. The statute provides no explicit criteria or direction 

for making this determination. As in the proposed rule, we have focused our evaluation for this 

final rule on the availability of renewable fuels that would qualify as advanced biofuel and 

renewable fuel, the ability of those fuels to be consumed, and the existing stock of RINs that can 

be used to make up any gap. We also considered the many comments received on our proposed 

approach, including suggested alternative approaches. Comments related to the advanced 

biofuel standard and our responses to those comments are discussed in Section III of this 

preamble.

The CAA specifies an applicable volume of 2.75 bill gal of advanced biofuel for 2013. 

To determine whether to lower this volume, we considered the sources that are expected to 

satisfy any advanced biofuel mandate including: cellulosic biofuel, biomass-based diesel, other 

domestically-produced advanced biofuels, and imported sugarcane ethanol.

As described in Section II, we project that 6 mill gallons of cellulosic biofuel will be 

available in 2013. This volume will fulfill 0.006 bill gal of the 2.75 bill gal advanced biofuel 

requirement.

We established an applicable volume of 1.28 bill gal for 2013 biomass-based diesel in a 

separate action, and we expect that this requirement will be fulfilled primarily with biodiesel5. 

Since biodiesel has an Equivalence Value of 1.5, 1.28 billion physical gallons of biodiesel will

provide 1.92 billion ethanol-equivalent gallons that can be counted towards the advanced biofuel 

standard of 2.75 bill gal. Additional volumes of biomass-based diesel are also possible based on 

our assessment of available feedstocks and production capacity, potentially up to 500 mill gal 

ethanol-equivalent.

As described in more detail in Section III, we have projected that domestic advanced 

biofuels are expected to grow steadily through 2013, and would include renewable diesel that 

does not qualify to be biomass-based diesel, heating oil, biogas used as CNG, and ethanol. We 

are projecting that up to about 250 mill gal of such domestic advanced biofuels could be 

available in 2013, which will count towards the 2.75 bill gal advanced biofuel requirement.

After taking into account cellulosic biofuel, biomass-based diesel, and domestic advanced 

biofuel described above, the volume of imported sugarcane ethanol that will be needed to meet 

the statutory advanced biofuel volume of 2.75 bill gal could be significantly below the 670 mill 

gal that we projected would be needed in the NPRM. The U.S. imported a total of 575 mill gal 

of ethanol in 2012, and most projections indicate that Brazilian sugarcane crop yields will be 

 

5

Some quantity of renewable diesel is also likely to be used towards satisfying the biomass based diesel standard.

Deleted: both 

Deleted: as well as 

Comment [A8]: Suggest adding FR citation to 59 

Fed. Reg. 59458 (Sept. 27, 2012)

Comment [A9]: Suggest also referencing the 

statutory volumes in this section. 

Comment [A10]: Please provide examples of 

such products.
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significantly better in the coming harvest (2013/2014, which began in April 2013) in comparison 

to the previous harvest. Since there is a high likelihood that the total volume of all advanced 

biofuels that can be produced or imported in 2013 is above the 2.75 bill gal statutory volume, we 

do not believe that the advanced biofuel requirement should be reduced.

We believe there will be sufficient volumes of conventional renewable fuel including 

corn-ethanol, combined with advanced biofuel, to satisfy the 16.55 bill gallon applicable volume 

of total renewable fuel specified in the Act. For instance, corn-ethanol production capacity in 

2012 was 14.9 bill gal, compared to the 13.8 bill gal needed to meet the RFS requirements in 

2013.

6

 There will also be a significant number of carryover RINs available from 2012 that can 

be used in lieu of actual volume in 2013 and which are sufficient in number to address 

limitations in consumption of ethanol blends higher than E10 or limitations in volumes brought 

about through the 2012 drought. Therefore, as discussed in more detail in Section III below, we 

are not reducing the advanced biofuel volume requirement of 2.75 bill gal or the total renewable 

fuel volume requirement of 16.55 bill gal. 

However, we believe that delaying the compliance demonstration for the 2013 

compliance period would alleviate some of the concerns that obligated parties have regarding the 

tardiness of the final rule and its effect on their decisions regarding RIN acquisition. Therefore, 

we are extending the RFS compliance deadline for the 2013 RFS standards from [Insert Date] to 

June 30, 2014. 

As described in the NPRM, we recognize that ethanol will likely continue to predominate 

in the renewable fuel pool in the near future, and that for 2014 the ability of the market to 

consume ethanol as E15 - E85 is constrained in a number of ways. We believe that it will be 

challenging for the market to consume sufficient quantities of ethanol sold in blends greater than 

E10 and to produce sufficient volumes of non-ethanol biofuels (biodiesel, renewable diesel, 

biogas, etc.) to reach the mandated 18.15 bill gal for 2014. Given these challenges, EPA 

anticipates that adjustments to the 2014 volume requirements are likely to be necessary based on 

the projected circumstances for 2014, taking into account the available supply of cellulosic 

biofuel, the availability of advanced biofuel, the E10 blendwall, and current infrastructure and 

market-based limitations to the consumption of ethanol in gasoline-ethanol blends above E10. 

As discussed in Section III.E below, EPA will discuss options and approaches for addressing 

these issues, consistent with our statutory authorities, in the forthcoming NPRM for the 2014 

standards.

3. Applicable Volumes Used to Set the Annual Percentage Standards for 2013

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

refiner, blender or importer to determine its renewable fuel volume obligations. The applicable 

percentages are set so that if each regulated party meets the percentages, and if EIA projections 

of gasoline and diesel use for the coming year are accurate, then the amount of renewable fuel, 

 

6

"2012 Ethanol Industry Outlook," Renewable Fuels Association, 

http://ethanolrfa.3cdn.net/d4ad995ffb7ae8fbfe_1vm62ypzd.pdf

Comment [A11]: Corn ethanol should not be 

hyphenated.

Comment [A12]: Suggest EPA use EIA’s more 

recent estimates instead of the RFA report from 

January 2012. EIA’s plant capacity report was 

released on May 20, 2013 (found here 

http://www.eia.gov/petroleum/ethanolcapacity/) and 

has capacity significantly lower at 13.7 billion 

gallons for 2012, and has capacity at 13.85 for 2013.

Comment [A13]: It may be possible that the 

2013 volumes can be attained with available capacity 

and stocks of RINs. However, production and 

investment incentives in 2013 depend crucially on 

expectations about future policy. The signal 

conveyed by the current version of the annual 

volume rule is that the EPA is reluctant to depart 

from the statutory total volume in EISA.
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cellulosic biofuel, biomass-based diesel, and advanced biofuel actually used will meet the 

volumes required on a nationwide basis. 

To calculate the percentage standards for 2013, we have used the projected volume of 6

million ethanol-equivalent gallons of cellulosic biofuel and the volume of biomass-based diesel 

of 1.28 bill gal that we established in a separate action. The applicable volumes used in this final 

rule for advanced biofuel and total renewable fuel for 2013 are those specified in the statute. 

These volumes are shown in Table I.B.3-1. 

Table I.B.3-1

Volumes Used to Determine the 2013 Percentage Standardsa

Cellulosic biofuel 6 mill gal

Biomass-based diesel 1.28 bill gal

Advanced biofuel 2.75 bill gal

Renewable fuel 16.55 bill gal

a All volumes are ethanol-equivalent, except for biomass-based diesel which is 

actual.

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

separate volume requirements shown in Table I.B.3-1. 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 IV.B.1. The percentage standards represent the ratio of 

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

volume of transportation gasoline and diesel used to calculate the standards in today's rule was 

derived from EIA projections.7EPA has approved a single small refinery/small refiner 

exemption for 2013, so an adjustment has been made to the standards to account for this 

exemption. The final standards for 2013 are shown in Table I.B.3-2. Detailed calculations can 

be found in Section IV, including the projected 2013 gasoline and diesel volumes used.

Table I.B.3-2

Final Percentage Standards for 2013

Cellulosic biofuel 0.003%

Biomass-based diesel 1.12%

Advanced biofuel 1.60%

Renewable fuel 9.64%

4. Applicable Percentage Standard for Cellulosic Biofuel in 2012

On January 25, 2013, the United States Court of Appeals for the District of Columbia 

Circuit responded to a challenge to the 2012 cellulosic biofuel standard. The Court found that in 

establishing the applicable volume of cellulosic biofuel for 2012, EPA had used a methodology 

in which “the risk of overestimation [was] set deliberately to outweigh the risk of 

underestimation.” The Court held EPA’s action to be inconsistent with the statute because EPA 

 

7

Letter, Adam Sieminski, Administrator, U.S. Energy Information Administration, to Lisa P. Jackson, 

Administrator, U.S. EPA, October 18, 2012.

Comment [A14]: This cites the older Oct. 2012 

letter. But EIA’s May 2013 letter has reduced 

forecasts for motor gasoline and diesel. If EPA is 

using the May revisions to justify reducing cellulosic 

biofuels, then the revised transportation fuel 

projections should be used as well.
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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. In today's final rule we have revised the regulations to eliminate the 

applicable standard for cellulosic biofuel for 2012 in light of the court’s decision and the very 

small number or cellulosic biofuel RINs produced in 2012. All of the money paid by obligated 

parties to purchase cellulosic waiver credits to comply with the cellulosic biofuel standard in 

2012 has been refunded. This change does not impact any other applicable 2012 standard.

5. Administrative Actions

By November 30 of each year we are required to make several administrative 

announcements which facilitate program implementation in the following calendar year. These 

announcements include the cellulosic biofuel waiver credit price and the status of the aggregate 

compliance approach to land-use restrictions under the definition of renewable biomass for both 

the U.S. and Canada. Since we did not make these announcements for 2013 by November 30 of 

2012, we presented our proposed assessments of these administrative actions in the February 7, 

2013 NPRM. In today's action we are providing the final announcements for these 

administrative actions.

When EPA reduces the applicable volume of cellulosic biofuel for 2013 below the 

volume specified in the statute, EPA is required to offer biofuel waiver credits to obligated

parties that can be purchased in lieu of acquiring cellulosic biofuel RINs. These waiver credits 

are not allowed to be traded or banked for future use, are only allowed to be used to meet the

2013 cellulosic biofuel standard, and cannot be applied to deficits carried over from 2012. 

Moreover, unlike cellulosic biofuel RINs, waiver credits may not be used to meet either the

advanced biofuel standard or the total renewable fuel standard. For the 2013 compliance period, 

we have determined that cellulosic biofuel waiver credits can be made available to obligated 

parties for end-of-year compliance should they need them at a price of $0.42 per credit. 

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 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. Based on data provided by the USDA, we have estimated that U.S. agricultural land 

reached 384 million acres in 2012, and thus did not exceed the 2007 baseline acreage. 
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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 nonforested on that date (and is therefore RFS2 qualifying land). The total 

agricultural land in Canada in 2012 is estimated at 120.9 million acres. The total acreage 

estimate of 120.9 million acres does not exceed the trigger point for further investigation.

C. Effective Date

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

standards for the following year by November 30. EPA did not meet this statutory deadline for 

the 2013 standards. The NPRM was published on February 7, 2013 and the comment period 

closed on April 7, 2013. Nevertheless, we believe that the applicable percentage standards we 

are finalizing in today's rulemaking should apply, as proposed, to all gasoline and diesel 

produced in 2013, including that produced prior to the effective date of this final rule. 

Some commenters asserted that this approach would provide insufficient notice and lead time to 

obligated parties, and result in prohibited retroactive rulemaking. However, as discussed below, 

application of the standards to the entire year’s production is reasonable given the structure of 

the statute, advance notice to obligated parties, compliance mechanisms under the program, and 

sufficiency of lead time for obligated parties to achieve compliance. Moreover, we have 

considered the alternative approaches suggested by commenters, and have determined that they 

are inappropriate as they would not satisfy the statutory requirements.

In response to the NPRM, several obligated parties commented that the rulemaking 

process to establish the applicable 2013 standards should be abandoned due to its tardiness, and 

instead EPA should focus only on promulgating the applicable standards for 2014. Other 

commenters requested that we make the applicable 2013 standards apply only to gasoline and 

diesel produced or imported after the publication of the final rule, thereby effectively reducing 

the volume of renewable fuel to be used in 2013 by an amount proportional to the months in 

2013 prior to the publication date. Alternatively, some commenters suggested that we apply the 

2012 standards to 2013. All of these suggested approaches would result in 2013 standards 

requiring substantially less renewable fuel use than specified in the statute. 

Under the statute, the renewable fuel obligations apply on a calendar year basis. The 

national volumes are established for each calendar year, and EPA’s regulations must ensure these 

national volumes are met on an annual average basis. The renewable volume obligation is based 

on a projection of gasoline and diesel production for the calendar year, and the renewable fuel 

obligation for that calendar year is to be expressed as a percentage of the transportation fuel a 

refiner or importer sells or introduces into commerce for that calendar year. 

EPA acknowledges that today’s rule is being finalized later than the statutory deadline of 

November 30, 2012. However, this delay does not deprive EPA of authority to issue standards 

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for calendar year 2013. As the United States Court of Appeals for the District of Columbia 

Circuit noted in its review of EPA’s delayed 2010 RFS standards, the statute does not specify a 

consequence for a situation where EPA misses the deadline, NPRM v. EPA, 630 F.3d 145, 152-

158 (2010), and 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 statute here requires 

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

annual average basis, contains at least the applicable volume of renewable fuel" specified in the 

statute. Id. at 152-153. Therefore EPA believes it has authority to issue RFS standards for 

calendar year 2013 notwithstanding EPA’s delay in issuing this final rule, and that it must issue 

standards that “ensure” that the volumes specified for 2013 are satisfied. EPA has not chosen 

any of the alternative approaches suggested by commenters, because none of the proferred 

solutions would ensure that the volumes Congress specified for 2013 would be used. 

EPA is mindful that the precise contours of obligated parties’ responsibilities for gasoline 

and diesel fuel produced in 2013 could not be known before issuance of this final rule. 

However, EPA believes that imposition in the final rule of an obligation related to production of 

gasoline or diesel that occurred prior to the effective date of this rule is reasonable. First, as 

noted above, EPA is required under the statute to ensure that applicable volumes specified in the 

statute for 2013 are satisfied, so it must take action notwithstanding the late date. The statute 

also provides that the national volumes are to be achieved on “an annual average basis.” The 

standards for obligated parties are based on a projection from the Energy Information

Administration of gasoline and diesel use for each calendar year, and the obligation for refiners 

and importers is to be expressed as an applicable percentage obligation for a calendar year. 

Thus, applying the standards to production in calendar year 2013 is most consistent with the 

statute. 

Second, obligated parties have been provided reasonable notice that EPA would act in 

approximately the manner specified in the final rule. EPA established the required volume of 

biomass-based diesel in a separate rulemaking and, as proposed, has not lowered the applicable 

volumes of total renewable fuel and advanced biofuel below the applicable volumes specified in 

the statute. EPA has, as proposed, substantially lowered the required volume of cellulosic fuel 

below the level specified in the statute. Indeed, EPA’s final rule requires use of less cellulosic 

biofuel than it proposed, so any change between the proposed and final rules in this regard 

operates to relieve burden on obligated parties. Regulated parties also had the benefit of 

knowing how EPA has previously approached standards that are finalized after the beginning of 

the calendar year. In the March 2010 final rule revising the RFS program regulations, we set the 

standards for 2010 and made them applicable to all gasoline and diesel produced in 2010 despite 

the fact that the rulemaking was not published until March 26, 2010. This approach was 

challenged and upheld in NPRM v. EPA, 630 F.3d 394 (DC Cir. 2010). Thus, EPA believes that 

obligated parties had sufficient notice. 

Third, the parties have adequate lead time to comply with the 2013 RFS standards 

notwithstanding EPA’s delay in issuing the rule. Because compliance is achieved by obligated 

parties purchasing an appropriate number of RINs from producers or blenders of the renewable 

fuel, obligated parties do not need lead time for construction or investment purposes. They are 
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not changing the way they produce gasoline or diesel, do not need to design or install new 

equipment, or take other actions that require longer lead time. Obtaining the appropriate amount 

of RINs involves contractual or other arrangements with renewable fuel producers or other 

holders of RINs. Indeed renewable fuel producers have been generating 2013 RINs since the 

beginning of the calendar year. Obligated parties have been acquiring RINs since the beginning 

of 2013 in anticipation of the publication of the final applicable standards in today's rule. There 

is also a significant quantity of 2012 RINs that can be used for compliance with the 2013 

standards. To facilitate compliance, and provide additional lead time, EPA is extending the date 

by which compliance with the 2013 standards must be demonstrated to June 30, 2014. EPA 

chose this date both to provide substantial additional time for a compliance demonstration, and 

because we project that the rule establishing the 2014 RFS standards will be final by that date. 

Having the 2013 compliance deadline occur after finalizing the 2014 RFS rule will allow 

obligated parties to determine their use of RINs for 2013 compliance while being mindful of 

their 2014 obligations. 

EPA considered, but rejected, the option of issuing numerically higher percentage 

standards based on just the 2013 production of gasoline and diesel fuel that took place after 

issuance of the final rule. However, such an approach would not provide for standards allowing 

compliance on an "annual average basis," based on “an applicable percentage for a calendar 

year,” as envisioned by the statute. Also, EPA believes application of the standards in this 

manner would be unfair because it could result in some producers or importers having 

substantially greater or lesser obligations, based on variable production or import volumes over 

the year, than would be the case if the standards were based on a full year's production. In 

essence, such an approach would provide a temporal window with no RFS obligation, and some 

parties might receive either a windfall or a substantially greater burden than they would have if 

EPA had issued its standards on time. This would be exacerbated by the fact that EPA did not 

take comment on this alternative, so obligated parties would not have been on notice of this 

potential approach. EPA rejected this approach for these reasons. 

D. Impacts of Final Actions

Analyses for the March 26, 2010 RFS final rule indicated the GHG benefits from 

cellulosic biofuels compared to the petroleum-based fuels they displace are well above the 60 

percent reduction threshold. Therefore, EPA expects that the increase in cellulosic biofuel use 

that EPA has projected for 2013 over prior year production levels will have directionally 

beneficial GHG emissions impacts.

For advanced biofuel and total renewable fuel, we are not reducing the applicable 

volumes below the applicable volumes set forth in the statute. All of the impacts of the biofuel 

volumes specified in the statute were addressed in the RFS final rule published on March 26, 

2010. Today's rulemaking simply sets the percentage standards for obligated parties for 2013 

advanced biofuel and total renewable fuel, where the impacts of the national volumes of those 

fuels were previously analyzed. 

Deleted: are 

Comment [A15]: Consider revising this 

paragraph a bit. It is odd that it starts with “EPA 

considered the option of higher % stds” (presumably 

this occurred before issuance of the NPRM?) and 

then later stating that EPA did not request comment. 

Suggest clarifying that EPA considered, but did not 

seek comment on this approach because X, Y, Z. 

Then also note that, for the reasons stated above, 

EPA did not seek comment on such an approach. 

Thus, obligated parties were on notice that this 

approach was not being considered and it would be 

inappropriate to adopt such an approach at this time. 

[or, something to this effect – just suggest a need for 

overall review of this paragraph]

Comment [A16]: Suggest adding FR cite.
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II. Projection of Cellulosic Biofuel Volume for 2013

In order to project the national production volume of cellulosic biofuel in 2013, we 

considered the EIA projections and collected information on individual facilities that have the 

potential to produce qualifying volumes for use as transportation fuel, heating oil, or jet fuel in 

the U.S. in 2013. In light of the delay in issuing the standards for 2013 we also sought and 

received an updated estimate of cellulosic biofuel production from EIA to inform our final 

standards. We also considered the comments we received in response to the NPRM. This 

section describes the volumes that we project will be produced or imported in 2013 as well as 

some of the uncertainties associated with those volumes. 

Despite significant advances in cellulosic biofuel production technology in recent years, 

RIN-generating production of biofuel from cellulosic feedstocks in 2010 and 2011 was zero 

despite our projections that the industry was positioned to produce about 6 mill gal in each of 

those years.8In 2010 the majority of the cellulosic biofuel shortfall was met through the use of 

RINs generated under the initial RFS regulations, and since there were excess cellulosic RINs 

many of these RINs were carried over into the 2011 compliance year. The remaining cellulosic 

biofuel requirements in 2011 were met through the purchase of cellulosic biofuel waiver credits.9

A discussion of the reasons for this disparity between our projections and subsequent production 

is provided in Section II.B below. 

In 2012 the first cellulosic RINs were generated under the current RFS regulations at two 

small pilot facilities. However, cellulosic biofuel production once again fell short of our 

projections in 2012. The 2012 cellulosic standard was challenged in court and based on the 

decision in that case the 2012 cellulosic biofuel standard was vacated.10 This decision is 

discussed further in the following sections. 

A. Statutory Requirements

The national volumes of cellulosic biofuel to be used under the RFS program each year 

through 2022 are specified in CAA 211(o)(2). For 2013, the statute specifies a cellulosic biofuel 

applicable volume of 1.0 bill gal. The statute requires that if EPA determines, based on EIA’s 

estimate, that the projected volume of cellulosic biofuel production for the following year is less 

than the applicable volume shown in Table II.A-1, then EPA is to reduce the applicable volume 

of cellulosic biofuel to the projected volume available during that calendar year. 

 

8

 In the first half of 2010 when the initial RFS program was still effective, some cellulosic biomass ethanol was 

produced and the RINs generated were valid for demonstrating compliance with the 2010 and 2011 RFS cellulosic 

biofuel standards. However, the cellulosic biomass ethanol that was produced was not made from cellulosic 

feedstocks, but rather was categorized as cellulosic because it was produced in plants using waste materials to 

displace 90% or more of fossil fuel use under the then-effective definition of cellulosic biomass ethanol in CAA 

Section 211(o)(1)(A). See also 40 CFR §80.1101(a)(2). 

9

4,248,338 cellulosic waiver credits were purchased for 2011 compliance according to the EMTS website 

(information retrieved from the website on December 11, 2012) at a cost of $1.13 per credit. The ethanol-equivalent 

volume of cellulosic biofuel projected for 2011 and used to calculate the percentage standard for that year was 6.0 

mill gal. 

10 See API v. EPA, 706 F.3d 474 (D.C. Cir. 2013)

Comment [A17]: In light of the new pathways 

for giant reed and napier grass; has EPA considered 

whether it is appropriate to acknowledge those 

pathways in this rulemaking?

Comment [A18]: Please spell out EMTS website 

in the FN.
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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. Our consideration of 

the 2013 volume requirements for advanced biofuels and total renewable fuel is presented in 

Section III.

The United States Court of Appeals for the District of Columbia Circuit recently 

interpreted the statutory requirements for EPA’s cellulosic biofuel projections, in the context of 

considering a challenge to the 2012 cellulosic biofuel standard. The Court found that in 

establishing the applicable volume of cellulosic biofuel for 2012, that 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 this 

provision required EPA to apply a “neutral methodology” aimed at providing a prediction of 

“what will actually happen”. In all other respects the Court upheld EPA’s methodology for 

making cellulosic biofuel projections. For example, the Court agreed with EPA that the statute 

requires that EPA treat the EIA estimate with “great respect,” but “allowing deviation consistent 

with that respect”. The Court also upheld EPA’s reasoned reliance on information provided by 

prospective cellulosic biofuel producers in formulating its projections. For a further discussion 

of the changes we have made to our approach in evaluating the information that forms the basis 

for our projection of cellulosic biofuel see Section C below.

B. Status of the Cellulosic Biofuel Industry

As in previous years, cellulosic biofuel production in the United States in 2012 was 

limited to small-scale research and development, pilot, and demonstration-scale facilities. 

Companies such as Abengoa, Blue Sugars, DuPont, KiOR, Poet, and others successfully 

operated small-scale facilities in 2012. Two of these companies, Blue Sugars and KiOR, 

generated a small number of RINs for the fuel they produced. Several of these facilities, 

including all that were part of our 2012 volume projections, are discussed in more detail in 

Section II.C below. While there were numerous small-scale facilities producing cellulosic 

biofuel in 2012, the total volume of fuel produced was very small. Two commercial scale 

facilities that were expected to begin fuel production in 2012 experienced unexpected delays in 

commissioning, while a third was delayed due to difficulties raising required funds.11 Although 

information is not available to EPA to quantify the total volume of cellulosic biofuel produced in 

2012 at these research and development, pilot, and demonstration scale facilities if they do not 

generate RINs, based on generally available information we believe that total production in the 

United States was likely less than one mill gal across the industry.

