# Vol. 78 Friday,

No. 115 June 14, 2013

Part II



# Environmental Protection Agency

40 CFR Part 80 Regulation of Fuels and Fuel Additives: RFS Pathways II and Technical Amendments to the RFS 2 Standards; Proposed Rule


### 36042 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

**ENVIRONMENTAL PROTECTION**
**AGENCY**

**40 CFR Part 80**

**[EPA–HQ–OAR–2012–0401; FRL–9816–3]**

**RIN 2060—AR21**

**Regulation of Fuels and Fuel Additives: RFS Pathways II and** 
**Technical Amendments to the RFS 2**
**Standards**

**AGENCY :**  Environmental Protection Agency (EPA).

**ACTION :**  Notice of Proposed Rulemaking.

**SUMMARY :**  In this Notice of Proposed Rulemaking, EPA is proposing amendments to three separate sets of regulations relating to fuels. First, EPA is proposing to amend certain of the renewable fuels standard (RFS2) program regulations. We believe these proposals will facilitate the introduction
of new renewable fuels as well as improve implementation of the program. This proposal includes various changes related to biogas, including changes related to the revised compressed natural gas (CNG)/liquefied natural gas (LNG) pathway and
amendments to various associated registration, recordkeeping, and reporting provisions. This proposed regulation includes the addition of new pathways for renewable diesel, renewable naphtha, and renewable electricity (used in electric vehicles) produced from landfill biogas. Adding these new pathways will enhance the ability of the biofuels industry to supply advanced biofuels, including cellulosic biofuels, which greatly reduce the greenhouse gas emissions (GHG) compared to the petroleum-based fuels they replace. It also addresses ‘‘nameplate capacity’’ issues for certain production facilities that do not claim exemption from the 20% greenhouse gas (GHG) reduction threshold. In this notice, EPA addresses issues related to crop residue and corn kernel fiber and proposes an approach to determining the volume of cellulosic RINs produced
from various cellulosic feedstocks. We also include a lifecycle analysis of
advanced butanol and discuss the potential to allow for commingling of compliant products at the retail facility level as long as the environmental performance of the fuels would not be
detrimental. Several other amendments to the RFS2 program are included.

Second, EPA is also proposing various changes to the E15 misfueling mitigation regulations (E15 MMR). Among the E15 changes proposed are
technical corrections and amendments to sections dealing with labeling, E15 surveys, product transfer documents, and prohibited acts. We also propose to
amend the definitions in order to address a concern about the rounding of
test results for ethanol content
violations.

Lastly, EPA is proposing changes to the survey requirements associated with the ultra-low sulfur diesel (ULSD)

program.

**DATES :**  Comments must be received on or before July 15, 2013. We do not expect a request for a public hearing. However, if we receive a request for a public hearing by July 1, 2013 we will publish information related to the timing and location of the hearing and the timing of a new deadline for public

comments.

**ADDRESSES :**  Submit your comments, identified by Docket ID No. EPA–HQ– OAR–2012–0401, by one of the following methods:

• http://www.regulations.gov. Follow the on-line instructions for submitting

comments.

• Email: a-and-r-docket@epa.gov,
Attention Air and Radiation Docket ID No. EPA–HQ–OAR–2012–0401.

• Mail: Air and Radiation Docket, Docket No. EPA–HQ–OAR–2012–0401, Environmental Protection Agency, Mail code: 6406J, 1200 Pennsylvania Ave. NW., Washington, DC 20460. Please include a total of two (2) copies.

• Hand Delivery: EPA Docket Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave. NW., Washington, DC 20460, Attention Air and Radiation Docket, ID No. EPA–HQ–OAR–2012– 0401. Such deliveries are only accepted during the Docket’s normal hours of operation, and special arrangements
should be made for deliveries of boxed
information.

Instructions: Direct your comments to Docket ID No. EPA–HQ–OAR–2012– 0401. EPA’s policy is that all comments received will be included in the public docket without change and may be
made available online at www.regulations.gov, including any personal information provided, unless
the comment includes information
claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through www.regulations.gov
or email. The www.regulations.gov Web site is an ‘‘anonymous access’’ system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an email comment directly to EPA without going through www.regulations.gov, your email address will be automatically captured and included as part of the comment that is placed in the public
docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD–ROM you submit. If EPA cannot read your
comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your
comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects
or viruses. For additional information about EPA’s public docket visit the EPA Docket Center homepage at http:// www.epa.gov/epahome/dockets.htm.

Docket: 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 for which 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, 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 and Radiation Docket is (202) 566–1742.

**FOR FURTHER INFORMATION CONTACT :**  Joseph Sopata, Chemist, Office of Transportation and Air Quality, Mail Code: 6406J, U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue NW., 20460; telephone number: (202) 343–9034; fax number: (202) 343– 2801; email address: sopata.joe@epa.gov.

**SUPPLEMENTARY INFORMATION :**  This preamble follows the following outline:

I. Why is EPA taking this action? II. Does this action apply to me? III. What should I consider as I prepare my

comments for EPA? IV. Executive Summary V. Renewable Fuel Standard (RFS2) Program

Amendments A. Approving Cellulosic Volumes From

Cellulosic Feedstocks 1. Variability in Cellulosic Content

Estimates of Feedstocks

2. Characteristics of the Amount of the

Final Fuel Derived From Cellulosic

Materials

3. Previous Precedents


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4. Alternative Approaches B. Lifecycle Greenhouse Gas Emissions

Analysis for Renewable Electricity, Renewable Diesel and Naphtha Produced From Landfill Biogas
1. Feedstock Production
2. Determination of the Cellulosic

Composition of Landfill Biogas
3. Fuel Production—General

Considerations
4. Fuel Production for Renewable

Electricity 5. Fuel Production, Transport and Tailpipe

Emissions for Renewable Diesel and Naphtha C. Proposed Regulatory Amendments

Related to Biogas 1. Changes Applicable to the Revised CNG/

LNG Pathway From Biogas 2. New Registration (Contract

Requirements) for Renewable Electricity and Fuels Produced From Biogas That Qualify as Renewable Fuel and That are Registered for RIN Generation 3. Changes Applicable to all Biogas Related

Pathways for RIN Generation 4. Changes Applicable To Process

Electricity Production Requirement for the Biogas-Derived Cellulosic Diesel and Naphtha Pathways D. Amendment to the Definition of ‘‘Crop

Residue’’ and Definition of a Pathway for

Corn Kernel Fiber

E. Consideration of Advanced Butanol

Pathway 1. Proposed New Pathway 2. Butanol, Biobutanol, and Volatility

Considerations

F. Amendments to Various RFS2

Compliance Related Provisions 1. Proposed Changes to Definitions

2. Provisions for Small Blenders of

Renewable Fuels 3. Proposed Changes to Section 80.1450—

Registration Requirements 4. Proposed Changes to Section 80.1452—

EPA Moderated Transaction System (EMTS) Requirements—Alternative Reporting Method for Sell and Buy Transactions for Assigned RINs 5. Proposed Changes to Section 80.1463—

Confirm That Each Day an Invalid RIN Remains in the Market is a Separate Day

of Violation 6. Proposed Changes to Section 80.1466—

Require Foreign Ethanol Producers, Importers and Foreign Renewable Fuel Producers That Sell to Importers to be Subject to U.S. Jurisdiction and Post a

Bond 7. Proposed Changes to Section

80.1466(h)—Calculation of Bond Amount for Foreign Renewable Fuel Producers, Foreign Ethanol Producers and Importers 8. Proposed Changes to Facility’s Baseline

Volume To Allow ‘‘Nameplate Capacity’’ for Facilities not Claiming Exemption
From the 20% GHG Reduction

Threshold

G. Minor Corrections to RFS2 Provisions VI. Amendments to the E15 Misfueling Mitigation Rule A. Proposed Changes to Section 80.1501—

Label B. Proposed Changes to Section 80.1502—

E15 Survey C. Proposed Changes to Section 80.1503—

Product Transfer Documents D. Proposed Changes to Section 80.1504—

Prohibited Acts E. Proposed Changes to Section 80.1500—

Definitions VII. Proposed Amendments to the ULSD Diesel Survey VIII. Statutory and Executive Order Reviews

I. Why is EPA taking this action?

EPA is taking this action to amend various provisions in its regulations pertaining to fuels and fuel additives. First, EPA is proposing to amend 40 CFR part 80, subpart M related to the renewable fuels standard (RFS2). The RFS2 program was required by the Energy Independence and Security Act of 2007 (EISA 2007), which amended the Clean Air Act (CAA). The final regulations for RFS2 were published in

the Federal Register on March 26, 2010 (75 FR 14670). In this notice, references

to the ‘‘RFS2 final rule’’ refer to the March 26, 2010 Federal Register notice unless otherwise noted. Second, EPA is proposing to amend provisions of 40 CFR part 80, subpart N, related to misfueling mitigation for 15 volume percent (%) ethanol blends (E15). The final regulations for E15 were published

in the Federal Register on July 25, 2011 (76 FR 44422). Several items in this proposed action will assist regulated parties in complying with RFS2 and E15 requirements. This action is not expected to result in significant changes in regulatory burdens or costs associated with the RFS2 and E15 programs. Third, EPA is proposing a change to the ultra low sulfur diesel (ULSD) program of 40 CFR part 80, subpart I. Specifically, EPA is proposing an amendment to the survey provisions that would likely result in decreasing the number of samples that must be taken, and as such would be expected to result in a decrease in regulatory burdens or costs.

II. Does this action apply to me?

Entities potentially affected by this
action include those involved with the production, distribution and sale of transportation fuels, including gasoline and diesel fuel, or renewable fuels such as ethanol and biodiesel. Regulated categories and entities affected by this
action include:

Category NAICS Codes a SIC Codes bExamples of potentially regulated parties

Industry ............................................................. 324110 2911 Petroleum refiners, importers. Industry ............................................................. 325193 2869 Ethyl alcohol manufacturers. Industry ............................................................. 325199 2869 Other basic organic chemical manufacturers. Industry ............................................................. 424690 5169 Chemical and allied products merchant wholesal ers. Industry ............................................................. 424710 5171 Petroleum bulk stations and terminals. Industry ............................................................. 424720 5172 Petroleum and petroleum products merchant whol esalers. Industry ............................................................. 454319 5989 Other fuel dealers.

a North American Industry Classification System (NAICS).

b Standard Industrial Classification (SIC) system code.

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that EPA is now aware could be potentially regulated by this action. Other types of entities not

listed in the table could also be regulated. To determine whether your entity is regulated by this action, you should carefully examine the applicability criteria of Part 80, subparts I, M and N of Title 40 of the Code of Federal Regulations. If you have any question regarding applicability of this action to a particular entity, consult the person in the preceding **FOR FURTHER**

**INFORMATION CONTACT** section above.

III. What should I consider as I prepare my comments for EPA?

A. Submitting CBI. Do not submit this information to EPA through www.regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI

information in a disk or CD–ROM that you mail to EPA, mark the outside of the

disk or CD–ROM as CBI and then identify electronically within the disk or CD–ROM the specific information that

is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a


### 36044 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

copy of the comment that does not
contain the information claimed as CBI
must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

B. Tips for Preparing Your Comments. When submitting comments, remember

to:

• Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).

• Follow directions—The agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part
or section number.

• Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

• Describe any assumptions and provide any technical information and/ or data that you used.

• If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

• Provide specific examples to illustrate your concerns, and suggest
alternatives.

• Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

• Make sure to submit your comments by the comment period
deadline identified.

C. Docket Copying Costs. You may be charged a reasonable fee for photocopying docket materials, as provided in 40 CFR part 2.

IV. Executive Summary

EPA is proposing amendments to three sets of regulations. First, EPA is proposing to amend certain of the renewable fuels standard (RFS2) program regulations at 40 CFR part 80, Subpart M. Section V of this preamble includes several proposed amendments to the RFS2 regulations of 40 CFR part 80. The final regulations for RFS2 were published in the Federal Register on March 25, 2010 (75 FR 14670). EPA has issued technical corrections in the past.
We have identified several additional changes. Some of the proposed changes in this notice are of a substantive nature;
others are more in the nature of technical corrections, including
corrections of obvious omissions and errors in citation. Among the more
substantive modifications are various proposed changes related to biogas, including changes related to the revised compressed natural gas (CNG)/liquefied natural gas (LNG) pathway and
amendments to various associated registration, recordkeeping, and reporting provisions. These fuels have the potential to add notable volumes of advanced biofuel including cellulosic biofuel to the existing renewable fuel volumes already being produced. Many of these changes are being proposed in
order to facilitate the introduction of
new renewable fuels under the RFS2 program and have come at the suggestion of industry stakeholders.

This preamble includes the addition of new pathways for renewable diesel, and renewable naphtha, and renewable electricity (used in electric vehicles) produced from landfill biogas. It includes a proposal to address ‘‘nameplate capacity’’ issues for certain production facilities that do not claim exemption from the 20% greenhouse gas (GHG) reduction threshold. EPA proposes to address issues related to crop residue and corn kernel fiber. We propose an approach for approving the
cellulosic volumes from cellulosic feedstocks. We include a lifecycle analysis of advanced butanol and discuss the potential to allow for commingling of compliant products at the retail facility level as long as the environmental performance of the fuels
would not be detrimental when compared to existing practices. We specifically discuss this consideration for commingling in regards to the volatility associated with butanol gasoline and ethanol gasoline blends.

We state when and how EPA may cancel a company registration. Of a more minor scope, this preamble includes proposed amendments that would define terminology used for registration and reporting purposes and propose changes to registration and reporting requirements. This preamble also discusses some minor corrections, including adding language to registration, recordkeeping and reporting sections requiring English language translation of documents. We have also proposed to correct obvious
omissions and errors in citation in the existing RFS2 regulation.

Second, EPA is also proposing various changes to the E15 misfueling mitigation regulations (E15 MMR) at 40 CFR part 80, subpart N. The final E15 MMR was published in the Federal Register on July 25, 2011 (76 FR 44406). Among the E15 changes proposed are
technical corrections and amendments to sections dealing with labeling, E15 surveys, product transfer documents, and prohibited acts. We also propose to
amend the definitions in order to address a concern about the rounding of Reid Vapor Pressure (RVP) test results, in response to a question raised by some industry stakeholders. Third, in response to questions received from regulated parties, we propose to amend the ultra low sulfur diesel (ULSD) survey provisions in a manner that will likely reduce the number of samples required. This may
mean a reduction in costs and burdens associated with compliance for regulated parties, with no expected degradation in the highly successful environmental performance of the

program.

V. Renewable Fuel Standard (RFS2) Program Amendments

The RFS2 program was required by the Energy Independence and Security Act of 2007 (EISA 2007), which amended the Clean Air Act (CAA). The final regulations for RFS2 were published in the Federal Register on March 26, 2010 (75 FR 14670). The rule took effect on July 1, 2010. In this notice, we are proposing several new renewable fuel pathway options for advanced biofuels including new cellulosic biofuel pathways. This proposed regulation would also provide
modifications and technical amendments to the existing RFS2

program.
A. Approving Cellulosic Volumes From
Cellulosic Feedstocks

Since the inception of the RFS program, EPA has qualified several fuel pathways that are able to generate cellulosic biofuel RINs (D codes 3 and 7). See 40 CFR 80.1426. Each of the qualified cellulosic feedstocks listed in
section 80.1426 contain other components such as starches, sugars, lipids, and proteins. To date, EPA has not provided detailed information on how other components should be treated. This has led to uncertainty amongst renewable fuel producers about
whether their entire volume of fuel produced from a cellulosic feedstock would be eligible to generate cellulosic RINs. In this rulemaking, EPA proposes
to allow 100% of the volume of renewable fuel produced from certain specified, currently approved cellulosic feedstocks to generate cellulosic (D–3 or D–7) RINs. We also take comment on two alternative approaches for how to treat non-cellulosic components of
cellulosic feedstocks.

For purposes of the RFS program,
cellulosic biofuel is defined as ‘‘renewable fuel derived from any cellulose, hemicellulose, or lignin that
is derived from renewable biomass and that has lifecycle greenhouse gas emissions, as determined by the Administrator, that are at least 60 percent less than the baseline lifecycle greenhouse gas emissions.’’ This


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1 See Memorandum to Docket, ‘‘Cellulosic Content of Various Feedstocks,’’ Docket EPA–HQ–

OAR–2012–0401.

2 Peplinski et al. (1992) Physical, chemical and dry-mill properties of corn of varying density and breakage susceptibility. Cereal Chemistry, 69(4),

397–400.

3 Illinois Soybean Association. Facts and Statistics for the Illinois Soybean Industry. http:// www.ilsoy.org/

_ data/mediaCenter/files/1290.pdf.

4 Values have been adjusted to account for the presence of inorganic ash, which will not produce fuel, as described in the Memorandum to the Docket, ‘‘Cellulosic Content of Various Feedstocks,’’ Docket EPA–HQ–OAR–2012–0401. 5 See, e.g., the Standard Biomass Analytical Procedures developed by the National Renewable Energy Laboratory, http://www.nrel.gov/biomass/ analytical

_ procedures.html.

6 Compositional Analysis of Lignocellulosic Feedstocks. 2. Method Uncertainties, David W. Templeton, Christopher J. Scarlata, Justin B. Sluiter, And Edward J. Wolfrum, J. Agric. Food Chem. 2010,

58, 9054–9062

7 Relative standard deviations (RSD) of 5–8% are reported for cellulose, hemicelluloses and lignin with the other minor components showing 16–22%

RSD.

8 Composition of Herbaceous Biomass Feedstocks, DoKyoung Lee, Vance N. Owens, Arvid Boe, Peter Jeranyama, Plant Science Department, South Dakota State University, SGINC1–07, June 2007.

9 EPA only considered the organic components of the materials when determining cellulosic content. Inorganic materials are not likely to end up in the final fuel product and would not contribute to the fuel heating content in the event that they remained in the final fuel. This methodology is consistent with how RINs are determined. In this section, EPA refers to this as ‘‘adjusted cellulosic.’’ Adjusted

cellulosic content does not consider other material

that is not converted into biofuel such as minerals or other components that would show up as part of the ash remaining after a thermo-chemical conversion process.

10 See Memorandum to Docket, ‘‘Cellulosic Content of Various Feedstocks,’’ Docket EPA–HQ–

OAR–2012–0401. definition was added in Section 211(o)(1)(E) by the Energy Independence and Security Act (EISA) of 2007, where Congress specified four different categories of renewable fuel
and their associated volume requirements. The threshold for reduction in greenhouse gases is set at a higher percentage for cellulosic
biofuel than the reduction for the other categories of renewable fuels. While the volume requirements for cellulosic biofuel start at a relatively low volume, Congress specified large volume
increases over time such that the main growth in the use of renewable fuels
comes from cellulosic biofuels. This reflects a strong Congressional intention to promote the use of cellulosic biofuel and achieve the associated greenhouse gas emissions reductions.

However, no plant matter can ever consist entirely of cellulose, hemicellulose and lignin. Plants require proteins, DNA, carbohydrates and many other types of compounds in order to grow and function. Even feedstocks such as switchgrass, corn stover, and woody materials which are the most commonly cited ‘‘cellulosic’’ feedstocks, contain measurable proportions of other types of organic molecules. However,
these ‘‘cellulosic’’ feedstocks contain much more cellulose, hemicellulose and lignin than do other types of biomass. As shown in Table V.A.–1, most
‘‘cellulosic’’ feedstocks consist of approximately 80–95% cellulose, hemicellulose, or lignin. 1 In contrast, corn kernels contain roughly 75% starch and less than 10% fiber (which includes the cellulosic components, as well as other materials), 2 and soybeans are roughly 60% oil and protein and only
about 15% fiber. 3



### TABLE 

### V.A.–1—A VERAGE 

### C ELLULOSIC



### C OMPOSITION OF 

### D IFFERENT 

### T YPES

OF 

### F EEDSTOCKS 4

Feedstock type Average adjusted cellulosic composition

(percent)

Crop Residue .................. 90 

### T ABLE 

### V.A.–1—A VERAGE 

### C ELLULOSIC 

### C OMPOSITION OF 

### D IFFERENT 

### T YPES

OF 

### F EEDSTOCKS 4

### —Continued

Feedstock type Average adjusted cellulosic composition

(percent)

Switchgrass .................... 85

Miscanthus ...................... 85
Other Grasses ................ 81

Wood and Branches ....... 92

EPA is proposing to allow 100% of the volume of renewable fuel produced from specific cellulosic feedstock
sources found in Table 1 of section 80.1426 to generate D–3 or D–7 RINs (depending on the type of finished fuel). However separated food waste, separated yard waste, and separated
MSW would continue to be treated as before, as discussed below. There are three major justifications for this determination: (1) There can be significant variation in the amount of cellulosic content in any feedstock, which varies within a growing season, across samples, and across sites. Attempting to account for this variability would impose a significant administrative burden on producers and EPA; (2) The amount of the final fuel that is produced from the cellulosic portion of the feedstock is likely to be very high, particularly for fuels produced using a biochemical reaction; (3) EPA has already made previous determinations in which a single RIN value was assigned to the fuel produced since it came primarily from one source even though it was also produced from
incidental amounts of other sources.

This determination is based on the view that the statutory requirement does
not mandate that in all cases the renewable fuel must be produced solely
from the cellulosic material in the
renewable biomass. EPA considers the statutory definition of cellulosic biofuel to be flexible on this point. Given these factors cited above, the Agency believes this interpretation of ‘‘derived from’’ is consistent with the Congressional intent to require increased use of cellulosic biofuels while ensuring that the program can be implemented in a reasonable way. Details on the variability in feedstocks, characteristics of the final fuel, previous precedents, and alternative proposals are included in the following sections.

1. Variability in Cellulosic Content
Estimates of Feedstocks

The cellulosic components of feedstock consist of the major structural components; cellulose; hemicellulose; and lignin. EPA has reviewed research characterizing the different components of feedstocks, mainly focused on how

the materials could be broken down and

converted into fuel. There has been work also in defining standardized procedures and test methods for analyzing the different components of biomass; 5 however, the studies considered all employ slightly different methods. For the purposes of this rule,

EPA considered the amount of the feedstocks that is composed of cellulosic components i.e., how much comes from the cellulose, hemicellulose or lignin, as opposed to any other components of the feedstock. There is significant variation in the data reported on feedstock component compositions.

The variation is due to a number of causes, such as measurement methods, 6 7 variety within a generic feedstock type, and storage time. 8

Although there are many factors that contribute to the large variability in assessments of cellulosic content, all

studies confirm that the feedstocks in

Table 1 of section 80.1426 have an adjusted cellulosic content of at least 70%, with an average content of around
85% cellulosic. 9 A memorandum to the docket provides more information on cellulosic terminology, percent composition of various feedstocks, and the variability of different feedstock
components. 10 From this data, EPA concludes that each of the qualified

feedstocks listed in section 80.1426 are comprised predominantly of cellulose, hemicellulose and lignin.


### 36046 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

11 75 FR 14670, 14706 (March 26, 2010). 12 75 FR at 14706. 2. Characteristics of the Amount of the
Final Fuel Derived From Cellulosic
Materials

Process technology plays a key role in how much of the final fuel product is actually produced from cellulose, hemicellulose, or lignin. There are two basic processes for converting cellulosic
feedstocks into fuel: thermo-chemical
and biochemical. Thermo-chemical processes mainly consist of pyrolysis—
in which cellulosic biomass isdecomposed with temperature to biooils and could be further processed to produce a finished fuel—and gasification—in which cellulosic biomass is decomposed to synthesis gas (‘‘syngas’’) with further catalytic processing to produce a finished fuel product. The biochemical process requires the release of sugars from biomass and the use of microorganismsto convert sugars into fuels. Thermochemical processes can accept a more heterogeneous mix of feedstock and typically convert all of the organic components of the feedstock into finished fuel. The biochemical process generally accepts a more homogeneous mix of feedstocks and typically converts only the cellulosic and hemicellulosic components of the feedstock into the final fuel product. Therefore, regardless of the feedstock used, the final fuel produced from the biochemical process will typically only come from the cellulosic or hemicellulosic portions of feedstock, while the final fuel produced from the thermo-chemical process could
come from cellulosic and non-cellulosic
components.

For thermo-chemical production in which the non-cellulosic components of
the feedstock can contribute to the volume of fuel produced in addition to the cellulosic components, the percent of fuel produced from the non-cellulosic portion can vary due to such factors as feedstock type and the time and location of feedstock harvest. Regardless, we believe that the majority of the fuel produced will be from the cellulosic components. As a practical matter, there is no simple test that can be used to measure the amount of fuel end product that originated from cellulosic materials. For fuel produced via the biochemical process, 100% of the fuel produced is directly the result of conversion of the
cellulosic content.

In selecting a cellulosic process,
whether based on biochemical or thermo-chemical design, the fuel producer is clearly demonstrating that its primary intent is to convert the cellulosic portions of the feedstock. Cellulosic fuel producers invest in expensive process technologies with the intent of converting the cellulosic components of a feedstock into fuel;
conversion of the non-cellulosic components can be achieved much more easily with less of a capital investment. Furthermore, since the fuel produced will be primarily the result of
the direct conversion of cellulosic content of the feedstock and consideringthe relatively small range of noncellulosic portion of feedstock that
could contribute to the volume of fuel produced, EPA believes it is reasonable to consider all the fuel produced when relying on cellulosic conversion processes to be cellulosic biofuel.

