Vol. 78 Thursday, 

No. 158 August 15, 2013 

Part II 

Environmental Protection Agency 

40 CFR Part 80 

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

Final Rule 

mstockstill on DSK4VPTVN1PROD with RULES2

49794 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 80 

[EPA–HQ–OAR–2012–0546; FRL–9834–5] 

RIN 2060–AR43 

Regulation of Fuels and Fuel 

Additives: 2013 Renewable Fuel 

Standards 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: Under section 211(o) of the 

Clean Air Act, the Environmental 

Protection Agency is required to set the 

renewable fuel percentage standards 

each November for the following year. 

Today’s action sets the annual 

percentage standards for cellulosic 

biofuel, biomass-based diesel, advanced 

biofuel, and renewable fuels that apply 

to all motor vehicle gasoline and diesel 

produced or imported in the year 2013. 

In general the standards are designed to 

ensure that the applicable national 

volumes of renewable fuel specified in 

the statute are used. For cellulosic 

biofuel, the statute specifies that EPA is 

to project the volume of production and 

must base the cellulosic biofuel 

standard on that projected volume if it 

is less than the applicable volume set 

forth in the Act. Today EPA is finalizing 

a cellulosic biofuel volume for 2013 that 

is below the applicable volume 

specified in the Act. EPA is also leaving 

the applicable volumes of advanced 

biofuel and total renewable fuel at the 

statutory levels for 2013 based on its 

assessment of the availability of 

renewable fuel for compliance purposes. 

DATES: This final rule is effective on 

August 15, 2013. 

ADDRESSES: EPA has established a 

docket for this action under Docket ID 

No. EPA–HQ–OAR–2012–0546. All 

documents in the docket are listed in 

the www.regulations.gov index. 

Although listed in the index, some 

information is not publicly available, 

e.g., CBI or other information whose 

disclosure is restricted by statute. 

Certain other material, such as 

copyrighted material, will be publicly 

available only in hard copy. Publicly 

available docket materials are available 

either electronically in 

www.regulations.gov or in hard copy at 

the Air and Radiation Docket and 

Information Center, EPA/DC, EPA West, 

Room 3334, 1301 Constitution Ave. 

NW., Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone 

number for the Public Reading Room is 

(202) 566–1744, and the telephone 

number for the Air Docket is (202) 566– 

1742. 

FOR FURTHER INFORMATION CONTACT: Julia 

MacAllister, Office of Transportation 

and Air Quality, Assessment and 

Standards Division, Environmental 

Protection Agency, 2000 Traverwood 

Drive, Ann Arbor, MI 48105; Telephone 

number: 734–214–4131; Fax number: 

734–214–4816; Email address: 

macallister.julia@epa.gov, or the public 

information line for the Office of 

Transportation and Air Quality; 

telephone number (734) 214–4333; 

Email address OTAQ@epa.gov. 

SUPPLEMENTARY INFORMATION: 

General Information 

Does this action apply to me? 

Entities potentially affected by this 

final rule are those involved with the 

production, distribution, and sale of 

transportation fuels, including gasoline 

and diesel fuel or renewable fuels such 

as ethanol and biodiesel. Potentially 

regulated categories include: 

Category NAICS1 Codes SIC 2 Codes Examples of potentially regulated entities 

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

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

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

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

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

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

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

1 North American Industry Classification System (NAICS). 

2Standard Industrial Classification (SIC) system code. 

This table is not intended to be 

exhaustive, but rather provides a guide 

for readers regarding entities likely to be 

regulated by this final action. This table 

lists the types of entities that EPA is 

now aware could potentially be 

regulated by this action. Other types of 

entities not listed in the table could also 

be regulated. To determine whether 

your activities will be regulated by this 

action, you should carefully examine 

the applicability criteria in 40 CFR part 

80. If you have any questions regarding 

the applicability of this action to a 

particular entity, consult the person 

listed in the preceding section. 

Outline of This Preamble 

I. Executive Summary 

A. Purpose of This Action 

B. Summary of Major Provisions in This 

Notice 

1. Cellulosic Biofuel Volume for 2013 

2. Advanced Biofuel and Total Renewable 

Fuel in 2013 

3. Applicable Volumes Used To Set the 

Annual Percentage Standards for 2013 

4. Applicable Percentage Standard for 

Cellulosic Biofuel in 2012 

5. Administrative Actions 

C. Effective Date 

D. Impacts of Final Actions 

II. Projection of Cellulosic Biofuel Volume for 

2013 

A. Statutory Requirements 

B. Status of the Cellulosic Biofuel Industry 

C. Cellulosic Biofuel Volume Assessment 

for 2013 

1. Comments on the Proposed Rule 

2. Projections From the Energy Information 

Administration 

3. Current Status of Cellulosic Biofuel 

Production Facilities 

4. Other Potential Sources of Domestic 

Cellulosic Biofuel 

5. Imports of Cellulosic Biofuel 

6. Summary of Volume Projections 

D. Cellulosic Biofuel Volume for 2013 

III. Assessment of Advanced Biofuel and 

Total Renewable Fuel for 2013 

A. Statutory Authorities for Reducing 

Volumes 

1. Cellulosic Waiver Authority 

2. General Waiver Authority 

3. Modification of Applicable Volumes for 

2016 and Beyond 

B. Available Volumes of Advanced Biofuel 

in 2013 

1. Biomass-Based Diesel 

a. Feedstocks 

i. Feedstock Availability 

ii. Impacts From Feedstock Use 

b. Limitations in the Use of Biodiesel 

2. Domestic Production of Advanced 

Biofuel Other Than Biomass-Based 

Diesel and Cellulosic Biofuel 

3. Imported Sugarcane Ethanol 

a. Brazilian Ethanol Export Capacity 

i. Brazilian Sugarcane and Ethanol 

Production Capacity 

ii. Brazilian Domestic Demand for Ethanol 

iii. Additional Market Factors 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49795 

1 75 FR 14670 

2The delay in the release of this final rule is 

addressed in more detail in Section I.C below. 