While cellulosic biofuel production in the United States remains limited, the industry 

continues to make significant progress towards producing cellulosic biofuel at prices competitive 

with petroleum fuels. From 2007 through the second quarter of 2012 venture capitalists invested 

 

11 For more information see Section II.C below

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over $3.4 billion in advanced biofuel companies in North America12. Recent advancements in 

enzyme and catalyst technologies are allowing cellulosic biofuel producers to achieve greater 

yields of biofuel per ton of feedstock. These advancements have led to lower operational costs 

as they have driven down the cost for feedstock, energy, and other important inputs on a per 

gallon basis. For example, the estimated cost of producing cellulosic ethanol using an enzymatic 

hydrolysis process in 2007 was $4-$8 per gallon.

13 By 2012 the estimated cost of cellulosic 

ethanol production using the same process had fallen to $2-$3.50 per gallon14. The U.S. 

Department of Energy (DOE) similarly reports that advancements in cellulosic ethanol 

technology have resulted in a decrease in modeled costs from approximately $4 per gallon 

(minimum ethanol selling price) in 2007 to approximately $2.50 per gallon in 2011.

15

 The same 

technological advances have also lowered the capital costs of cellulosic biofuel production 

facilities per gallon of annual fuel production, as more gallons of biofuel can be produced at a 

facility without additional equipment or increased feedstock requirements.

Another area where significant progress has been made is feedstock supply for 

commercial scale cellulosic biofuel production facilities. This issue has often been raised as a 

factor that could hinder the development of the cellulosic biofuel industry as many of the 

proposed facilities rely on feedstocks, such as agricultural residues or energy crops, for which 

supply chains have not previously existed. Over the past several years both Abengoa and Poet 

have been working with farmers in the regions surrounding their first commercial scale facilities 

to ensure the availability of the necessary feedstock. Because corn cobs and stover are only 

seasonally available, using them as a feedstock for a cellulosic biofuel production facility would 

require significant feedstock storage facilities. In the last two years Abengoa and Poet 

completed construction of large scale feedstock storage facilities to ensure adequate supply to 

their cellulosic biofuel production facilities throughout the year. Both companies successfully 

completed fall biomass harvests in 2011 and have contracted with local farmers to provide 

feedstock for their cellulosic ethanol facilities. This supply chain will not only provide feedstock 

for their first commercial scale facilities, but also a model that can be re-created at future 

production facilities.

Several cellulosic biofuel producers are planning to use pre-commercial thinnings, tree 

residue from tree plantations or the cellulosic portions of yard waste as feedstock.16 This 

material has many qualities that make it desirable as a cellulosic biofuel feedstock. It tends to be 

relatively inexpensive and is readily available in some regions of the United States. It is also 

available year round rather than seasonally, significantly reducing the need for large scale

feedstock storage facilities. Securing a sufficient quantity of this feedstock for a commercial 

 

12 Solecki M, Dougherty A, Epstein B. Advanced Biofuel Market Report 2012: Meeting U.S. Fuel Standards. 

Environmental Entrepreneurs. September 6, 2012. Available Online 

<http://www.e2.org/ext/doc/E2AdvancedBiofuelMarketReport2012.pdf>.

13 Nielsen, Peder Holk. “The Path to Commercialization of Cellulosic Ethanol – A Brighter Future.” PowerPoint 

Presentation. Conference Call. February 22, 2012. Available Online 

<http://www.novozymes.com/en/investor/events-presentations/Documents/Cellic3_conf_call_220212.pdf>.

14 IBID

15 Department of Energy. Biomass Multi-Year Program Plan. April 2012. DOE/EE-0702. Available Online 

<http://www1.eere.energy.gov/biomass/pdfs/mypp_april_2012.pdf>.

16 Pre-commercial thinnings and tree residue from tree plantations must come from non-federal lands and meet the 

definition of a renewable biomass definition and be eligible to generate RINs.

Comment [A19]: Please correct FN.
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scale facility, however, can be challenging. In the summer of 2011 KiOR announced it had 

signed a feedstock agreement with Catchlight Energy to provide all the necessary feedstock for 

their first commercial scale facility. While KiOR plans to transition to planted trees for future 

facilities, KiOR now has secured sufficient feedstock such that they can produce cellulosic 

biofuel and cellulosic RINs using an existing pathway at their first commercial scale facility. 

INEOS Bio also has a long term agreement with Indian River County to provide separated yard 

waste which will serve as the feedstock for their first facility.

Another feedstock for cellulosic biofuel production is separated municipal solid waste 

(MSW). MSW is already being collected and transported to a centralized facility, is consistently 

available throughout the year, and can be obtained for a very low, or even negative, cost. MSW 

often contains contaminants, however, that may make it challenging to process for some 

cellulosic biofuel technologies. EPA also requires that waste separation plans be submitted and 

approved prior to any company generating RINs using separated MSW as a feedstock. In June 

2012 EPA approved the first waste separation plan under the RFS program for Fiberight’s 

facility in Blairstown, Iowa.

In the early years of the cellulosic biofuel industry several small start-up companies 

announced plans to build large commercial scale facilities that were scheduled to begin 

production in the past few years. The construction of many of these facilities was dependent on 

the companies raising additional funding, either from venture capitalists, government grants, or 

loans backed by government guarantees. So far, few of the companies that made these early 

announcements have been able to successfully raise the necessary funds and begin construction. 

Securing this funding proved difficult, and when it did not materialize the projects were delayed 

or cancelled. However, recently significant progress has also been made by some companies 

towards funding the construction of their first commercial scale facilities. 

The funding profiles of the companies included in our projected volume for 2013, as well 

as for many of the companies targeting production in 2014, are markedly different than those of 

the companies that were expected to produce the majority of cellulosic biofuel in 2010 and 2011. 

Many of these projects have already received, and in several cases have closed on loan 

guarantees and grants offered by DOE or USDA. Other companies have filed for and 

successfully executed IPOs. Several cellulosic ethanol projects are being self-financed by large 

companies such as Abengoa and Poet with significant experience in the biofuel, petrochemical, 

and specialty chemical markets. This solid financial backing has allowed these companies to 

proceed with construction. Both of the facilities included in our final volume for 2013 have 

already completed the construction of their first commercial production facilities. KiOR’s 

facility has begun producing RINs and production from INEOS Bio is now expected in the 

summer of 2013. There is therefore far less uncertainty as to likely production from these two 

facilities than has been present for EPA’s earlier projections. The next section provides 

additional details on the funding and construction status of the projects included in our projected 

cellulosic biofuel production volumes for 2013. 

If these first commercial scale cellulosic biofuel production facilities are successful, the 

potential exists for a rapid expansion of the industry in subsequent years. Having successful 

commercial scale facilities would not only provide useful information to help maximize the 
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efficiency of future facilities, but would also significantly decrease the technology and scale-up 

risks associated with cellulosic biofuel production facilities and could lead to increased access to 

project funding. Fiberight and ZeaChem both plan to build larger-scale facilities (~25 mill gal 

per year) as soon as they are able to raise the necessary funds. INEOS Bio plans to expand 

production by building additional units near sources of inexpensive feedstock ranging in size 

from 8 to 50 mill gal of ethanol per year. They are currently exploring expansion possibilities in 

the United States and internationally. KiOR has plans for a second commercial scale facility to 

be built in Natchez, MS, that will be approximately three times larger (~30 mill gal per year) 

than their Columbus, MS, plant and plans to break ground at their second facility after their first 

is fully operational. Abengoa currently anticipates construction of additional cellulosic ethanol 

facilities at multiple locations, likely including co-locating with some of their existing starch 

facilities in the US. Poet has a similar expansion strategy to build cellulosic ethanol plants at 

their grain ethanol facilities, license their technology for use at other grain ethanol facilities, and 

build cellulosic ethanol facilities that use feedstocks such as agricultural residue or energy crops. 

Poet’s goal is to be involved in the production of 3.5 bill gal of cellulosic ethanol per year by 

2022. Several other companies are also targeting 2014 for the start-up of cellulosic biofuel 

production facilities and would likely look to build additional facilities relatively quickly if their 

first facilities operate successfully. While many of these expansion plans are still in the early 

stages and are subject to change, they do point to the potential for cellulosic biofuel production 

to increase very significantly in future years once the initial plants become operational.

C. Cellulosic Biofuel Volume Assessment for 2013

In 2012 the first cellulosic biofuel RINs under the current regulations were generated. 

Small quantities of RINs, a total of approximately 22,000, were generated by Blue Sugars and 

KiOR from their respective demonstration facilities. The small volumes of fuel produced from 

these two facilities are typical for R&D and pilot facilities whose primarily purpose is to prove 

the technology is viable, provide information for scale-up design, and provide fuel for testing 

purposes rather than to generate income from commercial volumes of fuel. However, national 

cellulosic biofuel production once again fell far short of the cellulosic biofuel standards. Two of 

the companies expected to begin producing fuel in 2012 experienced unexpected difficulties in 

commissioning their commercial scale production facilities following successful demonstration 

and pilot scale work, resulting in biofuel production being delayed until 2013. A third 

commercial facility was unable to secure the funds needed to convert an existing corn ethanol 

production facility to a cellulosic biofuel production facility, despite having secured a 

conditional loan guarantee from the United States Department of Agriculture (USDA). The 

remaining facilities that were included in our projected production volume for 2012 were small 

demonstration facilities that similarly experienced delays or significantly reduced production 

volumes for a variety of reasons.

There are several factors indicating that larger volumes of cellulosic biofuel will be 

produced in 2013. Commercial scale cellulosic biofuel projects from INEOS Bio and KiOR are 

structurally complete and KiOR’s facility has begun producing cellulosic biofuel. Both facilities 

plan to achieve steady state production and achieve production rates at or near their nameplate

capacities by the end of 2013. Another commercial scale facility backed by Abengoa, a large 
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company with significant experience in biofuel production, is also scheduled to begin producing 

cellulosic biofuel in late 2013 or early 2014. These facilities are indicative of a shift across the 

cellulosic biofuel industry from small-scale R&D and demonstration facilities often operated by 

small start-up companies to large commercial scale facilities backed by large companies, many 

of which have substantial experience in related industries. 

In order to project cellulosic biofuel production for 2013, we tracked the progress of 

more than 100 biofuel production facilities. From this list of facilities we used publicly available 

information, as well as information provided by DOE, EIA, and USDA, to make a preliminary 

determination of which facilities are the most likely candidates to produce cellulosic biofuel and 

generate cellulosic biofuel RINs in 2013. Each of these companies was investigated further in 

order to determine the current status of their facilities and their likely cellulosic biofuel 

production and RIN generation volumes for the coming years. Information such as the funding 

status of these facilities, current status of the production technologies, announced construction 

and production ramp-up periods, and annual fuel production targets were all considered when we 

met with senior level representatives of each company to discuss cellulosic biofuel target 

production levels for 2013. Throughout this process EPA is in regular contact with EIA to

discuss relevant information and assessment of potential cellulosic biofuel producers. Our 

projection of the cellulosic biofuel production in 2013 is based on the estimate we received from 

EIA, information we received from EIA, DOE, and USDA, the individual production projections

that emerged from these discussions, and comments we received on the NPRM. A brief 

description can be found below for each of the companies we believe will produce cellulosic 

biofuel and make it commercially available in 2013. 

To project the available volume of cellulosic biofuel, we have continued to obtain 

information from the potential producers of cellulosic biofuels to help inform our annual 

projection. We have, however, made several changes to the way that we used the information 

we gather in projecting cellulosic biofuel production to ensure consistency with the ruling of the 

DC Circuit Court and help ensure a neutral projection that aims at accuracy. Several of the more 

significant changes are:

Volumes from pilot and demonstration scale facilities are not included in our 

projections. Very few of these facilities are registered to generate RINs, and 

production volumes at those that are historically have been so small that they have no 

significant impact on our total volume projection for 2013.

Facilities with start-up dates near the end of the year are not included in our 

projections. There is a realistic possibility that minor delays could result in no 

production of cellulosic biofuel from such facilities in 2013, and even if these 

facilities start up as expected production volumes from the first month of production 

are expected to be very small.

Benchmarks for how quickly new facilities ramp up to full production, and for 

production volumes during this ramp-up period in a best case scenario have been 

established and used to assess the reasonableness of the production estimates received 

from producers. Production projections from companies that exceed the volumes 

calculated using this benchmark are not considered credible, even as the high end of a 

possible range of production. While we have considered ramp-up rates for cellulosic 
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biofuel production facilities in the past we have added best case scenario benchmarks 

to assess the reasonableness of the ramp-up schedules we received from potential 

biofuel producers.

In considering all factual information and projections we have weighted uncertainty 

neutrally, with the aim of providing an accurate projection rather than one intended to 

provide an incentive for growth in the cellulosic biofuel industry.

In our proposed rule we projected 14 million ethanol-equivalent gallons of cellulosic 

biofuel production in 2013. Since this time we have considered comments received on the 

proposed rule, updated information from EIA including a new projection of cellulosic biofuel 

production for 201317, and updated information from the companies expected to produce 

cellulosic biofuel. The sections that follow discuss the comments we received, the updated 

information from EIA, and the current status of the cellulosic production facilities that are 

relevant in setting the cellulosic biofuel standard for 2013. Based on this information we are 

setting the cellulosic biofuel standard at 6 million ethanol-equivalent gallons (4 million actual 

gallons) based on our current projection of cellulosic biofuel production in 2013.18

1. Comments on the Proposed Rule

EPA received many comments on the projected available cellulosic biofuel volumes in 

our proposed rule. Several commenters, including biofuel trade organizations and cellulosic 

biofuel production companies supported EPA’s methodology for projecting available cellulosic 

biofuel volumes. Some of these commenters further stated that EPA had appropriately assessed 

the status of the cellulosic biofuel industry and that the projected volume (14 million ethanolequivalent gallons) was likely to be achieved. Others, while affirming EPA’s methodology 

encouraged EPA to consider new information available since the publication of our proposed 

rule, particularly delays in the start-up of INEOS Bio and new production guidance from KiOR, 

and to adjust our projected volume accordingly. EPA has considered this information and 

believes the volume projected in today’s final rule (6 million ethanol-equivalent gallons) 

accurately represents the volume of cellulosic biofuel likely to be produced in 2013 based on the 

best available information.

Conversely, EPA also received several comments stating that the projected available 

volume of cellulosic biofuel should be based on historical production rather that projections of 

future production. Using this methodology would result in a cellulosic biofuel standard for 2013 

near zero. In effect the commenters argued that past production is the best and most sure 

indicator for future production. Adopting this methodology would be inconsistent with EPA’s 

charge to set the applicable volume for cellulosic biofuel through a neutral projection of the 

volume projected to be produced that aims at accuracy. Basing this projection solely on past 

 

17 Letter from A. Michael Schaal, Director, Office of Petroleum, Natural Gas, and Biofuels Analysis, EIA to 

Christopher Grundler Director, Office of Transportation and Air Quality, EPA, May 8, 2013.

18 The difference between actual volume and ethanol-equivalent volume stems from the fact that cellulosic gasoline 

and diesel fuels generate a greater number of RINs than the actual gallons produced because of their higher energy 

content. The number of RINs generated per gallon of fuel produced is based on the energy content of the fuel 

relative to ethanol.
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production would not neutrally aim at accuracy, as it would require EPA to ignore significant 

real world information that is relevant to project production for 2013. It would also require EPA 

to ignore the production estimates we receive from EIA, which we are required to consider with 

great respect. Additionally, it would be unusual to base a future projection solely on past 

performance, effectively assuming no growth in the cellulosic biofuel industry.

Several commenters also stated that the methodology used by EPA in setting the 

applicable volume for cellulosic biofuel is the same as that used in previous years and that this is 

inappropriate in light of the API v. EPA decision vacating the 2012 cellulosic biofuel standard. 

The process used by EPA to gather information on the relevant companies and their likely 

production is indeed similar. We continue to consider information received directly from 

potential cellulosic biofuel producers and the cellulosic and advanced biofuel trade associations. 

As noted above, we have made several changes to how we evaluate this information. We work 

closely with EIA in developing our volume projection and give their production estimate great 

weight. Indeed, this year we are projecting the same volume of cellulosic biofuel as the most 

recent estimate provided by EIA. Consistent with the Court’s directive, we are not weighing 

uncertainty in any element of our projection in a manner that favors a higher or a lower volume 

projection.

EPA believes the information and methods used to project the production of cellulosic 

biofuel for 2013 described in the preceding sections appropriately takes neutral aim at accuracy. 

EPA has established a benchmark for the expected production ramp-up timeframe that has been 

used to assess the reasonableness of production estimates received from companies. We did not 

receive any comments suggesting that this benchmark was inappropriate. We have appropriately 

considered the history of delays for the cellulosic industry as a whole and the companies 

included in our projection in particular in projecting these volumes. We have not included any 

volumes from pilot or demonstration scale facilities, nor have we included any volume from 

companies currently lacking a valid pathway to produce cellulosic biofuel - despite their claims 

that they can and intend to generate cellulosic biofuel RINs in 2013 - due to the highly uncertain 

nature of this production. Given the timing of this final rule this seems particularly appropriate 

for 2013. Finally, we have not used best case scenarios for the companies considered in 

determining our volume projection for 2013, and have not attempted to use this process to either 

promote or impede growth within the cellulosic biofuel industry. Of the seven companies and 

potential fuel producing pathways listed in Table II.C.6-1 that have the potential to produce 

cellulosic RINs in 2013 we have only included two in our volume projection. For the two 

facilities considered we have reduced their projected volume from the maximum possible 

production calculated from the start-up date and nameplate capacity taking into account expected 

ramp-up schedules and delays experienced at the two facilities. After using this information to 

establish projected ranges of production we selected a combined volume that represents 

production at the mid-point of our established ranges, as a shortfall in expected production from 

either company can be made up for by the other companies in Table II.C.6-1 exceeding their 

projected production. We believe our volume projection of 6 million ethanol-equivalent gallons 

of cellulosic biofuel in 2013 and the methodology utilized to arrive at this projection are our best 

assessment of production that will actually happen in 2013.

Comment [A20]: True for actual gallons. EIA 

did not provide the ethanol equivalent gallon volume 

in its letter. Please clarify.

Deleted: projection 
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2. Projections from the Energy Information Administration

Section 211(o)(3)(A) of the Clean Air Act requires EIA to "...provide to the Administrator of the Environmental Protection Agency an estimate, with respect to the following 

calendar year, of the volumes of transportation fuel, biomass-based diesel, and cellulosic biofuel 

projected to be sold or introduced into commerce in the United States." EIA provided these 

estimates to us on October 18, 2012.

19

 With regard to cellulosic biofuel, the EIA estimated that 

the available volume in 2013 would be 9.6 million actual gallons (13.1 million ethanolequivalent gallons). A summary of the commercial scale plants they considered and associated 

production volumes is shown below in Table II.C.5.

 

19 Letter from Adam Sieminski, EIA Administrator to Lisa Jackson, EPA Administrator October 18, 2012.

Comment [A21]: The preamble discusses EPA 

and EIA projections for production from the INEOS 

Bio and KiOR cellulosic biofuel plants on pages 24-

26, 28-29, and 33-34. The commenter found this 

part of the preamble to be a bit disjointed. Pages 24-

25 describe the EIA projections for those plants (but 

see above comment). Page 26 states that EIA's 

estimate is “very similar to EPA's projection . . .,” 

but does not comprehensively explain how the two 

sets of data compare. Pages 28-29 provide detailed 

information regarding the two plants, but there is no 

mention of the EIA's estimates. Finally, pages 33-34 

contain summaries of the data from the foregoing, 

with a table of projected available cellulosic biofuel 

for 2013 (apparently based on EPA data). Because 

this will assist readers and make the final rule more 

defensible, the preamble should in one place clearly 

describe the EIA and EPA production projections for 

the two plants, explain how the projections are 

similar and differ from one another, and describe the 

role of each projection in the final volume 

projections for the two plants.
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Table II.C.5

Cellulosic Biofuel Plants Expected to Generate Biofuel RINs for 2013 (from EIA)

Mechanical 

Completion

Company Location Product Design 

Capacity

EIA Forecast

Utilization Actual 

Production (Mill 

gal)

Ethanol-Equivalent 

Production (Mill 

gal)

2012 INEOS Bio Vero Beach, FL Ethanol 8 50% 4.0 4.0

2012 KiOR Columbus, MS Liquids 11 50% 5.5 9.0

Various Various Pilot 

Plants

Various Ethanol 1 10% 0.1 0.1

Total Capacity and Production for 2013 20 48% 9.6 13.1

Note: Ethanol-equivalent production volume totals were not specified in the EIA letter.

Comment [A22]: Table II.C.5 summarizes the 

EIA October 18, 2012 forecast of cellulosic biofuel 

production by commercial-scale plants. EIA 

released another estimate on May 8, 2013. Does the 

agency plan to add that information? If not, why 

not?

Comment [A23]: Because of this parenthetical, 

the commenter requests that the NOTE below be 

added.

Formatted: Font: 10 pt
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Several commenters noted a Today in Energy article that appeared on EIA’s website on 

February 26, 2013 that stated that cellulosic biofuel production “could grow to more than 5 mill 

gal in 2013, as operations ramp up at several plants.”20 The commenters stated that as this article 

was more recent than the letter EPA received in October 2012 it represented an updated volume 

projection from EIA and that EPA should base our volume projection on this smaller volume (5 

million actual gallons). A significant amount of time has passed since we received EIA’s initial 

cellulosic biofuel volume projections and any changes in projected volumes since this time 

should be considered as we determine the appropriate cellulosic biofuel volume projection. To 

ensure that we are using the most up to date information EPA requested and received from EIA 

an updated projection of cellulosic biofuel production in 2013 on May 8, 2013.21 In this letter 

EIA projected that 4 million actual gallons of cellulosic biofuel would be produced in 2013.

EIA’s projection of cellulosic biofuel production in 2013 is very similar to EPA’s 

projection discussed above and summarized in Section II.C.6 below. The lists of companies 

(KiOR and INEOS Bio) that EIA and EPA expect to generate cellulosic biofuel RINs in 2013 are 

the same. EIA’s estimate also no longer includes volumes from pilot facilities due to their highly 

uncertain production and the fact that these facilities are unlikely to generate RINs in 2013 for 

any fuel they do produce. While the total volume of cellulosic biofuel that EIA expects will be 

produced in 2013 is identical to the volume projected by EPA (4 million actual gallons), EIA 

does not specify how much of this production will be ethanol and how much will be renewable 

hydrocarbons. Because of this EPA is unable to calculate the ethanol-equivalent volume 

represented by EIA’s projection. Since this volume includes renewable gasoline and diesel 

produced by KiOR, however, EIA’s projection represents an implied ethanol-equivalent volume 

greater than 4 mill gal and is consistent with EPA’s 6 million ethanol-equivalent gallon 

projection.

The approach we have taken in setting the applicable volume for cellulosic biofuel for 

2013 is appropriate. Section CAA 211(o)(7)(D) vests the authority for making the projection 

with EPA. As described in past rulemakings, the statute provides that the projection is 

“determined by the Administrator based on the estimate provided [by EIA].” Congress did not 

intend that EPA simply adopt EIA’s projection without an independent evaluation. EPA’s 

consideration of EIA’s estimate in developing this final rule is consistent with EPA’s 

consideration of EIA’s estimate in the past rulemakings involving a reduction of the volume 

standard for cellulosic biofuel. EPA’s interpretation and implementation of the obligation to 

base its projection on the EIA estimate recently was upheld in API v. EPA,. 706 F.3d at 478 

(D.C. Cir. 2013).