3. Previous Precedents

EPA has already considered instances where one RIN value was assigned to the fuel produced since it came primarily from one source even though it was also produced from some amount of other chemical compounds. In the March 2010 RFS rulemaking, EPA
discussed two different situations for fuel produced from separated yard
waste and food waste as the renewable
biomass feedstock. The first involved food waste or yard waste that was kept separate, from generation, from municipal solid waste (MSW). EPA
determined that both of these feedstocks
could be considered renewable biomass. With respect to separated yard waste, EPA determined that the yard waste was expected to be composed almost entirely of woody material or leaves,
and this would be deemed to be cellulosic material and would generate cellulosic biofuel RINs. Separated food waste, however, was likely to becomposed of both cellulosic and noncellulosic materials, and in certain cases would likely be composed primarily of non-cellulosic materials, such as sugars
and starches from the food. EPA determined that separated food waste
would be deemed to be non-cellulosic material, and would generate advanced biofuel RINs and not cellulosic RINs, unless the renewable fuel producer demonstrated the part of the food waste that was cellulosic. This portion would then generate cellulosic RINs. 11

The second situation EPA previously addressed involved separated MSW. EPA determined that separated MSW that met certain regulatory requirements would qualify as a renewable biomass for purposes of producing renewable fuel. EPA recognized that the biogenic portion of this feedstock would be composed of a ‘‘variety of materials, including yard waste (largely cellulosic) and food waste (largely starches and sugar), as well as incidental materials remaining after reasonably practicable separation efforts such as plastic and rubber of fossil origin.’’ Testing could identify the portion of the fuel produced from biogenic materials, and these biogenic materials ‘‘will likely be largely derived from cellulosic materials (yard waste, textiles, paper, and construction materials), and to a much smaller extent starch-based materials (food wastes).’’ However, EPA was not aware of a test method to distinguish between renewable fuel produced from the cellulose and fuel produced from the
starch and under those circumstances determined that it was appropriate to base the assignment of RINs on the ‘‘predominant’’ component of the biogenic material. EPA thus determined that all of the fuel generated from the biogenic portion of separated MSW
would be considered cellulosic
biofuel. 12

Thus, EPA has interpreted the
definition of cellulosic biofuel as including in some cases a renewable fuel that is produced from both the
cellulosic and incremental amounts of non-cellulosic components of the feedstock. EPA has treated the resulting
fuel as all derived from cellulosic
material where the feedstock is composed almost entirely of woody materials and leaves, or where the predominant component of the feedstock is likely cellulosic. The fuel will be largely derived from this
cellulosic material and to a much
smaller extent from non-cellulosic materials. There currently is no ready test to identify the portion of fuel produced from non-cellulosic materials.
EPA has not considered the fuel as
cellulosic in cases where the feedstock was likely to be largely non-cellulosic materials. In all of these cases, EPA has recognized that the fuel would be produced from both the cellulosic and
non-cellulosic materials in the feedstock, and has determined in some cases to consider the fuel entirely
cellulosic biofuel based on the relative
amounts of the cellulosic and noncellulosic materials and, for fuel made from the biogenic portion of separated MSW, on the lack of availability of a test procedure to differentiate how much of
the fuel came from the cellulosic
materials.

These determinations have been based on the view that the statutory requirement that cellulosic biofuel be ‘‘derived from cellulose, hemicellulose, or lignin’’ does not mandate that in all
cases the renewable fuel must be produced solely from the cellulosic
material in the renewable biomass. EPA


### 36047 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

13 By predominant, EPA means the very high percentages for adjusted cellulosic content

discussed in section V.A.1. above for the feedstocks at issue in this proposal. 14 See Bot v. IRS, 353 F.3d 595 (8th Cir. 2003),

Wuebker v. IRS, 205 F.2d 897 (6th Cir. 2000), Milligan v. IRS, 38 F.3d 1094 (9th Cir. 1994). See also Hecla Mining Company v. US, 909 F.2d 1371 (10th Cir. 1990) (DOE’s interpretation of the term ‘‘derived from’’ in the Uranium Mill Tailings Radiation Control Act of 1978 accepted as a reasonable interpretation under Chevron ).

15 In addition, in section B of this proposal, EPA is also proposing to include corn fiber, CNG, LNG, electricity, and renewable diesel and naphtha from landfill biogas as cellulosic pathways for the

reasons discussed therein. considers the statutory definition of cellulosic biofuel to be ambiguous on this point, providing EPA the discretion to reasonably determine under what circumstances a fuel appropriately
could be considered cellulosic biofuel when the fuel is produced from a
feedstock that is a mixture of cellulosic and non-cellulosic materials. To date, EPA has specified certain circumstances
where the entire fuel will be considered
cellulosic biofuel. EPA has taken this
action in cases where the cellulosic material is almost entirely woody materials or leaves, or the fuel is produced from materials that are predominantly composed of cellulosic
materials and to a much smaller extent non-cellulosic materials, with no current test to identify the differing portions. There have been two elements present in these decisions. One involves
a determination that the feedstock is composed almost entirely or largely of
cellulosic materials. EPA has also
considered whether or not there is a test method to identify the actual portion of the fuel produced from cellulosic materials. In this rulemaking EPA is proposing an approach that is consistent with and an outgrowth of the approach taken in the RFS2 rulemaking. EPA is proposing to approve certain fuels as
cellulosic biofuel where the cellulosic components account for a predominant percentage of the biogenic material in
the renewable biomass feedstock used toproduce the fuel, even where the noncellulosic components of the renewable biomass could be reasonably identified
or estimated. 13

EPA is proposing to classify all of the
biofuel as cellulosic in the fuel pathways proposed today, where the cellulosic material makes up a predominant percentage of the organic
material from which the fuel is produced. This approach will avoid the
administrative and technical burden on producers and EPA of trying to determine the specific amounts of
cellulosic and non-cellulosic materials in the specified high-cellulosic feedstock sources, removing potentialdifficult and potentially timeconsuming and expensive impediment to expansion of the cellulosic biofuel industry. The growth in cellulosic biofuel volumes promoted by today’s proposal is expected to result in greater reductions in GHGs, as all of the biofuel qualified as cellulosic would have to
achieve the minimum 60% reduction in GHG emissions specified in the Act. EPA’s application of this approach to the specific fuel pathways and feedstocks discussed in this proposal is
intended to ensure that cellulosic materials are the predominant portion of the biogenic materials used to produce cellulosic biofuel. This approach avoids administrative, technical and cost burdens on EPA and industry and promotes the volume and greenhouse gas objectives of Congress. EPA proposes that this is a reasonable interpretation of the definition of cellulosic biofuels, and invites comment on this approach. 14

EPA is proposing that biofuel made from the following cellulosic feedstocks will be able to generate applicable
cellulosic RINs for 100% of the volumeproduced: crop residue; slash; precommercial thinnings and tree residue; annual cover crops; switchgrass; miscanthus; and energy cane. EPA’s prior treatment of separated yard waste, separated food waste, and separated
MSW is discussed above and is not being changed. On January 5, 2012, EPA proposed to qualify napier grass and
Arundo donax as new feedstocks that would be eligible to generate cellulosic RINs. If those pathways are approved before this rule is final, EPA is proposing to apply the approach
discussed above to these feedstocks as
well. 15 To the extent that additional cellulosic pathways are approved in the future, we would expect to apply this same methodology to those feedstocks as well, but will evaluate them on a case-by-case basis.

EPA requests comments on this proposed approach to allow 100% of the volume of renewable fuel produced from the specified cellulosic feedstock
sources found in Table 1 of section 80.1426 to generate cellulosic RINs. We
also take comment on the cellulosic content values presented for different feedstocks. In addition, we request comments about any analytical methods that may exist to determine what percent of a finished biofuel product may have derived from cellulosic versus non-cellulosic components, and what the costs may be associated with these test methods. We also request comment on the alternative approaches outlined
below.

4. Alternative Approaches

EPA seeks comment on two alternative approaches to assigning cellulosic RINs to fuels produced from
the cellulosic feedstocks discussed above. Separate from the specific pathways addressed in this proposal, EPA also seeks comment on potential approaches for assigning cellulosic RINs for anticipated future pathways for renewable fuels produced from
feedstocks that contain lower cellulosic
content than those discussed in this rulemaking.

Cellulosic Content Threshold Approach

An alternative approach for handling the variability in cellulosic content
would be for EPA to set a minimum
threshold of cellulosic content in the feedstock. Fuels produced from
feedstocks with a cellulosic content
above this minimum threshold would be eligible to generate cellulosic RINs
for 100% of their volume. Thresholds under consideration would range from 70% to 99.9%. A higher percentage would place more emphasis on the feedstock content having a higher actual cellulosic component, whereas the lower percentages would place more emphasis on promoting the volume of fuels that could be categorized as
cellulosic biofuel. EPA invites comment on this approach, and also invites comment on the most appropriate value to use as the threshold. Furthermore,
EPA invites comment on whether individual producers should be responsible for submitting data that their feedstock meets this threshold, or
whether EPA should determine whether
feedstocks meet this threshold based on existing published data.

Since biochemical processes generally only convert the cellulosic, hemicellulosic, or lignin components of the feedstock to fuel, EPA believes under this alternative approach, it may still be appropriate to allow fuel producers using biochemical processes to generate RINs for 100% of the fuel produced from cellulosic feedstocks. EPA requests comments on our assumption that biochemical processes will be specific for the cellulosic components, and we also request
comment on whether to allow 100% of the fuel produced via biochemical processes to generate cellulosic RINs.

Specified Percentage Approach

As noted above, examining the range of feedstock data compiled by EPA, it appears that 85% would be a reasonable approximation for the average adjusted


### 36048 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

16 U.S. Environmental Protection Agency. 2013. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2011, Chapter 8: Waste. EPA 430–R–

13– 001, available at http://www.epa.gov/climatechange/Downloads/ghgemissions/US-GHGInventory-2013-Main-Text.pdf. cellulosic content across a range of assessments of the specific feedstocks that are qualified to produce cellulosic fuel. Under this approach, fuels produced from the cellulosic feedstocks discussed above would be eligible to generate cellulosic RINs for 85% of their volume, and the remaining 15% would be eligible to generate advanced RINs. The specified percentage approach
would reduce administrative burden but
also incentivize renewable fuel production. For this approach, EPA would effectively be treating 85% of the fuel produced from all of these feedstock sources as being derived from cellulosic material. However, EPA would consider allowing a larger percentage of the fuel to qualify for cellulosic RINs if the producer could
submit data that demonstrates a consistently higher cellulosic content in their feedstock. Under this approach, producers could submit a written plan for approval under the registration procedures in 40 CFR 80.1416(b)(vii). The plan would need to detail the cellulosic content of the feedstock, the method used for quantifying the cellulosic and non-cellulosic contents, and the production process used.

Since biochemical processes generally only convert the cellulose, hemicellulose, or lignin components of the feedstock to fuel, EPA believes under this alternative approach it would be appropriate to allow fuel producers using biochemical processes to generate RINs for 100% of the fuel produced from cellulosic feedstocks. EPA requests comments on our assumption that biochemical processes will be specific for the cellulosic components, and we also request comment on whether to allow 100% of the fuel produced via biochemical processes to generate
cellulosic RINs.

Request for Comment on Potential Approaches for Fuels Produced From
Feedstocks With Lower Cellulosic

Content

Finally, EPA anticipates that in the future, we may address biofuels that are produced from feedstocks that contain
lower cellulosic content than those discussed in this rulemaking. Accordingly, we request comment on how EPA should assign RINs to the fuels produced from feedstocks with
lower cellulosic content than those presented in this rulemaking but for which some of the fuel is produced from the cellulosic components. One possible example would be a feedstock that contained in the range of 40–60% cellulose, hemicellulose and lignin, where the fuel was produced using
thermochemical methods such that the same percentage of the fuel may come
from cellulosic materials. EPA invites comments about what approaches could be taken for assigning cellulosic RINs to the biofuel. For example, would one or more of the approaches outlined above be appropriate for assigning RINs to this
fuel? Are there variations on these approaches that EPA should consider?
EPA also invites comments on how to assign cellulosic RINs where processes
other than thermochemical methods are
used.

B. Lifecycle Greenhouse Gas Emissions Analysis for Renewable Electricity, Renewable Diesel and Naphtha Produced from Landfill Biogas

EPA has received several facilityspecific petitions under § 80.1416 to allow renewable electricity, renewable diesel and naphtha produced from landfill biogas to qualify as renewable fuels under the RFS program. Since these new pathways could be more broadly applicable, EPA is proposing to add these pathways to Table 1 to § 80.1426 through this rulemaking process. Based on questions from companies, EPA is also modifying the existing biogas pathway to specify that compressed natural gas (CNG) or liquefied natural gas (LNG) is the fuel and biogas is the feedstock. For this proposal, EPA considered both the cellulosic origin of landfill biogas and the lifecycle GHG impacts of three types of fuel produced from landfill-derived biogas. In the final RFS2 rule, EPA established biogas as a fuel type when derived from landfills, sewage waste treatment plants, and manure digesters. This biogas was classified as an advanced biofuel eligible to generate
D-Code 5 RINs. EPA also established cellulosic diesel and cellulosic naphtha as cellulosic biofuels eligible to generate D-Code 7 and 3 RINs, respectively. The eligible feedstocks for these biofuels include cellulosic components of separated municipal solid waste but did not include biogas from landfills.

Based in part on additional information received through the petition process for EPA approval of renewable electricity and renewable diesel and naphtha produced from landfill biogas, EPA has evaluated these pathways and is proposing to include renewable electricity produced from landfill biogas feedstock in Table 1 to § 80.1426 as a cellulosic fuel type. It is important to note that RINs may only be generated for electricity from biogas that
can be tracked to use in the transportation sector, such as by an electric vehicle. We are also proposing to add renewable diesel produced from landfill biogas via the Fischer-Tropsch process as an approved advanced and/
or biomass-based diesel biofuel and naphtha produced from landfill biogas via the Fischer-Tropsch process as an approved advanced biofuel. If the Fischer-Tropsch facilities produce at least 20% of their electricity demand at the facility from certain allowed sources, we are proposing that the renewable diesel and naphtha produced would further qualify as cellulosic biofuels. We are also proposing to amend the existing biogas pathway to
list renewable CNG/LNG as the fuel types instead of biogas since the biogas
is converted into CNG or LNG before being used as a transportation fuel, as
discussed below. Renewable CNG/LNG produced from biogas from waste treatment plants and waste digesters is
still classified as an advanced biofuel. However, renewable CNG/LNG produced from biogas from landfills now qualifies as a cellulosic pathway. The changes to the renewable CNG/LNG pathway are described in section C.1. ‘‘Changes Applicable to the Revised CNG/LNG pathway from Biogas’’ below.

1. Feedstock Production

When waste materials are buried in a landfill, decomposition of the organic materials consumes all of the oxygen present within roughly one year, leaving the bulk of the material to undergo slower, anaerobic decomposition. This process produces large amounts of methane for several decades, as well as other products, with the gases released as ‘‘biogas.’’ Biogas from landfills typically contains approximately 50% methane and 50% carbon dioxide, with small or trace amounts of other gases. Methane is a potent greenhouse gas (GHG), with a global warming potential of 21 times that of carbon dioxide, and landfills are the third-largest anthropogenic source of methane to the atmosphere in the United States. 16

The methane present in biogas is also a potential energy source that may be purified and compressed to be used directly in CNG or LNG vehicles, combusted to produce electricity or
converted to renewable diesel and naphtha via the Fischer-Tropsch process. The March 2010 RFS final rule concluded that municipal solid waste has no agricultural or land use change
GHG emissions associated with its production. Furthermore, the feedstock for these fuels is landfill biogas, which already appears in Table 1 of


### 36049 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

17 Barlaz, M.A., R.K. Ham, and D.M. Schaefer. 1989. Mass-balance analysis of anaerobically decomposed refuse. Journal of Environmental Engineering, 15(6) 1088–1102.

18 ‘‘Support for Cellulosic Determination for Landfill Biogas and Summary of Lifecycle Analysis Assumptions and Calculations for Biofuels Produced from Landfill Biogas,’’ which has been placed in docket EPA–HQ–2012–0401. 19 Standards of Performance for New Stationary Sources and Guidelines for Control of Existing Sources: Municipal Solid Waste Landfills, 61 FR 9905, 9944 (March 12, 1996).

20 Some facilities also use the biogas directly in boilers and other applications or purify the biogas to create CNG or LNG or inject it directly into natural gas pipelines.

21 Environmental Protection Agency. 2012. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2010, Annex 3: Methodological Descriptions for Additional Source or Sink Categories. http://epa.gov/climatechange/ emissions/usinventoryreport.html. As of December 2012, landfills produced 1913 MW of electricity based on figures from LMOP. This electricity would be almost entirely sold for use on the grid. From http://www.epa.gov/lmop/projects-candidates/

index.html.

22 Environmental Protection Agency, Landfill Methane Outreach Program. 2010. LFG Energy Project Development Handbook: Chapter 2. Landfill Gas Modeling. http://epa.gov/lmop/publicationstools/handbook.html. § 80.1426(f) of the RFS2 regulations and has already been evaluated as part of the RFS2 final rule lifecycle GHG
determinations. Therefore no new renewable feedstock production modeling was required, no GHG
emissions were attributed to feedstock production for any of these renewable fuel pathways, and EPA focused our analysis on the new fuel production

processes.

2. Determination of the Cellulosic Composition of Landfill Biogas

In order for fuels produced from landfill biogas as a feedstock to qualify to generate D-Code 3 or 7 (cellulosic) RINs, the renewable fuel must be
derived from cellulosic materials and must meet a 60% GHG emissions reduction threshold, as described in the following sections. In this section, we discuss our determination that biogas
derived from landfills is derived from cellulose, hemicellulose or lignin.

CAA 211(o) specifies ‘‘separated yard waste or food waste’’ as a type of renewable biomass, and in the March 2010 RFS final rule, EPA stated:

As a result of the intermixing of wastes, the fact that biogas is formed only from the biogenic portion of landfill material, and the fact that landfill material is as a practical matter inaccessible for further separation, EPA believes that no further practical separation is possible for landfill material and biogas should be considered as produced from separated yard and food waste for purposes of EISA.

The March 2010 RFS final rule stated that all landfill-derived biogas was therefore eligible to generate RINs.

An in-depth study of methane production from different chemical components of municipal solid waste found that roughly 90% of the methane generated in landfills derived was from
cellulose and hemicellulose. 17 Accordingly, EPA is proposing to classify renewable fuels produced from landfill biogas as derived from cellulose, hemicellulose or lignin. This
determination is discussed in more
detail in a memo to the docket. 18
Consistent with the discussion in the section above, ‘‘Approving Cellulosic Volumes from Cellulosic Feedstock,’’ we are classifying all of the biofuel volume produced from landfill biogas as cellulosic in origin. Therefore the entire volume of renewable fuels using landfill biogas as a feedstock will be eligible to generate cellulosic RINs (D-Codes 3 and 7) if the fuel also meets the required 60% GHG emissions reductions. EPA
invites comment and data on the cellulosic component of biogas.

3. Fuel Production—General
Considerations

Landfills currently treat their methane in one of several ways. Municipal solid waste (MSW) landfills designed to collect at least 2.5 million megagrams (Mg) and 2.5 million cubic meters of waste and emitting at least 50 Mg of non-methane organic compounds per year are required by EPA regulations to capture and control their biogas. 19 These large, regulated landfills represent a small percentage of all landfills by number but are responsible for the majority of biogas emissions from landfills. To comply with the regulations, these landfills must at a minimum combust their biogas in a flare, converting the methane to carbon dioxide, a less potent GHG. They may also use it to generate electricity from combustion of the methane, in which case, the electricity produced may displace electricity from other sources (such as gas-fired power plants) once it enters the grid. If displacing other sources of electricity that on average have greater GHG emissions, landfills that generate electricity may reduce GHG emissions and are using the ‘‘best practices’’ in the industry. 20 Many smaller, unregulated landfills do not collect their biogas, and this methane is ‘‘vented’’ to the atmosphere. In 2010, 29% of the methane generated at
landfills was flared and 29% of the methane was used to generate electricity. 21 Accounting for the 25% average collection efficiency of biogas collection systems, 22 we estimate that approximately 38% of the methane generated is derived from landfills that flare their gas and another 38% isderived from landfills with gas-toelectricity projects. By mass balance, this suggests that 24% of the landfill methane generated is from landfills that

vent their methane.

In our lifecycle GHG analysis of these

biofuels we need to consider what would have happened to the landfill gas if it was not used to produce transportation fuels. This is the baseline for comparison to calculate the GHG impacts of the fuels in question. Once

we have chosen a baseline for comparison, we propose to treat biogas from all landfills the same regardless of how the biogas is processed at that landfill. This approach is consistent

with how we have treated the implementation of advanced technologies for all biofuels producers.

For the landfill gas-to-electricity pathway we use landfills that flare their biogas as the baseline GHG emissions with which we compare scenarios involving production of electricity from the landfill biogas. We chose this

baseline because these landfills are theones most likely to convert to gas-toenergy projects, since they already have gas collections systems in place. They are also the ones most likely to be the alternative to gas to energy projects since these projects will likely go into larger landfills that are required by regulation to collect and treat the biogas. We expect that small, unregulated landfills would be unlikely to generate enough biogas to justify collecting it for
conversion to renewable fuels. Furthermore, we expect that the capital
costs for such small landfills would preclude them from making such changes. However, if such small landfills were to capture and use their biogas in transportation fuels, this would result in significantly greater
reductions in GHG emissions at each
landfill than assumed for landfills already capturing biogas because of the decrease in methane release, so that biofuels produced from such facilities would easily meet the required
emissions reduction thresholds. Sincelandfills that currently have gas-toenergy projects in place at one pointeither replaced flaring with a gas-toenergy project or installed a gas-toenergy project as an alternative to the minimal compliance route of flaring, we are proposing to treat the emissions from these landfills compared to the same flaring baseline. We show lifecycle results calculated using alternative
baselines and discuss our choice of baseline in more depth in a memo to the


### 36050 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

23 ‘‘Support for Cellulosic Determination for Landfill Biogas and Summary of Lifecycle Analysis Assumptions and Calculations for Biofuels Produced from Landfill Biogas,’’ which has been placed in docket EPA–HQ–2012–0401.

24 Argonne National Laboratory (2011) Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation Model (GREET),
Version 1 2011, http://greet.es.anl.gov/.

25 EPA LMOP Data. 26 ‘‘Support for Cellulosic Determination for Landfill Biogas and Summary of Lifecycle Analysis Assumptions and Calculations for Biofuels Produced from Landfill Biogas,’’ which has been placed in docket EPA–HQ–2012–0401.

27 All values are derived from information provided by the EPA Landfill Methane Outreach Program except the distribution loss number, which is from the U.S. Energy Information Agency. Parasitic losses were calculated by apportioning the gross electricity generation to different types of generators and using parasitic loss values for that particular type of generator.

28 Note that in order to determine the number of RINs generated from a given amount of renewable electricity, section 80.1415(b)(6) of the regulations states that 22.6 kW-hr of electricity shall represent one gallon of renewable fuel with an equivalence

value of 1.0. docket. 23 We invite comment on our baseline assumptions for the electricity pathway. If commenters believe a different baseline is appropriate, EPA specifically invites the submission of data supporting this alternative
baseline.

For gas to liquids projects we also use landfills that flare their biogas as the
baseline GHG emissions with which we compare scenarios involving production of gas to liquids, for the same reasons
outlined above. We further consider that landfills that have already invested the capital to generate electricity are unlikely to stop doing so in order to generate liquid fuels from the biogas, which would require considerable additional capital investments. These facilities are therefore an unlikely baseline for the pathways generating renewable diesel and naphtha. We
invite comment on our baseline assumptions for the liquids pathway
and whether a different baseline would be more appropriate. If commenters believe a different baseline is appropriate, EPA specifically invites the submission of data supporting this
alternative baseline.

4. Fuel Production for Renewable Electricity

Landfills can generate electricity by
combustion of the methane in their biogas. Generating electricity at landfills requires collection of the biogas (using wells, piping and blowers), purification and compression of the biogas and electricity generation. Most landfills use internal combustion engines to generate the electricity, but a significant proportion also use gas or steam turbines or combined cycle systems. Once generated, the electricity enters the electrical grid.

In determining the lifecycle GHG analysis of renewable electricity, we
examined two main factors. The first involved determining by how much emissions at the landfill (from flaring)would change upon installation of a gasto-energy project. For this calculation,
we used emission factors from the
GREET model. 24 The second involved
calculation of the decrease in GHG emissions caused by powering the gasblowers already in use with biogasderived electricity rather than gridelectricity upon installation of a gas-toenergy project. This calculation used
data from the EPA Landfill Methane Outreach Project (LMOP). 25 For each factor, we needed to first calculate how much electricity could be generated and
delivered to the consumer. We used
values from LMOP as estimates of the relative shares of different types of engines or turbines, the electricity generation efficiency, parasitic losses, energy use in collecting and preparing the biogas, and a value from the U.S. Energy Information Agency to estimate
distribution losses. Values used are shown in Table V.B.–1, and the assumptions and calculations are
discussed in more detail in a memo to
the docket. 26



### T ABLE 

### V.B.–1—C ALCULATION OF THE 

### N ET 

### A MOUNT OF 

### E LECTRICITY 

### D ELIVERED TO THE 

### C ONSUMER 

### P RODUCED 

### F ROM A 

### G IVEN 

### A MOUNT OF 

### L ANDFILL 

### B IOGAS 27

Value Units

Electricity generation efficiency .............................................................................................. ............. 11700 Btu/kWh. Gross electricity production ................................................................................................... .............. 0.292 mmBtu/mmBtu biogas. Electricity produced after parasitic losses .................................................................................... ....... 0.267 mmBtu/mmBtu biogas. Energy used for blowers ........................................................................................................ ............. 0.014 mmBtu/mmBtu biogas.

Distribution losses ............................................................................................................ ................... 0.017 mmBtu/mmBtu biogas. Net electricity delivered to consumer .......................................................................................... ........ 0.236 mmBtu/mmBtu biogas.