3 78 FR 9282, February 7, 2013. 

4Non-advanced is composed primarily of corn 

ethanol, but may also include such things as 

biodiesel produced in facilities that are 

grandfathered under § 80.1403. 

b. United States-Brazil Ethanol Trade 

i. Direct Transportation Emissions 

ii. Indirect Emissions 

C. Compliance With the Total Renewable 

Fuel Standard in 2013 

D. Final Applicable Volume Requirements 

for 2013 

E. Volume Requirements for 2014 

IV. Applicable Percentage Standards for 2013 

A. Background 

B. Calculation of Standards 

1. How are the standards calculated? 

2. Small Refineries and Small Refiners 

3. Final Standards 

V. Annual Administrative Announcements 

A. 2013 Price for Cellulosic Biofuel Waiver 

Credits 

B. Assessment of the Domestic Aggregate 

Compliance Approach 

C. Assessment of the Canadian Aggregate 

Compliance Approach 

D. Vacatur of 2012 Cellulosic Biofuel 

Standard 

VI. Comments Outside the Scope of This 

Rulemaking 

VII. Public Participation 

VIII. Statutory and Executive Order Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132: Federalism 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

H. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

I. National Technology Transfer and 

Advancement Act 

J. Executive Order 12898: Federal Actions 

To Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

K. Congressional Review Act 

IX. Statutory Authority 

I. Executive Summary 

The Renewable Fuel Standard (RFS) 

program began in 2006 pursuant to the 

requirements in Clean Air Act (CAA) 

section 211(o) which were added 

through the Energy Policy Act of 2005 

(EPAct). The statutory requirements for 

the RFS program were subsequently 

modified through the Energy 

Independence and Security Act of 2007 

(EISA), resulting in the publication of 

major revisions to the regulatory 

requirements on March 26, 2010.1

The national volumes of renewable 

fuel to be used under the RFS program 

each year (absent an adjustment or 

waiver by EPA) are specified in CAA 

section 211(o)(2). The volumes for 2013 

are shown in Table I–1. 

TABLE I–1—REQUIRED APPLICABLE

VOLUMES IN THE CLEAN AIR ACT

FOR 2013 

[Bill gal] 

Cellulosic biofuel ............................. a 1.0 

Biomass-based diesel .................... b ≥1.0 

Advanced biofuel ............................ a 2.75 

Renewable fuel ............................... a 16.55 

aEthanol-equivalent volume. 

bActual volume. The ethanol-equivalent volume would be 1.5 if biodiesel is used to meet 

this requirement. 

Under the RFS program, EPA is 

required to determine and publish 

annual percentage standards for each 

compliance year by November 30 of the 

previous year.2 The percentage 

standards are used by obligated parties 

(refiners and importers) to calculate 

their individual compliance obligations. 

The percentage standards are applied to 

the volume of gasoline and/or diesel 

fuel that each obligated party produces 

or imports during the specified calendar 

year to determine the volumes of 

renewable fuel that must be used as 

transportation fuel, heating oil or 

qualifying fuel oil, or jet fuel. The 

percentage standards are calculated so 

as to ensure use in transportation fuel of 

the national ‘‘applicable volumes’’ of 

four types of biofuel (cellulosic biofuel, 

biomass-based diesel, advanced biofuel, 

and total renewable fuel) that are either 

set forth in the Clean Air Act or 

established by EPA in accordance with 

the Act’s requirements. 

The cellulosic biofuel industry is 

transitioning from research and 

development (R&D) and pilot scale to 

commercial scale facilities, leading to 

increases in production capacity. 

Construction has begun on several 

facilities with multiple facilities having 

progressed to the start-up phase. Based 

on information from the Energy 

Information Administration (EIA), 

detailed information from biofuel 

production companies and a 

consideration of various potential 

uncertainties, as well as the comments 

we received on the Notice of Proposed 

Rulemaking (NPRM),3 we are projecting 

that 6 million ethanol-equivalent 

gallons of cellulosic biofuel will be 

available in 2013. 

We have evaluated the types of 

advanced biofuels that can be produced 

or imported in 2013, including 

biodiesel, renewable diesel, biogas, 

heating oil, sugarcane ethanol, and 

others. While there is some uncertainty 

in the projected availability of advanced 

biofuel in 2013, we have determined 

that volumes to meet the statutory 

applicable volume of 2.75 bill gal 

should be sufficiently available. In 

addition, the combination of available 

volumes of advanced and non-advanced 

biofuel 4 from both domestic and foreign 

sources, the ability of the transportation 

sector to consume some quantity of 

ethanol in blend levels higher than E10, 

and carryover Renewable Identification 

numbers (RINs) from 2012 has led us to 

conclude that the statutory volumes for 

both advanced biofuel and total 

renewable fuel can be met in 2013. As 

a result, we are not reducing the 

national applicable volumes in the 

statute for either advanced biofuel or 

total renewable fuel volume of 16.55 bill 

gal. 

A. Purpose of This Action 

EPA is today setting annual 

percentage requirements for obligated 

parties for cellulosic biofuel, biomassbased diesel, advanced biofuel, and total 

renewable fuel for 2013. Table I.A–1 

lists the statutory provisions and 

associated criteria relevant to 

determining the national applicable 

volumes used to set the annual 

percentage standards in today’s final 

rule. 

TABLE I.A–1—STATUTORY PROVISIONS FOR DETERMINATION OF APPLICABLE VOLUMES

Applicable volumes Clean Air Act 

reference Criteria provided in statute for determination of applicable volume 

Cellulosic biofuel in 

2013.

211(o)(7)(D)(i) ............. Required volume must be lesser of volume specified in CAA 211(o)(2)(B)(i)(III) or EPA’s 

projected volume. 

mstockstill on DSK4VPTVN1PROD with RULES2

49796 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

5Solecki M, Dougherty A, Epstein B. Advanced 

Biofuel Market Report 2012: Meeting U.S. Fuel 

Standards. Environmental Entrepreneurs. 