3. Current Status of Cellulosic Biofuel Production Facilities

In the January 9, 2012, final rule that established the applicable volume of cellulosic 

biofuel for 2012, we identified six production facilities that we projected would produce 

 

20 “Cellulosic biofuels begin to flow but in lower volumes than foreseen by statutory targets.” Today in Energy. EIA, 

February 26, 2013. <http://www.eia.gov/todayinenergy/detail.cfm?id=10131>

21 Letter from A. Michael Schaal, Director, Office of Petroleum, Natural Gas, and Biofuels Analysis, EIA to 

Christopher Grundler Director, Office of Transportation and Air Quality, EPA, May 8, 2013.

Deleted: n

Deleted: RINS 

Deleted: No

Comment [A24]: Should the No. be removed?
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cellulosic biofuel and make that fuel commercially available in 2012. Five of these production 

facilities are currently structurally complete and one is planning to retrofit an existing corn 

ethanol plant with construction beginning in the summer of 2013. The current status of each of 

these facilities, including target production levels for each facility in 2013, is discussed below. 

Two additional facilities that are expected to begin producing cellulosic biofuel near the end of 

2013 or in early 2014 are also discussed.

API

American Process Inc. (API) is developing a project in Alpena, Michigan capable of 

producing up to 900,000 gallons of cellulosic ethanol per year from pre-commercial thinnings 

and tree residue from tree plantations. This facility will use a technology developed by API 

called GreenPower+TM. This technology extracts the hemicellulose portion of woody biomass 

using hot water and hydrolyzes it into sugars. These sugars are then converted to ethanol or 

other alcohols, while the remaining portion of the woody biomass, containing mostly cellulose 

and lignin, is processed into wood paneling at a co-located facility. At future, larger-scale 

facilities, API anticipates burning the residual biomass in a boiler to produce steam and 

electricity as well as cellulosic biofuel. 

In January 2010 API received a grant from DOE for up to $18 million for the 

construction of their demonstration facility. Construction of the Alpena, Michigan facility began 

in March 2011 and API began commissioning operations at their facility in the summer of 2012. 

API encountered several unexpected difficulties in commissioning their facility resulting in 

production delays; however they anticipate production of cellulosic biofuel from this facility in 

2013. EPA has not included production from API in our projections due to the facility's history 

of delays, uncertain start-up date, and small potential production volume.

Fiberight

Fiberight uses an enzymatic hydrolysis process to convert the biogenic portion of 

separated MSW and other waste feedstocks into ethanol. They have successfully completed five 

years of development work on their technology at their small pilot plant in Lawrenceville, 

Virginia. In 2009 Fiberight purchased an idled corn ethanol plant in Blairstown, Iowa with the 

intention of making modifications to this facility to allow for the production of 6 mill gal of 

cellulosic ethanol per year from separated MSW and industrial waste streams. These 

modifications were scheduled to be completed in 2011, but difficulties in securing funding have 

resulted in construction at this facility being delayed. In January 2012 Fiberight was offered a 

$25 million loan guarantee from USDA. Closing on this loan would provide substantially all of 

the remaining funds required for Fiberight to complete the required modifications at their 

Blairstown facility. Fiberight plans to begin construction in the second quarter 2013. Fiberight 

expects that it will take approximately 6 months to complete construction and that fuel 

production will begin in early 2014. Additionally, Fiberight’s waste separation plan for this 

facility was approved in June 2012 allowing Fiberight to generate RINs for the cellulosic ethanol 

they produce using separated MSW as a feedstock. Fiberight is also currently developing a 

second commercial scale project based on their MSW “hub and spoke” concept. They anticipate 

that this facility will produce approximately 25 mill gal of cellulosic ethanol per year when fully 

Comment [A25]: So status is not known?
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built out. Since Fiberight currently does not expect cellulosic biofuel production to begin until 

2014 no volume from their facility has been included in EPA’s projections.

INEOS Bio

INEOS Bio has developed a process for producing cellulosic ethanol by first gasifying 

cellulosic feedstocks into a syngas and then using naturally occurring bacteria to ferment the 

syngas into ethanol. In January 2011 USDA announced a $75 million loan guarantee for the 

construction of INEOS Bio’s first commercial facility to be built in Vero Beach, Florida. This 

loan was closed in August 2011. This was in addition to the grant of up to $50 million INEOS 

Bio received from DOE in December 2009. At full capacity, this facility will be capable of 

producing 8 mill gal of cellulosic biofuel as well as 6 megawatts (gross) of renewable electricity 

from a variety of feedstocks including yard, agricultural, and wood waste. The facility also plans

to use a limited quantity of separated MSW as a feedstock after initial start-up.

On February 9, 2011, INEOS Bio broke ground on this facility. INEOS Bio completed

construction on this facility in June 2012 and began full commissioning of the facility. In 

August 2012 INEOS Bio received approval from EPA for their yard waste separation plan and 

successfully registered their Vero Beach, FL facility under the RFS program. In September 2012 

the facility began producing renewable electricity. In April 2013 comments to the proposed rule 

INEOS Bio stated that their facility was in the final start-up phase and that they expected to 

produce cellulosic ethanol at full production rates by the end of the year. Due to the history of 

production delays at this facility, EPA believes a lower projection is appropriate. For this final 

rule we project 0 – 1 mill gal of cellulosic ethanol from INEOS Bio in 2013. Applying the six 

month straight-line ramp-up period, which we consider a best case scenario as discussed above, 

the start-up date for this facility would have to be no later than July 1, 2013 to produce a volume 

of 2 mill gal in 2013. EPA believes this is a reasonable benchmark to use as a best case scenario 

when assessing the ramp-up of cellulosic biofuel facilities. When compared to the expected 

ramp-up rates of grain ethanol facilities, which are generally 1-2 months this is a conservative 

benchmark, but one we believe is appropriate given the challenges of scaling up new 

technologies. Given the uncertainty in the first production from INEOS Bio’s facility and the 

history of delays for this facility EPA believes a further discount to a projected volume of 0 – 1 

mill gal is warranted. INEOS Bio is also exploring several opportunities for additional cellulosic 

biofuel production facilities, both in the United States and internationally. INEOS Bio is 

targeting sources of inexpensive feedstock, primarily waste materials, and sees a market for 

plants with production capacities ranging from 8 to 50 mill gal per year per facility.

KiOR

KiOR is using a technology that converts biomass to a biocrude using a process they call 

Biomass Fluid Catalytic Cracking (BFCC). BFCC uses a catalyst developed by KiOR in a 

process similar to Fluid Catalytic Cracking currently used in the petroleum industry. The first 

stage of this process produces a renewable crude oil which is then upgraded to produce primarily 

gasoline, diesel, and jet fuel as well as a small quantity of fuel oil, all of which are nearly 

identical to those produced from petroleum. 
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KiOR’s first commercial scale facility is located in Columbus, Mississippi and is capable 

of producing approximately 11 mill gal of gasoline, diesel, and jet fuel per year. Construction on 

this facility began in May 2011 and was completed in September 2012. This facility is funded, 

in large part, with funds acquired through private equity and supplemented by KiOR’s $150 

million IPO in June 2011. KiOR announced that the first renewable transportation fuel produced 

at this facility was shipped to customers on March 18, 2013. KiOR had intended to begin 

producing fuel at their Columbus facility in 2012. Unexpected difficulties during the 

commissioning of this facility, due in large part to an interruption in electricity supply to the 

facility during commissioning resulted in delays in fuel production. KiOR’s current expectations 

at their Columbus facility are for a start-up period lasting 9-12 months. During this period they 

estimate fuel production will average 30%-50% of the facility capacity after which they plan to 

approach full production rates at the facility. KiOR’s expected production from their Columbus 

facility in 2013, recently confirmed in their quarterly update on May 9th, 2013, is between 3 and 

5 million actual gallons of cellulosic gasoline and diesel. KiOR has feedstock supply agreements 

in place to supply all of the required feedstock for their Columbus facility with slash and precommercial thinning. They also have off-take agreements with several companies for all of the 

fuel that will be produced. KiOR has also announced plans to begin work on their second 

commercial scale biofuel production facility in Natchez, Mississippi upon the successful start-up 

of their first facility. It is unlikely this second facility will begin production of biofuel in 2013. 

For 2013 our production projection is for 3 – 4 million actual gallons (5 – 6 million ethanolequivalent gallons) of cellulosic biofuel from KiOR’s Columbus facility. This volume is 

significantly lower than the volume of fuel that would be produced assuming our best case 

scenario benchmark of a 6 month straight-line ramp-up period starting in mid March (~9 million 

ethanol-equivalent gallons). However, EPA believes this lower projection is appropriate based 

on the guidance received from KiOR and the progress achieved at their facility to date.

Blue Sugars

Blue Sugars, formerly KL Energy, has developed a process to convert cellulose and 

hemicellulose into sugars and ethanol using a combined chemical/thermal-mechanical 

pretreatment process followed by enzymatic hydrolysis, co-fermentation of C5 and C6 sugars, 

and distillation to fuel-grade ethanol. This production process is versatile enough to allow for a 

wide variety of cellulosic feedstocks to be used, including woody biomass and herbaceous 

biomass such as sugarcane bagasse. In August 2010 Blue Sugars announced a joint development 

agreement with Petrobras America Inc. As part of the agreement Petrobras has invested $11 

million to modify Blue Sugars’ 1.5 mill gal per year demonstration facility in Upton, Wyoming 

to allow it to process bagasse and other biomass feedstocks. The modifications to Blue Sugars’

facility were completed in the spring of 2011. In April 2012 Blue Sugars generated 

approximately 20,000 cellulosic biofuel RINs, the first RINs generated under the RFS program 

for fuel made from cellulosic feedstock. Blue Sugars has indicated, however, that the cellulosic 

ethanol they produced was exported to Brazil for promotional efforts at the Rio +20 conference 

in Brazil. These RINs therefore had to be retired and were not be available to obligated parties 

to meet their cellulosic biofuel requirements in 2012. In October 2012 Western Biomass Energy 

LLC, a subsidiary of Blue Sugars that owned the Upton, Wyoming demonstration facility, filed 

for Chapter 11 bankruptcy. This was changed to Chapter 7 bankruptcy on May 2, 2013 and was 

followed by a Chapter 7 bankruptcy filing for Blue Sugars on May 10th. 
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ZeaChem

ZeaChem successfully completed construction of their demonstration-scale facility in 

Boardman, Oregon, in October 2012, allowing for the production of ethanol from sugars derived 

from cellulose and hemi-cellulose. On March 12, 2013 they announced that they had 

successfully produced ethanol from cellulosic feedstocks at their biorefinery, which has a 

nameplate capacity of 250,000 gallons of cellulosic ethanol per year. ZeaChem’s production 

process uses a combination of biochemical and thermochemical technologies to produce ethanol 

and other renewable chemicals from cellulosic materials. The feedstock is first fractionated into 

two separate streams, one containing sugars derived from cellulose and hemicellulose and the 

other containing lignin. The sugars are fermented into an intermediate chemical, acetic acid, 

using a naturally occurring acetogen. The acetic acid is then converted into ethyl acetate, which 

can then be hydrogenated into ethanol. The hydrogen necessary for this process is produced by 

gasifying the lignin stream from the cellulosic biomass.

ZeaChem’s process is flexible and is capable of producing a wide range of renewable 

chemicals and fuels from many different feedstocks. They plan to use both agricultural residues 

and pre-commercial thinnings and tree residue from tree plantations at their demonstration 

facility and have contracts in place for these feedstocks, as well as planted trees from tree 

plantations, at their first commercial scale facility.22 In January 2012 ZeaChem announced that 

they had received a $232.5 million conditional loan guarantee offer from USDA for the 

construction of their first commercial scale facility, which will have a capacity of at least 25 mill 

gal per year. ZeaChem currently has agreements in place to provide all of the necessary 

feedstock for this facility. This facility, however, is not expected to begin producing cellulosic 

biofuel until late 2014 at the earliest. We therefore have not included any volume for this facility 

in our 2013 projection.

Abengoa

Abengoa has developed an enzymatic hydrolysis technology to convert corn stover and 

other agricultural waste feedstocks into ethanol. After successfully testing and refining their 

technology at a pilot scale facility in York, Nebraska as well as in a demonstration-scale facility 

in Salamanca, Spain, Abengoa is now working towards the completion of their first commercial 

scale cellulosic ethanol facility in Hugoton, Kansas. Abengoa has contracts in place to provide 

the majority of feedstocks necessary for this facility for the next 10 years and successfully 

completed their first biomass harvest in the fall of 2011. Construction at this facility, which 

began in September 2011, is expected to take approximately 24 months and be completed in the 

fourth quarter of 2013. All of the major process equipment for this project has been purchased 

and all of the required permits for construction have been approved. Abengoa’s Hugoton facility 

is being partially funded by a $132 million Department of Energy (DOE) loan guarantee.

 

22 EPA has not yet approved planted trees from tree plantations as a RIN generating feedstock. Unless and until 

EPA approves a pathway using planted trees from tree plantations as a feedstock ZeaChem will be unable to 

generate RINs for any biofuel produced using this feedstock.
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When completed, the Hugoton plant will be capable of processing 700 dry tons of corn 

stover per day, with an expected annual ethanol production capacity of approximately 24 mill 

gal. Abengoa plans to begin ramping up production at the facility shortly after completing 

construction in late 2013 and to be producing fuel at rates near the nameplate capacity in the 

summer of 2014. After successfully proving their technology at commercial scale in Hugoton, 

Abengoa currently plans to construct additional similar cellulosic ethanol production facilities, 

either on greenfield sites or co-locating these new facilities with their currently existing starch 

ethanol facilities around the United States. While this facility could produce a small volume of 

cellulosic ethanol in 2013, commissioning of the facility is expected to last through the first 

quarter of 2014, during which only small volumes of ethanol will be produced. Given the small 

volume potential and high degree of uncertainty of production from this facility in 2013, we have 

not included any of this volume in our projected available volume for 2013. 

Poet

Poet has also developed an enzymatic hydrolysis process to convert cellulosic biomass 

into ethanol. Poet has been investing in the development of cellulosic ethanol technology for 

more than a decade and began producing small volumes of cellulosic ethanol at pilot scale at 

their plant in Scotland, SD in late 2008. In January 2012, Poet formed a joint venture with Royal 

DSM of the Netherlands called Poet-DSM Advanced Biofuels to commercialize and license their 

cellulosic ethanol technology. 

The joint venture’s first commercial scale facility, called Project LIBERTY, will be 

located in Emmetsburg, Iowa. This facility is designed to process 770 dry tons of corn cobs, 

leaves, husks, and some stalk per day into cellulosic ethanol. The facility is projected to have an 

annual production capacity beginning at approximately 20 mill gal per year, increasing over time 

to 25 mill gal per year. In anticipation of the start-up of this facility, Poet constructed a 22-acre 

biomass storage facility and had its first commercial harvest in 2010, collecting 56,000 tons of 

biomass. 

Site prep work for Project LIBERTY began in the summer of 2011, and vertical 

construction of the facility began in the spring of 2012. Poet was awarded a $105 million loan 

guarantee offer for this project from DOE in July 2011, but with the joint venture decided to 

proceed without the loan guarantee. This project is expected to be completed in the first half of 

2014. After the completion of Project LIBERTY, Poet plans to build additional cellulosic 

ethanol facilities at many of their existing corn ethanol plants. They are also planning to license 

their technology for use at other grain ethanol plants, as well as build additional plants that will 

process wheat straw, rice hulls, woody biomass or herbaceous energy crops. By 2022 Poet has a 

goal of producing 3.5 bill gal of cellulosic ethanol per year. Given the projected completion date 

of 2014 for the Emmetsburg, Iowa facility, we have not included any of this volume ion our 

projected available volume for 2013.

Other companies

There are several more companies planning to begin producing cellulosic biofuel from 

commercial scale facilities in 2014 including Cool Planet Biofuels, DuPont, and Ensyn. Along 
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with the companies discussed above, these facilities represent approximately 100 mill gal of 

additional cellulosic biofuel production capacity. Most of these companies have already begun 

to develop plans for their successive facilities to follow after the successful completion of their 

initial projects. 

4. Other Potential Sources of Domestic Cellulosic Biofuel 

Each of the companies listed in the previous two sections is planning to generate 

cellulosic biofuel RINs using one of the valid RIN-generating pathways listed in Table 1 to 40 

CFR §80.1426. To generate RINs, each company must comply with all applicable registration, 

recordkeeping, and reporting requirements in the RFS regulations, including requirements to 

verify that the feedstocks used are renewable biomass and are sourced from approved land. EPA 

is not approving any additional feedstocks or processes in today’s rule. We are also aware of 

several companies that may be in a position to produce cellulosic biofuel in 2013 but intend to 

use a production pathway that is not currently approved for RIN generation. Pathways that are 

currently under evaluation by EPA include transportation fuels derived from landfill biogas such 

as CNG, cellulosic ethanol produced from corn kernel fiber and cellulosic heating oil. If these or 

other cellulosic biofuel pathways are approved by EPA, they may be used to generate on the 

order of 3 million cellulosic biofuel RINs in 2013. Because EPA has not yet made a final 

determination on these pathways no volume of cellulosic fuel from these pathways has been 

included in our 2013 cellulosic biofuel projection.

5. Imports of Cellulosic Biofuel

While domestically produced cellulosic biofuels are the most likely source of cellulosic 

biofuel available in the United States in 2013, imports of cellulosic biofuel produced in other 

countries may also generate RINs and participate in the RFS program. While the demand 

provided by the RFS program provides a financial incentive for companies to import cellulosic 

biofuels into the United States, the combination of local demand, financial incentives from other 

governments, and transportation costs for the cellulosic biofuel has resulted in no cellulosic 

biofuel being imported to the United States thus far. We believe this situation is likely to 

continue in the near future and have not included any cellulosic biofuel imports in our 

projections of available volume in 2013. 

As in the United States, the production of cellulosic biofuels internationally is mostly

limited to small-scale research and development, pilot, and demonstration facilities at this time. 

This is likely to continue to be the case throughout 2013. Two notable exceptions are facilities 

built and operated by Beta Renewables and Enerkem. Beta Renewables completed construction 

of their first commercial scale facility located in Crescentino, Italy in the summer of 2012. This 

facility is currently in a commissioning phase and is designed to produce approximately 20 mill 

gal of cellulosic ethanol per year. Beta Renewables uses an enzymatic hydrolysis process to 

produce ethanol from local agricultural residues and herbaceous energy crops. 
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Enerkem is also in the process of building their first commercial scale facility in 

Edmonton, Alberta and plans to begin operations in 2013. Enerkem’s facility will use a 

thermochemical process to produce syngas from MSW and then catalytically convert the syngas 

to methanol. The methanol can then be sold directly or upgraded to ethanol or other chemical 

products. At full capacity this facility will be capable of producing 10 mill gal of cellulosic 

ethanol per year. At this point, neither Beta Renewables nor Enerkem have registered their 

facilities under the RFS program, a necessary step that must be completed before these 

companies can generate RINs for any fuel they import into the United States. Both are planning 

to locate additional plants in the United States in the future and are likely to generate RINs for 

production from domestic facilities in future years.

 

6. Summary of Volume Projections

The information we have gathered on cellulosic biofuel producers, described above, 

allows us to project production volumes for each facility in 2013. For the purposes of this final

rulemaking we have focused on commercial scale cellulosic biofuel production facilities. We 

believe our focus on commercial scale facilities is appropriate as the industry transitions from 

small-scale R&D and pilot facilities to large scale commercial production. It is likely that 

several small-scale facilities such as API, DuPont, ZeaChem, and others will also produce some 

cellulosic biofuel in 2013. While RINs may be generated for any cellulosic biofuel produced 

from these small R&D and pilot facilities, historically many have chosen not to do so for a 

variety of reasons. We are therefore not including a volume projection from these facilities. 

In 2013 as many as seven cellulosic biofuel companies have the potential to produce fuel 

at commercial scale. Each of these facilities is discussed above, and the facility production 

targets for each are summarized in Table II.C.6-1 below. Of the two companies from which we 

are basing our 2013 cellulosic biofuel projection one has already begun producing cellulosic 

biofuel at their commercial scale facility and the other is expected to begin production soon. 

This gives us increased confidence in their production capabilities as they have already achieved 

significant milestones. The other companies that have the potential to produce cellulosic biofuel 

in 2013, Abengoa, EdeniQ, Ensyn, Fiberight, and companies producing biogas from landfills for 

transportation use, either do not yet have a valid RIN generating pathway or are not planning on 

beginning fuel production until late 2013 or early 2014. Even a small delay in their expected

production timeline could result in their failure to produce any cellulosic biofuel in 2013 and any 

volumes of fuel produced are likely to be very small. For this final rule, therefore, we are not 

projecting production from these facilities in 2013 consistent with EIA’s projection. The fact 

that our projection only includes volumes from facilities that have already completed 

construction of commercial scale facilities is in large part due to the delay in finalizing the RFS 

standards for 2013 and is not intended to set a precedent for future rulemakings. Volumes from 

facilities that have not yet completed construction may be considered in EPA’s volume 

projections in future rulemakings if appropriate under the circumstances, recognizing that EPA’s 

goal is a projection of what will actually happen in the year at issue, taking a neutral aim at 

accuracy. Comment [A26]: Revise phrasing to be 

consistent with other descriptions in the rule.
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When considering together all the potential sources of cellulosic biofuel, the total 

projected production volume from commercial scale production facilities in the United States in 

2013 is 4 million actual gallons (6 million ethanol-equivalent gallons). This is the mid-point of 

the range of values projected for the two facilities. This number represents EPA’s projection of

expected cellulosic RIN production in 2013, taking into account the EIA estimates and the many 

factors described in detail above.
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Table II.C.6-1

Projected Available Cellulosic Biofuel for 2013

Company 

Name Location Feedstock Fuel

Design

Capacity 

(MGY)

First Production 

(projected)

2013 Projected 

Available Actual 

Volume (Mill 

gal)

2013 Projected 

Available Volume 

(Million EthanolEquivalent gallons)

Abengoa Hugoton, KS Corn Stover Ethanol 24 1

st Quarter 2014b

0 0

EdeniQa Various Corn Kernel Fiber Ethanol 10 4

th Quarter 2013b

0 0

Ensyna Rhinelander, WI; 

Ontario, CA

Woody Biomass Heating 

Oil

4 Currently 

Producing

0 0

Fiberight Blairstown, IA MSW Ethanol 6 1

st Quarter 2014b

0 0

INEOS Bio Vero Beach, FL Vegetative Waste Ethanol 8 Mid 2013

b

0 – 1 0 – 1

KiOR Columbus, MS Wood Waste Gasoline 

and Diesel

11 March 18, 2013 3 – 4 5 – 6

Variousa N/A Landfill Biogas Biogas N/A Currently 

Producing

0 0

Various 

Pilot/ Demo 

Plants

Various Various Various Various Various 0 0

Total 49 4 6

aCompanies do not currently have valid pathways for RIN generation

b

Start-up dates for these facilities are projections
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D. Cellulosic Biofuel Volume for 2013

In today’s final rule we are setting the applicable volume for cellulosic biofuel for 2013

that is based on EIA’s estimate, projected production volumes developed in consultation with the 

companies expected to produce cellulosic biofuel from commercial scale facilities in 2013, 

comments we received in response to the NPRM, and EPA’s judgment. Many factors have been 

taken into consideration in developing these projections, such as the EIA estimate, the current 

status of project funding, the status of the production facility, anticipated construction timelines, 

the anticipated start-up date and ramp-up schedule, feedstock supply, intent to generate RINs, 

and many others. Moreover, all of the companies included in our 2013 volume projections have 

invested a significant amount of time and resources developing their technologies at R&D and 

demonstration-scale facilities prior to the design and construction of their first commercial scale

facilities. The projects have solid financial backing. We believe the sum of these individual 

projected available volumes (6 million ethanol-equivalent gallons) is a reasonable projection of 

expected actual production. This projection reflects EPA’s best estimate of what will actually 

happen in 2013.
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III. Assessment of Advanced Biofuel and Total Renewable Fuel for 2013

As described in Section I, the volumes of renewable fuel required for use under the RFS 

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

211(o)(2) through 2022. For 2013, the applicable volume of advanced biofuel is 2.75 bill gal,

and the applicable volume of total renewable fuel is 16.55 bill gal. 