We used the value for the net city yield from biogas to calculate how GHG
emissions from the landfill itself would change upon conversion from flaring to a gas-to-energy project. We first calculated emissions per mmBtu electricity (Table V.B.–2). However, the
drivetrains of electric vehicles are roughly three times as efficient as those of conventional gasoline-powered vehicles, meaning that any given EV
would be able to travel about three times as far per Btu of input. To account for this difference, we also calculated emissions per mmBtu fuel equivalent. It would take roughly three times the amount of energy from liquid fuel to drive a conventional vehicle a given distance compared to an EV powered by electricity, so the emissions per mmBtu fuel equivalent are approximately one third as large as the emissions per mmBtu electricity. EPA invites comments on the assumptions regarding electricity equivalence. 28


### 36051 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

29 Argonne National Laboratory, ‘‘Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation Model (GREET),’’ Version 1 2011, http://greet.es.anl.gov/.

30 Department of Energy: National EnergyTechnology Laboratory. (2009) NETL: PetroleumBased Fuels Life Cycle Greenhouse Gas Analysis—

2005 Baseline Model. www.netl.doe.gov/energyanalyses. 

### T ABLE 

### V.B.–2—F UEL 

### GHG E MISSIONS FOR THE 

### R ENEWABLE 

### E LECTRICITY 

### P ATHWAY 

### , C ALCULATED PER MM 

### B TU 

### E LECTRICITY AND PER MM 

### B TU 

### F UEL 

### E QUIVALENT 

### C OMPARED TO THE 

### 2005 G ASOLINE 

### B ASELINE

Lifecycle stage GHG emissions

Renewable electricity 2005 Gasoline
baseline U.S. Average grid electricity

kg CO 2 -eq/

mmBtu electricity kg CO 2 -eq/
mmBtu fuel equivalent kg CO 2 -eq/
mmBtu

fuel kg CO 2 -eq/
mmBtu electricity

On-site emissions ............................................................................................ 25 8 .............

........... ........................ Upstream (electricity production for blowers) ..................................................

¥ 13

¥ 4 ........................ ........................

Total Emissions: ....................................................................................... 12 4 98 220 % Change from Gasoline Baseline .................................................................

¥ 87%

¥ 96% ........................ ........................ % Change from Grid Electricity .......................................................................

¥ 94% N/A ........................ ........................

On-site emissions of facilities that generate electricity would be slightly higher than emissions from facilities that flare because reciprocating engines, which are the dominant technology used to generate electricity from biogas, are less efficient at destroying methane than flares. Facilities that originally flared their biogas are assumed to have been purchasing electricity from the grid to power the blowers needed to collect the biogas. Upon conversion to gas-to-energy projects, the facilities would now generate that electricity themselves and thus no longer need to purchase this electricity from the grid.

The calculations above include a credit

in GHG emissions for the avoided purchase of grid electricity (Table V.B.– 2). Unlike traditional transportation fuels, there are no GHG emissions involved in transportation or distribution of renewable electricity (distribution losses are accounted for above), nor are there any tailpipe

emissions from the direct use of the fuel. Therefore, the only emissions considered are those from production of the fuel, as outlined in Table V.B.–2.

The total GHG emissions for conversion from flaring to a gas-to-energy project are 12 kg CO 2 -eq/mmBtu electricity, or 4 kg CO 2 -eq/mmBtu fuel equivalent. Compared with the gasoline baseline GHG emissions of 98 kg CO 2 -eq/mmBtu, these projects would be accompanied by
an 87% reduction in GHG emissions when normalized per mmBtu electricity. Accounting for the improved efficiency

of EV drivetrains increases the GHG
emissions reductions to 96%. Renewable electricity therefore meets the statutory baseline of 60% reductions

in GHG emissions relative to the gasoline baseline and qualifies as a

cellulosic biofuel. EPA invites comments on the assumptions and

calculations of GHG emissions related to renewable electricity from landfill gas. 5. Fuel Production, Transport and Tailpipe Emissions for Renewable Diesel and Naphtha

Renewable diesel and naphtha can be made from landfill biogas by a combination of methane reforming and the Fischer-Tropsch gas-to-liquids (GTL) process. For methane reforming, the biogas must first be purified and then be reformed to create synthesis gas, known as ‘‘syngas,’’ which is composed of a
mixture of carbon monoxide and hydrogen gas. This process may occur via either steam methane reforming or autothermal reforming. The syngas isnext purified and then sent to a FischerTropsch (F–T) system in which the carbon monoxide and hydrogen are combined in the presence of a catalyst to form a range of hydrocarbons. This reaction produces relatively short-chain (naphtha), medium-length (diesel) and long-chain (wax) hydrocarbons. The wax can subsequently be upgraded by hydroprocessing to form naphtha and diesel fuels. The different products are then separated by simple distillation. Heat generated by the reaction can be used to preheat gases in the system and to generate electricity for use in the system or for export. Unconverted syngas from the F–T process and fuel gas from hydroprocessing can also be combusted to generate electricity. GTL plants may have substantially different lifecycle GHG impacts depending on whether they upgrade their waxes and whether they generate electricity as a side product of the reaction. Electricity generation can add to the capital costs of a facility but also greatly reduces the lifecycle GHG emissions of a plant.

In determining the lifecycle GHG impacts of GTL fuels, we considered
two main factors: on-site emissions at the landfill and upstream emissions from electricity production to power the plant. Additionally, a facility thatproduced wax was assigned a coproduct credit for the wax generated. We did the calculations assuming the facility did not generate any electricity
and then calculated what fraction of their electricity demands they would need to generate internally to meet the 60% emissions reduction threshold to qualify for cellulosic RINs.

To determine the lifecycle GHG emissions, we used confidential business information (CBI) data provided in a petition submitted to EPA. This process did not involve upgrading of wax to liquid fuels. For this scenario, we used the supplied information aboutinputs of biogas, outputs of fuel and coproduct and electrical demand for the lifecycle analysis. We first determined how many GHG emissions would be avoided on-site at the landfill by changing from the baseline scenario of flaring to collecting the biogas for conversion to liquid fuels. This
calculation was similar to that described above for renewable electricity and
relied on values from GREET 29 for the emissions factor for flaring. To calculate the emissions from electricity required by the process, we used the emissions factors for average U.S. electrical production used in the RFS2 final rule.

To assign a co-product credit to the fuels, we assumed that the wax produced during the Fischer-Tropsch process would enter a market in which it would displace wax derived from petroleum. To determine the effects of such a displacement on GHG emissions, we used data from a model by the Department of Energy’s National Energy Technology Laboratory (NETL) 30 for the yields and GHG emissions attributable to wax production from petroleum


### 36052 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

31 Kline Group (2011) Global Wax Industry 2010: Market Analysis and Opportunities. http:// www.klinegroup.com/reports/brochures/y635a/ brochure.pdf.

32 ‘‘Support for Cellulosic Determination for Landfill Biogas and Summary of Lifecycle Analysis Assumptions and Calculations for Biofuels Produced from Landfill Biogas,’’ which has been placed in docket EPA–HQ–2012–0401.

33 ‘‘Support for Cellulosic Determination for Landfill Biogas and Summary of Lifecycle Analysis Assumptions and Calculations for Biofuels Produced from Landfill Biogas,’’ which has been placed in docket EPA–HQ–2012–0401.

34 Skone, T.J. and Gerdes, K. (2008) NETL: Development of Baseline Data and Analysis of LifeCycle Greenhouse Gas Emissions of PetroleumBased Fuels. http://www.netl.doe.gov/energyanalyses/pubs/NETL%20LCA%20PetroleumBased%20Fuels%20Nov%202008.pdf.

35 Spath, P.M. and Mann, M.K. (2001) Lifecycle Assessment of Hydrogen Production via Natural Gas Steam Reforming. NREL Technical Report
NREL/TP–570–27637, http://www.nrel.gov/docs/ fy01osti/27637.pdf.

36 Contadini, J.F., Diniz, C.V., Sperling, D., and Moore, R.M. (2000) Hydrogen production plants: emissions and thermal efficiency analysis. ITSDavis. Presented at the Second International Symposium on Technological and Environmental
Topics in Transports, October 26–27, 2000. Milan, Italy. Publication No. UCD–ITS–RR–00–16. feedstock. These values only include production emissions and do not include any emissions from combustion of the wax in, for example, candles

because we do not have information

about what fraction of wax is

combusted. If combustion emissions were included, the co-product credit would be even larger. The global wax market is growing, with demand expected to outpace supply in the next few years. 31 As such, it is unlikely that F–T waxes would in reality displace petroleum-derived waxes. Instead, waxes from both sources are likely to be used in parallel to fulfill demand, and such waxes would replace any substitutes that might be used to fill the gap between supply and demand. The nature of these alternatives is presently unknown to EPA, as are their lifecycle

GHG emissions. As an alternative to assigning a displacement credit, we

could allocate emissions to the waxes along with the renewable diesel andnaphtha products. In this case, the coproduct credit disappears but total fuel production emissions decrease to 30 kg

CO 2 -eq/mm Btu, leading to overall GHG
emissions reductions of 68%. Our use of the displacement approach is conservative compared to the allocation approach, which would have resulted in a larger credit for the wax co-product. We welcome comment regarding what

kinds of materials these new waxes might replace, as well as how to best account for them in our lifecycle GHG analysis.

The results of this analysis are shown
on the ‘‘Fuel Production’’ line of Table V.B.–3, and the assumptions and
calculations are discussed in more
detail in a memo to the docket. 32 Emissions from electricity production used to power the F–T plant is the greatest contributor to the overall fuel production emissions. In addition to emissions from fuel production, there
were minor GHG emissions attributable to fuel transport and tailpipe emissions
of non-CO 2 GHGs (Table V.B.–3). Overall, renewable diesel and naphtha produced from landfill biogas via this process showed 52% and 51% reductions in GHG emissions, respectively, relative to the diesel or gasoline baseline (Table V.B.–3). These fuels would therefore qualify as advanced biofuels but not qualify as cellulosic biofuels. However, if the facility produced roughly 15% of its process electricity internally, using
either waste heat from the reaction or combustion of unreacted chemicals, emissions from purchased electricity would drop enough to reach the 60% GHG reduction threshold, qualifying
these fuels as cellulosic. Because emissions from production of these biofuels (without internal production of electricity) fall so close to the 50% threshold to qualify as advanced biofuels, the assumptions used to make the calculations are especially important and could potentially change the
classification of these fuels. Accordingly, we request comments about the assumptions and values used in the calculations, which are detailed
in a memo to the docket. 33 In particular, we request comment about the estimate
for the on-site GHG emissions at the Fischer-Tropsch facility. Data regarding fugitive emissions from Fischer-Tropsch facilities using methane as a feedstock appear to be limited, however, the
GREET model assumed a loss factor of 1.0000 for the production of F–T diesel, indicating their estimate that no methane is lost during this process.
Several studies mentioned emissions from the steam methane reforming of natural gas to produce hydrogen, and
we assumed emissions would be similar from a Fischer-Tropsch facility using steam methane reforming. Two of these
studies 34 35 found or estimated that
losses of methane from such facilities were negligible, agreeing with the GREET estimate. Accordingly, we
assumed no emissions of methane from F–T facilities. However, another study 36 estimated losses of 0.125% of the natural gas processed. Using this last value, the GHG emissions reductions for renewable diesel and naphtha would decrease to 49% for both fuels, meaning that the biofuels would no longer qualify as advanced fuels. We request
comments and information about our estimates of fugitive emissions from Fischer-Tropsch facilities.



### T ABLE 

### V.B.–3—T OTAL 

### GHG E MISSIONS FOR 

### R ENEWABLE 

### D IESEL AND 

### N APHTHA 

### P RODUCED 

### F ROM 

### L ANDFILL 

### B IOGAS AND 

### C OMPARED TO THE 

### A PPROPRIATE 

### P ETROLEUM 

### B ASELINE

Lifecycle stage GHG emissions (kg CO 2 -eq/mmBtu)

Biofuels Petroleum baselines

Renewable

diesel Naphtha 2005 diesel
baseline 2005 gasoline
baseline

Fuel Production ................................................................................................ 44 44 18 19 Fuel Transport ................................................................................................. 1 2 * * Tailpipe Emissions ........................................................................................... 1 2 79 79

Total Emissions ........................................................................................ 47 48 97 98 % Change from Petroleum Baseline ...............................................................

¥ 52%

¥ 51% ........................ ........................

* Emissions included in fuel production stage.

For this lifecycle analysis, we have only examined a facility that does not upgrade its wax and therefore produces wax as a co-product. It is likely that other facilities may produce F–T renewable diesel and naphtha by a


### 36053 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

37 Swanson, R.M., Satrio, J.A., Brown, R.C., Platon, A., and Hsu, D.D. (2010) Techno-Economic Analysis of Biofuels Production Based on Gasification. NREL Technical Report NREL/TP–
6A20–46587, http://www.nrel.gov/docs/fy11osti/ 46587.pdf.

38 Skone, T.J. and Gerdes, K. (2008) NETL: Development of Baseline Data and Analysis of LifeCycle Greenhouse Gas Emissions of PetroleumBased Fuels. http://www.netl.doe.gov/energyanalyses/pubs/NETL%20LCA%20PetroleumBased%20Fuels%20Nov%202008.pdf.

39 Emissions estimates are conservatively high. process that does involve upgrading waxes to increase the yield of the liquid fuels. Accordingly, we used assessments from other analyses of theoretical F–T 37 or steam methane reforming 38 plants using wax upgrading to estimate the lifecycle GHG emissions from such products. Based on this analysis (not shown), these facilities should theoretically have GHG emissions that
are as low as or lower than those calculated above. For this reason, we believe that the lifecycle analysis shown above is a reasonable, if slightly
conservative, 39 representation of expected landfill biogas-to-liquids projects. We accordingly classify all renewable diesel and naphtha produced via the F–T process from landfill biogas
as advanced biofuel.

The lifecycle analysis for these fuels
considered that the renewable dieselproduct produced from the FischerTropsch process would be used as
conventional diesel fuel. EPA does not
have sufficient information to evaluate the lifecycle greenhouse gas emissions for jet fuel or heating oil produced fromlandfill biogas using the FischerTropsch process. Because the lifecycle analysis results for this process fell so
close to the threshold for advanced biofuels, in this pathway, we are proposing to only allow renewable
diesel for use as conventional diesel fuel to qualify under the RFS program. We invite comments and supporting data about whether we should also allow jet fuel and heating oil produced from landfill biogas to qualify.

Our lifecycle analysis showed that if the evaluated facility meets approximately 15% of its electricity demand with internally produced electricity from eligible sources, it will meet the 60% threshold to qualify as
cellulosic. Because other facilities are likely to be somewhat different, and because this analysis relies on a number of assumptions, we are using a slightly
more conservative threshold of 20% of electrical generation. Accordingly, we are proposing that if a biogas-to-liquids facility produces at least 20 percent of its process electricity internally as discussed above, these biofuels will qualify as cellulosic. These requirements are discussed in greater length in Section C.4. ‘‘ Changes Applicable to Process ElectricityProduction Requirement for the BiogasDerived Cellulosic Diesel and Naphtha Pathways’’ below. Facilities that can supply data that demonstrate they meet
the 60% GHG emissions reduction threshold without production of 20% electricity are welcome to petition the EPA individually under section

80.1416.

EPA invites comment and data on the
GHG emissions associated with landfill biogas renewable fuel pathways. We
also welcome comment on the methodology and assumptions underlying this analysis. We do not at this point have sufficient information to evaluate the lifecycle greenhouse gas emissions for production of renewable electricity or renewable diesel and naphtha from biogas from waste treatment plants or waste digesters. Accordingly, we invite comments providing information about these potential pathways.

C. Proposed Regulatory Amendments Related to Biogas

1. Changes Applicable to the Revised CNG/LNG Pathway From Biogas

In the existing RFS2 regulations, an approved fuel pathway in Table 1 to section 80.1426(f)(1) allows biogas from landfill gas, manure digesters or sewage treatment plants to qualify as an advanced biofuel and generate a D code of 5 for the biofuel produced under the RFS2 program. Since the promulgation of the final rule, we have received many requests about what fuel qualifies under this pathway, including: (1) The renewable fuel type that is qualified under the term ‘‘biogas,’’ (2) what are the eligible sources of biogas, (3) what company along the production chain of biogas from generation to end user is considered the producer that qualifies to register under this pathway and generate RINs, and (4) what are the contract requirements to track the biogas from generation to end use.

In response, EPA is proposing in this rulemaking to amend the existing biogas pathway in Table 1 to section 80.1426(f) by changing the renewable fuel type in the pathway from ‘‘biogas’’ to ‘‘renewable compressed natural gas (renewable CNG) and renewable liquefied natural gas (renewable LNG)’’ and to replace the feedstock type of ‘‘landfills, manure digesters or sewage waste treatment plants’’ with ‘‘biogas from landfills, waste treatment plants or waste digesters.’’ We are also proposing to revise the definition of biogas and
add definitions for CNG and LNG to section 1401 to provide additional clarity. In addition, we are proposing to revise and add new contracting, registration, reporting and recordkeeping requirements along the production chain. Furthermore, we are specifying which company along the production chain is considered the ‘‘producer’’ and eligible to generate RINs under the RFS2 program. These proposed compliance requirements are applicable to this revised CNG/LNG pathway, and all the newly proposed pathways for renewable fuels produced from landfill gas in this rulemaking. The details of the proposed new requirements for contract, registration, reporting and recordkeeping are
discussed below in the section titled‘‘Changes Applicable to All BiogasRelated Pathways for RIN Generation.’’

The existing biogas pathway in Table 1 to section 80.1426(f) refers to ‘‘biogas’’ as the renewable fuel type and ‘‘landfills, manure digesters and sewage waste treatment plants’’ as the feedstock. Companies have raised questions whether the term ‘‘biogas’’ in this pathway could refer to the unprocessed or raw gas from the landfills, manure digesters or sewage treatment plants, or processed ‘‘biogas’’ that has been upgraded and could be used directly for transportation fuel or as an ingredient in the production of transportation fuel or as an energy source used in the production of transportation fuel, or other fuel types that can be produced from the raw biogas either through a physical or chemical process (such as CNG, LNG, renewable electricity, renewable diesel or naphtha). The companies further inquire if the various forms of biogas discussed above could qualify under this pathway, and therefore be eligible for RIN generation under the RFS2

program.

We agree that the term ‘‘biogas’’ in this pathway is used broadly in the industry to refer to various raw and processed forms of the biogas from various sources. However, under the existing requirements in sections 80.1426(f)(10) and (11), only biogas that is used for transportation fuel can qualify as renewable fuel for RIN generation under the RFS2 program. We believe the stipulations in sections 80.1426(f)(10) and (11) are clear that biogas used for non-transportation fuel purposes, such as an energy source for providing process heat would not qualify under this biogas pathway for RIN generation. Similarly, raw biogas would also not qualify under this pathway since unprocessed biogas cannot be used as transportation fuel. With regard to the fuel types that can be


### 36054 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

40 For this rulemaking, we conducted lifecycle analysis for renewable electricity, renewable diesel, naphtha produced from landfill gas, and are proposing new fuel pathways to Table 1 to Section 80.1426 for these fuel types. Please see section titled, ‘‘Lifecycle Greenhouse Gas Emissions Analysis for Renewable Electricity, Renewable Diesel and Naphtha Produced from Landfill Biogas’’ for the lifecycle analysis discussion in this rulemaking. 41 EPA notes that currently, producers of renewable electricity that may qualify as a renewable fuel cannot register and generate RINs because there is no approved pathway in Table 1 for renewable electricity from any approved feedstock. But in the event that an approved pathway for renewable electricity is added to Table 1, EPA notes there are existing requirements such as tracking and distribution requirements recordkeeping and reporting that are applicable for the registration of renewable electricity for RIN generation. 42 Distribution and registration requirements for biogas used as process heat, and not for RIN generation as renewable fuel is detailed in Section 1426(f)(12) and 1450(b)(1)(iv), respectively. produced from the raw biogas such as CNG, LNG, renewable electricity, renewable diesel, or naphtha, the pathway determinations for the final
rule did not account for all factors relevant for the additional fuel types such as renewable electricity, renewable diesel or naphtha produced from the raw biogas through a chemical process. Therefore, renewable electricity, renewable diesel and naphtha produced from biogas do not qualify under the existing pathway. 40 For CNG and LNG, we concluded that these types of fuels were close enough to the physical molecules of biogas since these fuels only go through a physical process in which the biogas is compressed or liquefied, and that because CNG and LNG can be used directly for transportation purposes, thus meeting the provisions in sections 80.1426(f)(10) and (11), we concluded that CNG and LNG could qualify under the existing pathway. For the reasons discussed above, we are proposing to amend the existing biogas pathway to clearly state that only CNG and LNG produced from biogas from landfills, waste treatment plants and waste digesters, and used as transportation fuel, qualify as a
cellulosic or advanced biofuel for RIN generation under the RFS2 program.

The current regulations provide apathway for biogas produced from a biodigester which uses manure. We are also proposing to expand the type of materials that may be used to produce CNG/LNG in a digester to include animal wastes, biogenic waste oils/fats/ greases, separated food and yard wastes, and crop residues. These feedstock sources are already eligible in the existing rules pathways and thereforeshould reasonably be added to the biodigester pathway. We are doing so in response to a petition request to generate RINs from biogas which is produced from bio-feedstock sources in addition to the already allowed manure, either individually or in combination with manure in a bio-digester. As with other LCA pathways using these materials, EPA is proposing to assume
these waste materials do not have
emissions associated with feedstock production, and therefore qualify as
cellulosic or advanced renewable fuels when used to produce CNG/LNG. To provide improvement for this revised pathway, we are proposing to revise the definition of biogas and add
new definitions for renewable CNG and
renewable LNG to section 80.1401 to
read as follows:

We are proposing Biogas would mean a mixture of hydrocarbons that is a gas at 60 degrees Fahrenheit and 1 atmosphere of pressure that is produced through the conversion of organic matter. We are also proposing that Biogas would include landfill gas, gas from waste digesters, and gas from waste treatment plants. Waste digesters would include digesters processing animal wastes, biogenic waste oils/fats/greases, separated food and yard wastes, and crop residues. Waste treatment plants would include wastewater treatment plants and publicly owned treatment works.

We are proposing that Renewable compressed natural gas (‘‘renewable CNG’’) would mean biogas that is processed to the standards of pipeline natural gas as defined in 40 CFR 72.2 and that is compressed to pressures up to 3600 psi. We are also proposing that only renewable CNG that qualifies as renewable fuel and is used for transportation fuel can generate RINs.

We are proposing that Renewable liquefied natural gas (‘‘renewable LNG’’) would mean biogas that is processed to the standards of pipeline natural gas as defined in 40 CFR 72.2 and that goes through the process of liquefaction in which the biogas is cooled below its boiling point and weighs less than half the weight of water so it will float if spilled on water. We are also proposing that only renewable LNG that qualifies as renewable fuel and is used for transportation fuel can generate RINs.

2. New Registration (Contract Requirements) for Renewable Electricity and Fuels Produced From Biogas That Qualify as Renewable Fuel and That Are Registered for RIN Generation

The regulations as currently written allow a producer of biogas or renewable electricity 41 that qualifies as renewable fuel and has an approved fuel pathway in Table 1 of section 1426(f)(1) to register and generate RINs for the volume it produces under the RFS2 program. We modified the existing regulations to state that biogas is the feedstock used to produce renewable fuel, as described above. The revised regulations in sections 1426(f)(10) and (11) detail the requirements for distribution and tracking for renewable electricity and biogas used to produce fuel that qualifies as renewable fuel that
can either be distributed in a dedicated pipeline or transmission line or distributed in a shared pipeline or power grid system. The purpose of these requirements is to provide EPA
assurance and verification that once the biogas or renewable electricity is put
into a dedicated or shared distribution system that in fact an equivalent volume of biogas or renewable electricity will be used for transportation fuel, and for no other purposes. The requirements are
also meant to address concerns of double counting of the biogas or renewable electricity, especially in situations that the biogas or renewable electricity is placed in or loaded onto shared distribution systems that contain gas or electricity from non-renewable
biomass sources. EPA intended to require producers to submit the information and contract requirements in sections 1426(f)(10) and (11) as part of the registration requirements for renewable electricity and renewable fuels produced from biogas that are used for transportation 42 fuel, but had not done so in the prior rulemakings. Therefore, as a natural outgrowth of the regulations for implementation and compliance purposes, we are proposing in this rulemaking to incorporate the requirements in sections 1426(f)(10) and (11) as part of registration requirements for producers of renewable electricity and renewable fuels produced from biogas that qualify as renewable fuel under the regulations under section 1450(b)(1)(iv)(C).

Section 1426(f)(11)(ii) of the regulations requires that, in order for renewable fuel made from biogas
withdrawn from a commercial distribution system for use as a transportation fuel to generate RINs, the biogas introduced into the system must
have been added to a common carrier pipeline. We propose to add a similar provision to section 1426(f)(11)(i) for renewable electricity, requiring a company to load the renewable electricity to a power grid shared by the second company that withdraws the electricity, such that the two companies must be physically connected to the same grid or located within the same

area.

EPA is requesting comments about whether the other existing requirements in sections 1426(f)(10) and (11) for renewable electricity and renewable fuels from biogas used for transportation


### 36055 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

43 Refer to preamble discussion for these various biogas pathways in section titled, ‘‘Lifecycle Greenhouse Gas Emissions Analysis for Renewable Electricity, Renewable Diesel and Naphtha Produced from Landfill Biogas.’’ fuel are sufficient to provide assurance and verification for the following situations. First, do the proposed requirements provide assurance and
verification that the same amount of biogas or renewable electricity is in fact
delivered to the renewable fuel producer or end user who will actually use the biogas or renewable electricity for transportation purposes? If the proposed requirements are not sufficient, what alternative requirements should be considered? Second, are the proposed requirements sufficient to ensure that double counting does not occur, e.g., to ensure that the biogas or renewable electricity once it is loaded into a shared pipeline or power grid is not sold to multiple clients or for purposes other than for transportation purposes? Similarly, if the proposed requirements are not sufficient, what alternative requirements could be considered to ensure double counting
does not occur?