September 6, 2012. Available Online http://www.e2.

org/ext/doc/E2AdvancedBiofuelMarket

Report2012.pdf. 

TABLE I.A–1—STATUTORY PROVISIONS FOR DETERMINATION OF APPLICABLE VOLUMES—Continued 

Applicable volumes Clean Air Act 

reference Criteria provided in statute for determination of applicable volume 

Advanced biofuel in 

2013.

211(o)(7)(D)(i) ............. If applicable volume of cellulosic biofuel is reduced to the projected volume, EPA may reduce advanced biofuel and total renewable fuel by the same or lesser volume. No other 

criteria specified. 

Total renewable fuel in 

2013.

211(o)(7)(D)(i) ............. If applicable volume of cellulosic biofuel is reduced to the projected volume, EPA may reduce advanced biofuel and total renewable fuel by the same or lesser volume. No other 

criteria specified. 

EPA must annually determine the 

projected volume of cellulosic biofuel 

production for the following year. If the 

projected volume of cellulosic biofuel 

production is less than the applicable 

volume specified in section 

211(o)(2)(B)(i)(III) of the statute, EPA 

must lower the applicable volume used 

to set the annual cellulosic biofuel 

percentage standard to the projected 

volume of production available during 

the year. In today’s final rule, we 

present our analysis of cellulosic biofuel 

production and final projected volume 

for 2013. The analyses that led to the 

2013 applicable volume requirement 

were based on our evaluation of EIA’s 

projection for 2013, individual 

producers’ production plans and 

progress to date, and comments received 

in response to the NPRM. 

When we lower the applicable 

volume of cellulosic biofuel below the 

volume specified in CAA 

211(o)(2)(B)(i)(III), we also have the 

authority to reduce the applicable 

volumes of advanced biofuel and total 

renewable fuel by the same or a lesser 

amount. Today’s action includes our 

consideration of the 2013 volume 

requirements for these biofuels. 

In today’s final rule we have also set 

the annual percentage standards (shown 

in Section I.B.3 below) that will apply 

to all producers and importers of 

gasoline and diesel in 2013. The 

percentage standards are based on the 

2013 applicable volumes for the four 

types of renewable fuel and a projection 

of volumes of gasoline and diesel 

consumption in 2013 from the Energy 

Information Administration (EIA). 

B. Summary of Major Provisions in This 

Notice 

1. Cellulosic Biofuel Volume for 2013 

The cellulosic biofuel industry in the 

United States continues to make 

advances in its progress towards large 

scale commercial production. Ongoing 

research and development work has 

resulted in increasing product yields, 

while at the same time lowering enzyme 

and catalyst costs. New supply chains 

have been developed, and several 

companies have reached contract 

agreements to provide the necessary 

feedstock for large scale cellulosic 

biofuel production facilities. Companies 

are continuing to invest significant sums 

of money to further refine cellulosic 

biofuel production technology and to 

construct the first commercial scale 

facilities. From 2007 through the second 

quarter of 2012 over $3.4 billion was 

invested in advanced biofuel production 

companies by venture capitalists alone.5

For more information on the current 

status of the cellulosic biofuel industry 

in the United States and the advances 

being made, see Section II.B. 

2013 is also expected to be a year of 

transition for the cellulosic biofuel 

industry, as several companies are 

shifting their focus from technology 

development to commercialization. This 

transition began in 2012 with the 

production of the first cellulosic RINs 

under the current regulations and the 

completion of construction at 

commercial scale production facilities 

from INEOS Bio and KiOR. KiOR 

announced the shipment of the first 

renewable transportation fuel produced 

from their Columbus, MS facility on 

March 18, 2013. INEOS Bio is expected 

to begin producing fuel from their Vero 

Beach, FL facility in the summer of 

2013. Abengoa, one of the largest 

producers of ethanol in the United 

States, is planning to begin producing 

cellulosic ethanol at commercial scale 

later in 2013 or early 2014. Several 

others companies, including DuPont 

and Poet, expect to be constructing their 

first commercial scale facilities in 2013, 

with the intention of beginning 

production in 2014. If these facilities are 

able to operate as anticipated, it would 

represent significant further progress in 

the commercial viability of cellulosic 

biofuel production. 

As part of estimating the volume of 

cellulosic biofuel that would be made 

available in the U.S. in 2013, we 

researched all potential production 

sources by company and facility. This 

included sources that were still in the 

planning stages, those that were under 

construction, and those that are already 

producing some volume of cellulosic 

ethanol, cellulosic diesel, or some other 

type of cellulosic biofuel. Facilities 

primarily focused on research and 

development were not the focus of our 

assessment as production from these 

facilities represents very small volumes 

of cellulosic biofuel, and these facilities 

typically have not generated RINs for 

the fuel they have already produced. 

From this universe of potential 

cellulosic biofuel sources we identified 

the subset that could be producing 

commercial volumes of qualifying 

cellulosic biofuel for use in 2013. To 

arrive at a projected volume for each 

facility, we took into consideration 

EIA’s projections and factors such as the 

current and expected state of funding, 

the status of the technology utilized, 

progress towards construction and 

production goals, and other significant 

factors that could potentially impact 

fuel production or the ability of the 

produced fuel to qualify for cellulosic 

biofuel Renewable Identification 

Numbers (RINs) in 2013. Further 

discussion of these factors can be found 

in Section II.B. 

In our assessment we focused on 

domestic sources of cellulosic biofuel. 

At the time of this final rule no 

internationally-based cellulosic biofuel 

production facilities have registered 

under the RFS program and therefore no 

volume from international producers 

has been included in our projections for 

2013. Of the domestic sources, we 

estimated that up to four facilities may 

produce commercial scale volumes of 

cellulosic biofuel available for use as 

renewable fuel in the U.S. in 2013. Two 

of these four facilities have made 

sufficient progress to project that 

commercial scale production from these 

two facilities will occur in 2013, and we 

have therefore included production 

from them in our projected available 

volume for 2013. All four facilities are 

listed in Table I.B.1–1 along with our 

estimate of the projected 2013 volume 

for each. 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49797 

6EPA received a letter from Adam Sieminski, EIA 

administrator on October 18, 2012 containing 

cellulosic biofuel projections for 2013 and a letter 

updating to these projections from A. Michael 

Schaal, Director of the office of Petroleum, Natural 

Gas, and Biofuels Analysis, EIA on May 8, 2013. 