In the NPRM, we proposed a reduction in the applicable volume of cellulosic biofuel. 

Under section 211(o)(7)(D)(i), when EPA reduces the volume of cellulosic biofuel EPA may 

reduce the applicable volume of total and advanced biofuel by an amount up to the reduction in 

cellulosic biofuel. We proposed no reduction in the volumes of advanced biofuel and total 

renewable fuel for 2013. However, we requested comment on whether the advanced biofuel and 

total renewable fuel requirements should be reduced under section 211(o)(7)(D)(i) to account for 

uncertainty in availability of advanced biofuel, specifically asking whether a reduction of 200 

mill gal would be appropriate. We also requested comment on whether the blendwall23 would 

present any difficulty in terms of compliance with the volume requirements in 2013.

No stakeholders supported the specific reduction of 200 mill gal in the advanced biofuel 

and total renewable fuel volume requirements on which we sought comment in our proposal. 

Instead, stakeholders were generally in favor of either much larger reductions or no reduction at 

all. Those requesting much larger reductions most commonly pointed to the authority under the 

cellulosic waiver authority to reduce advanced biofuel and total renewable fuel by up to the same 

amount as the reduction in cellulosic biofuel, which was 986 mill gal in the NPRM. Depending 

on the stakeholder, justifications for such large reductions included cost, availability, and the E10 

blendwall. Some went further, suggesting that the required volume of total renewable fuel 

should be reduced more than 986 mill gal since reductions in advanced biofuel would likely be 

insufficient to address the E10 blendwall. Of those that cited the E10 blendwall as a reason to 

reduce the required volumes, most requested that the total volume of ethanol demand created by 

the standards be no more than 10% of all gasoline, though some conceded that accounting for 

reasonably achievable volumes of E15 - E85 would be appropriate.

Those stakeholders requesting that the applicable standards be based on the statutory 

volumes without any reductions typically cited sufficiency of available biofuels and 

opportunities for growth in consumption of E15 - E85. Some also pointed to the need to promote 

growth in the advanced biofuel and non-ethanol markets and expressed concern that any 

reductions in the standards would jeopardize investments.

A. Statutory Authorities for Reducing 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 

 

23 In general, the term "blendwall" refers to the total volume of ethanol that can be consumed as either E10 or higher 

ethanol blends given various constraints.
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in the statute, then EPA must reduce the applicable volume of cellulosic biofuel to the projected 

volume available during that calendar year. Under such circumstances, EPA also has the 

discretion to reduce the applicable volumes of advanced biofuel and total renewable fuel by an 

amount not to exceed the reduction in cellulosic biofuel. 

Section 211(o)(7)(D)(i) provides that “For 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.” Thus Congress authorized EPA to reduce the volume of total renewable fuel 

“and” advanced biofuels. As EPA has discussed before, this indicates a clear Congressional 

intention that EPA may reduce both the total renewable and advanced biofuel volume together, 

not one or the other. 

As described in the May 2009 NPRM for the RFS regulations, we do not believe it would 

be appropriate to lower the advanced biofuel standard but not the total renewable standard, as 

doing so would allow conventional biofuels to effectively be used to meet the standards that 

Congress specifically set for advanced biofuels. See 74 FR 24914-15. EPA interprets this 

provision as authorizing EPA to reduce both total renewable fuel and advanced biofuel, by the

same amounts, if EPA reduces the volume of cellulosic biofuel. Using this authority the 

reductions in total renewable fuel and advanced biofuel can be up to but no more than the 

amount of reduction in the cellulosic biofuel volume.

The National Biodiesel Board (NBB) commented that the language of CAA 

211(o)(7)(D)(i) does not require advanced biofuel and total renewable fuel volumes to be 

reduced together. NBB cited several other legal decisions to support their assertion that 

advanced biofuel and total renewable fuel could be reduced by different amounts under the 

cellulosic waiver authority. While we agree that in some other contexts wording similar to that 

in 211(o)(7)(D)(i) has taken on a different meaning, in none of those other contexts was there a 

nested set of requirements such as there are in the RFS program. In the RFS program, cellulosic 

biofuel is also used to satisfy the advanced biofuel standard and the total renewable fuel 

standard. Similarly, advanced biofuel is used to satisfy the volume obligation for total renewable 

fuel. Thus any reductions in the applicable volume of cellulosic biofuel will also simultaneously 

affect the means through which obligated parties comply with these two other standards, and any 

reductions in advanced biofuel volume will affect the means through which obligated parties 

comply with the total renewable fuel volume. Congress structured the volumes such that total 

renewable fuel volume requirements were increasing in coordination with the increase in 

advanced biofuel. Congress established the volume requirements for advanced biofuel and total 

renewable fuel as interrelated standards. Therefore it is appropriate to consider a possible 

reduction in both the advanced biofuel and total renewable fuel applicable volumes when EPA 

reduces the cellulosic biofuel volume below the applicable volume for cellulosic biofuel set forth 

in the statute. Thus to the extent circumstances warrant a reduction in advanced biofuel and total 

renewable fuel based on the reductions in cellulosic biofuel pursuant to section 211(o)(7)(D)(i), 

EPA believes it will best reflect the goals and objectives of the Act for the advanced biofuel and 

total renewable fuel volumes to both be reduced by the same amount, maintaining the volume 

relationship between the two renewable fuel categories. In this way, if the circumstances in a 

specific year warrant not reducing the advanced biofuel and total renewable fuel volumes by the 
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amount that the cellulosic biofuel volume is reduced, then to the extent that the shortfall in 

cellulosic biofuel production is replaced it would be through advanced biofuel, which comes 

significantly closer to the GHG reductions achieved by cellulosic biofuel. It is important to note, 

however, that this discussion does not address whether or under what circumstances the 

advanced and total volume requirements should be reduced under section 211(o)(7)(D)(i), but 

solely whether any such reductions would be for both categories of fuel under section 

211(o)(7)(D)(i). 

NBB also argued that any consideration of a reduction in advanced biofuel should be 

accompanied by an equivalent reduction in total renewable fuel, but that the reverse was not true. 

We agree that a reduction in the total renewable fuel requirement that is considered under the 

general waiver authority at 211(o)(7)(A) need not necessarily be accompanied by an equivalent 

reduction in the advanced biofuel requirement. It is possible that there could be an inadequate 

supply of total renewable fuels that would justify a waiver of the total renewable fuel standard, 

for example, without there also being an inadequate supply of advanced biofuels. However, 

EPA is currently setting the annual RFS standard and is not responding to a petition that it assert 

its general waiver authority. 

In 2013, the applicable volume of cellulosic biofuel specified in the statute represents 

more than a third of the advanced biofuel volume (1.0 bill gal out of 2.75 bill gal), a higher 

fraction than in any previous year. A substantial reduction in the applicable volume of cellulosic 

biofuel could potentially also have a substantial impact on the sufficiency of volumes to meet the 

advanced biofuel and total renewable fuel standards. As described in Section II.D above, we are 

establishing an available volume of cellulosic biofuel for 2013 of 6 mill ethanol-equivalent 

gallons, significantly below the statutory applicable volume of 1.0 bill gal. As a result, we have 

the discretion under CAA section 211(o)(7)(D)(i) to reduce the advanced biofuel and total 

renewable fuel applicable volumes by up to 994 mill gallons (ethanol-equivalent). 

The statute does not provide any explicit criteria that must be met or factors that must be 

considered when making a determination as to whether and to what degree to reduce the 

advanced biofuel and total renewable fuel applicable volumes based on a reduction in cellulosic 

biofuel volumes under CAA section 211(o)(7)(D)(i). In comments on the NPRM, stakeholders 

differed in their views about which factors EPA should consider when making a determination 

about whether and to what degree to reduce volumes of advanced biofuel and total renewable 

fuel under the cellulosic waiver authority. Some indicated that the only factor that should be 

considered is whether the volumes in question are available. Others indicated that the criteria 

that apply under the general waiver authority at section 211(o)(7)(A) should also apply to the 

cellulosic waiver authority at section 211(o)(7)(D)(i). The Clean Air Task Force and the Union 

of Concerned Scientists both suggested that the criteria in section 211(o)(2)(B)(ii), which are 

required to be used to determine applicable volumes for years not specified in the statute, should 

also be considered in the context of the cellulosic waiver authority. The criteria in section 

211(o)(2)(B)(ii) are described more fully in Section III.A.3 below.

We agree that it would be reasonable for EPA to consider the criteria described in 

sections 211(o)(2)(B)(ii) and 211(o)(7)(A) in determining appropriate reductions in advanced 

biofuel and total renewable fuel under the cellulosic waiver authority at section 211(o)(7)(D)(ii). 
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However, we do not believe that there is any legal requirement to apply the criteria of those 

provisions as binding criteria for purposes of section 211(o)(7)(D)(ii). It is clear that these three 

statutory provisions are separate and independent provisions, with no cross-references. 

Congress did not include the criteria in those other waiver provisions in the separate waiver 

provision for cellulosic biofuel. In the case of the general waiver authority at section 

211(o)(7)(A), we do not agree with the comment that it provides criteria that must be met in 

order to reduce cellulosic and advanced volumes under 211(o)(7)(D)(i). If it did, the waiver 

language in 211(o)(7)(D)(i) would be superfluous, since 211(o)(7)(A) would already provide the 

discretionary authority to reduce advanced biofuel and total renewable fuel in the circumstances 

where the criteria in 211(o)(7)(A) are satisfied. Moreover, if the criteria in 211(o)(7)(A) apply to 

the cellulosic waiver authority in 211(o)(7)(D)(i), then it would also logically apply to the 

biomass-based diesel waiver authority in 211(o)(7)(E)(ii), also rendering that section 

superfluous. We do not believe that the Act can or should be interpreted in this manner.

One stakeholder suggested that uncertainty in potential imports of sugarcane ethanol 

from Brazil should not be a factor when projecting the volumes expected to be available to meet 

the statutory volume requirements for advanced biofuel. The stakeholder pointed to a recent 

decision from the U.S. Court of Appeals indicating that EPA need not present specific numerical 

projections of available volumes of advanced biofuel if it did not intend to reduce the required 

volumes below the volumes specific in the statute. In that case the court stated that:

Nothing in the text of §7545(o)(7)(D)(i), or any other applicable provision of the Act, 

plainly requires EPA to support its decision not to reduce the applicable volume of 

advanced biofuels with specific numerical projections. This stands in contrast to the 

Act’s explicit instructions that EPA make a numerical projection for cellulosic biofuel. 

Certainly EPA must provide a reasoned explanation for its actions, but rationality does 

not always imply a high degree of quantitative specificity. API v. EPA, 706F.3d at 481 

(D.C. Cir 2013)

Thus the court's decision does not restrain EPA as the commenter noted. EPA must provide a 

reasoned explanation for its choice. Further, in this case since EPA’s proposal indicated concern 

over whether the available volumes could fall short of the applicable volumes specified in the 

statute, we believe it is appropriate to consider and take comment on numerical projections in 

order to more fully assess the issue.

2. General Waiver Authority

Under CAA 211(o)(7)(A), EPA can reduce the amount of any of the four volume 

requirements specified in the statute if one of the following determinations is made:

• Implementation of the requirement would severely harm the economy or the 

environment of a State, a region, or the United States;

• There is an inadequate domestic supply.
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In order to make such a reduction in the required volumes, EPA would need to consult with the 

Secretary of Agriculture and the Secretary of Energy, and would need to provide public notice 

and opportunity for comment.

3. Modification of Applicable Volumes for 2016 and Beyond

Under certain specified conditions, CAA section 211(o)(7)(F) requires EPA to modify the 

applicable volume provided in the statute for calendar years 2016 and beyond if EPA has waived 

a volume requirement using the waiver authorities provided in CAA section 211(o)(7)(A), (D), 

or (E). This requirement to modify the applicable volumes is triggered when one of the 

following occurs:

• EPA waives at least 20 percent of the applicable volume requirement for two

consecutive years

• EPA waives at least 50 percent of the applicable volume requirement for a single year

This requirements applies separately for each of the four volume requirements in CAA section 

211(o)(2)(B),

Volume modifications made pursuant to CAA 211(o)(7)(F) would differ from waivers in 

several important ways. First, while waivers leave the statutory volume mandates at CAA 

211(o)(2)(B)(i) intact and merely reduce them for the purposes of calculating the applicable 

annual percentage standards for that year, the volume modifications under 211(o)(7)(F) would 

instead modify the applicable volumes that are provided in the statute. Once modified, the new 

volumes would replace those in the statute for the applicable years. Second, waivers are 

generally determined and applied for one year at a time, while the volume modifications could be 

done at one time for multiple years after 2015. Third, CAA 211(o)(7)(F) provides explicit 

direction concerning those factors that EPA must consider in modifying the statutory volumes 

for 2016 and beyond, incorporating by reference the requirements in CAA section 

211(o)(2)(B)(ii):

• 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;

• The impact of renewable fuels on the energy security of the United States;

• The expected annual rate of future commercial production of renewable fuels, including 

advanced biofuels in each category (cellulosic biofuel and biomass-based diesel);

• 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;
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• The impact of the use of renewable fuels on the cost to consumers of transportation fuel 

and on the cost to transport goods; and

• 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.

To modify the required volumes under 211(o)(7)(F), EPA is also required to coordinate with the 

Secretary of Energy and the Secretary of Agriculture and review the implementation of the 

program to date. Any modification under this provision would be made through rulemaking.

In response to the NPRM, one stakeholder requested that EPA use the authority under 

CAA 211(o)(7)(F) as soon as possible, or by 2014, to modify the required future volumes for 

cellulosic biofuel as a way of providing more long-term certainty to the market. However, we do 

not believe that taking action sooner would provide such long-term certainty since the authority 

under CAA 211(o)(7)(D) would continue to apply and we would still be required to reduce the 

applicable volume of cellulosic biofuel if the volume projected to be available for any one 

calendar year was less than the volumes for that calendar year as modified under CAA 

211(o)(7)(F). 

B. Available Volumes of Advanced Biofuel in 2013

In the NPRM we discussed the cellulosic waiver authority provided in CAA 

211(o)(7)(D)(i), which provides that EPA may reduce the applicable volume of advanced biofuel 

and total renewable fuel up to the amount of the reduction in required cellulosic biofuel volumes 

(986 mill gal in the NPRM). We clarified that, if we were to reduce the required volume of 

advanced biofuel under this statutory authority, we would also reduce the required volume of 

total renewable fuel by the same amount, with the net effect being that the volume of nonadvanced biofuel needed to meet the statutory required volumes would be unchanged. In the 

NPRM we did not discuss reductions in any of the statutory volume requirements under the 

general waiver authority. 

Our focus in the NPRM was on the availability of advanced biofuel in comparison to the 

volume needed to meet the statutory volume of 2.75 bill gal in light of the substantial reduction 

in cellulosic biofuel. Based on our assessment of availability of advanced biofuel, we proposed 

no reduction in the advanced biofuel and total renewable fuel volumes. We continue to believe 

that the availability of advanced biofuel is a critical component in determining whether the 

statutory volume requirement of 2.75 bill gal should be reduced. However, we recognize that we 

can also consider other factors in this determination. For instance, in response to our request for 

comment on whether the E10 blendwall might present difficulty in meeting the statutory volume 

requirements, a number of stakeholders indicated that we should use one of the statutory waiver 

authorities to reduce the required volumes of advanced biofuel and total renewable fuel to 

account for limitations in the volume of ethanol that can be consumed. Other stakeholders 

suggested that we reduce advanced and total volumes because of environmental or cost concerns.
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We have the discretion under 211(o)(7)(D)(i) to reduce the advanced biofuel and total 

renewable fuel volumes by up to the amount we reduce the applicable volume of cellulosic 

biofuel, and such a reduction would contribute to reducing complications associated with the E10 

blendwall. The net effect of such a change would be that the volume of non-advanced biofuel 

needed to meet the required volumes for total renewable fuel would be unaffected. We discuss 

the E10 blendwall and the treatment of total renewable fuel in Section III.C below, and we 

discuss a longer-term strategy for combining considerations of biofuel availability and the 

ethanol blendwall in Section III.E. In this section we focus on the availability of advanced 

biofuels in our determination of whether to reduce the advanced biofuel and total renewable fuel 

volumes using the cellulosic waiver authority.24

Renewable fuels that can be used to meet the standard for advanced biofuel include those 

with Renewable Identification Number (RIN) codes of 3, 4, 5, or 7. Table III.B-1 shows the 

number of each of these types of RIN that was generated in 2012. 

Table III.B-1

2012 RINs That Qualified to Meet the 2012 Advanced Biofuel Standard25

(million ethanol-equivalent gallons)

D 

code Category Ethanol Biodiesel

Renewable 

diesel

Biogas and 

heating oil

3 Cellulosic biofuel 0.02 0 0 0

4 Biomass-based 

diesel 0 1,579 147 0

5 Advanced biofuel 588 0 20 3

7 Cellulosic diesel 0 0 0 0

Total 2,337

The total of 2,337 mill ethanol-equivalent gallons is higher than the 2,000 mill gal of advanced 

biofuel required in 2012. This result supports our projection in the rulemaking setting the 2012 

standards26 that there was no need to reduce the 2012 advanced biofuel requirement despite the 

significant reduction in the applicable volume of cellulosic biofuel.

The applicable volume in the statute for advanced biofuel in 2013 is 2,750 mill gal, an 

increase of 750 mill gal over the 2012 requirement of 2,000 mill gal, and 413 mill gal above the 

volume actually produced or imported in 2012. In order to determine the sufficiency of 

advanced biofuel volumes to meet a requirement for 2,750 mill gal in 2013, we first accounted 

for biomass-based diesel and cellulosic biofuels that would be required under the standards we 

are setting today. As shown in Table III.B-2, the result is that there would need to be 824 mill 

 

24 Any exercise of the general waiver authority requires notice and the opportunity for comment. The NPRM did 

not propose a waiver under the general waiver authority, and only discussed volume adjustments made under the 

cellulosic waiver authority. We are not in a position to address in this final rule all of the issues that would be 

relevant under a notice and comment proceeding under the general waiver provisions. This final rule thus focuses 

on the exercise of our authority under the cellulosic biofuel waiver provision.

25 2012 data from the EPA-Moderated Transaction System (EMTS)

26 77 FR 1320, published on January 9, 2012
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ethanol-equivalent gallons of other advanced biofuels in order to meet the total advanced biofuel 

requirement of 2,750 mill gal.

Table III.B-2

Necessary Volume of Advanced Biofuel (mill gal ethanol-equivalent)

2013 Advanced biofuel applicable volume 2,750

Cellulosic biofuel requirement 6

Biomass-based diesel requirement 1,920a

Necessary volume of additional advanced 

biofuel 824

a

 We have assumed that the 1.28 bill gal requirement is composed entirely of 

biodiesel with an equivalence value of 1.5 based on historical production. If 

significant quantities of renewable diesel, with an equivalence value of 1.6 or 

1.7 are used to satisfy the biomass-based diesel requirement this number will be 

larger.

We have identified a variety of sources of advanced biofuel that could meet the need for 824 mill 

gal of additional advanced biofuel, including the following:

• Biodiesel in excess of that required to meet the volume requirement of 1.28 

bill gal

• Domestically produced advanced biofuels such as renewable diesel that does 

not qualify as biomass-based diesel, biogas from landfills, sewage waste 

treatment plants, and manure digesters, heating oil, sorghum ethanol produced 

at dry mill facilities using specified forms of biogas for both process energy 

and most electricity production, and ethanol and other qualifying renewable 

fuels from separated food wastes

• Imports of advanced biofuels, including sugarcane ethanol and renewable diesel

Taken together, and as discussed in more detail below, there is the potential for well over 1.0 bill 

gal of these additional advanced biofuels in 2013. Moreover, there are also a significant number 

of carryover RINs from 2012 that could be used to fulfill part of the 2013 advanced biofuel 

requirement. These carryover RINs alone could meet more than 500 mill gal of the 824 mill gal 

volume shown in Table III.B-2.

Table III.B-3

Advanced Biofuel Carryover RINs from 2012 into 2013 (million)

D Code RINs

Biomass-Based Diesel 4 353

Advanced Biofuel 5 196

1. Biomass-based Diesel
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In a separate action, we have finalized a biomass-based diesel volume of 1.28 bill gal for 

2013.27,28 However, biomass-based diesel volumes above 1.28 billion physical gallons are 

possible. As of February 2013, the aggregate production capacity of registered biodiesel plants 

in the U.S. was 2.8 bill gal per year across 171 facilities.29 Of this production capacity, 2.4 bill 

gallons is represented by companies that actually produced some biodiesel in 2012. For all 

facilities that produced biodiesel at 20% or more of their capacity in 2012, the total production 

capacity is 1.6 bill gallons.

The biodiesel industry has demonstrated that it can increase production quickly under 

appropriate circumstances. Total domestic production of biomass-based diesel in 2011 exceeded 

1.0 bill gal, compared to a 2010 production of about 380 mill gallons.30 In response to the 

NPRM on the 2012 RFS standards that was published on July 1, 2011, some stakeholders 

expressed doubts that the industry could substantially increase production over historic levels in 

order to permit compliance with the proposed 2012 advanced biofuel standard of 1.0 bill gal.

31

 

Nevertheless, the industry responded to RFS mandates with substantial production increases. 

Based on the single-year increase of more than 600 mill gal in 2011 and the total capacity of 

existing plants described above, we believe it is possible that the industry could, if the statutory 

applicable volume of advanced biofuel is not reduced, achieve increases in production above the 

280 mill gallon increment that is reflected in the biomass-based diesel requirement for 2013.

Recently, the tax credit for biodiesel was reinstated after having expired at the end of 

201132. This tax credit, applicable retroactively to 2012 and through the end of 2013, may 

provide additional incentive to produce and consume biodiesel volumes in excess of the 1.28 bill 

gal requirement. While one party commented that the biodiesel tax credit should not be a 

relevant factor, the existence of a tax credit affects the likelihood that biodiesel volumes in 

excess of 1.28 bill gal will be produced. Therefore, it is a relevant consideration in determining 

whether there are likely to be sufficient volumes of advanced biofuel available to meet the 

statutory volume requirement of 2.75 bill gal.

Because the 2013 volume requirement of 1.28 bill gal for biomass-based diesel was 

established in a final rulemaking published on September 27, 2012, we did not take comment on 

this volume in the NPRM. Nevertheless, in their comments on the NPRM, several refiners and 

their associations requested that the 2013 volume requirement for biomass-based diesel be 

reduced from 1.28 bill gal to the statutory minimum of 1.0 bill gal. They cited concerns about 

the industry's ability to produce this volume and pointed to a DOE study indicating that 2012 

 

27 77 FR 59458, September 27, 2012

28 Assuming most of this volume will be comprised of biodiesel, the required volume of 1.28 bill gal equates to 

approximately 1.92 bill ethanol-equivalent gallons

29 The complete list of biodiesel production companies and their associated production capacities is provided in the 

docket. 

30 All values from EMTS. 2010 estimate consists of approximately 209 mill gallons as recorded through EMTS for 

volume produced under the RFS2 regulations in July through December of 2010, and approximately 171 mill 

gallons as recorded through RIN generation reports submitted by producers for volume produced under the RFS1 

regulations in January through June of 2010.

31 See comments in docket EPA-HQ-OAR-2010-0133 from the American Petroleum Institute, Marathon Petroleum 

Company, and the National Petrochemical Refiners Association.

32 "Congress Votes to Reinstate Biodiesel Tax Incentive," January 2, 2013. http://biodiesel.org/news/biodieselnews/news-display/2013/01/02/congress-votes-to-reinstate-biodiesel-tax-incentive

Comment [A27]: Is this NBB’s list of biodiesel 

plants? At the end of 2012, EIA showed 110 

producers with 2.09 bill gall productive capacity. 