3. Changes Applicable to All Biogas Related Pathways for RIN Generation

As discussed above, we have had many inquiries related to the ‘‘biogas’’ pathway, specifically regarding contract requirements for tracking the biogas through the distribution system and regarding what company along the production chain is considered the ‘‘producer’’ and eligible to generate RINs under the RFS2 program. In this rulemaking, we are proposing to revise and add new requirements for contracts to track the biogas as it moves into and out of the distribution system, as well as provisions on registration, reporting and recordkeeping. These proposed amended requirements are applicable to all pathways related to biogas that are eligible for RIN generation that are existing or proposed in this rulemaking.

In response to the question of what company is considered the producer of renewable fuel and eligible to generate RINs under the RFS program, we propose to clarify who is the ‘‘producer’’
for renewable CNG/LNG and renewable electricity. We propose that the ‘‘producer’’ of renewable CNG/LNG is the company that compresses or liquefies the gas and distributes the CNG/LNG for transportation fuel, and for renewable electricity, the ‘‘producer’’ is the company that distributes the electricity for use as transportation fuel. There are two registration situations that this clarification will address: (1) The owner/operator of a landfill collects biogas and processes it to a qualifying renewable CNG/LNG/electricity for transportation use and distributes on site and (2) the owner/operator of a landfill collects biogas and it is processed into a qualifying renewable CNG/LNG/electricity for transportation use by a contracted third party and distributed by this third party. The party that converts the biogas to renewable CNG/LNG/electricity and distributes for use as a transportation fuel is responsible for RIN generation. Under the first scenario, the registration package, including the engineering review, would cover the biogas source (landfill, waste digester, etc.) as well as the distribution that is occurring on site. Under the the second scenario, the registration package, including engineering review, would cover the biogas source (landfill, waste digester, etc.) the pipeline (common carrier or dedicated) and each distribution facility. By requiring the party that is responsible for conversion and distribution to register as the RIN generator, we can prevent RINs from being generated for a batch or renewable CNG/LNG/electricity prior to use as a qualifying transportation fuel. For any of the fuels, the company designated as the ‘‘producer’’ will be required to register under the RFS2 program. We seek comment on our proposed definition of producer regarding
renewable CNG/LNG and renewable electricity.

We acknowledge that the process train from raw biogas to the final transportation fuel is complex, and may include many companies and processing steps from the point when the raw biogas is withdrawn from its source (such as landfills, waste digesters, waste treatment plants), processed and converted into biofuel
and distributed to consumers. Alternatively, the fuel may be cleaned at a biogas facility to pipeline quality specifications for distribution, and then
withdrawn from the commercial pipeline to be processed further at another production facility into
renewable CNG/LNG or renewable electricity. Due to the complexity of the many entities potentially involved in this process train, we are proposing that the company deemed as the ‘‘producer’’ under the qualifications described above also be responsible for providing all the required information and supporting documentation in their registration, reporting and recordkeeping to track and verify the information from point of extraction of the raw biogas from its original source, and all the processing steps and distribution in between, to the last step where the actual fuel is used for transportation purposes. In the engineering review report required for registration, the producer must include documentation that the professional engineer performed site visits at each production facility, including the biogas facility and the facility that produces the final fuel (if these are not the same facility). The producer must also review and verify all related supporting documents such as design documents, calculations, regulatory permits, and
contracts between facilities that track the raw biogas from the point of withdrawal from its source, the various injection/withdraw points into the distribution pipeline, the various production facilities, and the final step for use as transportation fuel. We believe these requirements will ensure that producers will perform due diligence that the fuel for which they generate RINs under the RFS2 program are in compliance with all the regulatory requirements for renewable fuel. The proposed registration, reporting and recordkeeping requirements are in sections 80.1426(f), 80.1450, 80.1451 and 80.1454 in this rulemaking. Additional changes regarding the contract requirements for distribution of the biogas in shared commercial pipelines are discussed below, and can be located in sections 80.1426(f)(10), (11), and (13).

4. Changes Applicable To Process Electricity Production Requirement for the Biogas-Derived Cellulosic Diesel and Naphtha Pathways

In this proposed rulemaking, EPA conducted greenhouse gas (GHG) lifecycle analysis for various renewable fuels produced from landfill gas as new
or revised advanced and cellulosic biofuel pathways that will be added to Table 1 to section 80.1426(f). 43 For some of these pathways, we are proposing to add various registration, recordkeeping and reporting requirements to the regulations to ensure that the facilities using these pathways meet the parameters stipulated in the lifecycle analysis. The additional registration, recordkeeping and reporting requirements are discussed in detail
below.

For the proposed fuel pathways for cellulosic diesel and cellulosic naphtha produced from landfill gas, we are proposing to require the renewable fuel production facility to produce a minimum of 20 percent of the process electricity used at the facility on a calendar year basis, from raw landfill gas, waste heat from the production process, unconverted syngas from the


### 36056 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

44 See specifically § 80.1401 Definitions. F–T process, fuel gas from the hydroprocessing or combined heat and power (CHP) units that use non-fossil fuel based gas or other renewable sources. We propose that if less than 20 percent (on an annual average basis) of process energy comes from one of these alternative sources, then no cellulosic RINs can be generated for that year.

For the renewable fuel production facility applying to use the proposed fuel pathway with the requirement to internally produce at least 20 percent of the total amount of process electricity used at its facility, we are proposing the facility submit to EPA the information
described below to demonstrate compliance with this requirement. For registration purposes, we are proposing that producers submit the following additional information in the process fuel supply plan that is currently required as part of the registration process (estimated summaries are to be reported on an annual/calendar year basis): —Estimated amount of total electricity

used at the facility —Estimated amount of total electricity

purchased for the facility
—Estimated amount of total renewable

electricity produced on-site, including the source of the energy and the equipment and/or process used to generate the renewable electricity —Calculation that verifies the facility

meets the specified 20 percent minimum electricity production requirement based on the reported total amount of electricity used at the facility, total amount of electricity purchased, and total amount of renewable electricity produced
For reporting purposes, we are proposing for producers to submit the following additional information as part of their existing quarterly and annual reporting obligations (reported amounts should be provided as monthly summaries on an annual/calendar year basis, and must be obtained from a utility meter that is continuously measured): —Actual total amount of electricity used

at the facility —Actual total amount of electricity

purchased for the facility
—Actual amount of total renewable

electricity produced on-site, including source of energy and the equipment or process used to generate the renewable electricity —Calculation that verifies the facility

meets the specified 20 percent minimum electricity production requirement based on the reported total amount of electricity used at the facility, total amount of fossil-fuel based electricity purchased, and total amount of renewable electricity produced

For recordkeeping purposes, we are proposing that producers retain the additional information, calculations and supporting documents required for registration and reporting as discussed above. The regulatory requirements for registration, reporting and recordkeeping as discussed in this proposed rulemaking can be located in the following applicable regulatory sections 80.1450, 80.1451 and 80.1454, respectively.

D. Amendment to the Definition of ‘‘Crop Residue’’ and Definition of a Pathway for Corn Kernel Fiber

We propose to amend the definition of ‘‘crop residue’’ so that this category includes only feedstock sources that are determined by EPA would not result in a significant increase in direct or indirect GHG emissions. ‘‘Crop residue’’

is the biomass left over from the harvesting or processing of planted crops from existing agricultural land and any biomass removed from existing agricultural land that facilitates crop management (including biomass

removed from such lands in relation to invasive species control or fire management), whether or not the biomass includes any portion of a crop or crop plant. Biomass is considered crop residue only if the use of that biomass for the production of renewable fuel has no significant impact on demand for the feedstock crop, products produced from that feedstock crop, and all substitutes for the crop and its products including the residue, nor any other impact that would result in a significant increase in direct or indirect

GHG emissions.

EPA is amending the definition of ‘‘crop residue’’ to confirm the meaning

of the term ‘‘left over’’ in the text of this definition. The phrase ‘‘left over’’ in our original definition of ‘‘crop residue’’ is

meant to indicate that the use of a

residue as a biofuel feedstock should not increase demand for the crop it is derived from, should not induce further crop production, and should not result

in additional direct or indirect GHG

emissions. The residue must come from crop production or processing for some other primary purpose (e.g., refined sugar, corn starch ethanol), such that the crop residue is not the reason the crop was planted. The residue must also come from existing agricultural land,

the exact definition of which is laid out in our current regulations that define ‘‘renewable biomass’’. 44 Further, the residue should generally not have a significant market in its own right, to the extent that removing it from that market to produce biofuels instead will
result in increased GHG emissions. EPA is seeking comments on this revision to the crop residue definition. EPA invites all comments regarding this revision, but specifically invites comments regarding the potential for the revision to create a significant shift in direct or indirect GHG emissions and what ought to constitute a ‘‘significant’’ increase or
decrease in GHG emissions in the
context of this definition.

EPA has previously identified several potential feedstocks that we believe meet the criteria of crop residue. Table IV.D.–1 lists feedstocks which may fit the definition of crop residue. Most of
these feedstocks were discussed in the final RFS2 rulemaking. For example, EPA analyzed the agricultural sector GHG emissions of using corn stover for biofuels in the final RFS2, and found that fuel produced from this feedstock
met the 60% GHG reduction threshold
for cellulosic biofuels. Since the direct and indirect impacts of citrus residue, rice straw, and wheat straw removal were expected to be similar to corn stover, EPA also applied the land use change impacts associated with corn stover to citrus residue, rice straw, and wheat straw. Based on that analysis, EPA found that fuels produced from citrus residues, rice straw, and wheat
straw also met the 60% reduction
threshold. EPA further determined that fuels produced from materials left over after the processing of a crop into a useable resource had land use impacts sufficiently similar to agricultural
residues to also meet the 60% threshold. EPA specifically cited bagasse left over from sugarcane processing as an example of this type of residue. EPA is seeking comment on whether the
feedstocks on this list should be considered crop residues, if these
feedstocks would have similar direct and indirect impacts as corn stover, and
whether additional feedstocks should
also be included in this list.



### TABLE 

### IV.D.–1—F EEDSTOCKS 

### T HAT



### M AY 

### Q UALIFY AS 

### C ROP 

### R ESIDUE

Feedstock D Code

Sugarcane Bagasse. D–3 Cellulosic biofuel.

Corn Kernel Fiber

(excluding the

corn starch component). D–3 Cellulosic biofuel.


### 36057 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

45 See specifically § 80.1426(f)(1).

46 See specifically § 80.1426(f)(3). 47 See, e.g., Kim, E.J., C.M. Parsons, R. Srinivasan, and V. Singh. 2010. Nutritional composition, nitrogen-corrected true metabolizable energy, and amino acid digestibilities of new corn distillers dried grains with solubles produced by new fractionation processes. Poultry Science 89, p. 44, available on the docket for this rulemaking. See also

additional studies cited within Kim et al 2010.

48 See Shurson, G.C. 2006. The Value of HighProtein Distillers Coproducts in Swine Feeds. Distillers Grains Quarterly, First Quarter, p. 22, available on the docket for this rulemaking. 

### TABLE 

### IV.D.–1—F EEDSTOCKS 

### T HAT 

### M AY 

### Q UALIFY AS 

### C ROP 

### R ESIDUE 

### — Continued

Feedstock D Code

Corn Stover ........... D–3 Cellulosic biofuel.
Citrus Residue ...... D–3 Cellulosic biofuel.
Rice Straw ............. D–3 Cellulosic biofuel.
Wheat Straw ......... D–3 Cellulosic biofuel.

While EPA believes that, under current conditions, generation of RINs for batches of renewable fuel produced
from the feedstocks listed in Table
IV.D.–1 above would not result in a significant increase in direct or indirect GHG emissions, we also acknowledge the potential for this assessment to change in the future based on unforeseeable factors. For example, some new use for one of these products could be developed which would change our assessment that the feedstock has no significant market in its own right. Further, it is possible that, at some point in the future, large enough quantities of renewable fuel could be produced from one of these fuels to create demand pull for the feedstock, potentially altering the behavior of producers of the residue and leading to significant increases in direct or indirect GHG emissions. To our knowledge, this is not currently the case for any of the feedstocks listed above. However, EPA will continue to monitor RIN generation from fuel produced using each of these feedstocks and the general use of these feedstocks in the marketplace. We further reserve the right to revisit the status of any feedstock that we have determined qualifies under the crop residue pathway. Should any feedstock qualifying as a crop residue be used to generate significant quantities of ethanol in the future, or should a significant market emerge for the product such that there is demand pull for it in excess of the demand pull for the planted crop from which it is a derived byproduct,
we will revisit whether that feedstock should remain under the crop residue pathway or be subjected to further scrutiny. EPA is seeking comment on this approach and on the potential for significant demand pull to emerge for the feedstocks we are proposing to consider as crop residues.

We also propose that this definition of ‘‘crop residue’’ includes corn kernel
fiber. Corn kernel fiber is not specifically mentioned as a type of crop
residue under the Renewable Fuel Standard (RFS2) regulations. Per the RFS2 definition of ‘‘crop residue’’, EPA
must evaluate whether corn kernel fiber is ‘‘left over from the harvesting or processing of planted crops’’ and that it has no ‘‘impact that would result in a significant increase in direct or indirect
GHG emissions’’ for this feedstock to qualify as a residue.

One additional consideration in the classification of corn kernel as a crop
residue is the fact that some amount of corn starch might still adhere to the corn kernel after separation. The percentage of contamination will vary, but as much as 20% of the final fuel could be derived from corn starch. By definition, corn starch ethanol can only qualify as a renewable fuel, not as an advanced fuel. However, our current regulations state that ‘‘producers and importers may disregard any incidental,
de minimis feedstock contaminants that are impractical to remove and are related to customary feedstock production and transport’’. 45 Therefore, EPA is seeking comment on whether the definition of crop residue should be amended to explicitly exclude the corn starch component.

EPA also invites comment on how
RINs should be allocated for ethanol
derived from corn fiber. EPA has existing regulations that define procedures for generating RINs from batches of fuel that contain multiple feedstocks, including feedstocks that generate RINs of different D codes. 46 We believe that these regulations provide sufficient guidance to producers and importers regarding how to assign RINs
to batches of renewable fuel that can be described by two or more pathways (e.g., corn starch ethanol and corn kernel fiber ethanol). However, we invite comment on the sufficiency of these regulations with regards to the assignment of RINs to coprocessed
batches of corn starch ethanol and corn kernel fiber ethanol, including whether producers have the technological capability to adequately demonstrate volume produced under each pathway.

To determine whether the use of corn kernel fiber to produce ethanol would
lead to increased direct or indirect GHG emissions, EPA conducted a detailed assessment of the two major potential
sources of emissions from this feedstock, namely effects on feed
markets and effects on demand for corn. The proposed method of acquiring corn
kernel fiber is to extract it from matter
that is otherwise converted to dried distillers grains (DDG) during the dry mill corn ethanol process. Consequently, this analysis relied significantly on the assessment of corn
starch ethanol-derived DDG that was conducted for the RFS2 final rule, adjusting the analysis to account for the extraction of fiber from this product. The analysis also drew substantially on
the available scientific literature on low fiber DDG (LF–DDG), as well as the expertise of the U.S. Department of Agriculture. Potential producers also submitted important data to EPA that helped determine whether producing
cellulosic ethanol from corn kernel fiber would result in a significant increase in
GHG emissions. This included a full nutritional analysis of LF–DDG for swine, poultry, and cattle.

EPA found that extracting the fiber from corn matter used to produce
standard DDG would not have a significant effect on feed markets.
Processors who extract the fiber from corn produce a feed product known as LF–DDG, as opposed to standard DDG
which retains the fiber. The scientific
literature on LF–DDG animal nutrition has found that this product has at least equal, and perhaps even slightly superior, nutritional value for swine and poultry compared to standard DDG. 47 This means that, even though the physical volume of the DDG produced by ethanol plants using corn kernel fiber extraction technology will be somewhat smaller, its nutritional content for swine and poultry will be equivalent to or greater than their output without fiber

extraction.

Conversely, LF–DDF is an inferior feed for cattle compared to standard DDG, since ruminants benefit from ingesting corn fiber in DDG. 48 Therefore, EPA expects swine and poultry producers to absorb the supply of LF– DDG, while the cattle and dairy industry
will continue to consume standard DDG. With this dynamic in place, fiber
extraction from DDG should not significantly affect feed markets, since
there will be no reduction in the overall supply of DDG in terms of nutritional content nor will there be any impact on aggregate demand for other animal feed

sources.

If enough corn ethanol producers adopt fiber extraction technology, LF– DDG could saturate swine and poultry demand and spill over into dairy and
cattle feed markets. If a situation arises where LF–DDG begin to replace standard DDG in cattle markets, this
could lead to an increase in feed


### 36058 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

demand, most likely in the form of increased demand for fiber supplements in dairy and cattle feed. This could
cause an increase in GHG emissions. If swine and poultry demand for LF–DDG becomes saturated, demand for standard DDG in the cattle and dairy industries
should create sufficient market incentives for the remaining corn starch ethanol producers to decide against adopting corn fiber ethanol production. EPA believes this will prevent a
situation where there is insufficient supply of standard DDG in the cattle and dairy industries. However, as noted above, EPA reserves the right to
reexamine corn kernel fiber as a
feedstock in the future.

EPA’s analysis indicates that producing cellulosic ethanol from corn kernel fiber is unlikely to increase
overall demand for corn. In order to meet the definition of a crop residue,
the source of corn kernel fiber must be a crop processing facility (e.g., a corn starch ethanol plant). A corn kernel fiber ethanol producer cannot purchase whole corn specifically for the generation of corn fiber ethanol and still qualify their feedstock as crop residue. EPA is seeking comment on this analysis.

Based on our assessment, EPA proposes that corn kernel fiber would meet the definition of a crop residue, and qualify for Cellulosic Ethanol and Advanced Biofuel (D-codes 3 & 5, respectively) RINs under the RFS2. EPA is seeking comment on whether corn kernel fiber should be considered a crop
residue.

E. Consideration of Advanced Butanol Pathway

1. Proposed New Pathway

EPA is proposing to add a new pathway to Table 1 to section 80.1426
that allows butanol made from corn starch using a combination of advanced technologies to meet the 50% GHG emissions reduction needed to qualify
as an advanced renewable fuel. This pathway applies to dry mill
fermentation facilities that use natural gas and biogas from an on-site thin stillage anaerobic digester for process energy with combined heat and power (CHP) producing excess electricity of at least 40% of the purchased natural gas energy of the facility (the proposed ‘‘advanced butanol pathway’’).

GEVO Incorporated submitted a petition requesting authorization to generate D-code 5 RINs for fuel produced through the GEVO butanol pathway. A petition is required because the proposed process utilizes a high yield butanol fermentation process that is different from those analyzed as part of the RFS2 corn ethanol pathways, and does not use the approved advanced technologies shown in Table 2 to section 80.1426 of the RFS2 regulations.

EPA’s evaluation of the lifecycle GHG
emissions of the advanced butanol pathway under this petition request is consistent with EISA’s applicable requirements, including the definition of lifecycle GHG emissions and threshold evaluation requirements. It was based on information regarding GEVO’s production process that was
submitted under a claim of Confidential Business Information (CBI) by GEVO on April 11, 2011. The information provided included the mass and energy balances necessary for EPA to evaluate the lifecycle GHG emissions of the advanced butanol pathway.

The lifecycle GHG emissions of fuel produced pursuant to the advanced butanol pathway were determined as
follows:

Feedstock production —The advanced butanol pathway uses corn starch as a
feedstock. Corn starch is one of the feedstocks already listed in Table 1 to section 80.1426 of the RFS2 regulations. Since corn starch has already been evaluated as part of the RFS2 final rule, no new feedstock production modeling was required.

The FASOM and FAPRI models were used to analyze the GHG impacts of the feedstock production portion of the fuel’s lifecycle. The same FASOM and FAPRI results representing the
emissions from an increase in corn production that were generated as part of the RFS2 final rule analysis of the existing corn butanol pathways were used in this analysis of the advanced butanol pathway. These results represent agriculture/feedstock production emissions for a certain quantity of corn produced. For the RFS2 analysis, this was roughly 960 million bushels of corn used to produce 2.6 billion gallons of fuel. We have
calculated GHG emissions from feedstock production for that amount of
corn. EPA does not believe the advanced butanol process for converting corn into butanol will materially affect
the total amount of corn used for biofuels and modeled as part of the
RFS2 final rule. Based on information provided by industry, the technologies to produce corn butanol are primarily being targeted at retrofitting existing corn ethanol facilities, where the infrastructure to produce renewable fuels already exists and the capital expenditures would be relatively small. Therefore, the existing agricultural sector modeling analyses for corn as a
feedstock remain valid for use in estimating the lifecycle impact of renewable fuel produced using the advanced butanol pathway. The Agency is seeking comment on whether there is any research to suggest that converting corn into an advanced butanol pathway would materially affect the total amount

of corn used.

GEVO provided, as part of the information claimed CBI, their process yield in terms of gallons of fuel produced per bushel of corn. Based on the data, GEVO’s process yield is slightly more efficient than the pathways modeled as part of the RFS2 rulemaking. Therefore, compared to the corn butanol pathways already analyzed, the GEVO process results in 0.93% more Btus of fuel produced for

the same amount of corn feedstock.

Fuel production —The fuel production

method included in this advanced butanol pathway involves the production of butanol from corn starch in a dry mill. The amount and type of energy used in this analysis is different than production methods that were analyzed under the final rule. While there were slight differences in the total amount of natural gas and electricity used in this analysis, the main difference was the use of biogas and production of excess electricity. To analyze the GHG impacts of the advanced butanol pathway, EPA utilized the same approach that was used to determine the impacts of processes in the RFS2 corn butanol pathways.

The amount and type of energy used

was taken from GEVO’s mass balance & energy balance submitted to EPA. GEVO submitted energy data on natural gas and biogas (in Btus) and electricity (in kWhs) inputs, as well as gallons of fuel produced. Biogas and natural gas are used in combination, while the RFS2 corn butanol analyses only considered natural gas or biogas used independently, not in combination.

The emissions from the use of energy were calculated by multiplying the amount of energy by emission factors for fuel production and combustion, based
on the same method and factors used in the RFS2 final rulemaking. The
emission factors for the different fuel types are from GREET and were based
on assumed carbon contents of the different process fuels.

One area where EPA is soliciting comments is on the most appropriate energy content assumption to use for butanol (lower heating value). As part of this analysis, EPA used the GREET value for the energy content of butanol,


### 36059 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

49 The GREET value is based on: Guibet, J.-C., 1997, Carburants et Moteurs: Technologies, Energie, Environnement, Publication de l’Institut Franc

 ̧ ais
du Pe  ́ trole, ISBN 2–7108–0704–1. which is 99,837 Btus per gallon. 49
Differences in the measurement of the energy content of butanol can occur for a number of reasons including variations amongst isomers (t-butanol, n-butanol, isobutanol, and sec-butanol), and differences in testing methodologies. EPA is seeking comment on whether there are any reasons why EPA should change its assumptions and use a different energy content of
butanol.

The RFS2 corn butanol pathways
included an estimate for DDGs coproduct production which we similarly applied to the advanced butanol production process. Since DDGs impact the agricultural markets, production of DDGs was already included as part of the FASOM and FAPRI modeling already described in the feedstock production section, above. Thus no additional co-product credits for the DDGs are applied for the fuel production stage of the analysis.

The advanced butanol production process analyzed here also results in excess electricity production. As per the pathway description the process produces excess electricity of at least 40% of the purchased natural gas energy of the facility. The onsite emissions of the electricity production are accounted for in the facility natural gas and biogas use. The co-product credit of the excess electricity is accounted for by assuming the electricity offsets average grid electricity production and results in
associated emission reductions.

The estimated production emissions from the advanced butanol process are
shown below in Table V.F.–1.



### T ABLE 

### V.F.–1—F UEL 

### P RODUCTION 

### E MISSIONS FOR THE 

### A DVANCED 

### B UTANOL 

### P ROCESS

Fuel production source GEVO isobutanol (g CO 2 -eq./mmBtu)

On-Site Emissions .............................................................................................................. ................................................. 15,273 Upstream (natural gas and electricity production) .............................................................................. ................................ 2,424 Emissions Credit from Offset Electricity .......................................................................................

....................................... ¥ 17,448

Total Fuel Production Emissions ................................................................................................ ..................................... 249

Fuel and feedstock distribution —We
used the same feedstock distribution emissions assumption considered for
corn butanol under the RFS2 final rule for the advanced butanol pathway corn feedstock. The fuel type, butanol, and hence the fuel distribution for butanol, was already considered as part of the RFS2 final rule. Therefore, the existing feedstock and fuel distribution lifecycle GHG impacts for corn butanol were applied to the advanced butanol pathway analysis.

Use of the fuel —The advanced butanol pathway produces a fuel that was analyzed as part of the RFS2 final rule. Thus, the fuel combustion emissions calculated as part of the RFS2 final rule for butanol were applied to our analysis of the advanced butanol pathway.

The advanced butanol fuel was then compared to baseline petroleum gasoline, using the same value for baseline gasoline as in the RFS2 final rule analysis. The results of the analysis
indicate that the advance butanol pathway would result in a GHG emissions reduction of 51.3% compared to the gasoline fuel it would replace.

Based on our LCA, we are proposing to add a new pathway to Table 1 to section 80.1426 that includes butanol from corn starch using the butanol process described here as an advanced biofuel (D–5 RINs). EPA invites comments on the assumptions used in this analysis.