Both of these letters are discussed in further detail 

in Section II. 

7 77 FR 59458, September 27, 2012. 

8Some quantity of renewable diesel is also likely 

to be used towards satisfying the biomass based 

diesel standard 

9Biomass-based diesel is defined in the statute to 

exclude renewable fuel that is co-processed with 

petroleum. Thus, fuel derived from biogenic waste 

oils or fats that is made through co-processing with 

petroleum does not qualify as biomass-based diesel 

but could, assuming other definitional requirements 

are satisfied, qualify as advanced biofuel. 

10Based on facilities registered as corn ethanol 

producers under the RFS program. 

TABLE I.B.1–1—EPA PROJECTED AVAILABLE CELLULOSIC BIOFUEL PLANT VOLUMES FOR 2013 

Company Location Fuel type Capacity (mill 

gal per year) First production 

Projected 

2013 available 

volume a

Abengoa ........................... Hugoton, KS ................... Ethanol ............................ 24 1Q 2014 b ........................ 0 

Fiberight ........................... Blairstown, IA .................. Ethanol ............................ 6 1Q 2014 b ........................ 0 

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

KiOR ................................ Columbus, MS ................ Gasoline and Diesel ....... 11 March 18, 2013 .............. 5–6 

Total .......................... ......................................... ......................................... 49 ......................................... 6 

aVolumes listed in million ethanol-equivalent gallons. 

bStart-up dates for these facilities are projections. 

The EIA projections,6 variation in 

expected start-up times, along with the 

facility production capacities, company 

production plans, the progress made in 

the first half or 2013, and a variety of 

other factors have all been taken into 

account in predicting the actual volume 

of cellulosic biofuel that will be 

available for use in 2013. For more 

detailed information on our projections 

of cellulosic biofuel in 2013 and the 

companies we expect to produce this 

volume see Section II. 

2. Advanced Biofuel and Total 

Renewable Fuel in 2013 

The statute authorizes EPA to reduce 

the applicable volume of advanced 

biofuel and total renewable fuel 

specified in the statute if we reduce the 

applicable volume of cellulosic biofuel 

for a given year below the statutory 

applicable volume specified in Section 

211(o)(2)(B)(i)(III). As shown in Table 

I.B.1–1, for 2013 we have projected 

cellulosic biofuel production at 6 

million ethanol-equivalent gallons, 

significantly less than the applicable 

volume of 1.0 bill gal set forth in the 

statute. Therefore, we have also 

evaluated whether to lower the 

applicable volumes for advanced biofuel 

and total renewable fuel. The statute 

provides no explicit criteria or direction 

for making this determination. As in the 

proposed rule, we have focused our 

evaluation for this final rule on the 

availability of renewable fuels that 

would qualify as advanced biofuel and 

renewable fuel, the ability of those fuels 

to be consumed, and carryover RINs 

from 2012. We also considered the 

many comments received on our 

proposed approach, including suggested 

alternative approaches. Comments 

related to the advanced biofuel standard 

and our responses to those comments 

are discussed in Section III of this 

preamble. 

The CAA specifies an applicable 

volume of 2.75 bill gal of advanced 

biofuel for 2013. To determine whether 

to lower this volume, we considered the 

sources that are expected to satisfy any 

advanced biofuel mandate including: 

cellulosic biofuel, biomass-based diesel, 

other domestically-produced advanced 

biofuels, and imported sugarcane 

ethanol. 

As described in Section II, we project 

that 6 mill gallons of cellulosic biofuel 

will be available in 2013. This volume 

will fulfill 0.006 bill gal of the 2.75 bill 

gal advanced biofuel requirement. 

We established an applicable volume 

of 1.28 bill gal for 2013 biomass-based 

diesel in a separate action,7 an increase 

from the 1.0 bill gal minimum provided 

in the statute. We expect that this 

requirement will be fulfilled primarily 

with biodiesel.8 Since biodiesel has an 

Equivalence Value of 1.5, 1.28 billion 

physical gallons of biodiesel will 

provide 1.92 billion ethanol-equivalent 

gallons that can be counted towards the 

advanced biofuel standard of 2.75 bill 

gal. Additional volumes of biomassbased diesel are also possible based on 

our assessment of available feedstocks 

and production capacity, potentially up 

to 500 mill gal ethanol-equivalent. 

As described in more detail in Section 

III, we have projected that domestic 

advanced biofuels are expected to grow 

steadily through 2013, and would 

include renewable diesel that does not 

qualify to be biomass-based diesel,9

heating oil, biogas used as CNG, and 

ethanol. We are projecting that up to 

about 250 mill gal of such domestic 

advanced biofuels could be available in 

2013, which will count towards the 2.75 

bill gal advanced biofuel requirement. 

After taking into account cellulosic 

biofuel, biomass-based diesel, and 

domestic advanced biofuel described 

above, the volume of imported 

sugarcane ethanol that will be needed to 

meet the statutory advanced biofuel 

volume of 2.75 bill gal could be 

significantly below the 670 mill gal that 

we projected would be needed in the 

NPRM. The U.S. imported a total of 575 

mill gal of ethanol in 2012, and most 

projections indicate that Brazilian 

sugarcane crop yields will be 

significantly better in the coming 

harvest (2013/2014, which began in 

April 2013) in comparison to the 

previous harvest. Since there is a high 

likelihood that the total volume of all 

advanced biofuels that can be produced 

or imported in 2013 is above the 2.75 

bill gal statutory volume, we do not 

believe that the advanced biofuel 

requirement should be reduced. 