EPA cites EIA’s Monthly Biodiesel Production 

Report in footnote 33 on p. 46. DOE has been 

working with them to make sure that no closed 

facilities are surveyed. Please correct if this is 

referencing EIA information or include EIA 

information if this is NBB’s list.
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production was below the 1.0 bill gal requirement.33 However, according to EMTS34 the total 

volume of RIN-generating biodiesel produced in 2012 was 1.05 bill gal. 

a. Feedstocks

In response to the NPRM, some parties expressed concern that there would not be 

sufficient feedstocks available for production of biomass-based diesel in excess of 1.28 bill gal in 

2013. Recognizing that there was some uncertainty regarding production in excess of 1.28 bill 

gal, we did not make a specific numerical projection in the NPRM. Nevertheless, we continue to 

believe that the availability of qualifying feedstocks is not likely to be a hindrance to excess 

biodiesel production in 2013.

According to EMTS, in 2012 nearly 90% of biomass-based diesel was produced from 

soybean oil and waste oils/fats/greases.

Table III.B.1.a-1

Feedstocks Used to Make Biodiesel and Renewable Diesel in 2012

Fraction of 2012 production

Soybean oil 47%

Biogenic waste oils/fats/greases 41%

Canola oil 8%

Non-food grade corn oil 2%

Oil from annual covercrops 1%

Non-cellulosic portions of separated food wastes 1%

Since the supply of waste oils/fats/greases is generally considered to be inelastic, it is reasonable 

to assume that any increases in biomass-based diesel production after 2012 will come from 

soybean oil. Overall production and use of soybean oil in 2012 is shown below.

Table III.B.1.a-2

Production and Use of Soybean Oil in 2012 (mill gal)

Domestic production of soy oil 2,471

Net exports of soy oil 254

Soy oil used to make biodiesel 524

Soy oil used for non-biodiesel purposes 1,693

Source: USDA/ERS, Oil Crops Yearbook, Table 5. Assumes 7.68 lb/gal. 

http://www.ers.usda.gov/data-products/oil-crops-yearbook.aspx

According to USDA, domestic soybean production is expected to increase by 13% in 2013 

compared to 2012.35 If this occurs, then domestic production of soy oil would increase by about 

 

33 EIA's "Monthly Biodiesel Production Report" published on March 28, 2013 indicates that total 2012 production of 

biodiesel was 969 mill gal. The same report indicates that 2011 production was 967 mill gal.

34 EMTS, or EPA’s Moderated Transaction System is the system established by EPA to track all RIN generation 

information and other RIN transactions.

Comment [A28]: EMTS does not align with 

EIA’s inputs to biodiesel production in pounds that 

is provided in our Monthly Biodiesel Production 

Report. Has EPA compared sources?
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320 mill gal. This is more than enough to increase 2013 biodiesel production to the required 

volume of 1.28 bill gal compared to 2012 production while having essentially no impact on the 

volume of soy oil used for non-biodiesel purposes. Moreover, there would still be excess soy oil 

on the order of 250 mill gal that could be exported or, alternatively, used to produce biodiesel in 

excess of 1.28 bill gal.

In addition to soy oil, it is also possible that other qualifying feedstocks could be 

available to produce biodiesel in excess of 1.28 bill gal in 2013. For instance, while production 

of non-food grade corn oil has been relatively constant over the last several years, exports have 

risen over this same time period. In 2012, more than one third of the 320 mill gal of corn oil 

produced was exported instead of being used domestically. These exports could be diverted to 

biodiesel production without any impact on other domestic markets for corn oil. Taken together, 

the use of both soy oil and corn oil could provide more than 500 mill ethanol-equivalent gal of 

biodiesel in excess of the 1.28 bill gal requirement.

A number of environmental organizations commented that the NPRM overly relies on 

biofuel production availability as a criterion for setting the standards and fails to consider other 

criteria and potential impacts. With respect to biodiesel, for example, commenters argued that 

maintaining the advanced standard at statutory levels could lead to increased production and use 

of biodiesel for compliance purposes. This biodiesel would likely be produced from soybean oil, 

and commenters argue that EPA fails to consider the follow-on effects, namely that world 

demand for other replacement food-grade oils, particularly for palm oil, would increase.

36

 They 

assert that the net impact would be increased lifecycle GHG emissions as a result of indirect 

effects from increased soy biodiesel production, but because EPA failed to assess or properly 

model such impacts, such biodiesel shouldn’t actually qualify as an advanced biofuel.

In making this argument, commenters make a number of assertions with respect to the 

modeling and lifecycle analysis EPA conducted as part of the March 2010 final RFS rulemaking. 

For example, commenters argue that EPA did not adequately account for substitutions in the 

vegetable oil markets, and therefore did not fully account for the potential GHG emissions 

associated with clearing of forests and draining of peat lands in Malaysia or Indonesia. 

Commenters also assert that market data suggests the increase in biodiesel production has had 

more of an impact on global palm oil production than increased U.S. soybean production, as 

modeled in EPA’s March 2010 lifecycle analysis of soybean oil biodiesel. Commenters also 

argue that EPA’s modeling for the March 2010 final rule was based on volume projections that 

are inconsistent with the potential growth in advanced biofuels, including biodiesel, should EPA 

determine that the advanced and total required volumes should not be reduced. As a result, 

commenters state, EPA’s assessments of the lifecycle GHG emissions associated with various 

advanced biofuels are flawed, and relying on them is inappropriate. If EPA were to reassess 

soybean oil lifecycle impacts, as at least one commenter recommends, commenters argue that 

such an analysis would show soybean oil biodiesel not meeting the statutory 50 percent reduction 

threshold in lifecycle GHGs needed to qualify as an advanced biofuel under the RFS program.

 

35 Pete Riley, "Grains and Oilseeds Outlook; 2013 Agricultural Outlook Forum," USDA/Farm Service Agency, 

February 22, 2013

36 In particular, see comments from Union of Concerned Scientists, International Council on Clean Transportation, 

Clean Air Task Force, Grocery Manufacturers Association, ActionAid, NRDC and the National Wildlife Federation.
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With respect to commenters’ arguments regarding the GHG impacts of biodiesel, EPA 

notes that the lifecycle threshold determinations conducted for various categories of biofuels (as 

required by statute) were completed as part of the March 2010 final RFS rule. EPA is not 

revisiting those determinations as part of this action. However, EPA believes it is of benefit to 

respond to commenters’ argument that our lifecycle analysis for soybean biodiesel is incorrect. 

Though we recognize that, in recent years, the large expansion in palm oil production has 

coincided with increasing U.S. biodiesel production, we also note that there are a large number 

of market factors (e.g., demand for food and non food products) that have driven the increase in 

palm oil production in recent years, many of which cannot be attributed to diverting soy oil to 

biodiesel. 

Separately, it is important to note that the analysis we conducted in 2010 did not attempt 

to answer the question of what the GHG emissions impacts would be of increasing or lowering 

the volume mandates in any one year. Instead, our analysis focused on quantifying the GHG 

impacts of an increase in soybean oil based biodiesel demand in 2022, when the full volumes of 

the RFS program were implemented. The March 2010 analysis captured the long-term market 

reaction to a sustained higher demand for soybean based biodiesel in the U.S., which primarily 

resulted in an increase in U.S. soybean production. We continue to believe that over the longterm, expansion of U.S. soybean production is a plausible reaction to increased demand for 

soybean based biodiesel.

In their comments on the NPRM, the American Cleaning Institute (ACI) expressed 

concern that demand for biodiesel and/or renewable diesel could adversely affect the 

oleochemical industry by diverting animal fats away from the production of soaps, detergents, 

and general cleaning supplies. ACI requested that the advanced biofuel volume requirement be 

reduced to ensure that such diversion of animals fats does not occur, or alternatively that animal 

fats be explicitly prohibited as a valid feedstock option for the production of biofuels. In our 

response to comments from ACI in the final rule setting the required volume biomass-based 

diesel for 201337, we pointed out that under the statutory definition of renewable biomass, valid 

feedstocks include animal waste material and animal byproducts. We believe that animal fats 

fall into these categories, and as a result we do not have the authority to exclude or limit volumes 

of animal fats that are used for production of biofuel. 

Since the biomass-based diesel volume of 1.28 bill gal was established previously, the 

NPRM only requested comment on volumes of biomass-based diesel in excess of 1.28 bill gal. 

Although we believe it is likely that such excess volumes would be produced from soybean oil as 

described above, it is possible that they could be produced from animal fats. The only way to 

influence whether or not animal fats would be used to make excess biodiesel above the 1.28 bill 

gal biomass-based diesel applicable volume would be to reduce the advanced biofuel standard to 

1.926 bill gal, which is the ethanol-equivalent sum of the biomass-based diesel and cellulosic 

biofuel applicable volumes. Even then, it would not prevent animal fats from being used to 

produce biodiesel. 

 

37 77 FR 59463, September 27, 2012.
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For the reasons discussed above, EPA concludes that the volumes of excess biomassbased diesel available for use in 2013 as advanced biofuel are reasonably projected as 500 mill 

gal or more. In addition, the arguments for reducing the advanced biofuel standard to reduce the 

reliance on excess biomass-based diesel are not of a nature to warrant changing the conclusions 

we would draw.

b. Limitations in the use of biodiesel

While we are not projecting a specific volume of biodiesel in excess of 1.28 bill gal for 

2013, we do acknowledge that there may be potential limitations on biodiesel consumption that 

could be imposed by manufacturer warranties and cold-weather operation.

Most diesel engines are warranted by their manufacturer to B5. That is, the use of 

biodiesel in concentrations above 5vol% may void these commercial warranties. While not a 

legal limitation on the use of biodiesel, it does present a practical limitation. Assuming a total 

diesel consumption volume of about 50 bill gal for 2013, B5 for the diesel pool as a whole would 

correspond to a biodiesel volume of 2.5 bill gal.

However, some diesel truck engines have been warranted by their manufacturers to 

consume B20, starting in 2011. Model-specific sales data for these vehicles was not available, 

so we could not directly estimate the volume of B20 consumed by these trucks. Nor were we 

able to assess the ability of the retail and distribution system to supply higher biodiesel blends for 

a subset of the fleet. But in the extreme, assuming all MY 2011 and newer trucks were designed 

for operation on B20 and that these trucks could always fuel on B20, it would only account for 

approximately 30% of the nationwide biodiesel volume in 2012.

At the same time, even B5 blends cannot be utilized year-round due to cold weather 

constraints. The cloud point for B5 soy methyl ester (SME) blended with No. 2 diesel is 

estimated to be approximately 5 °F. Thus, any region wherein temperatures regularly drop 

below 5 °F would present a difficulty for the use of B5. Assuming that biodiesel cannot be 

blended in such regions during any month where the 10% percentile temperature falls below 5 °F 

would result in a reduction of the 2013 biomass-based diesel volume by only about 3%. Thus, it 

appears that for 2013, the ability to consume biodiesel in the vehicle fleet does not provide a 

constraint.

2. Domestic Production of Advanced Biofuel Other Than Biomass-based Diesel and 

Cellulosic Biofuel

Generic pathways that have been approved for the generation of RINs are specified in the 

regulations in Table 1 to §80.1426.38 There are currently six pathways through which advanced 

biofuel RINs can be generated. These pathways are shown in Table III.B.2-1.

 

38 Pathways may also be approved for RIN generation in response to petitions submitted pursuant to 80.1416.

Deleted: l

Comment [A29]: Does this mean 10 percent of 

the time the temperature is below 5 °F, or there is 

only a 10 percent chance of the temperature 

dropping below 5 °F once?

Comment [A30]: Many people would not 

purchase such blends at all during the winter as 

precautionary measure. There needs to be a more 

thorough assessment of the B5 blend wall, including 

actual penetration rates geographically 

The commenter recommends at least adding that 

“more work is needed to understand what barriers 

exist to blending additional biodiesel”.
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Table III.B.2-1

Pathways for Advanced Biofuel

Fuel type Feedstock Production process 

requirements

DCode

H Biodiesel, 

renewable 

diesel, jet fuel 

and heating 

oil

Soy bean oil;

Oil from annual covercrops;

Algal oil;

Biogenic waste oils/fats/greases;

Non-food grade corn oil

Camelina sativa oil

One of the following:

Trans-Esterification

Hydrotreating

Includes only processes that 

co-process renewable biomass 

and petroleum

5

I Naphtha, LPG Camelina sativa oil Hydrotreating 5

J Ethanol Sugarcane Fermentation 5

P Ethanol, 

renewable 

diesel, jet 

fuel, heating 

oil, and 

naphtha

The non-cellulosic portions of 

separated food waste

Any 5

Q Biogas Landfills, sewage waste treatment 

plants, manure digesters

Any 5

S Ethanol Grain Sorghum Dry mill process, using only 

biogas from landfills, waste 

treatment plants, and/or waste 

digesters for process energy 

and for on-site production of 

all electricity used at the site 

other than up to 0.15 kWh of 

electricity from the grid per 

gallon of ethanol produced, 

calculated on a per batch basis

5

In the NPRM, we projected that the total volume of other advanced biofuel could be 150 

mill gal in 2013. Some stakeholders expressed their belief that this was a reasonable volume to

project for domestic advanced biofuel producers for 2013, and Clean Energy Renewable Fuels 

provided information supporting their view that we had significantly underestimated the 

potential for biogas. Nevertheless, others expressed concern that 150 mill gal was too 

aggressive, pointing to the fact that the actual domestic production of other advanced biofuel in 

2012 was only 50 mill gal. Consistent with our approach to cellulosic biofuel projections, we do 

not believe that future projections of advanced biofuel should be based strictly on actual 

historical production volumes. Nevertheless, we agree with stakeholders that expressed concern 

that we based our projections in part on information from registered producers that did not 

submit a Production Outlook Report as required under §80.1449 for all registered producers. For 

this final rule, we have not considered production volumes from a specific producer if that 

producer did not provide a projection for 2013 in a Production Outlook Report.
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In order to estimate the volumes of other advanced biofuels that could be produced in 

2013, we reviewed the most recent set of Production Outlook Reports. These reports were 

submitted in the summer of 2012 and contain projections of renewable fuel production for each 

of the next five years.39 Based on this review, we identified approximately 30 domestic 

companies that expect to produce advanced biofuel (with a D code of 5) in 2013. The total 

projected production volume for these companies in 2013 is 245 million ethanol-equivalent 

gallons, as shown in Table III.B.2-2.

Table III.B.2-2

Projected Domestic Production of Advanced Biofuelain 2013

(million ethanol-equivalent gallons)

Biogas 44

Naphtha 8

Renewable diesel 57

Ethanol 136

Total 245

a

Includes only volumes that would be 

assigned a D code of 5

We recognize that these volumes are higher than the 150 mill gal that we projected in the 

NPRM. Nevertheless, we believe that they provide a reasonable estimate of the volumes that can 

be achieved in 2013. Because Production Outlook Reports are provided directly to the EPA and 

are not made public (except in the aggregate), producers have less incentive to overstate volume 

projections. These projected volumes also do not account for imports of renewable diesel from 

foreign producers which have the capacity to produce hundreds of millions of gallons per year. 

More importantly, the projected volumes in Table III.D.2-2 were made in June 2012. Since that 

time, EPA has established additional valid pathways for the generation of advanced biofuel RINs 

using camelina oil and grain sorghum.40 Recent annual production of ethanol from grain 

sorghum was about 350 mill gal, though only a minority of these production facilities might be 

expected to install the requisite equipment allowing the use of biogas for process energy in 2013, 

thus allowing them to generate advanced biofuel RINs. 

We also investigated a variety of other potential RIN-generating pathways for advanced 

biofuel that could result in additional volumes in 2013. In addition to potential new pathways for 

cellulosic biofuel that would also count towards the advanced biofuel volume requirement as 

discussed in Section II.D, new pathways are also under review that may provide additional 

advanced biofuel volumes in 2013. These include pathways for renewable diesel from jatropha 

oil, ethanol from barley and biomass sorghum, and a number of others. We have not yet 

determined, either through rulemaking or approval of an industry petition, whether these

pathways are valid for the generation for advanced biofuel RINs. However, approval of such 

advanced biofuel pathways could potentially result in the production of more than 50 million 

ethanol-equivalent gallons in 2013. Insofar as any of these pathways are approved in time to be 

 

39 While the individual reports have not been published since they include company-specific information that could 

impact the competitive nature of the industry, we are providing aggregate results in this NPRM.

40 78 FR 14190, March 5, 2013.
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used in 2013, it would increase the volume of domestically-produced advanced biofuels 

available for 2013 compliance above the volumes shown in Table III.B.2-2.

3. Imported Sugarcane Ethanol 

In the NPRM we projected that the volume of imported sugarcane ethanol in 2013 would 

need to reach about 670 mill gal in order for the statutory volume of 2.75 bill gal to be met. 

Given the availability of carryover RINs from 2012, potential for excess biomass-based diesel, 

and domestic production of other advanced biofuel, the amount of imported sugarcane ethanol 

needed to reach the statutory volume of 2.75 bill gallons could be significantly below 670 mill 

gal. Here we evaluate whether the actual 2012 import volume of 580 mill gal could also be 

imported in 2013.

a. Brazilian Ethanol Export Capacity

Total exports of ethanol from Brazil depend on ethanol production and demand within 

Brazil and have varied significantly over the last decade. The historical maximum occurred in 

2008 when 1.35 bill gal was exported, and ongoing efforts to upgrade distribution infrastructure 

mean that Brazil has the infrastructure in place to export at least this volume annually. 

In response to the NPRM, stakeholders provided widely diverging views on the volumes 

of imported sugarcane ethanol that could be expected in 2013. Some stakeholders suggested that 

the advanced biofuel standards should be set based on an assumption that there would be no 

more than a few hundred mill gal of imported sugarcane ethanol available in 2013, and others 

indicated that imported sugarcane ethanol should be excluded entirely from consideration. The 

Brazilian Ministry of Mines and Energy (MME) provided a detailed assessment supporting their 

view that Brazil can supply at least 670 mill gal to the U.S. in 2013, and the Brazilian sugarcane 

industry association UNICA likewise indicated that at least 670 mill gal could be expected. No 

stakeholders supported our suggestion that a 200 mill gal reduction in the advanced biofuel 

requirement might be warranted to account for potential uncertainty in the availability of 

imported sugarcane ethanol.

i. Brazilian Sugarcane and Ethanol Production Capacity

From the supply perspective, production of sugarcane in Brazil in the years just preceding 

2013 has been lower than normally expected due to two factors. First, adverse weather 

conditions reduced production.41 For example, adverse weather conditions are estimated to have 

reduced cane production by about 4% in the 2011/2012 marketing year.42 Thus, a return to 

 

41 Gain Report BR110016, October 3, 2011, USDA Agricultural Service. See 

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Sugar%20Semiannual_Sao%20Paulo%20ATO_Brazil_10-3-2011.pdf 

42 The sugar marketing year in Brazil’s center-south sugar-producing region, where the large majority of production 

occurs, runs from May through April.

Comment [A31]: The sugarcane ethanol export 

data provided by MME and UNICA include non-fuel 

ethanol whereas EIA only surveys fuel ethanol 

imports. U.S. companies import non-fuel ethanol 

from Brazil to process into products for export to 

Japan. While redirecting ethanol use to fuel is 

possible, prices will be impacted. Suggest only 

discussing the fuel ethanol volumes in the text.
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normal weather conditions in the time frame that this rulemaking considers by itself would 

restore approximately 4% of production. 

Second, the general global economic downturn in recent years made obtaining credit 

more difficult in the Brazilian sugar cane industry, resulting in delayed replanting of existing 

fields. Normally sugarcane fields are replanted every five or six years to maximize yield. 

However, the lack of available credit caused some growers to delay the expense of this 

replanting, resulting in older fields losing production.43 Perhaps in part due to easing credit 

conditions, as noted below, more direct investment in sugar cane production and milling in 

Brazil is occurring. 

In the proposal, EPA cited data from September and December 2012 in estimating that 

the South Central region, the dominant region for ethanol production in Brazil, would produce a 

total of 5.56 bill gal for the 2012/13 year.44 Other regions contributed roughly another 565 mill 

gal in 2011/12. Based on this production data, EPA concluded that 6.1 bill gal would be a 

reasonable conservative estimate for total 2013 production, assuming no growth at all in 

production outside the South Central region. Subsequent to issuance of the proposal, UNICA 

released its final report on the 2012/2013 harvest season, which confirmed an increase in the 

sugarcane harvest relative to 2011/12. That report showed that the 2012/2013 harvest for the 

South Central region was approximately 8% larger than the 2011/12 harvest.45

Some parties expected a more typical trend in sugarcane ethanol production for both the 

2012/2013 and 2013/2014 harvest years, with replanted fields beginning to boost sugarcane 

production in existing plantations and, in response to increased worldwide demand, a growth in 

the acres planted with sugarcane. Increased production is supported by the Brazilian government 

which announced in February 2012 support for a plan to invest over $8 billion annually to boost 

cane and ethanol production.46 Private investment in Brazil may also be increasing. For 

example, Usina de Acucar Santa Terezinha, a Brazilian ethanol producer, last year announced 

plans to invest almost $300 million in a new mill and sugarcane plantation.47 As stated in the 

proposal, such information suggested that sugarcane and ethanol production in the 2013/14 

harvest year could be higher than production over the last two years.

The 2012/2013 harvest year in Brazil’s South Central region has ended, and EPA now 

has early estimates concerning the 2013/2014 harvest year, which began in April 2013. UNICA 

 

43 On the margin, the high sugar prices may have also encouraged some growers to divert their crop from ethanol 

production to sugar production. But most cane growers do not have this flexibility with sugarcane mills designed 

for fixed amounts of refined sugar or ethanol so high sugar prices was likely a contributing factor but not a major 

cause of reduced sugarcane ethanol production in Brazil.

44 UNICA, “Estimate for 2012/2013 Sugarcane Harvest of Brazilian South-Central Region”, September 20, 2012, 

http://www.unicadata.com.br/listagem.php?idMn=39.

45 UNICA, “Final Report of 2012/2013 Harvest Season, South-Central Region,” 

http://www.unicadata.com.br/listagem.php?idMn=83. 

46 See http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8987702

47 See http://www.bloomberg.com/news/2012-03-08/santa-terezinha-invests-283-million-in-brazil-ethanolprojects.html
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Page 55 of 87

now projects an increased 2013/2014 harvest for the South Central region of 10.7% over the 

2012/2013 harvest.48

With respect to ethanol production, analyses supplied in comment to the proposal by the 

Brazillian Ministry of Mines and Energy (MME) indicate it is projecting 2013/14 ethanol 

production to range from 7.2 to 7.5 bill gal, reflecting improvements in yield, additional acres 

planted and the expected market for sugar from sugarcane. MME’s projections are in line with 

other data sources referenced in MME’s comments that projected ethanol production for 2013/14 

ranging from 7.1 to 7.2 bill gal. These sources include projections by UNICA which in separate 

comment defended its analysis projecting 7.1 bill gal. This production rate would support the 

conclusion that enough ethanol should be available to meet Brazil’s domestic demand (discussed 

following) as well as supply 580 mill gal or more to the U.S. during calendar year 2013.

ii. Brazilian Domestic Demand for Ethanol

Brazil’s sugarcane ethanol production serves both its domestic market as well as the 

export market. The government of Brazil sets a minimum ethanol concentration for its gasoline. 

In 2011, the Brazilian government lowered this concentration to 20%, reflecting in part the 

decrease in domestic ethanol production. However, given the more optimistic production 

outlook, Brazil raised the minimum ethanol concentration to 25% effective May 1, 2013.49 The 

ability of the Brazilian government to reset the minimum ethanol content introduces some 

uncertainty in projecting future Brazilian demand. However, historically, adjustments have 

been infrequent, relatively small in degree (a few percent), and largely been influenced by the 

price of ethanol (high prices leading to a reduction in the minimum). Since reinvestment in 

sugarcane stock is already underway, a considerable resurgence in Brazilian ethanol export 

potential in the 2013 calendar year seems likely. Assuming that the 25% blending rate remains 

in effect through the 2013/14 sugarcane season, the analyses referenced above by MME and 

UNICA suggest that more than enough ethanol should be available assuming normal weather 

patterns to allow for at least 580 mill gallon export to the U.S. in 2013.

iii. Additional Market Factors

Aside from production capability and domestic demand within Brazil, market conditions 

generally determine the amount of sugarcane ethanol imported into the U.S. from Brazil. 