Table V.F.–2 below breaks down by stage the lifecycle GHG emissions for the RFS2 corn butanol pathway, the advanced butanol pathway and the 2005 gasoline baseline. This table

demonstrates the contribution of each stage in the fuel pathway and its relative significance in terms of GHG emissions.



### T ABLE 

### V.F.–2—L IFECYCLE 

### GHG E MISSIONS FOR THE 

### A DVANCED 

### B UTANOL 

### P ATHWAY 

### , 2022

[Kg CO2-eq./mmBtu]

Fuel type RFS2 corn ethanol, natural gas fired dry mill 63% dry DDGS GEVO butanol RFS2 2005 gasoline
baseline

Net Domestic Agriculture (w/o land use change) ............................................................ 4 4 .................

........... Net International Agriculture (w/o land use change) ....................................................... 12 12 ...............

............. Domestic Land Use Change ...........................................................................................

¥ 4

¥ 4 ............................ International Land Use Change, Mean ( Low/High ) ......................................................... 32 ( 21/46 ) 31

............................ Fuel Production ................................................................................................................ 28 0 19 Fuel and Feedstock Transport ........................................................................................ 4 4 * Tailpipe Emissions ........................................................................................................... 1 1 79

Total Emissions, Mean ............................................................................................. 77 (66/91) 48 98

% Reduction ....................................................................................................................

¥ 21%

¥ 51% ............................

* Emissions included in fuel production stage.

Table V.F.–3 lists the proposed DCodes by fuel type (butanol), considering the feedstock (corn starch) and different production process requirements.


### 36060 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

T ABLE 

### V.F.–3—P ROPOSED 

### D C ODES FOR 

### B UTANOL

Fuel type Feedstock Production process requirements D-Code

Butanol ............. Corn starch ....... Fermentation; dry mill using natural gas, biomass, or biogas for process energy .......... ..... 6 Butanol ............. Corn starch ....... Fermentation; dry mill using natural gas and biogas from on-site thin stillage anaerobic digester for process energy w/CHP producing excess electricity of at least 40% of the purchased natural gas energy used by the facility. 5

2. Butanol, Biobutanol, and Volatility
Considerations

Butanol is a flammable colorless liquid that is used as a fuel and as an industrial solvent. Butanol is composed of the chemical elements hydrogen, oxygen, and carbon. It can be made from petroleum or renewable biomass, such as corn, grasses, agricultural waste and
other renewable sources. It can be used in internal combustion engines as an additive to gasoline and is currently registered under the Fuel and Fuel Additives Registration System (FFARS) for use at up to 12 volume percent. A higher blend level would require a new FFARS registration that would include meeting Tier 1 and Tier 2 health effects testing requirements. Biobutanol is the
common name for butanol made from
renewable sources.

There has been an increased interest
in the use of biobutanol as a direct result of the requirements for increased use of renewable fuel volumes, adopted in EISA 2007. These provisions require
an increase in the use of renewable fuels, with 36 billion gallons of renewable fuel to be used in the U.S. by 2022. Parties required to meet these
standards are interested in cost effective and practical ways to satisfy the standards and meet the performance needs of the vehicles and engines. Biobutanol is one attractive option because of its higher energy density, lower blending vapor pressure, and lower heat of vaporization in comparison to ethanol, as well as the
fact that it can be distributed as a gasoline blend throughout the fungible gasoline distribution system.

The Clean Air Act (section 211(h)(4)) requires EPA to adopt regulations limiting the volatility of gasoline during the summer months, when ozone is of most concern, including a one pound per square inch (psi) Reid Vapor Pressure (RVP) increase in the volatility limit for blends of gasoline containing 9–10% ethanol (E10). This allowance for a 1 psi increase in allowable volatility is commonly called the 1 psi

waiver.

EPA’s regulations at 40 CFR 80.27 adopt RVP standards that apply to the gasoline at all points in the distribution system, including the retail outlet. Under the provisions for the 1 psi waiver, blends of gasoline that contain from 9 volume percent to 10 volume percent ethanol are allowed to have volatility 1 psi higher than otherwise would be allowed (40 CFR 80.27(d)(2)).
The chemical characteristics of ethanol are such that blends of gasoline with less than 9 volume percent to 10 volume percent ethanol would still have a significant increase in volatility. Thus the restriction on the 1 psi waiver to blends that have 9 volume percent to 10 volume percent ethanol has the effect of prohibiting the blending of E10 with other gasoline/renewable fuel blends at any point in the gasoline distribution system (wholesale or retail) in conventional gasoline areas during the
summer control season. Blends of E10 gasoline and gasoline that is not E10 would have less than 9 volume percent or greater than 10 volume percent ethanol, would have a resulting increase in volatility compared to E0, but would not have the 1 psi waiver to allow for
such an increase. This increase would
lead to an RVP above the allowable limit, unless a sub-RVP gasoline blendstock was used. The practical effect is a prohibition on commingling of E10 and gasoline blends other than

E10.

Under the current regulations, EPA applies the RVP standard to the commingled mixture as a whole, not to the components of the commingled
mixture. Once the ethanol and nonethanol blends are mixed, the commingled mixture is treated as the gasoline that is tested and compared to the RVP standard. A single RVP value is determined by testing the volatility of the commingled mixture, and this is compared to the standard. If the mixture has from 9 volume percent to 10 volume percent ethanol, then the 1 psi waiver applies to the mixture. If the mixture has a different percentage of ethanol, whether lower or higher, then the 1 psi waiver does not apply to the mixture.

This avoids a situation where there is an overall increase in volatility because of the commingling of E10 and gasoline that is not E10. As discussed below, the
chemical characteristics of ethanol and the nonlinear nature of the volatility increase associated with varying volumes of ethanol, mean that mixing E10 gasoline with gasoline that is not E10 typically results in a net overall
increase in emissions—the mixture has a higher volatility and emissions than the separate gasolines had on average before they were mixed.

Several parties have identified this as an obstacle that currently inhibits the opportunity for biobutanol to enter the commercial market. The primary issue is application of the RVP regulations at the final point of fuel dispensing, when the biobutanol (Bu) and the ethanol blends would be mixed, that is in a storage tank at the retail station. When a butanol product that complies with the RVP standards prior to commingling (e.g., a complying Bu12 blend) is commingled with a compliant E10 in underground storage tanks at fuel dispensing facilities, the resulting mix generally would exceed the applicable RVP standard as EPA’s RVP regulations currently apply the standard. Certain fuels, including renewable biofuels such as butanol, however, do not have a net negative impact on RVP when blended with E10 at wholesale or retail. That is,
the RVP and related emissions of the commingled blend of butanol and ethanol is no higher than the average
RVP if the fuels had never been commingled. Thus, in these kinds of circumstances it may be appropriate to adopt a modified approach to applying the RVP standard to permit the commingling of complying E10 blends with complying butanol blends at wholesale and retail, as there is no overall degradation of RVP and the air quality impacts compared to what would occur if they were not blended.

Today, the agency is providing some additional background on this issue and requesting information for use in deciding whether EPA can and should modify its RVP regulations as discussed below. Specifically, we are inviting comment on the ability of regulated parties to comply with the existing regulations by segregating biobutanol
blends from ethanol blends and whether there is a need to change the regulations. We are also seeking comment on an alternative approach to applying the RVP standards to a commingled mixture of E10 with biobutanol or other approved gasoline additives, where the additives have


### 36061 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

characteristics such that there is no net
adverse emissions effect from the commingling. We are inviting comments
as to whether the RVP standards can and should be applied such that the commingled mixture of E10 and specified blends of gasoline additives
such as biobutanol is treated as complying with the RVP standard as long as the components of that mixture complied with the RVP standard prior to the commingling. This approach would provide a limited modification to how the RVP standards are applied, and the modification would apply for only
certain fuel mixtures—those where the overall or net volatility of the commingled mixture is no higher than the weighted average of the original blends themselves, such that there is no adverse impact on emissions from the mixing compared to what would have occurred without such mixing. In order to assist parties in preparing comments, EPA is providing some additional background regarding the RVP program in the following paragraphs.

Background and History of Volatility Regulations

Reid Vapor Pressure (RVP) is the most common measure of gasoline volatility under ambient conditions. In 1989, EPA began reducing gasoline volatility by limiting its RVP (54 FR 11868, March 22, 1989) (40 CFR 80.27). Due to the presence of gasoline in certain markets mixed with about 10 volume percent ethanol (known as gasohol at the time), and because blending an alcohol into gasoline increases the volatility of the final product, EPA provided an additional 1 psi allowance for such blends. In the absence of the 1 psi allowance, a special blend stock would have been required for such blends to comply with the RVP standards and
such sub-RVP blendstocks did not exist at the time. EPA imposed the RVP standards at all points in the gasoline distribution system, i.e., anywhere gasoline is sold, supplied, offered for sale or supply or transported, including service stations, refinery shipping, tanks, importer shipping tanks, pipeline and bulk terminals and plants. (40 CFR 80.28) (1989). In 1990, the agency promulgated additional regulations that further lowered the RVP standards. (55 FR 23658, June 11, 1990). EPA continued to provide both the 1.0 psi allowance to fuel blends containing about 10 volume percent ethanol, (40 CFR 80.27) (1990), and the requirement that RVP standards applied at all points in the distribution system.

Congress largely codified the approach taken in EPA’s RVP regulations by adding a new section 211(h) in the 1990 CAA amendments. Section 211(h)(1) requires EPA to set the maximum RVP standard during the high ozone season as 9.0 psi. EPA was to ‘‘promulgate regulations making it unlawful for any person during the high ozone season to sell, offer for sale, dispense, supply, offer for supply, transport, or introduce into commerce gasoline with a Reid Vapor Pressure in excess of 9.0 pounds per square inch (psi).’’ Lower RVP standards could be
set for ozone nonattainment areas. See Clean Air Act section 211(h)(1). Section 211(h)(2) addresses the RVP standard that apply in attainment areas, and sets the standard at 9.0 psi for attainment areas with authority for EPA to set a more stringent RVP level under certain circumstances. In section 211(h)(2), Congress allowed a 1-psi waiver for E10 gasoline, stating: ‘‘For fuel blends containing gasoline and 10 percent denatured anhydrous ethanol, the Reid vapor pressure limitation under this subsection shall be one pound per square inch (psi) greater than the applicable Reid vapor pressure limitations established under paragraph (1).’’ Additionally, Congress enacted a conditional defense against liability for
violations of the RVP level allowed under the 1 psi waiver by stating that ‘‘[p]rovided; however, that a distributor, blender, marketer, reseller, carrier,retailer, or wholesale purchaserconsumer shall be deemed to be in full compliance with the provisions of this subsection and the regulations promulgated there under if it can demonstrate that—(A) the gasoline portion of the blend complies with the Reid vapor pressure limitations promulgated pursuant to this subsection; (B) the ethanol portion of
the blend does not exceed its waiver condition under subsection (f)(4) of this section; and (C) no additional alcohol or
other additive has been added to increase the Reid Vapor Pressure of the ethanol portion of this blend.’’ Section 211(h)(4).

In a 1991 rulemaking, EPA modified the RVP regulations to conform to the 1990 amendments (56 FR 64704, December 12, 1991). These regulations
addressed the RVP standards in attainment areas, required the use of denatured anhydrous ethanol as a specific condition for the 1-psi waiver for fuel blends containing gasoline and from 9 volume percent to 10 volume percent ethanol, and included a new defense against liability for violations of
the RVP standards for such fuel blends. We made no changes to the requirement that the RVP standards applied at all points in the distribution system. What modification is EPA considering to the application of the RVP standards
to certain fuel blends?

Gasoline and ethanol are mixed or blended after the refining process. The practice of blending ethanol with gasoline increases the RVP of the resulting blend by approximately 1.0 psi. It is a non-linear relationship, most of the volatility increase occurs after just a few percent of ethanol have been added, with the volatility increasing more slowly as the gasoline ethanol blend increases to 10 volume percent. Above 10 volume percent the volatility generally does not increase any more, and at even higher levels of ethanol the volatility starts to decrease again. As explained above, section 211(h)(4) provides a 1-psi waiver for fuel blends containing gasoline from 9 volume percent to 10 volume percent ethanol.
The absence of such a waiver would have required the creation of a production and distribution network for sub-9.0 psi RVP gasoline, to offset the increase in volatility associated with blending ethanol into the gasoline. At the time the costs of producing and distributing an additional grade of this type of fuel, especially in consideration of the low volumes of fuel being blended with ethanol at the time, would have likely been prohibitive and
resulted in the termination of the availability of ethanol in the marketplace. Thus, the 1-psi waiver facilitated the participation of ethanol in the transportation fuel industry while also limiting gasoline volatility resulting from ethanol blending.

But the RVP levels of gasoline actually used by consumers are dependent on the mixture of alcohol blends and gasoline that are commingling in either vehicle or storage tanks. Depending on the mixture, the resulting RVP level could be significantly higher than the average volatility of the fuels prior to the commingling. This is because the volatility increase when ethanol is added to gasoline is non-linear, with a large increase with the first few percent and then slowly tapering off as the concentration increases (see Illustration V.F.–4). In other words, mixing E10 and EO gasoline results in a net increase in the volatility of the gasoline mixture, compared to the average volatility that would occur absent such mixing. For example, 2000 gallons of 10 psi E10
added to a service station tank with 8000 gallons of 9.0 psi E0 would result in 10,000 gallons of fuel with a volatility of approximately 10 psi. However if the fuels had not been mixed, the average volatility of the 10000 gallons would


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have been 9.2 psi. The emissions associated with the commingled mixture (10000 gallons at 10 psi) would be significantly higher than the
emissions associated with the two separate blends of 2000 gallons at 10 psi and 8000 gallons at 9 psi. The commingling thus results in an adverse environmental impact compared to
what would occur absent the commingling. EPA’s current RVP regulations address this adverse emissions impact by applying the RVP standard to the commingled mixture as a single fuel. In this case the commingled mixture has an RVP of 10 psi. The 1 psi waiver does not apply as the mixture is now 2% ethanol, not from 9 volume percent to 10 volume percent ethanol. The commingled mixture thus would not comply with the 9.0 psi RVP standard, effectively prohibiting such commingling.

As discussed earlier, the EPAct 2005
and EISA2007 mandated increased
volumes of renewable fuel for use in gasoline. This has resulted in the
increased use of ethanol. E10 is now present in nearly all gasoline sold in the country. Recently, EPA granted a waiver from the substantially similar requirements under section 211(f)(4) for
the use of E15 blends in MY2001 and newer light-duty vehicles ( See 75 FR 68094, November 4, 2010 and 76 FR 4662, January 26, 2011). EPA interpreted section 211(h) as not extending the 1 psi waiver to such blends with ethanol levels above 10%. Several companies are also developing and planning on introducing biobutanol
into commerce. The characteristics of
butanol are such that it could be beneficial with respect to volatility and vehicle evaporative emission performance. For example, 2000 gallons of 10 psi E10 added to a service station tank with 8000 gallons of 9.0 psi Bu12 would result in 10000 gallons of fuel with an RVP of 9.2 psi. The RVP of the commingled blend would be the same as the average of the separate blends if they had never been commingled. There is no adverse emissions impact from the commingling of the E10 and Bu12 blends. However the 1-psi waiver would not be applicable because the resulting blend no longer contains from 9 volume percent to 10 volume percent ethanol. The RVP level for the resulting blend would also be higher than the maximum RVP standard of 9.0 psi, making the commingled blend noncomplying with

the RVP standard. However the

available data indicates that commingling of biobutanol blends with ethanol blends would not result in any net increase in gasoline volatility. This

is because biobutanol blends and gasoline containing from 9 volume percent to 10 volume percent ethanol blend linearly from a volatility perspective, resulting in no net increase in volatility compared to what would occur without the blending. This means that there would be no net degradation in environmental performance, as indicated in Illustration V.F.–4, below.

We are inviting comment on an alternative approach to applying the RVP standard to the gasoline that results from commingling of E10 and certain other products like biobutanol. We are inviting comment as to whether the RVP standards could be applied to the commingled blend such that the commingled blend would be considered in compliance as long as the separate components of the commingled product were in compliance with the RVP standards prior to commingling. In
effect the RVP standard would be applied to the commingled mixture by treating it as if it still contained two separate products, with each product required to comply with the RVP standard separately. This approach
would be somewhat artificial but would allow for the commingling of specified blends of fuels, such as biobutanol, with E10 where the resulting commingled
mixture does not result in a net increase in average RVP and associated emissions. This would provide more flexibility in achieving the RFS standards while avoiding adverse environmental impacts. This approach would provide a limited modification to the RVP provisions for only certain fuel
blends. EPA invites comment on whether it would have the authority under § 211(h) to adopt such an approach, and if so whether it would be appropriate to do so and under what
conditions. Specifically, we would consider imposing the following conditions on
such fuel blends:

(1) Each separate component must individually meet the applicable RVP standards (e.g., 10 psi for E10 and 9 psi for other blends).

(2) The resulting commingled mixture
would have to have an RVP that is no higher than the weighted average of the products or components considered separately. This could occur with blends that blend linearly with respect to RVP (e.g., butanol).

(3) The burden would be on the
retailer to show that these conditions had been satisfied. If a commingled product had volatility above the allowable standard, and did not have from 9 volume percent to 10 volume percent ethanol, then the fuel would be considered noncomplying unless the regulated party demonstrated that it met
the limited conditions discussed here.
The retailer would have to demonstrate
that the conditions were met for application of this modified method of determining compliance. This would call for at least retaining records of the products received (with all required regulatory statements and indications required) and volumes of the products
received in order to demonstrate a calculation to verify compliance with
the RVP standard.

(4) In situations where the RVP of retail tank samples exceed 9.0/7.8 psi, for defense purposes the retailer would need to test the sample for the concentration of ethanol, butanol, and any other applicable oxygenate in
addition to the RVP level in order to allow for the calculation in (3). The resulting blend ratio would need to meet or demonstrate better performance
reductions of such ratio on a linear scale as established through regulation.

Under this approach, we believe there
would be no adverse environmental
effects because such mixtures would result in no net increase in volatility.
We also believe this would enable us to give effect to the RFS provisions that call for increased use of renewable fuels,
and also be consistent with our rational for the treatment of gasohol at the time we promulgated the RVP standards.


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F. Amendments to Various RFS2 Compliance Related Provisions

We are proposing a number of changes to the RFS2 regulations.

1. Proposed Changes to Definitions

‘‘Responsible Corporate Officer’’

The existing RFS2 regulations at sections 80.1416, 80.1451 and 80.1454, and EPA guidance and instructions regarding registration and reporting, frequently refer to the responsibilities of the ‘‘owner or a responsible corporate officer.’’ However, the term ‘‘responsible corporate officer’’ is not currently defined in the RFS2 regulations. We propose that, for purposes of the RFS2 program, a ‘‘responsible corporate officer’’ (RCO) means a corporate officer who has the authority and is assigned responsibility to provide information to EPA on behalf of a company. A company may name only one RCO, and the RCO may not delegate his/her responsibility to any other person. However, the RCO may delegate the ability to submit information to EPA to one or more employees of the company or to one or more agents. The RCO remains responsible for the information submitted to EPA by any employee or agent. Adding a definition of RCO will codify existing practices and will assist regulated parties in understanding roles under the RFS2 regulation.

‘‘Small Refinery’’

Section 211(o)(9)(A) of the Clean Air Act provides an exemption from RFS requirements through 2010 for ‘‘small refineries,’’ defined as refineries having an average aggregate daily crude oil throughput for a calendar year that does not exceed 75,000 barrels. It also provides for possible extensions of this exemption, through individual petitions to EPA. CAA 211(o)(9)(B). In EPA’s March 26, 2010 regulations implementing the EISA amendments we specified in the regulatory definition of ‘‘small refinery’’ that the 75,000 bpd

threshold determination should be

calculated based on information from calendar year 2006. At the beginning of the program, having a single year in which to make this determination, simplified the calculations, and helped

to ensure that all refineries were treated similarly. However, we no longer believe that it is appropriate that refineries satisfying the 75,000 bpd threshold in 2006 should be eligible for extensions to their small refinery RFS exemption if they no longer meet the 75,000 bpd threshold. Allowing such facilities to qualify for an exemption extension, while not allowing similarly sized facilities that have not grown since 2006 to qualify for an exemption,


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does not appear fair, nor does it further the objectives of the statute to target relief to only truly small facilities. Therefore, we propose modifying the definition of small refinery so that the crude throughput threshold of 75,000 bpd must apply in 2006 and in all subsequent years. We also propose specifying in section 80.1441(e)(2)(iii) that in order to qualify for an extension of its small refinery exemption, a refinery must meet the definition of ‘‘small refinery’’ in section 80.1401 for all full calendar years between 2006 and the date of submission of the petition for an extension of the exemption.

We proposed that that these changes would not affect any existing exemption extensions under CAA 211(o)(9)(B); rather, they would apply at such time as any approved exemption extension expires and the refinery at issue seeks a further exemption extension. No further extension would be permitted unless the revised crude oil throughput specifications were satisfied.

2. Provisions for Small Blenders of
Renewable Fuels

The RFS2 regulations at section
80.1440 allow renewable fuel blenders who handle and blend less than 125,000 gallons of renewable fuel per year, and who are not obligated parties or exporters, to delegate their RIN-related responsibilities to the party directly upstream from them who supplied the renewable fuel for blending. EPA has received feedback from several parties to the effect that the 125,000 threshold is too low, and is a lower threshold than what industry considers ‘‘small.’’ EPA seeks input on what a more appropriate gallon threshold should be. EPA seeks comment on the regulated community’s experience with the existing gallon
threshold associated with the provisions. EPA may adjust the gallon
threshold in the final rule based on
further consideration of this issue and
evaluation of comments received.

3. Proposed Changes to Section 80.1450—Registration Requirements

We propose to add a new paragraph (h) to section 80.1450 that will describe
the circumstances under which EPA may cancel a company registration. EPA proposes to initiate a process to cancel a company registration if the company has reported no activity in the EPA Moderated Transaction System (EMTS) under section 80.1452 for one year. EPA also proposes to initiate a process to cancel a company registration if a party fails to comply with any registration requirement of section 80.1450, if the party fails to submit any required compliance report under section 80.1451, if the party fails to meet the requirements related to the EPA Moderated Transaction System (EMTS) under section 80.1452, or if the party fails to meet the requirements related to attest engagements under section 80.1454. If any required report, including the attest engagement, is thirty (30) or more days overdue, EPA would provide written notice to the owner or responsible corporate officer (RCO) that it intends to cancel the company’s registration and would allow the company fourteen (14) days from the date of the letter’s issuance to respond. If there is no satisfactory response received, then EPA would cancel the registration. Re-registration would be possible following the standard registration procedures.

4. Proposed Changes to Section
80.1452—EPA Moderated Transaction System (EMTS) Requirements— Alternative Reporting Method for Sell and Buy Transactions for Assigned RINs

Reporting and product transfer document (PTD) requirements, found in sections 80.1452 and 80.1453, respectively, currently state that the reportable event for a RIN purchase or
sale occurs on the date of transfer. Sellers must report the sale of RINs within five (5) business days of the reportable event via the EPA Moderated Transaction System (EMTS). Buyers must report the purchase of RINs within ten (10) business days of the reportable
event via EMTS. The date of transfer is
the date on which title of RINs is transferred from the seller to the buyer. Some buyers and sellers of assigned RINs have expressed concerns with these requirements stating they have difficulty determining the date of
transfer since title of the renewable fuel
is not transferred until the fuel physically reaches the buyer. Some transactions, for example those by rail or barge, may take several weeks, and their current accounting systems do not include a means for capturing the buyer’s receipt date.

EPA understands this concern, but also recognizes that some regulated parties have modified their accounting systems to address the current reporting and PTD requirements in RFS2. We also believe that for parties separating, retiring, and selling or buying separated RINs, the current reporting and PTD requirements are effective and should remain unchanged. Therefore, at this time EPA is not proposing to replace existing requirements, but is instead proposing an additional, alternative method for reporting sell and buy transactions involving assigned RINs only. The proposed alternative method for sell and buy transactions of assigned RINs would redefine the reportable event for both the seller and the buyer, introduce a unique identifier that the seller must provide to the buyer, and require the buyer to report the date of transfer. Buyers and sellers would need to agree on which method they would be using to report transfers of assigned RINs; either the current method or the

alternative method. EPA believes that this alternative would provide the regulated community with the flexibility to address their reporting concerns and also provide EPA with the data necessary to effectively administer and enforce transactions of assigned

RINs. EPA welcomes comment on this proposed alternative method for reporting assigned RIN buy and sell

transactions.

We propose that sellers of assigned

RINs under the alternative method be required to do the following:

• Within five (5) business days of shipping renewable fuel with assigned RINs, report a sell transaction, using the alternative method, via EMTS;

• Include in the EMTS sell transaction report other required information per section 80.1452; and

• Provide a PTD to the assigned RIN buyer with a unique identifier, also reported via EMTS, in addition to the

information in section 80.1453. The date of transfer is not required for the

alternative method.

We propose that buyers of assigned

RINs under the alternative method be required to do the following:

• Within five (5) business days of receiving a shipment of renewable fuel with assigned RINs, report a buy transaction, indicating use of the alternative method, via EMTS;

• Include in the EMTS buy transaction report other required information per section 80.1452;

• Include in the EMTS buy transaction report the unique identifier provided by the seller; and

• Include in the EMTS buy transaction report the date the renewable fuel was received, i.e. the

date of transfer.

If this proposed alternative method is finalized, the EMTS would be modified to accept such transactions. EPA would provide additional instruction and guidance at the time of the new EMTS

version release. EPA invites comment on all aspects of this proposal.