We believe there will be sufficient 

volumes of conventional renewable fuel 

including corn ethanol, combined with 

advanced biofuel, to satisfy the 16.55 

bill gallon applicable volume of total 

renewable fuel specified in the Act. For 

instance, current corn ethanol 

production capacity is 14.5 bill gal, 

compared to the 13.8 bill gal needed to 

meet the RFS requirements in 2013.10

There will also be a significant number 

of carryover RINs available from 2012 

that can be used in lieu of actual volume 

in 2013 and which are sufficient in 

number to address limitations in 

consumption of ethanol blends higher 

than E10 or limitations in volumes 

brought about through the 2012 drought. 

Therefore, as discussed in more detail in 

Section III below, we are not reducing 

the advanced biofuel volume 

requirement of 2.75 bill gal or the total 

renewable fuel volume requirement of 

16.55 bill gal. 

mstockstill on DSK4VPTVN1PROD with RULES2

49798 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

11Letter, A. Michael Schaal, Director, Office of 

Petroleum, Natural Gas, and Biofuels Analysis, U.S. 

Energy Information Administration, to Christopher 

Grundler, Director, Office of Transportation and Air 

Quality, U.S. EPA, May 8, 2013. 

However, we believe that delaying the 

compliance demonstration for the 2013 

compliance period would alleviate some 

of the concerns that obligated parties 

have regarding the tardiness of the final 

rule and its effect on their decisions 

regarding RIN acquisition. Therefore, we 

are extending the RFS compliance 

deadline for the 2013 RFS standards 

from February 28, 2014 to June 30, 2014. 

As described in the NPRM, we 

recognize that ethanol will likely 

continue to predominate in the 

renewable fuel pool in the near future, 

and that for 2014 the ability of the 

market to consume ethanol as E15–E85 

is constrained in a number of ways. We 

believe that it will be challenging for the 

market to consume sufficient quantities 

of ethanol sold in blends greater than 

E10 and to produce sufficient volumes 

of non-ethanol biofuels (biodiesel, 

renewable diesel, biogas, etc.) to reach 

the mandated 18.15 bill gal for 2014. 

Given these challenges, EPA anticipates 

that adjustments to the 2014 volume 

requirements are likely to be necessary 

based on the projected circumstances 

for 2014, taking into account the 

available supply of cellulosic biofuel, 

the availability of advanced biofuel, the 

E10 blendwall, and current 

infrastructure and market-based 

limitations to the consumption of 

ethanol in gasoline-ethanol blends 

above E10. As discussed in Section III.E 

below, EPA will discuss options and 

approaches for addressing these issues, 

consistent with our statutory 

authorities, in the forthcoming NPRM 

for the 2014 standards. 

3. Applicable Volumes Used to Set the 

Annual Percentage Standards for 2013 

The renewable fuel standards are 

expressed as a volume percentage and 

are used by each refiner, blender or 

importer to determine its renewable fuel 

volume obligations. The applicable 

percentages are set so that if each 

regulated party meets the percentages, 

and if EIA projections of gasoline and 

diesel use for the coming year are 

accurate, then the amount of renewable 

fuel, cellulosic biofuel, biomass-based 

diesel, and advanced biofuel actually 

used will meet the volumes required on 

a nationwide basis. 

To calculate the percentage standards 

for 2013, we have used the projected 

volume of 6 million ethanol-equivalent 

gallons of cellulosic biofuel and the 

volume of biomass-based diesel of 1.28 

bill gal that we established in a separate 

action. The applicable volumes used in 

this final rule for advanced biofuel and 

total renewable fuel for 2013 are those 

specified in the statute. These volumes 

are shown in Table I.B.3–1. 

TABLE I.B.3–1—VOLUMES USED TO

DETERMINE THE 2013 PERCENTAGE

STANDARDS a

Cellulosic biofuel ................ 6 mill gal. 

Biomass-based diesel ....... 1.28 bill gal. 

Advanced biofuel ............... 2.75 bill gal. 

Renewable fuel .................. 16.55 bill gal. 

aAll volumes are ethanol-equivalent, except 

for biomass-based diesel which is actual. 

Four separate standards are required 

under the RFS program, corresponding 

to the four separate volume 

requirements shown in Table I.B.3–1. 

The specific formulas we use in 

calculating the renewable fuel 

percentage standards are contained in 

the regulations at 40 CFR § 80.1405 and 

repeated in Section IV.B.1. The 

percentage standards represent the ratio 

of renewable fuel volume to projected 

non-renewable gasoline and diesel 

volume. The projected volume of 

transportation gasoline and diesel used 

to calculate the standards in today’s rule 

was derived from EIA projections.11

EPA has approved a single small 

refinery/small refiner exemption for 

2013, so an adjustment has been made 

to the standards to account for this 

exemption. The final standards for 2013 

are shown in Table I.B.3–2. Detailed 

calculations can be found in Section IV, 

including the projected 2013 gasoline 

and diesel volumes used. 

TABLE I.B.3–2—FINAL PERCENTAGE

STANDARDS FOR 2013 

Percent 

Cellulosic biofuel ............................. 0.004 

Biomass-based diesel .................... 1.13 

Advanced biofuel ............................ 1.62 

Renewable fuel ............................... 9.74 

4. Applicable Percentage Standard for 

Cellulosic Biofuel in 2012 

On January 25, 2013, the United 

States Court of Appeals for the District 

of Columbia Circuit responded to a 

challenge to the 2012 cellulosic biofuel 

standard. The Court found that in 

establishing the applicable volume of 

cellulosic biofuel for 2012, EPA had 

used a methodology in which ‘‘the risk 

of overestimation [was] set deliberately 

to outweigh the risk of 

underestimation.’’ The Court held EPA’s 

action to be inconsistent with the statute 

because EPA had failed to apply a 

‘‘neutral methodology’’ aimed at 

providing a prediction of ‘‘what will 

actually happen,’’ as required by the 

statute. As a result of this ruling, the 

court vacated the 2012 cellulosic biofuel 

standard. In today’s final rule we have 

revised the regulations to eliminate the 

applicable standard for cellulosic 

biofuel for 2012 in light of the court’s 

decision and the very small number or 

cellulosic biofuel RINs produced in 

2012. All of the money paid by 

obligated parties to purchase cellulosic 

waiver credits to comply with the 

cellulosic biofuel standard in 2012 has 

been refunded. This change does not 

impact any other applicable 2012 

standard. 