Approved as an advanced biofuel pathway, ethanol produced from sugarcane benefits from the 

RIN value associated with advanced biofuel but also has to compete with other sources of 

ethanol used for blending with gasoline in the U.S., most notably ethanol made from corn starch 

(which does not qualify as an advanced biofuel). The expiration of the tariff applicable to 

imported ethanol has helped make imported sugarcane ethanol more cost competitive in the U.S., 

and any volumes of Brazilian sugarcane ethanol imported into California to meet the 

 

48 UNICA, “South-Central brazil cane crush projected at 589.60 million tons for 2013/2014,” 

http://www.unicadata.com.br/listagem.php?idMn=80.

49 Platts, "Brazil to raise ethanol mix in gasoline to 25% from 20% May 1," 

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8194390

Formatted: Highlight
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Page 56 of 87

requirements of their Low Carbon Fuel Standard (LCFS) would also count towards meeting the 

requirements of the RFS program. 

b. United States- Brazil Ethanol Trade

In both calendar years 2011 and 2012 there was some two-way trade in ethanol between 

the United States and Brazil. A number of stakeholders raised concerns about this two-way 

ethanol trade between the U.S. and Brazil. Some suggested that we should adjust the advanced 

biofuel standard to reduce or eliminate such outcomes. 

Looking at currently available data, we note that 2013 Brazilian ethanol exports to the 

U.S. through April are 115.4 mill gal50 compared to 37.4 mill gal during the same period in 2012, 

a 209% rise. This upturn, combined with the fact that the majority of Brazilian ethanol exports 

to the United States have historically occurred in the second half of the calendar year, suggests 

that Brazilian ethanol exports to the U.S. are on a trajectory that would readily enable Brazil to 

supply 580 mill gal to the U.S. in 2013.

Table III.B.3-1

Exports of ethanol (mill gal)

2007 2008 2009 2010 2011 2012

Exports from Brazil

Total51

To the U.S.52

869

170

1,260

401

814

71

469

82

484

173

763

541

Exports from the U.S.53

Total

To Brazil

N/A

N/A

N/A

N/A

N/A

N/A

398

23

1195

396

741

86

Fuel Ethanol Flows from Brazil to U.S. (million gallons per year)

2007 2008 2009 2010 2011 2012

UNICA 

exports from 

Brazil to U.S.

1

7

0

4

0

1

7

1

8

2

1

7

3

5

4

1

EIA 4 5 1 2 1 4

 

50 UNICA, Brazlilian Ethanol Exports per Country Destination: United States Period: 2013 

http://www.unicadata.com.br/pdfHstExp.php?idioma=2&tipoHistorico=9&idTabela=1430&produto=Ethanol&agre

gacao=3&destino=United+States&periodicidade=civil&ano=2013&unidadeMedida=Volume

51 UNICA, Historical Series of Brazilian Ethanol Exports.

http://www.unicadata.com.br/listagem.php?idMn=65

52 UNICA, Brazlilian Ethanol Exports per Country Destination: United States Period: 2012 

http://www.unicadata.com.br/pdfHstExp.php?idioma=2&tipoHistorico=9&idTabela=1430&produto=Ethanol&agre

gacao=3&destino=United+States&periodicidade=civil&ano=2012&unidadeMedida=Volume

53 EIA, Exports by Destination

http://www.eia.gov/dnav/pet/pet_move_expc_a_EPOOXE_EEX_mbbl_a.htm

Comment [A32]: These exports are sourced from 

UNICA, not EIA like the bottom half of the table. 

EIA’s U.S. ethanol exports only include fuel ethanol, 

not other industrial products we export to Japan, etc. 

UNICA’s Brazilian exports possibly include exports 

through CBI countries and non-fuel ethanol. The 

commenter included a separate table below 

comparing the data sets and text indicating the 

differences – see added text below.
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impo

rts 

from 

Braz

il, 

CBI, 

and 

CAF

TA

2

7

2

3

8

7

7

0

8

5

EIA 

impo

rts 

from 

Braz

il 

only

1

8

5

2

0

3 5

1

0

1

4

0

3

Sources: 

UNICA, http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epooxe_im0_mbbl_a.htm.

CBI = Caribbean Basin Initiative.

CAFTA = Central American Free Trade Agreement.

CBI and CAFTA nations with reported ethanol imports are Costa Rica, El Salvador, Guatemala, 

Jamaica, Nicaragua, Trinidad and Tobago, and the Virgin Islands.

In 2011 and 2012, the UNICA data seem comparable to the sum of direct imports from Brazil 

and indirect imports from Brazil via the CBI and CAFTA dehydration plants. UNICA’s figures 

are higher than EIA numbers in 2010-2012 but lower in 2007-2009.

Comments on this two-way trade focused on associated GHG impacts, both direct impacts from 

transportation-related emissions, and the indirect GHG impacts resulting from the market 

dynamics that could potentially result as a consequence of EPA’s volume determinations. 

i. Direct Transportation Emissions

With respect to direct emissions, commenters noted that GHG emissions occur as a result 

of shipping sugarcane ethanol to the U.S. and shipment of corn-based ethanol to Brazil. EPA 

recognizes that there are GHG emissions associated with shipping sugarcane ethanol from Brazil 

to the U.S. as well as the subsequent emissions associated with distributing this fuel from the 

port of entry to likely blending locations. These transportation emissions were taken into 

account as part of the lifecycle assessment of sugarcane ethanol adopted as part of the 2010 final 

rule, and represent approximately (3%) of total lifecycle emissions for sugarcane ethanol. 

Regarding the emissions associated with potential shipments of corn ethanol from the U.S. to 

Brazil, these would be small in magnitude compared to the overall emission reductions from the 

use of sugarcane ethanol, as the transportation emissions are a small part of the lifecycle 

emissions, whether the emissions are for fuel imported from Brazil or exported to Brazil. Also, 
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Page 58 of 87

as noted below, the commenter provides no basis for EPA to determine the magnitude of the 

emissions they are concerned about, given the multiple factors that lead to wide variability in 

import and export levels of ethanol between the U.S. and Brazil. 

ii. Indirect Emissions

Stakeholder’s comments regarding sugarcane ethanol and U.S.-Brazil trade concern the 

annual standard-setting process for 2013 and the indirect GHG impacts associated with the use of 

imported sugarcane ethanol as an advanced biofuel. Commenters raised two major issues 

associated with the potential GHG impacts associated with sugarcane ethanol demand in the U.S. 

(1) In the long-run (e.g., 2022), if EPA were to maintain the full statutory advanced standard 

while reducing the cellulosic standard to levels seen in recent years based on availability, more 

than 10 bill gal of imported ethanol would be required to meet the advanced standard. At those 

volumes, based on studies by the OECD and FAPRI-Missouri, commenters state that it is likely 

that a majority of the imported ethanol gallons would be diverted from Brazilian consumption of 

ethanol, and that much of the sugarcane ethanol would be backfilled by corn ethanol imports 

from the U.S. As a result, commenters argue that imported sugarcane would not meet the 50 

percent GHG emissions reductions required for an advanced biofuel. (2) In the short-run, 

commenters claim that there are limited options for increasing the supply of sugarcane ethanol, 

many of which would undermine the GHG emission reductions included in EPA’s lifecycle 

analysis. Commenters claim that in the 2013 time period, increased sugarcane ethanol imports to 

the U.S. could only be supplied if Brazil decreases gasoline consumption, Brazil replaces 

sugarcane ethanol with fossil gasoline, Brazil replaces sugarcane ethanol with another ethanol 

(presumably corn), sugar production in Brazil increases, or stocks of sugar are reduced to meet 

increased demand. Commenters claim that if replacement of sugarcane ethanol is with gasoline 

or corn ethanol, sugarcane ethanol would not meet the GHG emission reductions required for an 

advanced biofuel.

Regarding the first issue, it is premature and would be speculation to consider at this time 

what emissions might result were EPA to maintain the statutory advanced standard over the next 

several years. That issue is also not relevant for this rulemaking action. For each calendar year, 

EPA may reduce the required volumes of advanced biofuel and total renewable fuel if it reduces 

the volume required for cellulosic biofuel. This rulemaking addresses only calendar year 2013, 

and does not establish or set a precedent for what actions EPA may or may not take for future 

calendar years. Therefore, we believe the analysis presented by commenters on future scenarios 

that rely on imported volumes of sugarcane ethanol that exceed current Brazilian production are 

not relevant to this 2013 rulemaking. 54

The second issue raised in this context pertains to the question of how the national 

applicable volume for advanced biofuel influences ethanol production and trade patterns (along 

with concomitant indirect GHG emissions effects) in a given year. A comprehensive analysis of 

 

54 In addition, as discussed below, in this action EPA is not revisiting or reopening the determination made in the 

2010 RFS final rule that imported sugar cane ethanol meets the greenhouse gas reductions threshold for advanced 

biofuel. 
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those effects is challenging, as there are a variety of economic and other factors at play. A 

thorough analysis of this issue would require complex economic and emissions modeling for 

multiple market sectors, which is impractical, particularly for a rule that establishes a yearly 

volume requirement. Furthermore, we do not believe that the data commenters submitted 

provides an adequate basis for drawing the conclusion, as commenters do, that retaining the 

statutory 2013 advanced biofuel requirement would result in an overall increase in GHG 

emissions due to ethanol trade. For example, in the comments submitted by ICCT, no data is 

provided indicating whether it is more likely that increased sugarcane exports will result in 

increased petroleum gasoline consumption or increased corn ethanol imports in Brazil, or if the 

market response will be an increase in sugar production or drawing down sugar stocks. 

Each of these different market implications would have significantly different GHG 

emissions impacts. Multiple reasons exist for the volume of trade between the US and Brazil 

beyond the RFS program’s requirements, including other US demand for sugarcane ethanol (e.g., 

California’s LCFS); seasonal production of sugarcane which results in off-season demand for 

ethanol; and regional infrastructure constraints in Brazil, which makes it easier for parts of Brazil 

to import corn ethanol in some regions. As shown by Table III.B.3-1 above, there is no clear 

correlation at all between corn ethanol exports to Brazil and sugarcane ethanol imports from 

Brazil. There is no basis to assume that each gallon of sugarcane ethanol imported into the U.S. 

would be offset by a gallon of corn ethanol exported to Brazil. Furthermore, fluctuations in the 

sugar markets could lead to increased sugarcane ethanol supply without increasing sugarcane 

production. As discussed in the UNICA comments, world sugar prices are currently down 36% 

since 2011, which creates an additional incentive for producers, to the extent possible, to shift 

from sugar production to ethanol production. In fact, UNICA expects ethanol production to 

increase by 18-20% in 2013/2014, even though sugarcane production will only increase by 10%. 

To the extent that the increase in sugarcane ethanol to the U.S. results in increased sugarcane 

production, decreased sugar production, or a drawdown of sugar stocks, it is not likely that the 

increase in U.S. imports of sugarcane ethanol would lead to increased exports of corn ethanol to 

Brazil or a significant change in GHG emissions. 

We also note that Congress established the RFS as a long-term program aimed at 

replacing substantial volumes of fossil-based transportation fuels with low-GHG renewable fuels 

over time. The annual standard-setting process however involves a decision for a single year, 

which may not reflect the long-term effects of the program. For example, our emissions analysis 

conducted for the March 2010 final RFS rule focused not on yearly decisions on standards, but 

rather the effects of the program over the long term. That analysis did not attempt to answer the 

question of what the GHG emissions impacts would be of increasing or lowering the volume 

mandates in any one year. Instead, our analysis focused on quantifying the GHG impacts of an 

increase in sugarcane ethanol demand in 2022, when the full volumes of the RFS program were 

implemented. The March 2010 analysis captured the long-term market reaction to a sustained 

higher demand over many years for sugarcane ethanol in the U.S., which primarily resulted in an 

increase in Brazilian sugarcane production. We continue to believe that over the long-term, 

expansion of Brazilian sugarcane production is a realistic reaction to increased demand for 

sugarcane ethanol in the U.S., thus supporting our analysis that sugarcane ethanol reduces GHG 

emissions over the long run. 

Deleted: 
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Page 60 of 87

In sum, EPA believes that the import of sugar cane ethanol as an advanced biofuel in 

2013 should produce reductions in GHGs compared to the fossil-based gasoline it will replace, 

which would not occur if the advanced biofuel standard were reduced. While the points raised 

by commenters indicate there is some uncertainty about the magnitude of these reductions on a 

year-by-year basis, the evidence and arguments they present do not warrant a conclusion that 

there would be any significant change in GHG benefits. In addition, as noted above, the ongoing 

demand for advanced biofuels is part of a long-term approach to achieving major GHG 

reductions from the RFS program. 

Finally, with respect to commenters’ arguments regarding the GHG impacts of imported 

sugarcane ethanol, EPA notes that the lifecycle threshold determinations conducted for various 

biofuels pathways (as required by statute) were completed as part of the March 2010 final RFS 

rule. EPA made the determination in that rulemaking that imported sugar cane ethanol meets the 

greenhouse gas reductions threshold for advanced biofuel. EPA is not revisiting those 

determinations as part of this action. Instead this rulemaking addresses the applicable volume 

requirements for the various categories of renewable fuels, in applying the provision for a waiver 

of the cellulosic biofuel volumes. Thus EPA is not reconsidering or reopening the GHG 

threshold determinations made in the 2010 RFS final rule. Instead, EPA is considering this 

comment solely in the context of exercising its discretion under CAA section 211(o)(7)(D)(i).

For the reasons discussed above, EPA concludes that the volumes of sugarcane ethanol 

that are available for use in 2013 as advanced biofuel are reasonably projected as at least as 

much as 580 mill gallons. EPA continues to place primary weight on this factor in determining 

whether to maintain the statutory levels for advanced biofuel. In addition, the arguments and 

reasons for reducing the advanced biofuel standard to reduce the reliance on imported sugar cane 

ethanol are not of a nature to warrant changing the conclusions we would draw based on the 

available supply of sugarcane ethanol as an advanced biofuel.

C. Compliance with the Total Renewable Fuel Standard in 2013

As described in Section III.B above, the NPRM addressed potential reductions in 

advanced biofuel and total renewable fuel under the cellulosic waiver authority. In this context, 

any reduction in advanced biofuel would be matched gallon-for-gallon (on an ethanol-equivalent 

basis) by reductions in total renewable fuel, effectively having no impact on volumes of nonadvanced biofuel such as corn-ethanol. 

In response to the NPRM, many stakeholders expressed concern about the E10 blendwall 

and the possibility that the applicable standards for 2013, absent a reduction in the advanced 

biofuel and total renewable fuel volume requirements, could require the consumption of more 

volumes of higher ethanol blends (E15 - E85) than can reasonably be absorbed by the market.55 

In order to evaluate these concerns, we estimated the volumes of ethanol that could be needed to 

meet the statutory volume requirements in 2013 and whether or not that volume could reasonably 

be used.

 

55 In the proposal, we requested comment on the degree to which the E10 blendwall might present a difficulty in 

meeting the applicable volume requirements in 2013.

Deleted: be 

Deleted: expected 

Deleted: from 
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Page 61 of 87

In the NPRM we proposed a significant reduction in the required volume of cellulosic 

biofuel. For today's final rule we are adjusting this volume requirement downward to 6 mill gal 

as described in Section II.D above. We also set a volume requirement for biomass-based diesel 

of 1.28 bill gal in a separate rulemaking.56 Table III.C-1 shows what the four volume 

requirements would be without any reductions in the statutory volumes of advanced biofuel or 

total renewable fuel.

Table III.C-1

Volumes of Renewable Fuel for 2013 Absent Reductions in Advanced Biofuel and Total 

Renewable Fuel (million ethanol-equivalent gallons)

D codes that can be used 

to meet this standard Required volume

Cellulosic biofuel 3, 7 6

Biomass-based diesel 4, 7 1,920

Advanced biofuel 3, 4, 5, 7 2,750

Total renewable fuel 3, 4, 5, 6, 7 16,550

Based on these volume requirements, we estimated the volumes of both ethanol and non-ethanol 

that could be used to satisfy these standards if there were no biomass-based diesel produced in 

excess of the 1.28 bill gal requirement. As such, these estimates may overstate the volume of 

ethanol that would have to be consumed because, as discussed above, there is significant 

capacity for biodiesel production beyond the 1.28 bill gal requirement for 2013. This scenario 

also does not consider the availability of substantial numbers of carryover RINs from 2012, 

which is discussed in greater detail below.

Table III.C-2

Potential Volumes of Renewable Fuel for 2013 (million ethanol-equivalent gallons)

D code Ethanol Non-ethanol

Cellulosic biofuel 3 1 5

Biomass-based diesel 4 0 1,920a

Other advanced biofuel

 - Domestically 

produced

 - Imported

5

136b

580c

109b

0

Conventional Biofuel 6 13,800 0

Total 14,517 2,034

a Based on the applicable volume requirement of 1.28 bill gal, and assuming no excess.

b

From Production Outlook Reports as listed in Table III.B.2-2.

c Balance of advanced biofuel standard of 2.75 bill gal that is estimated to come from 

imported sugarcane ethanol.

In order to determine the volume of ethanol that would need to be consumed in blends 

higher than E10 in order to meet this standard, we assumed a total 2013 energy consumption for 

 

56 77 FR 59458, September 27, 2012.
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Page 62 of 87

all gasoline-powered vehicles and engines of 14.58 Quadrillion Btu.

57

 Based on a denatured 

ethanol energy content of 77,000 Btu/gal and a gasoline energy content of 115,000 Btu/gal, we 

determined that the 14.5 bill gal of ethanol shown in Table III.C-2 would require 129.5 bill gal of

E10 and 2.1 bill gal of E85.

58

 This volume of E85 would contain about 1.6 bill gal of ethanol. 

By contrast, if no E85 were consumed, the total volume of E10 would be 131.1 bill gal and the 

maximum volume of ethanol that could be consumed would thus be 13.1 bill gal. As shown in 

Table III.C-2, the conventional biofuel volume alone exceeds this level. In the absence of 

carryover RINs from 2012, it would be nearly impossible to meet this standard.

In their comments on the NPRM, a number of refiners contended that E85 is not a viable 

strategy for consuming volumes of ethanol in excess of the E10 blendwall. Some called for 

reducing the required volumes of renewable fuel so that ethanol would comprise no more than 

10% of the gasoline fuel pool. We agree that, historically, E85 consumption has been very low. 

In 2012 EIA estimated that E85 consumption was about 40 mill gal, and in prior years it was 

less. EPA expects that consumption of E85, and perhaps blends with other concentrations of 

ethanol, will grow over time, and help obligated parties meet their renewable volume obligations.

While current consumption of E85 (approximately 40 mill gal in 2012) is considerably 

lower than 2.1 bill gal that would be needed in the scenario outlined above, we note that the 

current price of E85 is only about 18% lower than the price of E10.

59

 Since the volumetric 

energy content of E8560 is about 22% below that of E10, the current price of E85 is actually 

higher than the price of E10 on an energy equivalent basis. Those flex-fuel vehicle (FFV) 

owners that are purchasing E85 today are thus doing so for reasons other than the economic 

benefit (e.g. government fleet mandates). If the price of E85 were to fall relative to the price of 

E10, we would expect consumption of E85 to increase. Significant reductions in the price of 

E85 could result in significantly higher volumes of E85 consumption, provided there is adequate 

availability of infrastructure for distribution of E85, availability of FFVs, and consumer 

information and acceptance. This could occur with a reduction in the price of corn. Historically 

during periods of lower corn prices the desire to maximize profit caused an increase in ethanol 

blending. With the E10 market saturated lower corn prices could result in lower E85 prices. 

Furthermore, as described more fully in Section III.D below, increases in the price of RINs could 

result in reductions in the price of E85 relative to the price of E10, with a commensurate increase 

in E85 consumption. Based on this it is clear that some increase in volumes of higher ethanol 

blends could reasonably be accomplished through the market. 

While the volume of E85 consumed in 2013 could grow, there are also other mechanisms 

through which obligated parties could comply with the applicable volume requirements in the 

absence of reductions in the advanced biofuel and total renewable fuel volume requirements. 

One of those options is carryover RINs from 2012. EMTS was examined after the February 28, 

2013 deadline for compliance with the 2012 standards to determine the total number of 2012 

RINs that had not been used for compliance in 2012 or retired for any other reason. The totals 

are shown below.

 

57 EIA Annual Energy Outlook 2013, Table 37.

58 To simplify this analysis we have not assumed any other ethanol blend levels and no E0. 

59 E85prices.com, 6-12-13

60 E85 in this rulemaking is assumed to contain 74% ethanol on an annual average basis.

Deleted: .

Comment [A33]: The commenter was unable to 

confirm the projection of 14.53 Quad Btu of gasoline 

consumption in 2013, attributed to Table 37 of the 

Annual Energy Outlook 2013. The AEO2013 

Reference Case projects motor gasoline consumption 

in transportation of 15.9 Quads, and total motor 

gasoline consumption of 16.2 Quads. (AEO2013 

Reference Case, Tables 2 and 37) Does EPA use 

LHV or HHV in your calculations? Source of 14.5 

quads?

Deleted: B.1

Comment [A34]: The commenter notes that 

DOE’s approach yields different values than EPA’s 

approach, and would be interested in seeing EPA’s 

calculation.

Deleted: very challenging

Deleted: In its Annual Energy Outlook 2013, EIA 

projects that E85 consumption will increase to 176 

mill gal in 2013, but this is still significantly less 

than the 2.1 bill gal that we estimate would need to 

be consumed under the limitations of the scenario 

described above.

Comment [A35]: Where in AEO2013 are these 

E85 values from? The 2012 Ed55 gasoline 

production for refiner/blenders at 891,000 bbl (37.4 

million gallons) is on 

http://www.eia.gov/dnav/pet/pet_pnp_refp_dc_nus_

mbbl_a.htmTthe 176 million gallons can be

calculated from AEO2013 table 11. DOE’s 2012 # 

in AEO2013 is an estimate. The petroleum Supply 

series probably underestimates 2012 E85 

consumption.

Comment [A36]: EIA’s estimate was based on 

the RFS program. Is it then circular to cite EIA’s 

estimate as evidence of the fuels availability in the 

marketplace?

Deleted: .

Comment [A37]: The commenter does not 

believe it is appropriate to assume that E85 contains 

74 percent ethanol. In this context, EPA is talking 

about its attractiveness to consumers as a fuel. E85 

may contain up to 85 percent ethanol, and although a 

lower concentration is more energy, the consumer 

buying the fuel, who has no way to know what is 

really in it, is going to to assume that the fuel is 85 

percent ethanol. Since EPA is talking about the 

price needed to induce demand, then the assumptions 

that the reasonable consumer will use should be 

used.

Comment [A38]: Lower E85 costs do not 

necessarily translate into lower E85 prices. They 

may translate into greater profits for distillers or 

farmers, but that is not the point here.

Comment [A39]: NOTE: We’ll be sending over 

more specific suggestions on this paragraph as there 

were multiple comments submitted.

Deleted: it is clear that some increased volume of 

Deleted: could be 

Deleted: However, E15 or other blend levels are 

possible.
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Page 63 of 87

Table III.C-3

Carryover RINs from 2012 into 2013 (million)

D Code RINs

Biomass-Based Diesel 4 353

Advanced Biofuel 5 196

Conventional Biofuel 6 2,117

Total 2,666

Although the rollover provisions in §80.1427(a)(5) limit the carryover of RINs to 20% of the 

next year's volume obligations for individual obligated parties, the values in Table III.C-3 are 

less than 20% of the values shown in Table III.C.1-1 for the nation as a whole. 