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5. Proposed Changes to Section 80.1463—Confirm That Each Day an Invalid RIN Remains in the Marketplace Is a Separate Day of Violation

Preventing the generation and use of invalid RINs and encouraging rapid retirement and replacement of invalid RINs is crucial to the integrity of the RFS2 program. The RFS regulations include various provisions related to prohibited acts and liability for violations. Section 80.1460(a) sets forth the prohibited acts for the renewable fuels program. Section 80.1460(b)(2) prohibits parties from creating or transferring invalid RINs. Section 80.1461(a) states that the person who violates a prohibited act is liable for the violation of that prohibition. Section 80.1461(b) provides the liability provisions for failure to meet other provisions of the regulations. The penalty provisions of the regulations at section 80.1463(a) state that any person
who is liable for a violation under section 80.1461 is subject to a civil penalty as specified in sections 205 and 211(d) of the Clean Air Act (CAA), for every day of each such violation and the amount of economic benefit or savings resulting from each violation. Section 80.1463(c) provides that ‘‘any person . . . is liable for a separate day of violation for each day such a requirement remains unfulfilled.’’

EPA interprets these statutory and regulatory penalty provisions to give the Agency the authority to seek penalties against parties generating, transferring or causing another person to generate or transfer invalid RINs for each day subsequent to the party’s action that an
invalid RIN is available for sale or use by a party subject to an obligation under the RFS2 program to acquire and retire RINs. For example, for a RIN generator, this time period typically runs from the date of invalid RIN generation until either corrective action is taken by the RIN generator to remove the invalid RIN from the marketplace or a party uses the RIN to satisfy an RVO or other requirement to retire RINs (such as would apply under today’s proposal to exporters of renewable fuel or parties using fuel produced as renewable fuel for a use other than as transportation fuel, heating oil or jet fuel). This is consistent with the CAA approach of assessing penalties for every day of a violation, consistent with EPA’s historic approach under the fuels regulations ( See Section 80.615), and will encourage renewable fuel producers that generate invalid RINs to promptly take corrective

action.

We are proposing to amend section 80.1463 to more explicitly incorporate EPA’s interpretation of these penalty provisions into the regulations. The amendments would state that any person liable for a violation of section 80.1460(b) for creating or transferring an invalid RIN, or for causing another person to create or transfer and invalid RIN, is subject to a separate day of violation for each day that the invalid
RIN remains available for use for compliance purposes, and EPA has the authority to seek the maximum statutory penalty for each day of violation. EPA will apply the statutory factors in sections 211(c) and 205(b) of the CAA to evaluate the appropriate penalties for each violation on a case by case basis.

6. Proposed Changes to Section 80.1466—Require Foreign Ethanol Producers, Importers and Foreign
Renewable Fuel Producers That Sell to Importers To Be Subject to U.S. Jurisdiction and Post a Bond

The current regulations include requirements that foreign renewable fuel producers that generate RINs agree to be subject to a number of additional requirements at section § 80.1466, including, but not limited to, designation, foreign producer certification, product transfer document, load port independent testing and producer identification, submission to U.S. jurisdiction and posting of a bond. We are proposing to require the same requirements for foreign renewable fuel producers, and foreign ethanol producers that produce biofuel for which importers ultimately generate RINs, and for importers of renewable
fuel.

In order to evaluate whether a fuel qualifies as RIN generating renewable fuel (including determining the proper renewable fuel category and RIN type for the imported fuel), EPA must be able to evaluate the feedstocks and processes used to produce the renewable components of the fuel. This is a particular challenge for fuel produced at foreign facilities; unlike our other fuels programs, EPA cannot determine whether a particular shipment of renewable fuel is eligible to generate RINs under the RFS program by testing the fuel itself. Furthermore, significantopportunity for fraud and noncompliance with the regulations exists
where EPA is not able to ensure that RINs entering the U.S. are valid, and where enforcement of the regulations may be hampered due to a facility’s foreign location. We believe that the same safeguards that apply to foreign RIN generating renewable fuel producers should apply to other foreign producers whose product is used by importers to generate RINs, and to those importers themselves. Accordingly, we propose that foreign renewable fuel producers and foreign ethanol producers who do not themselves generate RINs for their product, and importers of renewable fuel, be required to comply with the safeguards of section 80.1466. Given the challenges associated with EPA’s ability to determine whether a fuel qualifies as RIN generating renewable fuel, and the potential for fraud, we believe these additional safeguards are necessary for all foreign produced renewable fuel, regardless of who generates the RINs. However, we seek comment on the reasonability of expanding these additional requirements onto foreign renewable fuel producers, and foreign ethanol producers that produce biofuel for which importers ultimately generate RINs, and for importers of renewable fuel. We further propose to amend section 80.1426(a)(4) to prohibit importers from generating RINs for renewable fuel imported from a foreign renewable fuel producer or foreign ethanol producer, unless and until the foreign renewable fuel producer or foreign ethanol producer has satisfied all requirements of section 80.1466.

7. Proposed Changes to Section 80.1466(h)—Calculation of Bond Amount for Foreign Renewable Fuel Producers, Foreign Ethanol Producers and Importers

EPA proposes two changes to section 80.1466 regarding calculation of bonds. EPA proposes to amend the procedures for calculating the bond amount for foreign renewable fuel producers, foreign ethanol producers and importers to require that the bond amount be the larger of: (1) One cent times the largest volume of renewable fuel produced by the foreign producer and exported to the United States, in gallons, during a single calendar year among the five preceding calendar years, or the largest volume of renewable fuel that the foreign producers expects to export to the Unites States during any calendar year
identified in the Production Outlook Report required by section 80.1449, or (2) the sum of the following calculation for each RIN type: 0.25 times the largest volume of renewable fuel produced by the foreign producer and exported to the United States, in gallons, during a single calendar year among the five preceding calendar years, or the largest volume of renewable fuel that the foreign producers expects to export to the Unites States during any calendar year
identified in the Production Outlook Report required by section 80.1449, times a ‘‘RIN multiplier D code’’ established by EPA in the regulations.


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The proposed ‘‘RIN multiplier D codes’’ vary from $.02 for D code 6 to $1.30 for D code 4. When the original renewable fuels standard regulations (RFS1) were written, an RFS1 RIN was worth pennies. With the implementation of RFS2, the price of some RINs has increased significantly, in part because of the demand for certain categories of
fuel such as biomass-based diesel. In order to keep up with these market conditions, the bond amount needs to be increased; a penny per gallon of fuel may no longer be a fair valuation of a foreign renewable fuel producer’s potential penalty for RFS violations. Bonds are used to satisfy any judicial judgment that results from an administrative or judicial enforcement
action for conduct in violation of this subpart. Therefore, we propose to amend section 80.1466(h)(1) to include the calculation described above, that
reflects current market valuation for different types of RINs. We seek comment on whether the proposed bond calculation procedures are appropriate, and in particular whether they are sufficiently large to cover potential liability.

EPA also proposes to amend paragraph (h) of section 80.1466 to be consistent with paragraph (j)(4), which prohibits generating RINs in excess of
the number for which the bond requirements have been satisfied. Paragraph (h) regulates the size of the bond a foreign renewable fuel producer must post in order to generate RINs.
This formula takes into account the volume of renewable fuel a foreign renewable fuel producer has exported or intends to export to the United States. Section 80.1466(h) states, in part: ‘‘If the volume of renewable fuel exported to
the United States increases above the largest volume identified in the Production Outlook Report during any calendar year, the foreign producer shall
increase the bond to cover the shortfall within 90 days.’’ This conflicts with the stricter language in paragraph (j)(4) of the same section, which prohibits a foreign producer of renewable fuel from generating RINs in excess of the number for which the bond requirements of
section 80.1466 have been satisfied. EPA interprets the stricter provision at section 80.1466(j)(4) to be controlling, and we propose to change the language in section 80.1466(h) accordingly.

8. Proposed Changes to Facility’s Baseline Volume To Allow ‘‘Nameplate Capacity’’ for Facilities Not Claiming Exemption From the 20% GHG
Reduction Threshold

As a requirement of registration under the RFS2 program, each renewable fuel producer and foreign ethanol producer must establish and provide documents to support its facility’s baseline volume
as defined in section 80.1401. This is either the permitted capacity or, if permitted capacity cannot be determined, the actual peak capacity of a specific renewable fuel production facility on a calendar year basis. After the promulgation of the March 26, 2010 RFS2 rule, we have received many requests from companies to allow them to use their nameplate or ‘‘design’’ capacity to establish their facility’s
baseline volume due to either the facility being exempt from obtaining a permit, and thus not able to determine their permitted capacity, or the facility not starting operations, or not being operational for a full calendar year to produce actual production records to establish actual peak capacities. Because the regulations currently only allow a facility’s baseline volume to be established by a limit stated in a permit or actual production records for at least one calendar year, facilities that had neither a permit or sufficient production records had difficulty registering under the RFS2 program. To allow facilities that fall under this predication to register under the RFS2 program, we are proposing in this rulemaking to allow a facility to use its ‘‘nameplate capacity’’ to establish its facility’s baseline volume for the purposes of registration, only if (1) the facility does not have a permit or there is no limit stated in the permit to establish their permitted capacity, and (2) has not started operations or does not have at least one calendar year of production records, and (3) does not claim exemption from the 20 percent GHG threshold under § 80.1403. Due to the complexity of the exemption provision provided under § 80.1403, and the added flexibility that facilities claiming this exemption are allotted under the program, we are not proposing to extend this option to facilities claiming an exemption under § 80.1403. Additionally, by this stage in the RFS2 program, the facilities that would qualify for registration under § 80.1403 would be very few, if any. This proposal would revise the
definition of baseline volume to include ‘‘nameplate capacity,’’ add a new definition for ‘‘nameplate capacity’’ to § 80.1401, and include conforming amendments to the registration requirements of § 80.1450.

G. Minor Corrections to RFS2 Provisions

We are proposing a number of
corrections to address minor
definitional issues that have been
identified as we have been implementing the RFS2 program. Renewable Biomass
We propose to amend the definition
of ‘‘renewable biomass’’ in section
80.1401 to make clear that biomass obtained in the vicinity of buildings
means biomass obtained within 200 feet of the buildings. The preamble for the March 26, 2010 RFS2 final rule cites the distance of 200 feet ( see 75 FR 14696),
but EPA did not include a reference to this value in the regulations. We believe doing so would provide additional clarity to the regulations.

English Language Translations

We propose to add a new paragraph (i) to section 80.1450 to state that any registration materials submitted to EPA must be in English or accompanied by an English language translation. Similarly, we propose to add a new paragraph (h) to section 80.1451 that will state that any reports submitted to EPA must be in English or accompanied by an English language translation and add a new paragraph (q) to section 80.1454 that will state that any records submitted to EPA must be in English or accompanied by an English language
translation. The translation and all other
associated documents must be maintained by the submitting company for a period of five (5) years, which is already the established time period for keeping records under the existing RFS2

program.
Correction of Typographical Errors

We propose to correct various typographical errors in section 80.1466. Specifically, we propose to amend paragraph (o) to correct a typographical
error in the last sentence of the affirmation statement, by changing the citation from § 80.1465 to § 80.1466. We also propose to amend paragraph (d)(3)(ii) to correct a typographical error. The current regulation cites section 80.65(e)(2)(iii), which does not exist.
The correct citation is to section 80.65(f)(2)(iii).

VI. Amendments to the E15 Misfueling Mitigation Rule

We propose the following minor corrections and other changes to the E15 misfueling mitigation rule (E15 MMR) found at 40 CFR Part 80, subpart N.

A. Proposed Changes to Section
80.1501—Label

We propose to correct several minor errors in the description of the E15 label required by the E15 MMR at section 80.1501, including corrections in the dimensions of the label and ensuring
that the word ‘‘ATTENTION’’ is capitalized. The Agency intended the label required by the regulations to look


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identical to that pictured in the Federal Register notice for the final E15 MMR ( see 76 FR 44406, 44418, July 25, 2011).

B. Proposed Changes to Section 80.1502—E15 Survey

We are proposing two changes to the survey requirements found at section 80.1502. First, we propose to clarify that E15 surveys need to sample for Reid vapor pressure (RVP) only during the high ozone season as defined in section 80.27(a)(2)(ii) or during any time RVP standards apply in any state implementation plan approved or promulgated under the Clean Air Act. EPA did not intend to require RVP sampling and testing during the rest of the year, when RVP standards do not apply.

Second, we propose to change when the results of surveys that detect potential noncompliance must be reported to the Agency. As originally drafted, the regulations require the independent survey association conducting a survey to notify EPA of potentially noncompliant samples within 24 hours of the laboratory receiving this sample ( see 76 FR at 44423, July 25, 2011). EPA has since learned that more time may be needed for reporting of noncompliant samples since it may take several days for analysis of the sample to be completed. We are therefore requiring that noncompliant samples be reported to EPA within 24 hours of being analyzed.

C. Proposed Changes to Section 80.1503—Product Transfer Documents

EPA is proposing certain minor changes to the product transfer document (PTD) requirements found at section 80.1503. Specifically, we are proposing to allow the use of product
codes for conventional blendstock/ gasoline upstream of an ethanol blending facility, since historically, the
codes have been allowed to be used for conventional blendstock/gasoline upstream of an ethanol blending facility in other fuels programs. This was an omission from the original regulation.

We are also seeking comment on potential ways of streamlining the PTD language required at section 80.1503.

D. Proposed Changes to Section
80.1504—Prohibited Acts

EPA is slightly rewording section 80.1504(g) to state that blending E10 that has taken advantage of the statutory 1.0 psi RVP waiver during the summertime RVP control period with a gasoline-ethanol fuel that cannot take advantage of the 1.0 psi RVP waiver (i.e., a fuel that contains more than 10.0 volume percent ethanol (e.g., E15) or less than 9 volume percent ethanol)
would be a violation of the E15 MMR. As originally written, the language does not clearly describe the prohibited activity ( see 76 FR 44435, 44436, Jult 25, 2011).

E. Proposed Changes to Section 80.1500—Definitions

On August 17, 2011, the National Petroleum Refiners Association, now
called American Fuel and Petrochemical Manufacturers (AFPM), filed a petition for reconsideration with the Agency under CAA section 307(d)(7)(B) asking EPA to reconsider certain portions of the E15 MMR. A copy of the petition has been placed in the docket. The petition fundamentally focuses on one issue—AFPM expressed concern that the Agency had defined E10 and E15 in the E15 MMR in a way that would change how ethanol
concentrations are determined for regulatory purposes. Today we grant AFPM’s request for reconsideration of this issue as explained in their August 17, 2011 petition. As explained below,
while EPA did not intend the
definitions of E10 and E15 in the E15 MMR to have this effect, we are proposing changes to the regulations to avoid this perceived impact.

On April 6, 1979, fuel containing 90% unleaded gasoline and 10% ethyl
alcohol received a waiver under section 211(f)(4) by operation of law (see 44 FR 20777, April 6, 1979). Later, EPA issued an interpretative ruling that stated theApril 6, 1979 waiver covered gasolineethanol blends that contained up to 10 vol% ethanol content (see 47 FR 14596, April 5, 1982). Finally, in the context of regulations limiting the Reid vapor pressure (RVP) of gasoline, EPA has defined E10 as gasoline containing between 9 and 10 volume percent ethanol. Under the RVP regulations and the Clean Air Act, the RVP of E10 is allowed to be 1 pound per square inch (psi) higher than it is for gasoline or gasoline-ethanol blends containing less
than 9 and more than 10 vol% ethanol (often referred to as the ‘‘1.0 psi waiver’’).

In the E15 MMR, EPA defined E10 as gasoline containing at least 9.0 and no
more than 10.0 vol% ethanol and defined E15 as a gasoline-ethanol blend containing greater than 10.0 and no
more than 15.0 vol% ethanol. EPA
included those definitions in the E15
MMR so that fuels blended to contain
more than 10.0 vol% ethanol were subject to the misfueling mitigation requirements for E15. After publication of the E15 MMR, stakeholders including AFPM expressed concern that by defining E10 as E10.0, the Agency may have effectively made the ethanol concentration limits specified in the E10
and the E15 waiver decisions and the RVP regulations more stringent, which in turn would impact whether a party must comply with the E15 MMR requirements and whether a fuel qualifies for the RVP 1.0 psi waiver.

In its petition, AFPM noted that under existing EPA regulations at 40 CFR 80.9, the results of compliance testing for the ethanol concentration in gasoline are
‘‘rounded down’’ when the results indicate that gasoline-ethanol fuel may contain slightly more than 10 vol%
ethanol. AFPM further stated that in view of this rounding procedure, fuel that compliance testing indicates has an
ethanol concentration of between 10.0
and 10.4 should be considered E10. AFPM argued that the E15 MMR definition of E10 as containing no more than 10.0 vol% ethanol constituted a ‘‘substantive change’’ to the proposed
E15 MMR that would also alter the implementation of other EPA fuels regulations without a required rulemaking.

As part of the E15 MMR proposed rule, we identified prospective responsible parties for each misfueling mitigation measure, including requirements related to labeling E15 fuel dispensers, compliance surveys, and product transfer documents. We
received a number of comments from many affected stakeholders, including AFPM, that asked us to clarify which party or parties would be responsible for each misfueling mitigation measure and when each party or parties would be subject to those requirements. In the final E15 MMR, we added the significant digit to the definitions of E10 and E15 in order to provide a
delineation between E10 and E15 and consequently the parties subject to one or more of the E15 misfueling mitigation

measures.

AFPM argued in their petition that by defining E10 as containing no more than 10.0 vol% ethanol, EPA effectively made a substantive change to the way test results used for determining compliance with fuel requirements arerounded. For example, for a gasolineethanol blend to be considered E10, it could no longer contain up to 10.4 vol% ethanol; it could only contain up to 10.04 vol% ethanol. AFPM asserted that there is a tolerance for blending ethanol that allows blends containing up to 10.4
vol% ethanol to be considered E10. While we do not agree that there is a blending tolerance for ethanol, we agree that test results are rounded utilizing the procedures identified in section 80.9 when compared to applicable standards,
in this case the ethanol concentrations


### 36068 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

50 See 74 FR 25018 (May 26, 2009).

51 See 74 FR 25018 (May 26, 2009).

52 See 75 FR 14762–14764 (March 26, 2010). 53 For an explanation of the rounding procedures outlined in § 80.9 and the rationale the Agency used to adopt those procedures, see 71 FR 16496 (April 3, 2006). specified in the E10 and the E15

waivers.

The Agency specifically addressed the issue of blending tolerances versus testing tolerances for gasoline-ethanol
blends in the RFS2 NPRM. 50 At the time, some stakeholders had suggested that the implementation of a blending
tolerance for the ethanol content of gasoline could be allowed to help obligated parties satisfy RFS requirements without the need for a CAA section 211(f)(4) waiver. In response, we argued that although the
test methods used to measure ethanol concentration (ASTM D 5599 and ASTM D 4815) include some variability,
ethanol is different than other fuel properties and components that are controlled in other fuel programs. 51 Fuel properties such as RVP, and components such as sulfur and benzene, are natural characteristics of gasoline as
a result of the chemical nature of crude oil and the refining process. Their levels or concentrations in gasoline are
unknown until measured and are dependent upon the accuracy of the test method. In contrast, ethanol is intentionally added in known amounts using equipment designed to ensure a specific concentration within a very narrow range. Parties that blend ethanol into gasoline normally have precise
control over the final concentration. Therefore, a blending tolerance for ethanol would not be appropriate. During the comment period for the RFS2 NPRM, EPA received a number of comments from stakeholders that argued that the volume percentage of ethanol in gasoline is readily determined using very accurate volumetric ratio blending facilities now in place at most blending terminals; therefore, the Agency should not allow a blending tolerance. In the final RFS rule, we did not include a blending tolerance for ethanol blends. 52

We continue to believe that blending
tolerances for ethanol are not appropriate, and the definitions of E10
and E15 in the E15 MMR are consistent
with this view. The E10 waiver is for gasoline containing ‘‘up to’’ 10 vol% ethanol, not for gasoline containing ‘‘up to’’ 10.4 vol% ethanol, and the E15 partial waivers are for fuel designed to contain ‘‘greater than 10 vol% ethanol
and not more than 15 vol% ethanol.’’ In the case of both waivers, the ‘‘10’’ and the ‘‘15’’ are exact numbers, not approximations, and they express how much ethanol can be lawfully added to fuel. Testing by the Department of Energy utilized in making the E15 partial waiver decisions was blended as precisely as possible to contain the relevant percentage of ethanol, not that percentage plus ‘‘0.49.’’ Testing for registration of E10 and E15 fuel and fuel additives under 40 CFR part 79 was also done with fuels blended as precisely as possible to contain the relevant percentage of ethanol. Similarly, EPA regulations provide that only fuel with
an ethanol concentration of between 9 and 10 vol%, not more or less, may lawfully use the statutory 1.0 psi RVP

waiver.

At the same time, we did not intend to change the definition of E10 in a way that impacts the rounding of test results
for ethanol concentrations. 53 If a manufacturer blends in a way designed to result in a gasoline-ethanol fuel containing no more than 10.0 vol% ethanol, but compliance testing indicates a concentration of 10.4 vol%,
we will still round down the test result in accordance with procedures in section 80.9. The purpose of the E15
MMR definitions state that if a
manufacturer blends ethanol into gasoline in a way designed to result in a gasoline-ethanol fuel containing greater than 10.0 vol% and no more than 15.0 vol% ethanol, it will be subject to applicable E15 MMR requirements. For example, bills of lading for an E10 fuel manufacturer that
indicates the manufacturer has purchased and blended more ethanol than 10.0 vol% ethanol may indicate
that a fuel does not meet the definition of E10 for E15 MMR purposes.

AFPM also argued that the E15 MMR
definitions of E10 would alter the implementation of other EPA fuels regulations without a required rulemaking, specifically the application of the 1.0 psi RVP waiver to E10. Since the Agency intended the E15 MMR definition of E10 to only apply for purposes of determining the applicability of E15 MMR requirements, the Agency does not believe these definitions affect the implementation
and enforcement of others fuels programs, including the applicability of the 1.0 psi RVP waiver. The introductory language to the definitions at 40 CFR part 80, subpart N clearly
states that definitions in section 80.1500 are ‘‘[f]or purposes of this subpart only.’’

In order to clarify that these definitions only apply in the context of the E15 MMR, EPA is proposing to add a new section 80.1509, which contains language that clearly states that when ethanol concentrations are measured for compliance testing purposes for 40 CFR, Part 80, Subpart N, the applicable
ethanol concentration value will be rounded using the rounding procedures at section 80.9. EPA is also proposing new prohibited acts language in section
80.1504 that should make it clear that only those parties that (1) produce gasoline, blendstocks for oxygenate blending (BOBs), or ethanol designed to
be used in the manufacture of E15 as currently defined (i.e., E15.0); (2) that
manufacture E15 to be introduced into commerce; or (3) that dispense E15 from a retail outlet. The Agency specifically seeks comments on this proposed language.

VII. Proposed Amendments to the ULSD Diesel Sulfur Survey

EPA is requesting comment concerning whether to amend a provision of the ultra-low sulfur diesel (ULSD) rule. The ULSD rule includes a provision that deems branded refiners
liable for violations of the ULSD sulfur
standard that are found at retail outlets displaying the refiner’s brand (40 CFR 80.612). The regulations include defense provisions. One element of a branded
refiner’s defense to such violations is that it must have a periodic sampling and testing program at the retail level (40 CFR 80.613(b) and (d)). The regulations also set forth an alternative sampling and testing defense element provision for branded refiners.

This alternative defense element provision (40 CFR 80.613(e)) allows abranded refiner to meet the companyspecific downstream periodic sampling and testing element of its defense by participating in funding a survey consortium that samples diesel fuel at retail outlets nationwide. This sampling and testing of fuel to determine compliance with the ULSD sulfur standard is carried out by an independent survey association. EPA reviews and approves the annual survey plan submitted by the survey association. The number of samples that are taken each year is determined by a statistical formula that is based in part on the previous year’s compliance rate. In addition, the regulations set a floor and a ceiling for the number of samples that must be taken in an annual survey cycle regardless of the sample number that would be calculated using the regulatory formula. Therefore, the number of samples required to be taken can potentially be less than the formula would require, or it can be more.

Compliance with the ULSD sulfur content standard has been extremely high; less than 1% of the samples have been in violation in recent years. The


### 36069 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

minimum number of samples currently required to be taken annually is set by the regulation at 5,250 regardless of this high compliance rate. Due to the high compliance rate, use of the statistical formula would result in a sampling rate of several hundred samples for each of the past several years, instead of 5,250 samples. The cost difference between taking several hundred samples versus taking over 5,000 samples is significant.
For these reasons we believe the continued high compliance rate, and the substantial discrepancy between the sampling rate calculated by the formula and the minimum sampling rate, argue for lowering the minimum sampling rate. However, we believe there is a point where the number of samples per year would be so few that the survey would be meaningless relative to robust sampling and testing programs conducted by each refiner individually. Balancing these concerns, we believe minimum sampling rate of about 1,800 samples is appropriate. We are requesting comment on reducing the minimum number of samples to some rate below 2,000 samples.

VIII. Statutory and Executive Order

Reviews

A. Executive Order 12866: Regulatory Planning and 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. 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.

B. Paperwork Reduction Act

The information collection requirements in this notice of proposed rulemaking have been submitted for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The Information Collection Request (ICR) document prepared by EPA related to this proposal has been assigned EPA ICR number 2469.01. A supporting statement for the proposed ICR has been placed in the docket. The proposed information collection is described in the following paragraphs.

This action contains recordkeeping and reporting that may affect the following parties under the RFS2 regulation: RIN generators (producers, importers), obligated parties (refiners), exporters, and parties who own or transact RINs. We estimate that 670 parties may be subject to the proposed
information collection. We estimate an annual recordkeeping and reporting burden of 3.1 hours per respondent. This action contains recordkeeping and reporting that may affect the following parties under the E15 regulation: gasoline refiners, gasoline and ethanol importers, gasoline and ethanol blenders (including terminals and carriers). We estimate that 2,000 respondents may be subject to the proposed information collection. We estimate an annual recordkeeping and reporting burden of 1.3 hours per respondent. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency.
This includes the time needed to review the instructions; develop, acquire, install, and utilize technology and systems for the purpose of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transit or otherwise
disclose the information. Burden is as defined at 5 CFR 1320.3(b).