5. Administrative Actions 

By November 30 of each year we are 

required to make several administrative 

announcements which facilitate 

program implementation in the 

following calendar year. These 

announcements include the cellulosic 

biofuel waiver credit price and the 

status of the aggregate compliance 

approach to land-use restrictions under 

the definition of renewable biomass for 

both the U.S. and Canada. Since we did 

not make these announcements for 2013 

by November 30 of 2012, we presented 

our proposed assessments of these 

administrative actions in the February 7, 

2013 NPRM. In today’s action we are 

providing the final announcements for 

these administrative actions. 

When EPA reduces the applicable 

volume of cellulosic biofuel for 2013 

below the volume specified in the 

statute, EPA is required to offer biofuel 

waiver credits to obligated parties that 

can be purchased in lieu of acquiring 

cellulosic biofuel RINs. These waiver 

credits are not allowed to be traded or 

banked for future use, are only allowed 

to be used to meet the 2013 cellulosic 

biofuel standard, and cannot be applied 

to deficits carried over from 2012. 

Moreover, unlike cellulosic biofuel 

RINs, waiver credits may not be used to 

meet either the advanced biofuel 

standard or the total renewable fuel 

standard. For the 2013 compliance 

period, we have determined that 

cellulosic biofuel waiver credits can be 

made available to obligated parties for 

end-of-year compliance should they 

need them at a price of $0.42 per credit. 

As part of the RFS regulations, EPA 

established an aggregate compliance 

approach for renewable fuel producers 

who use planted crops and crop residue 

from U.S. agricultural land. This 

compliance approach relieved such 

producers (and importers of such fuel) 

of the individual recordkeeping and 

reporting requirements otherwise 

required of producers and importers to 

verify that such feedstocks used in the 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49799 

production of renewable fuel meet the 

definition of renewable biomass. EPA 

determined that 402 million acres of 

U.S. agricultural land was available in 

2007 (the year of EISA enactment) for 

production of crops and crop residue 

that would meet the definition of 

renewable biomass, and determined that 

as long as this total number of acres is 

not exceeded, it is unlikely that new 

land has been devoted to crop 

production based on historical trends 

and economic considerations. We 

indicated that we would conduct an 

annual evaluation of total U.S. acreage 

that is cropland, pastureland, or 

conservation reserve program land, and 

that if the value exceed 402 million 

acres, producers using domestically 

grown crops or crop residue to produce 

renewable fuel would be subject to 

individual recordkeeping and reporting 

to verify that their feedstocks meet the 

definition of renewable biomass. Based 

on data provided by the USDA, we have 

estimated that U.S. agricultural land 

reached 384 million acres in 2012, and 

thus did not exceed the 2007 baseline 

acreage. 

On September 29, 2011, EPA 

approved the use of a similar aggregate 

compliance approach for planted crops 

and crop residue grown in Canada. The 

Government of Canada utilized several 

types of land use data to demonstrate 

that the land included in their 124 

million acre baseline is cropland, 

pastureland or land equivalent to U.S. 

Conservation Reserve Program land that 

was cleared or cultivated prior to 

December 19, 2007, and was actively 

managed or fallow and nonforested on 

that date (and is therefore RFS2 

qualifying land). The total agricultural 

land in Canada in 2012 is estimated at 

120.9 million acres. The total acreage 

estimate of 120.9 million acres does not 

exceed the trigger point for further 

investigation. 

C. Effective Date 

Under CAA 211(o)(3)(B)(i), EPA must 

determine and publish the applicable 

percentage standards for the following 

year by November 30. EPA did not meet 

this statutory deadline for the 2013 

standards. The NPRM was published on 

February 7, 2013 and the comment 

period closed on April 7, 2013. 

Nevertheless, we believe that the 

applicable percentage standards we are 

finalizing in today’s rulemaking should 

apply, as proposed, to all gasoline and 

diesel produced in 2013, including that 

produced prior to the effective date of 

this final rule. 

Some commenters asserted that this 

approach would provide insufficient 

notice and lead time to obligated 

parties, and result in prohibited 

retroactive rulemaking. However, as 

discussed below, application of the 

standards to the entire year’s production 

is reasonable given the structure of the 

statute, advance notice to obligated 

parties, compliance mechanisms under 

the program, and sufficiency of lead 

time for obligated parties to achieve 

compliance. Moreover, we have 

considered the alternative approaches 

suggested by commenters, and have 

determined that they are inappropriate 

as they would not satisfy the statutory 

requirements. 

In response to the NPRM, several 

obligated parties commented that the 

rulemaking process to establish the 

applicable 2013 standards should be 

abandoned due to its tardiness, and 

instead EPA should focus only on 

promulgating the applicable standards 

for 2014. Other commenters requested 

that we make the applicable 2013 

standards apply only to gasoline and 

diesel produced or imported after the 

publication of the final rule, thereby 

effectively reducing the volume of 

renewable fuel to be used in 2013 by an 

amount proportional to the months in 

2013 prior to the publication date. 

Alternatively, some commenters 

suggested that we apply the 2012 

standards to 2013. All of these suggested 

approaches would result in 2013 

standards requiring substantially less 

renewable fuel use than specified in the 

statute. 

Under the statute, the renewable fuel 

obligations apply on a calendar year 

basis. The national volumes are 

established for each calendar year, and 

EPA’s regulations must ensure these 

national volumes are met on an annual 

average basis. The renewable volume 

obligation is based on a projection of 

gasoline and diesel production for the 

calendar year, and the renewable fuel 

obligation for that calendar year is to be 

expressed as a percentage of the 

transportation fuel a refiner or importer 

sells or introduces into commerce for 

that calendar year. 