As discussed above, compliance with the statutory volume requirements for advanced 

biofuel and total renewable fuel in 2013 could in theory be met by the consumption of 2.1 bill 

gal of E85 containing about 1.6 bill gal of ethanol. However, given that there are over 2.6 bill 

carryover RINs available, there are more than enough in the market to permit compliance with 

the 2013 advanced biofuel and total renewable fuel volume requirements even if E85 

consumption does not increase in 2013. These carryover RINs are also available to address any 

potential shortfalls in production of corn-based ethanol that may result from the 2012 drought.61 

We recognize that in some cases carryover RINs from 2012 may not be available to an 

obligated party that need them. There are indications from some stakeholders that those who 

own carryover RINs may opt to retain and not sell them, instead banking them to use for their 

own obligations in a future year. There is no way to determine what fraction of carryover RINs 

may fall into this category. However, we note that the 14.5 bill gal of ethanol that might need to 

be consumed in 2013 (Table III.C-2) is only 1.4 bill gal above the E10 blendwall. This is 

significantly less than the number of available carryover RINs available. Thus only about half of 

the carryover RINs in existence would need to be made available in order for the full statutory 

volume requirements for advanced biofuel and total renewable fuel to be met in 2013. 

In response to the NPRM, one stakeholder indicated that carryover RINs should not be 

considered in the process of setting standards. Instead, this stakeholder argued, carryover RINs 

were intended only to provide flexibility to enable companies to remain in compliance in years 

when circumstances such as drought or other biofuel supply shortage limit the availability of 

RINs. However, the final rulemaking for the RFS1 program did not describe the purpose of 

carryover RINs in such narrow terms. Droughts were indeed provided as an example of a market 

circumstance that could limit the production of renewable fuels, but the RFS1 final rule also 

described the use of carryover RINs more broadly as a means for protecting against any potential 

 

61 Through April 2013 approximately 4.1 billion D6 RINs have been produced. This production rate projected 

through 2013 would indicate the production of approximately 12.3 billion D6 RINs. In addition, the production rate 

at ethanol facilities has been increasing. EIA’s weekly fuel ethanol production data shows that ethanol production 

had dropped to 770 ,000 barrels per day in late January but had recovered to 875,000 barrels per day by the third 

week of May. This later number projects to an annual production rate of approximately 13.4 bill gal of ethanol per 

year. When considered together with the estimated 2.1 billion carry over RINs we project there will be sufficient D6 

RINs to satisfy the unadjusted total renewable fuel standard. 

Deleted: .1

Deleted: rolling them over to help assure 

compliance 
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Page 64 of 87

supply shortfalls that could limit the availability of RINs. The rule also put this flexibility in 

terms of availability of RINs and the potential for waivers:

The availability of excess previous-year RINs would thus provide compliance 

certainty in the event that the supply of current-year RINs falls below the RFS 

program requirements and the Agency does not waive any portion of the program 

requirements. (72 FR 23935)

In addition, carryover RINs are a valid compliance mechanism, and they will either be used for 

compliance purposes or eventually retired. The issue here is estimating the adequacy of the 

availability and use of ethanol in 2013 for compliance purposes, and the availability of carryover 

RINs is certainly relevant in analyzing that issue. Therefore, we believe that it is appropriate to 

consider carryover RINs in the context of evaluating the comments received on the need for 

further compliance relief to address the E10 blendwall.

Carryover RINs and increased E85 are not the only available mechanisms that obligated 

parties have for meeting the 2013 standards. There are also additional sources for non-ethanol 

biofuels that potentially could be used for compliance in 2013 instead of relying on increased 

volumes of E85. As discussed in Section III.B.1 above, there is unused biodiesel production 

capacity and sufficient feedstocks available to permit biodiesel production in excess of 1.28 bill 

gal. In addition, various feedstocks not currently identified in Table 1 to 80.1426 can be used in 

facilities that have been grandfathered under §80.1403 to produce biodiesel that is categorized as 

renewable fuel, but not advanced biofuel, providing these feedstocks meet the definition of 

renewable biomass.

Several commenters noted the recent rise in D6 RIN prices, from approximately 5 ¢/RIN 

in early January 2013 to approximately 70 ¢/RIN by March 2013, as evidence that the E10 

blendwall had been reached and that obligated parties would have significant difficulty 

complying with the proposed renewable fuel volumes. We recognize that the blendwall is the 

underlying driver for these price increases. As discussed previously in this section, however,

EPA projects that there will be sufficient RINs available to obligated parties to satisfy their 

advanced biofuel and total renewable fuel obligations in 2013 despite the challenge represented 

by the blendwall. 

One commenter also suggested that this increase in RIN prices would increase the cost of 

transportation fuel to US consumers by about $17 billion. EPA does not believe this is a credible 

cost increase as a result of high RIN prices. It is incorrect to assume a direct correlation between 

the increase in RIN prices and a rise in transportation fuel costs.. The cost of the RFS program is 

driven by the cost of renewable fuels relative to the petroleum fuels they displace. Since the 

price of renewable fuels did not increase over this time period to the same degree as the price of 

RINs we do not believe the higher RIN prices have caused a significant increase in the cost of 

transportation fuels to consumers.62 The cost of the RFS program is driven by the cost of 

renewable fuels relative to the petroleum fuels they displace. Since the price of renewable fuels 

did not increase over this time period to the same degree as the price of RINs , we do not believe 

 

63 External analysts have begun to examine this issue. For example: 

Comment [A40]: See comment below for 

adding this qualifier.

Deleted: significant 

Comment [A41]: Availability of production 

capacity and feedstocks does not ensure there is 

sufficient demand for B5. 

Comment [A42]: EPA needs to redraft this text. 

. I have attempted to include the 

ap6464646464646464646464646464646464646464

646464646464646464646464646464646464646464

64646464646464646464646464646464646464Are 

we trying to promote biodiesel use or not?

Deleted: While it is likely

Deleted: an 

Comment [A43]: If there are things other than 

the blendwall that is driving up the price of RINs, 

EPA should explain them. The commenter thinks it 

is important that the industry gets that EPA 

understands what is happening. If they do not think 

that EPA understands the problem, then they are far 

less likely to believe that EPA will fix it in the 2014 

rule which will result in more months of RIN market 

uncertainty.

Deleted: ,

Deleted: it is also likely that a variety of factors 

and market mechanisms contributed to the increase 

in the price of D6 RINs.

Deleted: 62 External analysts have begun to 

examine this issue. For example: ¶

Irwin, Scott and Good, Darrel. “High Gasoline and 

Ethanol RINs Prices: Is There a Connection?” 

Farmdoc Daily. Department of Agricultural and 

Consumer Economics, University of IllinoisChampaign. 27 March 2013. Web. 15 June 2013.¶
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Page 65 of 87

the higher RIN prices have caused a significant increase in the cost of transportation fuels to 

consumers.63

In their comments on the NPRM, some refiners indicated that absent a waiver related to 

the E10 blendwall they may reduce production of gasoline and/or diesel, or might increase 

exports of these products, in order to reduce their Renewable Volume Obligations (RVO) under 

the RFS program. We recognize that an individual obligated party may consider such actions if 

it cannot acquire the RINs needed for compliance and is faced with the prospect of noncompliance penalties. However, we do not believe such actions would be called for in 2013

because we believe that there is an adequate volume of RINs available for all obligated parties to 

meet their obligations under the program.

For all of the reasons discussed above, EPA concludes that for 2013 adequate volumes of 

renewable fuel are available to meet the requirements for total and advanced biofuel, and that the 

E10 blendwall is not a barrier to compliance with these volumes given the various alternative 

methods to comply besides the blending of ethanol as E10. EPA notes that this conclusion is 

specific to the circumstances present for 2013. 

D. Final Applicable Volume Requirements for 2013

As shown in Table III.B-2, in order for an advanced biofuel requirement of 2.75 bill gal 

to be met, there would need to be 824 mill gal of advanced biofuels in addition to the volumes 

that would need to be produced or imported to meet the biomass-based diesel and cellulosic 

biofuel requirements. After reviewing the projected availability of advanced biofuel volumes 

from various sources, we have determined that it is likely that there will be sufficient volumes 

available to produce or import this 824 mill gal. First, we have determined that there are more 

than 500 million advanced biofuel carryover RINs from 2012 that can be used for compliance in 

2013. With regard to excess biodiesel, we have determined that there potentially could be up to 

250 mill gal of excess soy oil and up to 100 mill gal of excess corn oil available, which together 

could provide 500 million or more advanced biofuel RINs. With regard to other advanced 

biofuels, we project that up to 245 mill gal could be produced, and another 50 mill gal if 

pathways under consideration are approved in enough time for them to be used by producers in 

2013. Finally, we project that the volume of imported sugarcane ethanol from Brazil can reach 

the actual import volumes in 2012, which was 580 mill gal, and potentially considerably more. 

It is clear that, in the aggregate, these sources of advanced biofuel RINs are substantially more 

than what is needed to meet the advanced biofuel requirement of 2.75 bill gal. Therefore, we do 

not believe that there is a compelling reason to reduce the required volume of 2.75 bill gal 

advanced biofuel for 2013. Moreover, we do not believe that the blendwall will represent an 

impediment to compliance in 2013 due to the availability of carryover RINs from 2012, 

opportunities for some increase in consumption of E85, and opportunities for non-ethanol 

biofuels.

 

63 External analysts have begun to examine this issue. For example: 

Irwin, Scott and Good, Darrel. “High Gasoline and Ethanol RINs Prices: Is There a Connection?” Farmdoc Daily.

Department of Agricultural and Consumer Economics, University of Illinois-Champaign. 27 March 2013. Web. 15 

June 2013.

Comment [A44]: NOTE: We plan to send over 

additional comments on this section as we received 

multiple comments.

Deleted: for the reasons noted above, 

Deleted: , and we do not believe that such actions 

on the part of individual refiners would affect the 

availability of gasoline and diesel for the country as 

a whole. As the consumption of gasoline and diesel 

is highly inelastic in the short term, any reductions in 

supply of gasoline and/or diesel on the part of one 

refiner will be compensated for by increases in 

supply from other refiners or importers.

Deleted: Future circumstances may vary and could 

lead to a different conclusion.¶

¶

Comment [A45]: See previous comment on 

page 63.

Comment [A46]: Again, it seems like we are 

pushing the fuel because it is there, even though it is 

not cost effective as a means to reduce GHG 

emissions.

Comment [A47]: Is it, as a matter of policy, a 

good thing to create policies that promote the import 

of sugar can ethanol from Brazil? If so, why?

Comment [A48]: Why not reduce the advanced 

and total numbers by 200 million as offered as an 

alternative in the NPRM as a clear and unambiguous 

demonstration that EPA is willing to respond to real 

issues in the market.
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E. Volume Requirements for 2014

As described in the NPRM, we recognize that ethanol will likely continue to predominate 

in the renewable fuel pool in the near future, and that for 2014 the ability of the market to 

consume ethanol as E15 - E85 is highly constrained. Most stakeholders that submitted 

comments in response to the NPRM made reference to the impending E10 blendwall, though 

they differed on how EPA should address it. A number of obligated parties and other 

stakeholders have communicated to EPA that while the E10 blendwall may be manageable in 

2013, in 2014 compliance is expected to become significantly more difficult. We agree with this 

assessment. In 2014 the applicable volume of total renewable fuel set forth in the statute rises to 

18.15 billion ethanol-equivalent gallons, of which 14.4 bill gal would be non-advanced biofuel 

comprised primarily of corn-ethanol, and 3.75 bill gal would be advanced biofuel. A significant 

portion of advanced biofuel would also likely be sugar-based ethanol imported from Brazil. 

However, the maximum volume of ethanol that could be consumed as E10 in 2014 is projected 

to be just 13.2 bill gal.

64

 Given their history in the market, it is unlikely that consumers will 

consume enough ethanol sold in blends greater than E10 to meet the volumes of renewable fuel 

stated in the statute.

Given these circumstances, EPA anticipates that it will likely be necessary to adjust the 

2014 volume requirements. We expect that in preparing the 2014 proposed rule, we will estimate

the available supply of cellulosic biofuel and of advanced biofuel. Then, after taking into account 

the E10 blendwall, and current infrastructure and market-based limitations to the consumption of 

ethanol in gasoline-ethanol blends above E10, we would establish volume requirements that 

obligated parties can meet without being constrained by the blendwall. EPA believes that the 

statute provides EPA with the authority, including general waiver authority, and the tools needed 

to address these challenges. EPA is currently evaluating a variety of options and approaches 

consistent with our statutory authorities for use in establishing RFS requirements for 2014. We 

will discuss these options in detail in the forthcoming NPRM for the 2014 standards and expect 

to utilize the notice and comment process to fully engage the public in consideration of a path 

forward that appropriately addresses the blendwall and other constraints..

We received a number of comments suggesting that because EPA was late in issuing 

these final RFS standards for 2013, and in light of concerns over the blendwall and RIN prices, 

that the Agency should take action to relieve or reduce burdens associated with RFS compliance

in 2013. While we do not believe that it would be appropriate to remove or further reduce the 

statutory volume obligations for 2013 as some suggested, we do agree with the commenter who 

suggested that EPA provide additional time for obligated parties to demonstrate compliance with 

the 2013 standards. Knowledge of the volume requirements for 2014 is crucial to the strategies 

that obligated parties may implement when purchasing RINs and wet gallons of fuel for 

compliance with their individual 2013 RVOs. Given this, EPA's view is that delaying the 

compliance demonstration for the 2013 compliance period would alleviate some of the

uncertainty and concerns that obligated parties have regarding the tardiness of the final rule and 

its effect on their decisions regarding RIN acquisition.

 

64 This volume is calculated using EIA’s 2013 Annual Energy Outlook assuming ethanol represents 10% of total 

motor gasoline consumption by volume

Comment [A49]: If EPA is going to say E15, 

then they need to say highly. There are only 20 

pumps in the nation.

Deleted: in a number of ways

Deleted: It 

Deleted: would be challenging for the market to 

consume sufficient quantities of

Deleted: It would be challenging for the market to 

consume sufficient quantities of 

Deleted: and to produce sufficient 

Deleted: non-ethanol biofuels (biodiesel, 

renewable diesel, biogas, etc.) to reach the mandated 

18.15 bill gal.

Deleted: challenges

Comment [A50]: The aim of the proposed 

wording is to clarify plans to focus Total Advanced 

and Total Renewable RVOs around the blendwall, as 

opposed to the statutory levels used to date; and 

further to signal that EPA will continue to support 

the expansion of advanced cellulosic capacity.

Deleted: ments

Deleted: to 

Deleted: are likely to be necessary based on the 

projected circumstances for 2014, taking into 

account 

Deleted: , the availability of 

Comment [A51]: This should be qualified to take 

into account only the availability of domestically 

produced advanced biofuel (e.g., biodiesel in excess 

of that required to meet volume requirements, biogas 

from landfills, sewage waste treatment plants; 

manure digesters, heating oil, etc.).

Alternatively, the reference to advanced biofuel 

should be omitted in this list.

Deleted: ,

Deleted: . 

Deleted: also 

Deleted: an appropriate 

Deleted: a given compliance year
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Page 67 of 87

Therefore, we are extending the RFS compliance deadline for the 2013 RFS standards to 

June 30, 2014. This change affects §80.1451(a)(1) and adds a new paragraph (a)(1)(xiv). In 

addition to providing obligated parties with more time to demonstrate compliance, we believe 

that this extension will allow obligated parties to implement various purchasing and allocation 

strategies that help them comply on an individual basis given the tardiness of this final rule. The 

compliance demonstration deadline extension is for the 2013 compliance year only, and does not 

extend the compliance demonstration deadline in any subsequent year. Additionally, given the 

extension of the compliance demonstration deadline for the 2013 compliance period, we are 

extending the deadline for submitting reports for the attest engagement requirement for the 

corresponding compliance year until September 30, 2014. This change affects §80.1464(d) and 

adds a new paragraph (g). The attest engagement deadline extension is likewise for the 2013 

compliance year only, and does not extend the deadline in any subsequent year.
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IV. Applicable Percentage Standards for 2013

A. Background 

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

refiner, blender, or importer to determine their renewable volume obligations (RVO). Since there 

are four separate standards under the RFS2 program, there are likewise four separate RVOs 

applicable to each obligated party. Each standard applies to the sum of all gasoline and diesel 

produced or imported. The applicable percentage standards are set so that if every obligated party 

meets the percentages, then the amount of renewable fuel, cellulosic biofuel, biomass-based diesel, 

and advanced biofuel used will meet the volumes required on a nationwide basis. 

As discussed in Section II.D, we are projecting a volume of cellulosic biofuel for 2013 of 

4 million gallons (6 million ethanol-equivalent gallons). This is the volume we have used as the 

basis for setting the percentage standard for cellulosic biofuel for 2013. We are maintaining the 

advanced biofuel and total renewable fuel volumes at the applicable volumes specified in the 

statute. The biomass-based diesel volume for 2013 has been established at 1.28 billion gallons 

through a separate rulemaking. The volumes used to determine the four final percentage 

standards are shown in Table IV.A-1. 

Table IV.A-1

Final Volumes for Use in Setting the Applicable Percentage Standards for 2013a

Cellulosic biofuel 6 mill gal

Biomass-based diesel 1.28 bill gal

Advanced biofuel 2.75 bill gal

Renewable fuel 16.55 bill gal

a Due to the manner in which the percentage standards are 

calculated, all volumes are given in terms of ethanolequivalent except for biomass-based diesel which is given 

in terms of physical volume

As with previous years’ renewable fuels standards determinations, the formulas used in 

deriving the annual standards are based in part on estimates of the volumes of gasoline and diesel 

fuel, for both highway and nonroad uses, that are projected to be used in the year in which the 

standards will apply. Producers of other transportation fuels, such as natural gas, propane, and 

electricity from fossil fuels, are not subject to the standards, and volumes of such fuels are not 

used in calculating the annual standards. Since the standards apply to producers and importers of 

gasoline and diesel, these are the transportation fuels used to set the standards, and then again to 

determine the annual volume obligations of an individual gasoline or diesel producer or importer.

B. Calculation of Standards

1. How Are the Standards Calculated?
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Page 69 of 87

The following formulas are used to calculate the four percentage standards applicable to 

producers and importers of gasoline and diesel (see §80.1405): 

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV Std 100%CB,i

CB,i

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV 1.5

Std 100%

BBD,i 

BBD,i

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV Std 100%AB,i

AB,i

(Gi RGi) (GSi RGSi) GEi (Di RDi) (DSi RDSi) DEi

RFV Std 100%RF,i

RF,i

Where

StdCB,i = The cellulosic biofuel standard for year i, in percent.

StdBBD,i = The biomass-based diesel standard (ethanol-equivalent basis) for year i, in percent.

StdAB,i = The advanced biofuel standard for year i, in percent.

StdRF,i = The renewable fuel standard for year i, in percent.

RFVCB,i = Annual volume of cellulosic biofuel required by section 211(o) of the Clean Air 

Act for year i, in gallons.

RFVBBD,i = Annual volume of biomass-based diesel required by section 211(o) of the Clean 

Air Act for year i, in gallons.

RFVAB,i = Annual volume of advanced biofuel required by section 211(o) of the Clean Air 

Act for year i, in gallons.

RFVRF,i = Annual volume of renewable fuel required by section 211(o) of the Clean Air Act 

for year i, in gallons.

Gi = Amount of gasoline projected to be used in the 48 contiguous states and Hawaii, in 

year i, in gallons. 

Di = Amount of diesel projected to be used in the 48 contiguous states and Hawaii, in 

year i, in gallons.

RGi = Amount of renewable fuel blended into gasoline that is projected to be consumed 

in the 48 contiguous states and Hawaii, in year i, in gallons.
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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. For 2013, this value is non-zero. See further discussion in 

Section IV.B.2 below.

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. For 2013, this value is non-zero. See further discussion in

Section IV.B.2 below.

The Act requires EPA to base the standards on an EIA estimate of the amount of gasoline 

and diesel that will be sold or introduced into commerce for that year. The four separate 

renewable fuel standards for 2013 are based on the gasoline, ethanol, diesel, and biodiesel

consumption volumes projected by EIA.

65

 We adjusted these nationwide values to represent the 

49 states that participate in the RFS program (neither Alaska nor any U.S. territory participates).

 

65 Letter, Adam Sieminski, Administrator, U.S. Energy Information Administration, to Lisa P. Jackson, 

Administrator, U.S. EPA, October 18, 2012.
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2. Small Refineries and Small Refiners

In CAA section 211(o)(9), enacted as part of the Energy Policy Act of 2005, Congress 

provided a temporary exemption to small refineries (those refineries with a crude throughput of 

no more than 75,000 barrels of crude per day) through December 31, 2010. In our initial 

rulemaking to implement the new RFS program66, we exercised our discretion under section 

211(o)(3)(B) and extended this temporary exemption to the few remaining small refiners that 

met the Small Business Administration’s (SBA) definition of a small business (1,500 employees 

or less company-wide) but did not meet the statutory small refinery definition as noted above. 

40 CFR §§ 80.1141, 80.1142. Because EISA did not alter the small refinery exemption in any 

way, the RFS2 program regulations maintained the exemptions for gasoline and diesel produced 

by small refineries and small refiners through 2010 (unless the exemption was waived). See 40 

CFR §§ 80.1441, 80.1442. 

Congress provided two ways that small refineries can receive a temporary extension of 

the exemption beyond 2010. One is based on the results of a study conducted by the Department 

of Energy (DOE) to determine whether small refineries would face a disproportionate economic 

hardship under the RFS program. The other is based on EPA determination of disproportionate 

economic hardship on a case-by-case basis in response to refiner petitions.

In January 2009, DOE issued a study which did not find that small refineries would face 

a disproportionate economic hardship under the RFS program.67 The conclusions were based in 

part on the expected robust availability of RINs and EPA’s ability to grant relief on a case-bycase basis. As a result, beginning in 2011 small refiners and small refineries were required to 

participate in the RFS program as obligated parties, and there was no small refiner/refinery 

volume adjustment to the 2011 standards as there was for the 2010 standards. 

Following the release of DOE's 2009 small refinery study, Congress directed DOE to 

complete a reassessment and issue a revised report. In March of 2011, DOE re-evaluated the 

impacts of the RFS program on small entities and concluded that some small refineries would 

suffer a disproportionate hardship.68 As a result, EPA exempted these refineries from being 

obligated parties for two additional years, 2011 and 2012.69 The 2012 standards established in 

the January 9, 2012, final rulemaking reflected the exemption of these refineries. 

EPA may also extend the exemption for individual small refineries or small refiners on a 

case-by-case basis if they demonstrate disproportionate economic hardship. 40 CFR §§ 

80.1441(e)(2), 80.1442(h). EPA has granted some exemptions pursuant to this process that 

apply in 2011 and 2012. EPA has granted one exemption for 2013. However, any requests for 

exemption that are approved after the release of today's final rulemaking will not affect the 2013 

standards. As stated in the final rule establishing the 2011 standards, “EPA believes the Act is 

 

66 72 FR 23900, May 1, 2007.

67 DOE report “EPACT 2005 Section 1501 Small Refineries Exemption Study”, (January, 2009). 

68 "Small Refinery Exemption Study: An Investigation into Disproportionate Economic Hardship," U.S. Department 

of Energy, March 2011.

69 Since the standards are applied on an annual basis, the exemptions are likewise on an annual basis even though the

determination of which refineries would receive an extension to their exemption did not occur until after January 1, 

2011.

Comment [A52]: Flagging for discussion.
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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.” Thus, any additional 

exemptions for small refineries or small refiners that are issued after today will not affect the

2013 standards. 

EPA requested comment on two areas related to small refiner/refinery exemptions. The 

first was whether it would be appropriate to extend the two year exemption for small refineries. 

Two commenters stated that EPA should not provide such an extension to small refineries. Both 

referenced the number of years the program has been in place, leading to the conclusion that 

small entities have had time to prepare to meet the standards. One of the commenters also stated 

that small refiners likely have been blending renewable fuel for years given market incentives. 