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB
control number. The OMB control numbers for EPA’s regulations in 40
CFR are listed in 40 CFR Part 9.

To comment on the Agency’s need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, EPA has established a public docket for this proposed rule,
which includes the ICR described above, under Docket ID number EPA– HQ–OAR–2012–0401. Submit any
comments related to the ICR to EPA and
OMB. See the **ADDRESSES** section at the beginning of this notice for where to
submit comments to EPA. Send
comments to OMB at the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street NW., Washington, DC 20503,
Attention: Desk Office for EPA. Since OMB is required to make a decision concerning the ICR between 30 and 60 days after June 14, 2013, a comment to OMB is best assured of having its full effect if OMB receives it by July 15,

2013. C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.

For purposes of assessing the impacts of today’s rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration’s (SBA) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not
dominant in its field.

After considering the economic impacts of this action on small entities, I certify that this action will not have a significant economic impact on a
substantial number of small entities. The amendments to the RFS2 provisions in this direct final rule will not impose any requirements on small entities that were not already considered under the final RFS2 regulations, as it makes relatively minor corrections and modifications to those regulations. We
continue to be interested in the potential impacts of the proposed rule
on small entities and welcome
comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

This rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any one year. We
have determined that this action will not result in expenditures of $100 million or more for the above parties and thus, this rule is not subject to the requirements of sections 202 or 205 of

UMRA.

This rule 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. It only applies to gasoline, diesel, and renewable fuel producers, importers,
distributors and marketers and makes relatively minor corrections and


### 36070 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

modifications to the RFS2 and diesel regulations.

E. Executive Order 13132 (Federalism)

This action does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. This action only applies to gasoline, diesel, and renewable fuel producers, importers,
distributors and marketers and makes relatively minor corrections and
modifications to the RFS2 and diesel regulations. Thus, Executive Order 13132 does not apply to this action. In the spirit of Executive Order 13132, and consistent with EPA policy to promote
communications between EPA and State and local governments, EPA specifically solicits comment on this proposed
action from State and local officials.

F. Executive Order 13175 (Consultation
and Coordination With Indian Tribal Governments)

This proposed rule does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). It applies to gasoline, diesel, and renewable fuel producers, importers, distributors and marketers. This action makes relatively
minor corrections and modifications to the RFS and diesel regulations, and does not impose any enforceable duties on
communities of Indian tribal governments. Thus, Executive Order 13175 does not apply to this action. EPA specifically solicits additional comment on this proposed action from tribal
officials.

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.

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 (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 amends existing regulations related to renewable fuel, E15, and
ultra-lower sulfur diesel. We have concluded that this rule is not likely to have any adverse energy effects. In fact, we expect this proposed rule may result in positive effects, because many of the changes we are proposing will facilitate
the introduction of new renewable fuels under the RFS2 program and have come at the suggestion of industry
stakeholders.

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.

This action does not involve technical standards. Therefore, EPA did not consider the use of any voluntary
consensus standards. EPA welcomes comments on this aspect of the proposed rulemaking and, specifically, invites the public to identify potentially-applicable voluntary consensus standards and to explain why
such standards should be used in this regulation.

J. Executive Order 12898: Federal
Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.

EPA has determined that this proposed 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. These technical

amendments do not relax the control measures on sources regulated by the RFS regulations and therefore will not

cause emissions increases from these

sources.

K. Clean Air Act Section 307(d)

This rule is subject to Section 307(d) of the CAA. Section 307(d)(7)(B) provides that ‘‘[o]nly an objection to a rule or procedure which was raised with reasonable specificity during the period for public comment (including any public hearing) may be raised during judicial review.’’ This section also provides a mechanism for the EPA to convene a proceeding for reconsideration, ‘‘[i]f the person raising an objection can demonstrate to the EPA that it was impracticable to raise such objection within [the period for public comment] or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule.’’ Any person seeking to make such a demonstration to

the EPA should submit a Petition for

Reconsideration to the Office of the Administrator, U.S. EPA, Room 3000, Ariel Rios Building, 1200 Pennsylvania Ave. NW., Washington, DC 20460, with a copy to both the person(s) listed in the preceding **FOR FURTHER INFORMATION**

**CONTACT** section, and the Director of the Air and Radiation Law Office, Office of General Counsel (Mail Code 2344A), U.S. EPA, 1200 Pennsylvania Ave. NW., Washington, DC 20460.

List of Subjects in 40 CFR Part 80

Environmental protection, Administrative practice and procedure, Agriculture, Air pollution control, Confidential business information, Energy, Forest and Forest Products, Fuel additives, Gasoline, Imports, Motor vehicle pollution, Penalties, Petroleum, Reporting and recordkeeping requirements.

Dated: May 20, 2013.

Bob Perciasepe,

Acting Administrator.

For the reasons stated in the preamble, the Environmental Protection Agency proposes to amend 40 CFR chapter I as set forth below:


### 36071 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

**PART 80—REGULATION OF FUELS**
**AND FUEL ADDITIVES**

■ 1. The authority citation for part 80
continues to read as follows:

Authority: 42 U.S.C. 7414, 7521, 7542, 7545 and 7601(a).

■ 2. Section 80.613 is amended by revising paragraph (e)(4)(v)(A)
definition ‘‘n’’ as follows:

**§ 80.613 What defenses apply to persons deemed liable for a violation of a prohibited**  **act under this subpart?**

* * * * *

(e) * * * (4) * * * (v) * * * (A) * * *

Where:

n = minimum number of samples in a yearlong survey series. However, in no case

shall n be larger than 9,600 nor smaller than 1,800.

* * * * *

■ 3. Section 80.1401 is amended by adding the definitions of ‘‘Nameplate capacity’’, ‘‘Renewable compressed natural gas’’, ‘‘Renewable fuel producer’’, ‘‘Renewable liquefied natural gas’’, ‘‘Responsible corporate officer’’, in alphabetical order and revising the definitions of ‘‘Biogas’’, ‘‘Crop residue’’, ‘‘Naphtha’’, ‘‘Renewable biomass’’, and ‘‘Small refinery’’ in to read as follows:

**§ 80.1401 Definitions.**

* * * * *

Biogas means a mixture of hydrocarbons that is a gas at 60 degrees Fahrenheit and 1 atmosphere of pressure that is produced through the conversion of organic matter. Biogas includes landfill gas, gas from waste digesters, and gas from waste treatment plants. Waste digesters include digesters processing animal wastes, biogenic waste oils/fats/greases, separated food and yard wastes, and crop residues, and waste treatment plants include wastewater treatment plants and publicly owned treatment works.

* * * * *

Crop residue is the biomass left over from the harvesting or processing of planted crops from existing agricultural land and any biomass removed from existing agricultural land that facilitates crop management (including biomass
removed from such lands in relation to invasive species control or fire management), whether or not the biomass includes any portion of a crop or crop plant. Biomass is considered crop residue only if the use of that biomass for the production of renewable fuel has no significant impact on demand for the feedstock crop, products produced from that feedstock crop, and all substitutes for the crop and its products, nor any other impact that would result in a significant increase in
direct or indirect GHG emissions.

* * * * *

Nameplate capacity means the peak design capacity of a facility for the purposes of registration of a facility under § 80.1450(b)(1)(V)(E).

Naphtha means a blendstock or fuel blending component falling within the boiling range of gasoline which is composed of only hydrocarbons, is commonly or commercially known as naphtha and is used to produce gasoline through blending.

* * * * *

Renewable biomass means each of the following (including any incidental, de
minimis contaminants that are impractical to remove and are related to customary feedstock production and transport):

(1) Planted crops and crop residue harvested from existing agricultural land cleared or cultivated prior to December 19, 2007 and that was nonforested and either actively managed or fallow on December 19, 2007.

(2) Planted trees and tree residue from a tree plantation located on non-federal land (including land belonging to an
Indian tribe or an Indian individual that is held in trust by the U.S. or subject to a restriction against alienation imposed by the U.S.) that was cleared at any time prior to December 19, 2007 and actively managed on December 19, 2007.

(3) Animal waste material and animal byproducts.

(4) Slash and pre-commercial thinnings from non-federal forestland (including forestland belonging to an Indian tribe or an Indian individual, that are held in trust by the United States or subject to a restriction against alienation imposed by the United States) that is not ecologically sensitive
forestland.

(5) Biomass (organic matter that is available on a renewable or recurring basis) obtained from the immediate vicinity (i.e., obtained within 200 feet) of buildings and other areas regularly occupied by people, or of public infrastructure, in an area at risk of
wildfire.

(6) Algae. (7) Separated yard waste or food waste, including recycled cooking and trap grease, and materials described in § 80.1426(f)(5)(i).

Renewable compressed natural gas means biogas as defined in this section, that is processed to the standards of pipeline natural gas as defined in 40 CFR 72.2 and that is compressed to pressures up to 3600 psi. Only renewable CNG that qualifies as
renewable fuel and is used for transportation purposes can generate

RINs.

* * * * *

Renewable fuel producer means a person who operates or directly supervises the operation of a facility where renewable fuel is produced.

* * * * *

Renewable liquefied natural gas means biogas as defined in this section, that is processed to the standards of pipeline natural gas as defined in 40 CFR 72.2 and that goes through the process of liquefaction in which the biogas is cooled below its boiling point and weighs less than half the weight of water so it will float if spilled on water. Only renewable LNG that qualifies as
renewable fuel and is used for transportation fuel can generate RINs.

Responsible Corporate Officer, or RCO, for this subpart only, means a corporate officer who has the authority and is assigned responsibility to provide
information to EPA on behalf of a company. A company may name only one Responsible Corporate Officer. A Responsible Corporate Officer may not delegate his or her responsibility to any other person. The Responsible Corporate Officer may delegate the ability to submit information to EPA, but the Responsible Corporate Officer remains responsible for the actions of such employees or agents.

* * * * *

Small Refinery, for this subpart only, means a refinery for which the average aggregate daily crude oil throughput for calendar year 2006 and subsequent years (as determined by dividing the aggregate throughput for the calendar year by the number of days in the calendar year) does not exceed 75,000
barrels.

■ 4. Section 80.1415 is amended by revising paragraphs (b)(5) and (c)(1) to
read as follows:

**§ 80.1415 How are equivalence values assigned to renewable fuel?** 

(b) * * * (5) 77,000 Btu (lower heating value) of compressed natural gas (CNG) or liquefied natural gas (LNG) shall represent one gallon of renewable fuel with an equivalence value of 1.0.

(c) * * * (1) The equivalence value for renewable fuels described in paragraph (b)(7) of this section shall be calculated using the following formula:
EV = (R/0.972) * (EC/77,000)

Where:


### 36072 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

EV = Equivalence Value for the renewable fuel, rounded to the nearest tenth.
R = Renewable content of the renewable fuel. Except as provided in § 80.1426(f)(4)(iii), this is a measure of the portion of a
renewable fuel that came from renewable biomass, expressed as a fraction, on an energy basis. EC = Energy content of the renewable fuel, in Btu per gallon (lower heating value). ■ 5. Section 80.1426 is amended by:

■ a. Revising Table 1 of paragraph (f)(1) by:

■ 1. Revising the entry for ‘‘Q’’; and

■ 2. Adding new entries for T through AA to the end of the table;

■ b. Revising paragraphs (f)(10) and f(11); and

■ c. Adding paragraph (f)(14). The revisions and additions read as

follows:

**§ 80.1426 How are RINs generated and assigned to batches of renewable fuel by**  **renewable fuel producers or importers?**

(f) * * *

(1) * * *



### T ABLE 

### 1 TO 

### § 80.1426—A PPLICABLE 

### D C ODES FOR 

### E ACH 

### F UEL 

### P ATHWAY FOR 

### U SE IN 

### G ENERATING 

### RIN S

Fuel type Feedstock Production process requirements D-Code

* * * * * * * Q ............... Renewable Compressed Natural Gas, Renewable Liquefied Natural

Gas. Biogas from waste treatment plants and waste digesters. Any ........................................................................ 5

* * * * * * * T ............... Butanol .............................................. Corn starch .................... Fermentation; dry mill usin g natural gas andbiogas from on-site thin stillage anaerobic digester for process energy w/CHP producingexcess electricity of at least 40% of the purchased natural gas energy used by the facility. 5

U ............... Renewable Compressed Natural Gas, Renewable Liquefied Natural

Gas. Biogas from Landfills ..... Any ........................................................................ 3

V ............... Renewable Electricity ........................ Biogas from landfills ...... Any .................................... .................................... 3 W .............. Cellulosic Naphtha ............................ Biogas from landfills ...... Fischer-Tropsch process; Facilities mus t produceat least 20% of their electricity usage at the facility. 3

X ............... Cellulosic Diesel for use as conventional diesel fuel. Biogas from landfills ...... Fischer-Tropsch process; Facilities must produceat least 20% of their electricity usage at the facility. 7

Y ............... Naphtha ............................................. Biogas from landfills ...... Fischer-Tropsch process ......... .............................. 5
Z ............... Renewable Diesel for use as conventional diesel fuel. Biogas from landfills ...... Fischer-Tropsch process; Excluding processesthat co-process renewable biomass and petroleum. 4

AA ............. Renewable Diesel for use as conventional diesel fuel. Biogas from landfills ...... Fischer-Tropsch process; Includes only processes that co-process renewable biomass and petroleum. 5

* * * * *

(10)(i) For purposes of this section, renewable electricity that is not introduced into a distribution systemwith electricity derived from nonrenewable feedstocks is considered renewable fuel and the producer may generate RINs if all of the following apply:

(A) The electricity is produced from renewable biomass and qualifies for a D
code in Table 1 to this section or has received approval for use of a D code by the Administrator;

(B) The fuel producer has entered into
a written contract for the sale of a specific quantity of renewable electricity as transportation fuel; and

(C) The renewable electricity is used as a transportation fuel.

(ii) For purposes of this section, fuels produced from biogas that is not introduced into a distribution system with gas derived from non-renewable
feedstocks is considered renewable fuel and the producer may generate RINs if all of the following apply: (A) The fuel is produced from renewable biomass and qualifies for a D
code in Table 1 to this section or has received approval for use of a D code by the Administrator;

(B) The fuel producer has entered into
a written contract for the sale of a specific quantity of biogas to be used as a feedstock for transportation fuel; and

(C) The fuel produced from the biogas is used as a transportation fuel.

(iii) A producer of renewable electricity that is generated by co-firing
a combination of renewable biomass and fossil fuel may generate RINs only for the portion attributable to the renewable biomass, using the procedure described in paragraph (f)(4) of this

section.

(11)(i) For purposes of this section, renewable electricity that is introduced into a commercial distribution system (transmission grid) may be considered renewable fuel and the producer may generate RINs if:

(A) The electricity is produced from renewable biomass and qualifies for a D code in Table 1 of this section or has received approval for use of a D code by the Administrator;

(B) The fuel producer has entered into
a written contract for the sale of a specific quantity of electricity derived
from renewable biomass sources with a party that uses electricity taken from a commercial distribution system for use as a transportation fuel, and such electricity has been introduced into that commercial distribution system (transmission grid);

(C) The quantity of renewable electricity for which RINs were generated was sold for use as transportation fuel and for no other purposes; and

(D) The renewable electricity was
loaded onto and withdrawn from a physically connected transmission grid as defined by the North American Electrical Reliability Corporation (NERC) regions.

(ii) For purposes of this section, fuel produced from biogas that is introduced


### 36073 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

into a commercial distribution system may be considered renewable fuel and the producer may generate RINs if:

(A) The fuel is produced from renewable biomass and qualifies for a D
code in Table 1 of this section or has received approval for use of a D code by the Administrator;

(B) The fuel producer has entered into
a written contract for the sale of a specific quantity of fuel derived from renewable biomass sources with a party
that uses fuel taken from a commercial distribution system for transportation fuel, and such fuel has been introduced
into that commercial distribution system (e.g., pipeline);

(C) The quantity of fuel produced from the biogas for which RINs were generated was sold for use as transportation fuel and for no other

purposes;

(D) The biogas was injected into and withdrawn from a physically connected carrier pipeline;

(E) The gas that is ultimately withdrawn from that pipeline for use in a transportation fuel is withdrawn in a
manner and at a time consistent with the transport of gas between the injection and withdrawal points; and

(F) The volume and heat content of biogas injected into the pipeline and the volume of gas withdrawn to make a transportation fuel are measured by continuous metering.

(iii) The fuel sold for use in transportation fuel is considered produced from renewable biomass only
to the extent that:

(A) The amount of fuel sold for use as transportation fuel matches the amount
of fuel derived from renewable biomass that the producer contracted to have placed into the commercial distribution system; and

(B) No other party relied upon the contracted volume of biogas or renewable electricity for the creation of

RINs.

(iv) For renewable electricity that is generated by co-firing a combination of renewable biomass and fossil fuel, the producer may generate RINs only for the portion attributable to the renewable biomass, using the procedure described in paragraph (f)(4) of this section.

* * * * *

(14) For purposes of verification, in
order for facilities to meet the renewable electricity production requirement for the biogas-derived cellulosic diesel and cellulosic naphtha pathways, all conditions below apply.

(i) The quantity of process electricity produced on-site must be measured by continuous metering. (ii) The electricity must be used to provide power to process units or process equipment at the facility.

(iii) The electrical energy must derive from raw landfill gas, waste heat from the production process, unconverted syngas from the F–T process, fuel gas from the hydroprocessing or combined heat and power (CHP) units that use non-fossil fuel based gas or other
renewable sources.

■ 6. Section 80.1427 is amended by:

■ a. Revising paragraphs (a)(1), (a)(1)(i)
definition ‘‘RVO CB,i ’’, (a)(1)(ii) definition

‘‘RVO BBD,i ’’, (a)(1)(iii) definition

‘‘RVO AB,i ’’, (a)(1)(iv) definition

‘‘RVO RF,i , (a)(5) introductory text, and (a)(6); and

■ b. Adding paragraph (a)(1)(v), (a)(1)(vi), (a)(1)(vii), (a)(1)(viii),

The additions and revisions read as
follows:

**§ 80.1427 How are RINs used to demonstrate compliance?** 

(a) Renewable Volume Obligations and Exporter Renewable Volume Obligations. (1) Except as specified in paragraph (b) of this section or § 80.1456, each party that is an obligated party under § 80 1406 and is obligated
to meet the Renewable Volume Obligations under § 80.1407, or is an exporter of renewable fuel that is obligated to meet the Exporter Renewable Volume Obligations under § 80.1430, must demonstrate pursuant to § 80.1451(a)(1) that it is retiring for compliance purposes a sufficient number of RINs to satisfy the following equations.

(i) * * *

RVO CB,i = The renewable Volume Obligation for cellulosic biofuel for the obligated party for calendar year i, in gallons, pursuant to § 80.1407.

(ii) * * *

RVO BBD,i = The renewable Volume Obligation for biomass-based diesel for the obligated party for calendar year i, in gallons, pursuant to § 80.1407.

(iii) * * *

RVO AB,i = The renewable Volume Obligation for advanced biofuel for the obligated party for calendar year i, in gallons,
pursuant to 80.1407.
(iv) * * *

RVO RF,i = The renewable Volume Obligation for renewable fuel for the obligated party for calendar year i, in gallons, pursuant

to 80.1407.
(v) Cellulosic biofuel—Exporter.
( SRINNUM) CB,i + ( SRINNUM) CB,i

¥ 1 = ERVO CB,i

Where:

( SRINNUM) CB,i = Sum of all owned gallonRINs that are valid for use in complying with the cellulosic biofuel ERVO, were generated in year i, and are being applied

towards the ERVO CB,i , in gallons. ( SRINNUM)CB,i-1= Sum of all owned gallonRINs that are valid under subparagraph (6) of this paragraph for use in complying with the cellulosic biofuel ERVO, were generated in year i-1, and are being applied towards the ERVO CB,i , in gallons.

ERVO CB, k = The Exporter Renewable Volume Obligation for cellulosic biofuel for the renewable fuel exporter for an export of renewable fuel k, in gallons, pursuant to
§ 80.1430.

(vi) Biomass-based diesel—Exporter.
( SRINNUM) BBD,i + ( SRINNUM)BBD,i-1=

ERVO BBD,i

Where:

( SRINNUM) BBD,i = Sum of all owned gallonRINs that are valid for use in complying with the biomass-based diesel ERVO, were generated in year i, and are being applied towards the ERVO BBD,i , in gallons. ( SRINNUM)BBD,i-1= Sum of all owned gallon-RINs that are valid under subparagraph (6) of this paragraph for use in complying with the biomass-based diesel ERVO, were generated in year i-1, and are being applied towards the

ERVO BBD,i , in gallons.

ERVO BBD,i = The Exporter Renewable Volume Obligation for biomass-based diesel for the renewable fuel exporter for an export of renewable fuel I after 2010, in gallons, pursuant to § 80.1430.

(vii) Advanced biofuel—Exporter.

( SRINNUM) AB,i + ( SRINNUM)AB,i-1=

ERVO AB,i

Where:

( SRINNUM) AB,i = Sum of all owned gallonRINs that are valid for use in complying with the advanced biofuel ERVO, were generated in year i, and are being applied

towards the ERVO AB,i , in gallons. ( SRINNUM)AB,i-1= Sum of all owned gallonRINs that are valid under subparagraph (6) of this paragraph for use in complying with the advanced biofuel ERVO, were generated in year i-1, and are being applied towards the ERVO AB,i , in gallons.

ERVO AB,i = The Exporter Renewable Volume Obligation for advanced biofuel for the renewable fuel exporter for an export of renewable fuel i, in gallons, pursuant to
§ 80.1430.

(viii) Renewable fuel—Exporter.
( SRINNUM) RF,i + ( SRINNUM)RF,i-1=

ERVO RF,i

Where:

( SRINNUM) RF,i = Sum of all owned gallonRINs that are valid for use in complying with the renewable fuel (D code 6) E

ERVO RF,i , in gallons. ( SRINNUM)RF,i-1= Sum of all owned gallonRINs that are valid under subparagraph (6) of this paragraph for use in complying with the renewable fuel (Dcode 6) ERVO, were generated in year iVerDate Mar<15>2010 18:55 Jun 13, 2013 Jkt 229001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4702 E:\FR\FM\14JNP2.SGM 14JNP2mstockstill on DSK4VPTVN1PROD with PROPOSALS2

### 36074 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

1, and are being applied towards the

ERVO RF,i , in gallons.

ERVO RF,i = The exporter Renewable Volume Obligation for renewable fuel for the renewable fuel exporter for an export of renewable fuel i, in gallons, pursuant to
§ 80.1430.

* * * * *

(5) The value of ( SRINNUM)i-1 may not exceed values determined by the following inequalities as provided in paragraph (a)(7)(iii) of this section and 80.1442(d), for obligated parties only.

* * * * *

(6) Except as provided in paragraph (a)(7) of this section:

(i) For obligated parties, RINs may only be used to demonstrate compliance with the RVOs for the calendar year in which they were generated or the following calendar year.

(ii) [Reserved.] (iii) For Renewable Fuel Exporters, RINs generated in calendar year i, must be used to demonstrate compliance with
the ERVOs from renewable fuel export(s) in calendar year i, except as provided in paragraph (a)(6)(iv) of this

section.

(iv) For Renewable Fuel Exporters, RINs generated in calendar year i-1, may only be used to demonstrate compliance
with the ERVOs from renewable fuel exports in January of calendar year i.

* * * * *

■ 7. Section 80.1441 is amended by adding paragraph (e)(2)(iii) to read as
follows:

**§ 80.1441 Small refinery exemption.**

* * * * *

(e) * * * (2) * * * (iii) In order to qualify for an extension of its small refinery exemption, a refinery must meet the definition of ‘‘small refinery’’ in § 80.1401 for all full calendar years
between 2006 and the date of submission of the petition for an

extension.

* * * * *

■ 8. Section 80.1450 is amended by:

■ a. Adding paragraph (b)(1)(iv)(C);

■ b. Revising paragraphs (b)(1)(v)(C), (b)(1)(v)(D); and adding (b)(1)(v)(E); and

■ c. Adding paragraphs (h) and (i).

The additions and revisions read as
follows:

**§ 80.1450 What are the registration requirements under the RFS program?** 

* * * * *

(b) * * * (1) * * * (iv) * * * (C) To demonstrate compliance with the renewable electricity production requirement for the biogas-derived cellulosic diesel and cellulosic naphtha pathways, provide all the following
information:

( 1 ) The energy source, equipment and/or process used to generate the electricity. Permitted sources are raw landfill gas, waste heat from the production process, unconverted syngas from the Fischer-Tropsch process, fuel gas from the hydroprocessing, or combined heat-and-power (CHP) units that use non-fossil fuel based gas or
other renewable sources.

(2) Estimates of the total amount of electricity to be used, the total amount of grid electricity to be purchased, the total amount of renewable electricity to be produced, and a calculation of the percent of total process electricity use to be produced from allowed sources at the facility.

(v) * * * (C)( 1 ) For all facilities, copies of documents demonstrating each facility’s actual peak capacity as defined in § 80.1401 if the maximum rated annual volume output of renewable fuel is not specified in the air permits specified in paragraphs (b)(1)(v)(A) and (b)(1)(v)(B) of this section, as appropriate.

(2) For facilities claiming the exemption described in § 80.1403 (c) or (d) which are exempt from air permit requirements and for which insufficient production records exist to establish actual peak capacity, copies of document demonstrating the facility’s nameplate capacity, as defined in § 80.1401.