EPA acknowledges that today’s rule is 

being finalized later than the statutory 

deadline of November 30, 2012. 

However, this delay does not deprive 

EPA of authority to issue standards for 

calendar year 2013. As the United States 

Court of Appeals for the District of 

Columbia Circuit noted in its review of 

EPA’s delayed 2010 RFS standards, the 

statute does not specify a consequence 

for a situation where EPA misses the 

deadline, NPRM v. EPA, 630 F.3d 145, 

152–158 (2010), and courts have 

declined to treat a statutory direction 

that an agency ‘‘shall’’ act within a 

specified time period as a jurisdictional 

limit that precludes action later. Id. at 

154 (citing Barnhart v. Peabody Coal, 

537 U.S. 149, 158 (2003)). Moreover, the 

statute here requires that EPA 

regulations ‘‘ensure’’ that transportation 

fuel sold or introduced into commerce 

‘‘on an annual average basis, contains at 

least the applicable volume of 

renewable fuel’’ specified in the statute. 

Id. at 152–153. Therefore EPA believes 

it has authority to issue RFS standards 

for calendar year 2013 notwithstanding 

EPA’s delay in issuing this final rule, 

and that it must issue standards that 

‘‘ensure’’ that the volumes specified for 

2013 are satisfied. EPA has not chosen 

any of the alternative approaches 

suggested by commenters, because none 

of the proffered solutions would ensure 

that the volumes Congress specified for 

2013 would be used. 

EPA is mindful that the precise 

contours of obligated parties’ 

responsibilities for gasoline and diesel 

fuel produced in 2013 could not be 

known before issuance of this final rule. 

However, EPA believes that imposition 

in the final rule of an obligation related 

to production of gasoline or diesel that 

occurred prior to the effective date of 

this rule is reasonable. First, as noted 

above, EPA is required under the statute 

to ensure that applicable volumes 

specified in the statute for 2013 are 

satisfied, so it must take action 

notwithstanding the late date. The 

statute also provides that the national 

volumes are to be achieved on ‘‘an 

annual average basis.’’ The standards for 

obligated parties are based on a 

projection from the Energy Information 

Administration of gasoline and diesel 

use for each calendar year, and the 

obligation for refiners and importers is 

to be expressed as an applicable 

percentage obligation for a calendar 

year. Thus, applying the standards to 

production in calendar year 2013 is 

most consistent with the statute. 

Second, obligated parties have been 

provided reasonable notice that EPA 

would act in approximately the manner 

specified in the final rule. EPA 

established the required volume of 

biomass-based diesel in a separate 

rulemaking and, as proposed, has not 

lowered the applicable volumes of total 

renewable fuel and advanced biofuel 

below the applicable volumes specified 

in the statute. EPA has, as proposed, 

substantially lowered the required 

volume of cellulosic fuel below the level 

specified in the statute. Indeed, EPA’s 

final rule requires use of less cellulosic 

biofuel than it proposed, so any change 

between the proposed and final rules in 

this regard operates to relieve burden on 

obligated parties. Regulated parties also 

had the benefit of knowing how EPA 

mstockstill on DSK4VPTVN1PROD with RULES2

49800 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

12 75 FR 14672. 

13 In the first half of 2010 when the initial RFS 

program was still effective, some cellulosic biomass 

ethanol was produced and the RINs generated were 

valid for demonstrating compliance with the 2010 

and 2011 RFS cellulosic biofuel standards. 

However, the cellulosic biomass ethanol that was 

produced was not made from cellulosic feedstocks, 

but rather was categorized as cellulosic because it 

was produced in plants using waste materials to 

displace 90% or more of fossil fuel use under the 

then-effective definition of cellulosic biomass 

ethanol in CAA Section 211(o)(1)(A). See also 40 

CFR § 80.1101(a)(2). 

14 4,248,338 cellulosic waiver credits were 

purchased for 2011 compliance according to the 

EPA Moderated Transaction System (EMTS) Web 

site (information retrieved from the Web site on 

December 11, 2012) at a cost of $1.13 per credit. 

The ethanol-equivalent volume of cellulosic biofuel 

projected for 2011 and used to calculate the 

percentage standard for that year was 6.0 mill gal. 

15See API v. EPA, 706 F.3d 474 (D.C. Cir. 2013). 

has previously approached standards 

that are finalized after the beginning of 

the calendar year. In the March 2010 

final rule revising the RFS program 

regulations, we set the standards for 

2010 and made them applicable to all 

gasoline and diesel produced in 2010 

despite the fact that the rulemaking was 

not published until March 26, 2010. 

This approach was challenged and 

upheld in NPRM v. EPA, 630 F.3d 394 

(DC Cir. 2010). Thus, EPA believes that 

obligated parties had sufficient notice. 

Third, the parties have adequate lead 

time to comply with the 2013 RFS 

standards notwithstanding EPA’s delay 

in issuing the rule. Because compliance 

is achieved by obligated parties 

purchasing an appropriate number of 

RINs from producers or blenders of the 

renewable fuel, obligated parties do not 

need lead time for construction or 

investment purposes. They are not 

changing the way they produce gasoline 

or diesel, do not need to design or 

install new equipment, or take other 

actions that require longer lead time. 

Obtaining the appropriate amount of 

RINs involves contractual or other 

arrangements with renewable fuel 

producers or other holders of RINs. 

Indeed renewable fuel producers have 

been generating 2013 RINs since the 

beginning of the calendar year. 

Obligated parties have been acquiring 

RINs since the beginning of 2013 in 

anticipation of the publication of the 

final applicable standards in today’s 

rule. There is also a significant quantity 

of 2012 RINs that can be used for 

compliance with the 2013 standards. To 

facilitate compliance, and provide 

additional lead time, EPA is extending 

the date by which compliance with the 

2013 standards must be demonstrated to 

June 30, 2014. EPA chose this date both 

to provide additional time for a 

compliance demonstration, and because 

we anticipate issuing a final rule 

establishing the 2014 RFS standards as 

soon as possible before that date. 