One of these commenters stated that the relief provided was meant to be temporary and not “ongoing”. A third commenter suggested that EPA not only continue to provide hardship waivers, 

but extend the opportunity for waivers to mid-size refiners, on the basis that these refiners, like 

small refiners, do not own ethanol facilities and have little control of the RIN and ethanol 

markets. In addition, the location of several small and mid-size refineries prohibits the export of 

gasoline, thus reducing their compliance options in the face of limited RIN availability. 

However, it is the limited financial resources of such entities that provide overarching hardship 

to such entities, according to the commenter. This commenter also stated that EPA’s granting of 

hardship relief is based on whether the refinery cannot remain economically viable without said 

relief. The commenter believes the decision point should be based on whether the refiner suffers 

disproportionately to others in the industry.

The Act specifically provides for a temporary RFS exemption for small refineries, and for 

the possibility of extensions of those temporary exemptions. EPA used its discretion in the RFS1 

program regulations, and again in the RFS2 regulations, to extend the temporary exemption (and 

possibility of extensions) to a few small refiners meeting criteria established in prior EPA fuels 

rules based on general authority to provide appropriate lead time in establishing implementing 

regulations and based on the language in section 211(o) directing EPA to apply RFS 

requirements to refineries, blenders, distributors, and importers “as appropriate.” Regarding 

EPA’s use of “economic viability” (in the commenter’s words) as a decision point, the Agency 

has interpreted this to be a severe impact – large enough to create a hardship and threaten the 

viability of the company. Thus, absent such hardship, the agency does not believe it is 

appropriate to extend the exemption for small refineries. 

EPA also requested comment on whether it is appropriate for the agency to change the 

standards if small refiner exemptions are granted after the final rule is issued. As discussed 

above, EPA has heretofore considered and rejected this option for the primary reason of wanting 

to provide certainty to obligated parties regarding the levels of the standards. One commenter 

stated that, though they were opposed to further extending exemptions to small entities, that -

lawfully, the standards must be adjusted whenever a waiver is granted. In the rule establishing 

the 2011 standards, we stated that “EPA believes the Act is best interpreted to require issuance of 

a single annual standard...thereby providing advance notice and certainty to obligated parties...” 
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Page 73 of 87

The Agency continues to believe that this is the single best approach; the commenter did not 

provide new information to cause us to re-evaluate this position.

3. Final Standards

As specified in the March 26, 2010 RFS2 final rule70, 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 biomass-based diesel 

standard based on biodiesel equivalence. However, all RIN generation is based on ethanolequivalence. More specifically, the RFS2 regulations provide that production or import of a 

gallon of qualifying biodiesel will lead to the generation of 1.5 RINs. In order to ensure that 

demand for 1.28 billion physical gallons of biomass-based diesel will be created in 2013, the 

calculation of the biomass-based diesel standard provides that the required volume be multiplied 

by 1.5. The net result is a biomass-based diesel gallon being worth 1.0 gallon toward the 

biomass-based diesel 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 RFS2 program, as gasoline and diesel produced in or imported into 

that state or territory would then be subject to the standard. Neither Alaska nor any U.S. territory 

has chosen to participate in the RFS2 program at this time, and thus the value of the related terms 

in the calculation of the standards is zero.

Note that because the gasoline and diesel volumes estimated by EIA include renewable 

fuel use, we must subtract the total renewable fuel volumes from the total gasoline and diesel 

volumes to get total non-renewable gasoline and diesel volumes. The values of the variables 

described above are shown in Table IV.B.3-1.71 Terms not included in this table have a value of 

zero.

 

70 75 FR 14716, March 26, 2010.

71 To determine the 49-state values for gasoline and diesel, the amounts of these fuels used in Alaska is subtracted 

from the totals provided by DOE. The Alaska fractions are determined from the most recent (2011) EIA State 

Energy Data, Transportation Sector Energy Consumption Estimates. The gasoline and transportation distillate fuel 

oil fractions are approximately 0.2% and 0.7%, respectively. Ethanol use in Alaska is estimated at 11.2% of its 

gasoline consumption (based on the same State data), and biodiesel use is assumed to be zero.
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Table IV.B.3-1

Values for Terms in Calculation of the Standards (bill gal)

Term Value

RFVCB,2013 0.006

RFVBBD,2013 1.28

RFVAB,2013 2.75

RFVRF,2013 16.55

G2013 133.70

D2013 52.26

RG2013 12.85

RD2013 1.23

GEi Confidentiala

DEi Confidentiala

aThis information is not published because it reflects an exemption for a single entity and publishing 

such information would reveal confidential business information.

Using the volumes shown in Table IV.B.3-1, we have calculated the final percentage 

standards for 2013 as shown in Table IV.B.3-2.

Table IV.B.3-2

Final Percentage Standards for 2013

Cellulosic biofuel 0.003%

Biomass-based diesel 1.12%

Advanced biofuel 1.60%

Renewable fuel 9.64%
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V. Annual Administrative Announcements

In the RFS2 final rule, we stated our intent to make two announcements each year:

• Set the price for cellulosic biofuel waiver credits that will be made available to 

obligated parties in the event that we reduce the volume of cellulosic biofuel below 

the applicable volume specified in the Clean Air Act (CAA), and

• Announce the results of our annual assessment of the aggregate compliance approach 

for U.S. planted crops and crop residue.

The biofuel waiver credit price being announced today was calculated in accordance with the 

specifications in §80.1456(d). The manner in which EPA calculates the waiver credit price is 

precisely set forth in EPA regulations, and EPA’s assessment of the aggregate compliance 

approach is based on data sources, methodology, and criteria that were identified and explained 

in the preamble to the RFS2 final rule. For these reasons we would not typically include these 

administrative announcements in a Notice of Proposed Rulemaking. However, given that the 

NPRM for the 2013 standards was not published prior to 2013, we determined that regulated 

parties would benefit from knowing the waiver credit price and our conclusions regarding the 

aggregate compliance approach as soon as possible. Therefore, the February 7, 2013 NPRM 

included both of these administrative announcements. In today's rulemaking we are finalizing 

both announcements, and responding to a number of comments we received on the aggregate 

compliance approach.

A. 2013 Price for Cellulosic Biofuel Waiver Credits

Section 211(o)(7)(D) of the CAA requires that whenever EPA sets the applicable volume 

of cellulosic biofuel at a level lower than that specified in the Act, EPA is to provide a number of 

cellulosic credits for sale that is no more than the EPA-determined applicable volume. Congress 

also specified the formula for calculating the price for such waiver credits: adjusted for inflation, 

the credits must be offered at the price of the higher of 25 cents per gallon or the amount by 

which $3.00 per gallon exceeds the average wholesale price of a gallon of gasoline in the United 

States. The inflation adjustment is for years after 2008. EPA regulations provide that the 

inflation adjustment is calculated by comparing the most recent Consumer Price Index for All 

Urban Consumers (CPI-U) for the “All Items” expenditure category as provided by the Bureau 

of Labor Statistics that is available at the time EPA sets the cellulosic biofuel standard to the 

comparable value that was reported soonest after December 31, 2008. 

In contrast to its directions to EPA for setting the price of a cellulosic biofuel waiver 

credit, Congress afforded the Agency considerable flexibility in designing regulations specifying 

the permissible uses of the credits. The CAA states that EPA regulations “shall include such 

provisions, including limiting the credits’ uses and useful life, as the Administrator deems 

appropriate to assist market liquidity and transparency, to provide appropriate certainty for 

regulated entities and renewable fuel producers, and to limit any potential misuse of cellulosic 

biofuel credits to reduce the use of other renewable fuels, and for such other purposes as the 
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Administrator determines will help achieve the goals of this subsection.” The final RFS2 

regulations provide a detailed discussion of how we designed the provisions for cellulosic 

biofuel waiver credits in keeping with the statutory language. In short, 2013 cellulosic biofuel 

waiver credits (or ”waiver credits”) are only available for the 2013 compliance year. Waiver 

credits will only be made available to obligated parties, and they are nontransferable and 

nonrefundable. Further, obligated parties may only purchase waiver credits up to the level of 

their cellulosic biofuel RVO less the number of cellulosic biofuel RINs that they own. A 

company owning cellulosic biofuel RINs and cellulosic waiver credits may use both types of 

credits if desired to meet their RVOs, but unlike RINs, waiver credits may not be carried over for 

use in the next calendar year. Obligated parties may not use waiver credits to meet a prior year 

deficit obligation. Finally, unlike cellulosic biofuel RINs which may also be used to meet an 

obligated party's advanced and total renewable fuel obligations, waiver credits may only be used 

to meet a cellulosic biofuel RVO. An obligated party will still need to additionally and 

separately acquire RINs to meet their advanced biofuel and total renewable fuel obligations.

For the 2013 compliance period, since the applicable volume of cellulosic biofuel used to 

set the annual cellulosic biofuel standard is lower than the volume for 2013 specified in the 

CAA, we are making cellulosic waiver credits available to obligated parties for end-of-year 

compliance should they need them at a price of $0.42 per credit. To calculate this price, EPA 

first determined the average wholesale (refinery gate) price of gasoline using the most recent 12 

months of data available from the EIA website on September 30, 2012. Based on this data, we 

calculated an average price of gasoline for the period July 2011 to June 2012 of $2.85. In 

accordance with the Act, we then calculated the difference of the inflation-adjusted value of 

$3.00, or $3.27, and $2.85, which yielded $0.42. Next, we compared the value of $0.42 to the 

inflation-adjusted value of $0.25, or $0.27. The Act requires EPA to use the greater of these two 

values as the price for cellulosic biofuel waiver credits. 

The derivation of this value is more fully explained in a memorandum submitted to the 

docket for this rulemaking, and a more complete description of the statutory requirements and 

their application can be found in the RFS2 final rule. 

B. Assessment of the Domestic Aggregate Compliance Approach

The RFS2 regulations contain a provision for renewable fuel producers who use planted 

crops and crop residue from U.S. agricultural land that relieves them of the individual

recordkeeping and reporting requirements concerning the specific land from which their 

feedstocks were harvested. To enable this approach, EPA established a baseline number of acres 

for U.S. agricultural land in 2007 (the year of EISA enactment) and determined that as long as 

this baseline number of acres was not exceeded, it was unlikely that new land outside of the 2007 

baseline would be devoted to crop production based on historical trends and economic 

considerations. We therefore provided that renewable fuel producers using planted crops or crop 

residue from the U.S. as feedstock in renewable fuel production need not comply with the 

individual recordkeeping and reporting requirements related to documenting that their feedstocks 

are renewable biomass, unless EPA determines through one of its annual evaluations that the 

2007 baseline acreage of agricultural land has been exceeded. 
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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. 

In response to the NPRM, we received two comments criticizing the aggregate 

compliance approach, including a comment questioning transparency surrounding the data and

methodology. EPA continues to believe that USDA cropland and reserve program acreage data 

are the most appropriate and applicable sources of data on which to base our annual evaluation 

for whether the 2007 baseline has been exceeded for aggregate compliance. The USDA data 

along with a description of our evaluation has been provided in the rulemaking dockets for each 

annual RFS standard.

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 384 million acres in 2012, 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 2012, from which we derived a total estimated acreage of 384 million acres. We 

then subtracted the amount of land estimated to be participating in the Grasslands Reserve 

Program (GRP) and Wetlands Reserve Program (WRP) by the end of Fiscal Year 2012, 230,550 

acres, to yield an estimate of approximately 384 million acres of U.S. agricultural land in 2012. 

The USDA data used to make this calculation can be found in the docket to this rule.

C. Assessment of the Canadian Aggregate Compliance Approach

On March 15, 2011, EPA issued a notice of receipt of and solicited public comment on a 

petition for EPA to authorize the use of an aggregate approach for compliance with the 

Renewable Fuel Standard renewable biomass requirements, submitted by the Government of 

Canada. The petition requested that EPA determine that an aggregate compliance approach will 

provide reasonable assurance that planted crops and crop residue from Canada meet the 

definition of renewable biomass. After 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 nonforested on that date (and is therefore RFS2 

qualifying land). The total agricultural land in Canada in 2012 is estimated at 120.9 million 

acres. This total agricultural land area includes 97.3 million acres of cropland and summer 

fallow, 13.8 million acres of pastureland and 9.8 million acres of agricultural land under 
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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.

D. Vacatur of 2012 Cellulosic Biofuel Standard

On January 25, 2013 a D.C. circuit court ruled that the EPA’s projection of cellulosic 

biofuel production was in excess of the agency’s statutory authority and vacated the cellulosic

biofuel standards.72 Very few cellulosic biofuel RINs were generated in 2012 and of those that 

were the majority of these RINs were required to be retired when the cellulosic biofuel they 

represented was exported. EPA is therefore eliminating the cellulosic biofuel requirement for 

2012 in accordance with the order from the D.C. circuit court. Cellulosic biofuel RINs generated 

in 2012 may still be used to satisfy up to 20% of an obligated party’s cellulosic biofuel 

obligation in 2013.

 

72 See API v. EPA, No. 12-1139, slip op. at 5-9 (D.C. Cir. January 25, 2013)
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VI. Comments Outside the Scope of This Rulemaking

In their comments responding to the NPRM, a number of parties used the opportunity to 

raise concerns that were not directly related to the issues and provisions we were addressing in 

the NPRM, namely the determination of the applicable volume requirements and associated 

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

renewable fuel. Instead, they addressed issues associated with the following:

• EPA’s petition process in §80.1416 for approving new fuel pathways and requests 

that the review of certain pathways be expedited

• Requests for clarification regarding whether certain feedstocks qualify as renewable 

biomass

• Requests for new EPA initatives to promote FFVs and blender pumps

• Possible legislative changes to the RFS program

• E15 waivers and EPA policy on E15

• Requests for new or revised lifecycle GHG assessments

• Impacts of ethanol on small engines

• Impacts of ethanol on air quality and use of corn for food

• Comments on specific regulatory provisions in 40 CFR Part 80, Subpart M

• Comments on the 1.28 bill gal volume requirement for biomass-based diesel

We also received some comments addressing the impacts of ethanol on air quality and the use of 

corn for food. These issues were addressed in the RFS2 final rule released in 2010 and were not 

revisited in the February 7, 2013 NPRM.

While we are taking these comments under consideration as we continue to implement 

the RFS2 program, these comments are outside the scope of today’s action, and we are not 

providing substantive responses to them at this time. With regard to comments on the 1.28 bill 

gal requirement for biomass-based diesel, we will take them into consideration in the context of 

our response to the petition for reconsideration submitted by the American Fuels and 

Petrochemical Manufacturers.
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VII. Public Participation 

Many interested parties participated in the rulemaking process that culminates with this 

final rule. This process provided opportunity for submitting written public comments following 

the proposal that we published on February 7, 2013 (78 FR 9282), and we also held a public 

hearing on March 8, 2013 at which a number of parties provided both verbal and written 

testimony. All comments received, both verbal and written, are available in EPA docket EPAHQ-OAR-2012-0546 and we considered these comments in developing the final rule. Public 

comments and EPA responses are discussed throughout this preamble.
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VIII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 

13563: Improving Regulation and Regulatory Review

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a 

"significant regulatory action” because it raises novel legal or policy issues arising out of legal 

mandates, the President’s priorities, or the principles set forth in the Executive Order. 

Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for 

review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) and any 

changes made in response to OMB recommendations have been documented in the docket for 

this action.

The economic impacts of the RFS2 program on regulated parties, including the impacts 

of the required volumes of renewable fuel, were already addressed in the RFS2 final rule 

promulgated on March 26, 2010 (75 FR 14670). With the exception of cellulosic biofuel, this 

action proposes the percentage standards applicable in 2013 based on the volumes that were 

analyzed in the RFS2 final rule.

B. Paperwork Reduction Act

This action does not impose an information collection burden under the provisions of the 

Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Burden is defined at 5 CFR 1320.3(b). This 

final rule does not impose any additional reporting requirements on regulated parties beyond 

those already required under the RFS program; therefore, there will not be any additional 

reporting burdens on entities impacted by this regulation. This action merely establishes the RFS 

annual standards for 2013 as required by section 211(o) of the Clean Air Act.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a 

regulatory flexibility analysis of any rule subject to notice and comment rulemaking 

requirements under the Administrative Procedure Act or any other statute unless the agency 

certifies that the rule will not have a significant economic impact on a substantial number of 

small entities. Small entities include small businesses, small organizations, and small 

governmental jurisdictions.

For purposes of assessing the impacts of today's rule on small entities, small entity is 

defined as: (1) a small business as defined by the Small Business Administration’s (SBA) 

regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a 

city, county, town, school district or special district with a population of less than 50,000; and (3) 

a small organization that is any not-for-profit enterprise which is independently owned and 

operated and is not dominant in its field.
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Today's rule is an annual rulemaking implementing a long-term program that was 

finalized in 2010. Under that program small refiners and small refineries were already granted 

two years of relief that could be extended upon demonstration of ongoing hardship. EPA, with 

the assistance of DOE, has continued to implement these provisions and provide relief when 

warranted.

After considering the economic impacts of today’s final rule on small entities, we certify 

that this action will not have a significant economic impact on a substantial number of small 

entities. This rule sets the annual standard for cellulosic biofuel for 2013 at 6 mill gal. Since 

small refiners and small refineries collectively comprise about 11.9% of gasoline and 15.2% of 

diesel production73, for an average of 12.9% for the entire gasoline + diesel pool, small refiners 

and small refineries would only be required to collectively meet a cellulosic biofuel requirement 

of about 0.8 mill gal (6 x 12.9%). At the cellulosic biofuel waiver credit price of $0.42, 

established in this rule for 2013, the cost of complying with this requirement would total about 

$0.33 million for the approximately 60 obligated parties that would be affected, or about $5,500 

per facility on average.

The impacts of the RFS2 program on small entities were already addressed in the RFS2 

final rule promulgated on March 26, 2010 (75 FR 14670), and this final rule will not impose any 

additional requirements on small entities. 

D. Unfunded Mandates Reform Act

This final action contains no Federal mandates under the provisions of Title II of the 

Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 for State, local, or tribal 

governments or the private sector. This action implements mandate(s) specifically and explicitly 

set forth by the Congress in Clean Air Act section 211(o) without the exercise of any policy 

discretion by EPA. Therefore, this action is not subject to the requirements of sections 202 or 

205 of the UMRA.

This action is also not subject to the requirements of section 203 of UMRA because it 

contains no regulatory requirements that might significantly or uniquely affect small 

governments. This final rule only applies to gasoline, diesel, and renewable fuel producers, 

importers, distributors and marketers and merely sets the 2013 annual standards for the RFS 

program.

E. Executive Order 13132: Federalism 

This action does not have federalism implications. It will not have substantial direct 

effects on the States, on the relationship between the national government and the States, or on 

the distribution of power and responsibilities among the various levels of government, as 

specified in Executive Order 13132. This action sets the 2013 annual standards for the RFS 

 

73 Estimates from RFS2 final rule, 75 FR 14867.
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program and only applies to gasoline, diesel, and renewable fuel producers, importers, 

distributors and marketers. Thus, Executive Order 13132 does not apply to this rule. 

F. Executive Order 13175: Consultation and Coordination with Indian Tribal 

Governments

This action does not have tribal implications, as specified in Executive Order 13175 (65 

FR 67249, November 9, 2000). This 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 governments would be affected only to the 

extent they purchase and use regulated fuels. Thus, Executive Order 13175 does not apply to 

this action.

G. Executive Order 13045: Protection of Children from Environmental Health Risks 

and Safety Risks

EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying only to those 

regulatory actions that concern health or safety risks, such that the analysis required under 

section 5-501 of the EO has the potential to influence the regulation. This action is not subject to 

EO 13045 because it does not establish an environmental standard intended to mitigate health or 

safety risks and because it implements specific standards established by Congress in statutes 

(section 211(o) of the Clean Air Act). 

H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect 

Energy Supply, Distribution, or Use

This action is not a “significant energy action” as defined in Executive Order 13211, 

“Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” 

(66 FR 28355 (May 22, 2001)) because it is not likely to have a significant adverse effect on the 

supply, distribution, or use of energy. This action simply sets the annual standards for renewable 

fuel under the RFS program for 2013.

I. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 

(‘‘NTTAA’’), Public Law 104–113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary 

consensus standards in its regulatory activities unless to do so would be inconsistent with 

applicable law or otherwise impractical. Voluntary consensus standards are technical standards 

(e.g., materials specifications, test methods, sampling procedures, and business practices) that are 

developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide 

Congress, through OMB, explanations when the Agency decides not to use available and 

applicable voluntary consensus standards.
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This final rulemaking does not involve technical standards. Therefore, EPA is not 

considering the use of any voluntary consensus standards.

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

Minority Populations and Low-Income Populations

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive 

policy on environmental justice. Its main provision directs federal agencies, to the greatest 

extent practicable and permitted by law, to make environmental justice part of their mission by 

identifying and addressing, as appropriate, disproportionately high and adverse human health or 

environmental effects of their programs, policies, and activities on minority populations and lowincome populations in the United States. 

EPA has determined that this final rule will not have disproportionately high and 

adverse human health or environmental effects on minority or low-income populations because it 

does not affect the level of protection provided to human health or the environment. This action 

does not relax the control measures on sources regulated by the RFS regulations and therefore 

will not cause emissions increases from these source.

K. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business 

Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take 

effect, the agency promulgating the rule must submit a rule report, which includes a copy of the 

rule, to each House of the Congress and to the Comptroller General of the United States. EPA 

will submit a report containing this rule and other required information to the U.S. Senate, the 

U.S. House of Representatives, and the Comptroller General of the United States prior to 

publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after 

it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 

804(2). Therefore, this rule will be effective on the date of publication.
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IX. Statutory Authority

Statutory authority for this action comes from section 211 of the Clean Air Act, 42 

U.S.C. 7545. Additional support for the procedural and compliance related aspects of today’s 

final rule, come from Sections 114, 208, and 301(a) of the Clean Air Act, 42 U.S.C. Sections 

7414, 7542, and 7601(a).

List of Subjects in 40 CFR Part 80

Administrative practice and procedure, Air pollution control, Diesel fuel, Environmental 

protection, Fuel additives, Gasoline, Imports, Oil imports, Petroleum.

Dated: 

Robert Perciasepe,

Acting Administrator.
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For the reasons set forth in the preamble, 40 CFR part 80 is amended as follows:

PART 80—REGULATION OF FUELS AND FUEL ADDITIVES

1. The authority citation for part 80 continues to read as follows:

Authority: 42 U.S.C. 7414, 7542, 7545, and 7601(a).

2. Section 80.1405 is amended by removing and reserving paragraph (a)(3)(i) and by adding 

paragraph (a)(4) to read as follows:

§ 80.1405 What are the Renewable Fuel Standards?

(a) * * *

(3) Renewable Fuel Standards for 2012. 

(i) [Reserved]

* * * * *

(4) Renewable Fuel Standards for 2013.

(i) The value of the cellulosic biofuel standard for 2013 shall be 0.003 percent.

(ii) The value of the biomass-based diesel standard for 2013 shall be 1.12 percent.

(iii) The value of the advanced biofuel standard for 2013 shall be 1.60 percent.

(iv) The value of the renewable fuel standard for 2013 shall be 9.64 percent.

3. Section 80.1451 is amended by revising paragraph (a)(1) introductory text and by adding 

paragraph (a)(1)(xiv) to read as follows:

§ 80.1451 What are the reporting requirements under the RFS program?

(a) * * *

(1) Annual compliance reports for the previous compliance period shall be submitted by 

February 28 of each year except as provided in paragraph (xiv) below, and shall include 

all of the following information:

* * * 

(xiv) For the 2013 compliance year, annual compliance reports shall be submitted by June 30, 

2014.

4. Section 80.1464 is amended by revising paragraph (d) and by adding paragraph (g) to 

read as follows:

§80.1464 What are the attest engagement requirements under the RFS program?

* * * * *

Deleted: 008

Deleted: 63
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(d) For each compliance year, each party subject to the attest engagement requirements under 

this section shall cause the reports required under this section to be submitted to EPA by 

May 31 of the year following the compliance year, except as provided in paragraph (g) 

below.

* * * * *

(g) For the 2013 compliance year, reports required under this section shall be submitted to 

EPA by September 30, 2014.