(D) For all facilities producing renewable electricity or fuel from biogas that qualifies as renewable fuel, submit
all relevant information in § 80.1426(f)(10) or (11), and copies of all contracts that the track the biogas or renewable electricity from its original source, to the producer that processes it into renewable fuel, and finally to the end user that will actually use the renewable electricity or the renewable fuel derived from biogas for transportation purposes.

(1) Specific quantity and the heat content, percent efficiency of transfer, if applicable, and any conversion factors of the biogas or renewable biomass.

(2) Specific quantity and the heat content and percent efficiency of transfer, if applicable, and any
conversion factors for the renewable fuel derived from biogas or renewable electricity.

(E) Such other records as may be requested by the Administrator.

* * * * *

(h) Cancellation of Company Registration. (1) EPA may cancel a company’s registration, using the process in paragraph (h)(2) of this section, if any of the following

circumstances exist:

(i) The company has reported no activity in EMTS for one calendar year (January 1 through December 31) or has failed to meet any EMTS requirement under § 80.1452;

(ii) The company has failed to comply with the registration requirements of this section;

(iii) The company has failed to submit any required report within thirty (30) days of the required submission date under § 80.1451; or

(iv) The attest engagement required under § 80.1454 has not been received within thirty (30) days of the required
submission date.

(2) EPA will use the following process
whenever it decides to cancel the registration of a company:

(i) EPA will notify the company’s owner or Responsible Corporate Officer (RCO), in writing, that it intends to cancel the company’s registration, and identifying the reasons for that proposed action. The company will have fourteen (14) calendar days from the date of the
notification to correct the deficiencies identified or explain why there is no
need for corrective action.

(ii) If the basis for EPA’s notice of intent to cancel registration is the absence of EMTS activity for one calendar year, a stated intent to engage in activity reported through EMTS within the next calendar year will be
sufficient to avoid cancellation of registration.

(iii) If the company does not respond, does not correct identified deficiencies, or does not explain why such correction is not necessary within the time allotted for response, EPA may cancel the company’s registration within further notice to the party.

(3) Impact of registration cancellation. (i) A company whose registration is
cancelled shall still be liable for violation of any requirements of this subpart.

(ii) A company whose registration is cancelled will not be listed on any public list of actively registered companies that is maintained by EPA.

(iii) If the company whose registration
is cancelled is a renewable fuel producer or foreign ethanol producer, it will not be listed on any public list of registered producers maintained by

EPA.

(iv) A company whose registration is cancelled will not have access to any of the electronic reporting systems
associated with the renewable fuel standard program, including the EPA Moderated Transaction System (EMTS).


### 36075 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

(v) A company whose registration is canceled must submit any corrections of deficiencies to EPA on forms, and following policies, established by EPA.

(vi) If a company whose registration has been canceled wishes to re-register, they may initiate that process by submitting a new registration, consistent with paragraphs (a)–(c) of this section.

(vii) English language registrations. Any document submitted to EPA under § 80.1450 must be submitted in English, or shall include an English translation.

■ 9. Section 80.1451 is amended by revising paragraphs (a)(1)(vi) and (b)(1)(ii)(Q), and by adding paragraph (h) to read as follows:

**§ 80.1451 What are the reporting requirements under the RFS program?** 

(a) * * * (1) * * * (vi) The RVOs for obligated parties, as defined in § 80.1427(a) and for exporters of renewable fuel, as defined in § 80.1427(a) and 80.1430(b), for the reporting year.

* * * * *

(b) * * * (1) * * * (ii) * * * (Q) Producers or importers of renewable fuel produced at facilities that use biogas for process heat as described in § 80.1426(f)(12), shall report the total energy supplied to the renewable fuel facility, in MMBtu based on metering of gas volume. Producers or importers of renewable fuel produced at
facilities that meet the renewable electricity production requirement for the biogas-derived cellulosic diesel and cellulosic naphtha pathways as described in § 80.1426(f)(13), shall report the total renewable electricity produced by the renewable facility, in kilowatt-hour (kWh) or megawatt-hour (MWh), the total amount of electricity used, the total amount of grid electricity purchased, and a calculation verifying the percent of total process electricity from allowed sources produced on-site.

* * * * *

(h) English language reports. Any
document submitted to EPA under § 80.1451 must be submitted in English, or shall include an English translation.

■ 10. Amend Section 80.1452 to revise paragraph (c) introductory text and add paragraphs (e) and (f) to read as follows:

**§ 80.1452 What are the requirements**

**related to the EPA Moderated Transaction System (EMTS)?** 

* * * * *

(c) Starting July 1, 2010, each time any party sells, separates, or retires RINs generated on or after July 1, 2010, all of the following information must be submitted to EPA via the submitting party’s EMTS account within five (5) business days of the reportable event, except as provided in § 80.1430(f). Starting July 1, 2010, each time any party purchases RINs generated on or after July 1, 2010, all the following
information must be submitted to EPA via the submitting party’s EMTS account within ten (10) business days of the reportable event. The reportable event for a RIN separation occurs on the date of separation as described in § 80.1429. The reportable event for a
RIN retirement occurs on the date of retirement as described in this subpart.

* * * * *

(e) [Reserved.] (f) [Reserved.]

■ 11. Amend Section 80.1454 by

■ a. Adding paragraph (a)(7);

■ b. Revising paragraph (b)(4)(i);

■ c. Adding paragraph (b)(7);

■ d. Revising paragraph (f)(3)(i) and adding paragraph (f)(5); and

■ e. Revising paragraph (k)(1); and

■ f. Adding paragraph (q).

The additions and revisions read as
follows:

**§ 80.1454 What are the recordkeeping requirements under the RFS program?** 

* * * * *

(a) * * * (7) Records related to any volume of renewable fuel that was disqualified by the party pursuant to § 80.1433:

(b) * * * (4) * * * (i) A list of the RINs owned, purchased, sold, separated, retired, or
reinstated.

* * * * *

(7) Records related to any volume of
renewable fuel where RINs were not generated by the renewable fuel producer or importer pursuant to § 80.1426(c):

* * * * *

(f) * * * (3) * * * (i) A list of the RINs owned, purchased, sold, separated, retired, or
reinstated.

* * * * *

(5) Records related to any volume of renewable fuel that was disqualified by the party pursuant to § 80.1433.

* * * * *

(k)(1) Biogas and electricity in pathways involving feedstocks other than grain sorghum. A renewable fuel producer that generates RINs for
renewable CNG/LNG or renewable electricity produced from renewable
biomass for fuels that are used for transportation pursuant to § 80.1426(f)(10) and (11), or that uses process heat from biogas to generate RINs for renewable fuel pursuant to § 80.1426(f)(12) or that meets the renewable electricity production requirement for the biogas-derived cellulosic diesel and cellulosic naphtha pathways pursuant to § 80.1426(f)(13) shall keep all of the following additional
records:

(i) Documents demonstrating the kilowatt-hours (kWh) of allowable electricity relied upon under § 80.1426(f)(13) that was generated at the facility, if applicable.

(ii) The energy source, equipment and/or process used to generate the electricity relied upon under § 80.1426(f)(13), if applicable. Permitted sources are raw landfill gas, waste heat from the production process,unconverted syngas from the FischerTropsch process, fuel gas from thehydroprocessing, or combined heat-andpower (CHP) units that use non-fossil fuel based gas or other renewable

sources.

(iii) Contracts and documents memorializing the sale of renewable CNG/LNG or renewable electricity for use as transportation fuel relied upon in § 80.1426(f)(10), § 80.1426(f)(11), or for use of biogas for use as process heat to make renewable fuel as relied upon in § 80.1426(f)(12) and the transfer of title of the biogas or renewable electricity
and all associated environmental attributes from the point of generation to the facility which sells or uses the fuel for transportation purposes.

(iv) Documents demonstrating the volume and energy content of biogas, or kilowatts of renewable electricity, relied upon under § 80.1426(f)(10) that was delivered to the facility which sells or uses the fuel for transportation

purposes.

(v) Documents demonstrating the volume and energy content of biogas, or kilowatts of renewable electricity, relied upon under § 80.1426(f)(11), or biogas relied upon under § 80.1426(f)(12) that was placed into the common carrier pipeline (for biogas) or transmission line shared power grid (for renewable electricity).

(vi) Documents demonstrating the volume and energy content of biogas relied upon under § 80.1426(f)(12) at the point of distribution.

(vii) Affidavits from the biogas or renewable electricity producer and all parties that held title to the biogas or renewable electricity confirming that
title and environmental attributes of the biogas or renewable electricity relied upon under § 80.1426(f)(10) and (11) were used for transportation purposes only, and that the environmental attributes of the biogas or process


### 36076 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

electricity relied upon under § 80.1426(f)(12) or § 80.1426(f)(13) were used for process heat or electricity at the renewable fuel producer’s facility, and for no other purpose. The renewable fuel producer shall create and/or obtain these affidavits at least once per calendar quarter.

(viii) The biogas or renewable electricity producer’s Compliance Certification required under Title V of
the Clean Air Act.

(ix) Documents demonstrating the total amount of grid electricity purchased and calculations showing the percent of total electricity usage provided by allowable electricity production at the facility, if applicable.

(x) Such other records as may be requested by the Administrator.

* * * * *

(q) English language records. Any document requested by the
Administrator under this section must be submitted in English, or shall include an English translation.

■ 12. Section 80.1463 is amended by adding paragraph (d) to read as follows:

**§ 80.1463 What penalties apply under the RFS program?** 

* * * * *

(d) Any person violating § 80.1460(b)(1)–(4) or (6) engages in a separate violation for each day that an
invalid RIN remains available for use in RFS compliance, and each such daily violation is punishable by the maximum daily penalty allowed under the Clean

Air Act.

■ 13. Section 80.1466 is amended by revising the section heading and paragraphs (a), (d)(1), (d)(1)(vi), (d)(3)(ii), (e)(1)(i), (f) introductory text, (h), (h)(1), and (o)(2) and adding paragraph (p) as follows:

**§ 80.1466 What are the additional requirements under this subpart for RIN** **generating foreign producers, non RIN generating foreign producers, foreign**  **ethanol producers and importers of**

**renewable fuels?**

(a) Foreign producer of renewable fuel. For purposes of this subpart, a foreign producer of renewable fuel is a person located outside the United States, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands (collectively referred to in this section as ‘‘the United States’’) that has been registered with EPA as a renewable fuel producer or foreign ethanol producer, regardless of whether the foreign renewable fuel producer generates RINs or an importer of renewable fuel generates RINs for the fuel. Hereinafter referred to as a ‘‘foreign producer’’ under this section.

(d) * * * (1) On each occasion that
RFS–FRRF is loaded onto a vessel for transport to the United States the foreign producer shall have an independent third party do all the following:

* * * * *

(vi) Review original documents that reflect movement and storage of the RFS–FRRF from the foreign producer to the load port, and from this review determine all the following:

* * * * *

(3) * * * (ii) Be independent under the criteria specified in § 80.65(f)(2)(iii); and

* * * * *

(e) * * * (1)(i) Any foreign producer and any United States importer of RFS– FRRF shall compare the results from the load port testing under paragraph (d) of this section, with the port of entry testing as reported under paragraph (k) of this section, for the volume of renewable fuel, standardized per § 80.1426(f)(8), except as specified in paragraph (e)(1)(ii) of this section.

* * * * *

(f) Foreign producer commitments. Any foreign producer shall commit to and comply with the provisions contained in this paragraph (f) as a condition to being approved as a foreign producer under this subpart.

* * * * *

(h) Bond posting. Any foreign producer shall meet the requirements of this paragraph (h) as a condition to approval as a foreign producer under this subpart and on a continuing basis if the foreign producer exceeds projections used in calculated the bond.

(1) The foreign producer shall post a bond of the amount calculated using one of the two following equations whichever equation results in a higher
bond value:

Bond = G * $0.01

Or

Bond = .25 * S (M i * RIN i )

Where:

Bond = amount of the bond in U.S. dollars. G = the greater of: the largest volume of renewable fuel produced by the foreign producer and exported to the United States, in gallons, during a single calendar year among the five preceding calendar years, or the largest volume of renewable fuel that the foreign producer expects to export to the Unites States during any calendar year identified in the Production Outlook Report required by § 80.1449. If the volume of renewable fuel anticipated to be exported to the United States during any calendar year

increases above the value used in calculating the existing bond amount, the foreign producer shall increase the bond by using the higher anticipated export volume for the calendar year to calculate a higher bond amount and purchasing the higher bond prior to the generation of RINs to reflect the increase in export volume. M i = RIN multiplier for specified D code, i, in U.S. dollars,

as follows: The RIN multiplier for a D3 RIN is $0.78 The RIN multiplier for a D4 RIN is $1.30 The RIN multiplier for a D5 RIN is $0.80 The RIN multiplier for a D6 RIN is $0.02 The RIN multiplier for a D7 RIN is $0.78

RIN i = the greater of: (i) the largest quantity

of RINs for a specified D code, i, produced by the foreign producer and exported to the United States, in gallons, during a single calendar year among the five preceding calendar years, or (ii) the largest quantity of RINs that the foreign producer expects to export to the United States during any calendar year

identified in the Production Outlook Report required by § 80.1449. If the volume of renewable fuel anticipated to be exported to the United States during any calendar year increases above the value used in calculating the existing bond amount, the foreign producer shall increase the bond by using the higher anticipated export volume for the calendar year to calculate a higher bond amount and purchasing the higher bond prior to the generation of RINs to reflect the increased export volume.

* * * * *

(o) (2) Signed by the president or owner of the foreign producer company, or by that person’s immediate designee, and shall contain the following declaration: ‘‘I hereby certify: (1) That I have actual authority to sign on behalf of and to bind [INSERT NAME OF FOREIGN PRODUCER] with regard to all statements contained herein; (2) that I
am aware that the information contained herein is being Certified, or
submitted to the United States Environmental Protection Agency, under the requirements of 40 CFR part 80, subpart M, and that the information is material for determining compliance under these regulations; and (3) that I
have read and understand the information being Certified or submitted, and this information is true, complete and correct to the best of my knowledge and belief after I have taken reasonable and appropriate steps to verify the accuracy thereof. I affirm that
I have read and understand the provisions of 40 CFR part 80, subpart M, including 40 CFR 80.1466 apply to [INSERT NAME OF FOREIGN PRODUCER]. Pursuant to Clean Air Act section 113(c) and 18 U.S.C. 1001, the penalty for furnishing false, incomplete or misleading information in this
certification or submission is a fine of


### 36077 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

up to $10,000 U.S., and/or imprisonment for up to five years.’’

( p ) Foreign Produced Renewable Fuel and Foreign Produced Ethanol for

Which RINs Have Been or Will Be Generated by the Importer

(1) For non-RIN generating foreign producers and foreign ethanol producers already registered pursuant to section § 80.1450, all of the requirements in paragraphs (a) through (o) of this section must be satisfied no later than January 1, 2013.

(2) For RIN generating foreign producers and foreign ethanol producers already registered pursuant to section § 80.1450 and 80.1466, paragraph (h) of this section must be satisfied no later than January 1, 2013 if the required amount in paragraph (h) of this section exceeds the original amount of the bond posted when the producer was originally approved under 80.1466.

■ 14. Section 80.1500 is amended by revising the definitions of E10, E15, and

EX to read as follows:

**§ 80.1500 Definitions.**

* * * * *

E10 means a gasoline-ethanol blend

that contains at least 9 and no more than 10 volume percent ethanol.

E15 means a gasoline-ethanol blend that contains greater than 10 volume percent ethanol and not more than 15 volume percent ethanol.

EX means a gasoline–ethanol blend that contains less than 9 volume percent ethanol where X equals the maximumvolume percent ethanol in the gasolineethanol blend.

* * * * *

■ 15. Section 80.1501 is amended by revising the section 80.1501 heading paragraphs (a) introductory text, (b)(3)(i) and (iv), and (b)(4)(ii) to read as follows: **§ 80.1501 What are the labeling requirements that apply to retailers and**  **wholesale purchaser-consumers of gasoline-ethanol blends that contain**  **greater than 10 volume percent ethanol and not more than 15 volume percent ethanol?** 

(a) Any retailer or wholesale purchaser-consumer who sells, dispenses, or offers for sale or dispensing E15 shall affix the following conspicuous and legible label to the fuel dispenser:

* * * * *

(b) * * * (3) * * * (i) The word ‘‘ATTENTION’’ shall be capitalized in 20-point, orange,
Helvetica Neue LT 77 Bold Condensed font, and shall be placed in the top 1.25
inches of the label as further described in (b)(4)(iii) below.

* * * * *

(iv) The words ‘‘Use only in’’ shall be in 20-point, left-justified, black,
Helvetica Bold font in the bottom 1.875
inches of the label.

(4) * * *

* * * * *

(ii) The background of the bottom 1.875 inches of the label shall be orange.

* * * * *

■ 16. Section 80.1502 is amended by revising paragraphs (b)(3)(iii)(A), (b)(3)(iv), (b)(4)(iv)(B), (b)(4)(v)(A), (c)(4), and (c)(6) to read as follows:

**§ 80.1502 What are the survey requirements related to gasoline-ethanol** 

**blends?**

* * * * *

(b) * * * (3) * * * (iii) * * * (A) Samples collected at retail outlets shall be shipped the same day the samples are collected via ground service to the laboratory and analyzed for oxygenate content. Samples collected at a dispenser labeled E15 in any manner, or at a tank serving such a dispenser, shall also be analyzed for RVP during the high ozone season defined in § 80.27(a)(2)(ii) or any SIP approved or promulgated under §§ 110 or 172 of the Clean Air Act. Such analysis shall be completed within 10 days after receipt of the sample in the laboratory. Nothing in this section shall be interpreted to require RVP testing of a sample from any dispenser or tank serving it unless the dispenser is labeled E15 in any

manner.

* * * * *

(iv) In the case of any test that yields
a result that does not match the label affixed to the product (e.g., a sample greater than 15 volume percent ethanol dispensed from a fuel dispenser labeled as ‘‘E15’’ or a sample containing greater than 10 volume percent ethanol and not more than 15 volume percent ethanol dispensed from a fuel dispenser not labeled as ‘‘E15’’), or the RVP standard of § 80.27(a)(2), the independent survey association shall, within 24 hours after the laboratory has completed analysis of the sample, send notification of the test
result as follows:

* * * * *

(4) * * * (iv) * * * (B) In the case of any retail outlet from which a sample of gasoline was collected during a survey and
determined to have an ethanol content that does not match the fuel dispenser label (e.g. a sample greater than 15 volume percent ethanol dispensed from a fuel dispenser labeled as ‘‘E15’’ or a sample with greater than 10 volume percent ethanol and not more than 15 volume percent ethanol dispensed from a fuel dispenser not labeled as ‘‘E15’’) or determined to have a dispenser containing fuel whose RVP does not comply with § 80.27(a)(2), that retail
outlet shall be included in the subsequent survey.

* * * * *

(v) * * * (A) The minimum number of samples to be included in the survey plan for each calendar year shall be calculated as
follows:

Where:

n = minimum number of samples in a yearlong survey series. However, in no case

shall n be smaller than 7,500.

Z a = upper percentile point from the normal

distribution to achieve a one-tailed 95%
confidence level (5% a -level). Thus, Z a equals 1.645.

Z b = upper percentile point to achieve 95% power. Thus, Z b equals 1.645. f 1 = the maximum proportion of noncompliant stations for a region to be deemed compliant. In this test, the parameter needs to be 5% or greater, i.e., 5% or more of the stations, within a stratum such that the region is considered non-compliant. For this

survey, f 1 will be 5%.
f

o = the underlying proportion of noncompliant stations in a sample. For the first survey plan, f

o will be 2.3%. For subsequent survey plans, f

o will be the average of the proportion of stations found to be non-compliant over the previous four surveys.

St

n = number of sampling strata. For purposes of this survey program, St

n equals 3.

F

a = adjustment factor for the number of extra samples required to compensate for collected samples that cannot be included in the survey, based on the


### 36078 Federal Register / Vol. 78, No. 115 / Friday, June 14, 2013 / Proposed Rules

number of additional samples required during the previous four surveys. However, in no case shall the value of F

a be smaller than 1.1.

F b = adjustment factor for the number of samples required to resample each retail outlet with test results exceeding the labeled amount (e.g. a sample greater than 15 volume percent ethanol dispensed from a fuel dispenser labeled as ‘‘E15’’, a sample with greater than 10 volume percent ethanol and not more than 15 volume percent ethanol dispensed from a fuel dispenser not labeled as ‘‘E15’’), or a sample dispensed from a fuel dispenser labeled as ‘‘E15’’ with greater than the applicable seasonal and geographic RVP pursuant to § 80.27, based on the rate of resampling required during the previous four surveys. However, in no case shall the value of F b be smaller than 1.1.

Su

n = number of surveys per year. For purposes of this survey program, Su

n equals 4.

* * * * *

(c) * * * (4) The survey program plan must be sent to the following address: Director, Compliance Division, U.S. Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Mail Code 6506J, Washington, DC 20460.

* * * * *

(6) The approving official for a survey plan under this section is the Director of the Compliance Division, Office of Transportation and Air Quality.

* * * * *

■ 17. Section 80.1503 is amended by revising paragraphs (a)(1)(vi)(B)(3), (a)(1)(vi)(C)(2), adding paragraph (a)(1)(vi)(C)(3), and revising paragraphs (b)(1)(vi)(B) through (D).

The revisions and additions read as
follows:

**§ 80.1503 What are the product transfer document requirements for gasoline**  **ethanol blends, gasolines, and conventional blendstocks for oxygenate blending subject**  **to this subpart?**

(a) * * * (1) * * * (vi) * * * (B) * * * ( 3 ) ‘‘The use of this blendstock/gasoline to manufacture a gasolineethanol blend containing anything other than between 9 and 10 volume percent ethanol may cause a summertime RVP
violation.’’

(C) * * * (2) The requirements in paragraph (a)(1) do not apply to reformulated gasoline blendstock for oxygenate blending, as defined in § 80.2(kk), which is subject to the product transfer document requirements of § 80.69 and § 80.77.

(3) Except for transfers to truck carriers, retailers, or wholesale purchaser-consumers, product codes may be used to convey the information required under paragraph (a)(1) of this section if such codes are clearly understood by each transferee.

(b) * * * (1) * * * (vi) * * * (B) For gasoline containing less than 9 volume percent ethanol, the following statement: ‘‘EX—Contains up to X% ethanol. The RVP does not exceed [fill in appropriate value] psi.’’ The term X refers to the maximum volume percent ethanol present in the gasoline.

(C) For gasoline containing between 9 and 10 volume percent ethanol (E10), the following statement: ‘‘E10: Contains
between 9 and 10 vol % ethanol. The RVP does not exceed [fill in appropriate value] psi. The 1 psi RVP waiver applies to this gasoline. Do not mix with gasoline containing anything other than
between 9 and 10 vol % ethanol.’’

(D) For gasoline containing greater than 10 volume percent and not more than 15 volume percent ethanol (E15), the following statement: ‘‘E15: Contains up to 15 vol % ethanol. The RVP does not exceed [fill in appropriate value] psi;’’ or

* * * * *

■ 18. Section 80.1504 is amended by revising paragraphs (a)(1), (a)(3), (e), and (g) to read as follows:

**§ 80.1504 What acts are prohibited under this subpart?** 

* * * * *

(a)(1) Sell, introduce, cause or permit the sale or introduction of gasoline containing greater than 10 volume percent ethanol (i.e., greater than E10)into any model year 2000 or older lightduty gasoline motor vehicle, any heavyduty gasoline motor vehicle or engine, any highway or off-highway motorcycle, or any gasoline-powered nonroad engines, vehicles or equipment.

* * * * *

(3) Notwithstanding paragraphs (a)(1) and (a)(2) of this section, no person shall be prohibited from manufacturing, selling, introducing, or causing or allowing the sale or introduction of gasoline containing greater than 10volume percent ethanol into any flexfuel vehicle.

* * * * *

(e)(1) Improperly blend, or cause the improper blending of, ethanol into conventional blendstock for oxygenate blending, gasoline or gasoline already containing ethanol, in a manner
inconsistent with the information on the product transfer document under § 80.1503(a)(1)(vi) or § 80.1503(b)(1)(vi);

(2) No person shall produce E10 by blending ethanol and gasoline in a manner designed to produce a fuel that
contains less than 9.0 or more than 10.0 volume percent ethanol.

(3) No person shall produce E15 by blending ethanol and gasoline in a manner designed to produce a fuel that contains less than 10.0 volume percent
ethanol or more than 15.0 volume percent ethanol.

(4) No person shall produce EX by blending ethanol and gasoline in a manner designed to produce a fuel that contains less than 9.0 volume percent
ethanol.

* * * * *

(g) For gasoline during the regulatorycontrol periods, combine any gasolineethanol blend that qualifies for the 1 psi allowance under the special regulatory treatment as provided by § 80.27(d) applicable to 9–10 volume percent gasoline-ethanol blends with any gasoline containing less than 9 volume percent ethanol or more than 10 volume percent ethanol up to a maximum of 15 volume percent ethanol.

* * * * *

■ 19. Section 80.1508 is amended by revising paragraph (b) as follows:

**§ 80.1508 What evidence may be used to determine compliance with the**  **requirements of this subpart and liability for violations of this subpart?** 

* * * * *

(b) Determinations of compliance with the requirements of this subpart and determinations of liability for any violation of this subpart may be based on information obtained from any
source or location. Such information may include, but is not limited to,
business records and commercial
documents.

■ 20. Section 80.1509 is added to read
as follows:

**§ 80.1509 Rounding a test result for purposes of this Subpart.** 

The provisions of Section 80.9 apply for purposes of determining the ethanol content of a gasoline-ethanol blend under this subpart.

[FR Doc. 2013–12714 Filed 6–13–13; 8:45 am]

**BILLING CODE 6560–50–P**