Establishing a 2013 compliance 

deadline on a date that occurs after 

promulgation of the final rule setting the 

2014 standards should allow obligated 

parties to take their 2014 obligations 

into consideration as they determine 

how to utilize RINs for 2013 

compliance. 

In response to stakeholder concerns 

about the lateness of this final rule, EPA 

considered, but rejected, the option of 

issuing numerically higher percentage 

standards based on just the 2013 

production of gasoline and diesel fuel 

that took place after issuance of the final 

rule. Such an approach would not 

provide for standards allowing 

compliance on an ‘‘annual average 

basis,’’ based on ‘‘an applicable 

percentage for a calendar year,’’ as 

envisioned by the statute. Also, EPA 

believes application of the standards in 

this manner would be unfair because it 

could result in some producers or 

importers having substantially greater or 

lesser obligations, based on variable 

production or import volumes over the 

year, than would be the case if the 

standards were based on a full year’s 

production. In essence, such an 

approach would provide a temporal 

window with no RFS obligation, and 

some parties might receive either a 

windfall or a substantially greater 

burden than they would have if EPA 

had issued its standards on time. This 

would be exacerbated by the fact that 

EPA did not take comment on this 

alternative, so obligated parties would 

not have been on notice of this potential 

approach. EPA rejected this approach 

for these reasons. 

D. Impacts of Final Actions 

Analyses for the March 26, 2010 RFS 

final rule indicated the GHG benefits 

from cellulosic biofuels compared to the 

petroleum-based fuels they displace are 

well above the 60 percent reduction 

threshold. Therefore, EPA expects that 

the increase in cellulosic biofuel use 

that EPA has projected for 2013 over 

prior year production levels will have 

directionally beneficial GHG emissions 

impacts. 

For advanced biofuel and total 

renewable fuel, we are not reducing the 

applicable volumes below the 

applicable volumes set forth in the 

statute. All of the impacts of the biofuel 

volumes specified in the statute were 

addressed in the RFS final rule 

published on March 26, 2010.12 Today’s 

rulemaking simply sets the percentage 

standards for obligated parties for 2013 

advanced biofuel and total renewable 

fuel, where the impacts of the national 

volumes of those fuels were previously 

analyzed. 

II. Projection of Cellulosic Biofuel 

Volume for 2013 

In order to project the national 

production volume of cellulosic biofuel 

in 2013, we considered the EIA 

projections and collected information 

on individual facilities that have the 

potential to produce qualifying volumes 

for use as transportation fuel, heating 

oil, or jet fuel in the U.S. in 2013. In 

light of the delay in issuing the 

standards for 2013 we also sought and 

received an updated estimate of 

cellulosic biofuel production from EIA 

to inform our final standards. We also 

considered the comments we received 

in response to the NPRM. This section 

describes the volumes that we project 

will be produced or imported in 2013 as 

well as some of the uncertainties 

associated with those volumes. 

Despite significant advances in 

cellulosic biofuel production technology 

in recent years, RIN-generating 

production of biofuel from cellulosic 

feedstocks in 2010 and 2011 was zero 

despite our projections that the industry 

was positioned to produce about 6 mill 

gal in each of those years.13 In 2010 the 

majority of the cellulosic biofuel 

shortfall was met through the use of 

RINs generated under the initial RFS 

regulations, and since there were excess 

cellulosic RINs many of these RINs were 

carried over into the 2011 compliance 

year. The remaining cellulosic biofuel 

requirements in 2011 were met through 

the purchase of cellulosic biofuel waiver 

credits.14 A discussion of the reasons for 

this disparity between our projections 

and subsequent production is provided 

in Section II.B below. 

In 2012 the first cellulosic RINs were 

generated under the current RFS 

regulations at two small pilot facilities. 

However, cellulosic biofuel production 

once again fell short of our projections 

in 2012. The 2012 cellulosic standard 

was challenged in court and based on 

the decision in that case the 2012 

cellulosic biofuel standard was 

vacated.15 This decision is discussed 

further in the following sections. 

A. Statutory Requirements 

The national volumes of cellulosic 

biofuel to be used under the RFS 

program each year through 2022 are 

specified in CAA 211(o)(2). For 2013, 

the statute specifies a cellulosic biofuel 

applicable volume of 1.0 bill gal. The 

statute requires that if EPA determines, 

based on EIA’s estimate, that the 

projected volume of cellulosic biofuel 

production for the following year is less 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49801 

16For more information see Section II.C below. 17Solecki M, Dougherty A, Epstein B. Advanced 

Biofuel Market Report 2012: Meeting U.S. Fuel 

Standards. Environmental Entrepreneurs. 

September 6, 2012. Available Online http://www.e2.

org/ext/doc/E2AdvancedBiofuelMarket

Report2012.pdf. 18Nielsen, Peder Holk. ‘‘The Path to 

Commercialization of Cellulosic Ethanol—A 

Brighter Future.’’ PowerPoint Presentation. 

Conference Call. February 22, 2012. Available 

Online http://www.novozymes.com/en/investor/

events-presentations/Documents/Cellic3_conf_call_

220212.pdf. 19Nielsen, Peder Holk. ‘‘The Path to 

Commercialization of Cellulosic Ethanol—A 

Brighter Future.’’ PowerPoint Presentation. 

Conference Call. February 22, 2012. 20 Department of Energy. Biomass Multi-Year 

Program Plan. April 2012. DOE/EE–0702. Available 

Online http://www1.eere.energy.gov/biomass/pdfs/

mypp_april_2012.pdf. 

21Pre-commercial thinnings and tree residue from 

tree plantations must come from non-federal lands 

and meet the definition of a renewable biomass 

definition and be eligible to generate RINs. 

than the applicable volume shown in 

Table II.A–1, then EPA is to reduce the 

applicable volume of cellulosic biofuel 

to the projected volume available during 

that calendar year. 

In addition, if EPA reduces the 

required volume of cellulosic biofuel 

below the level specified in the statute, 

the Act also indicates that we may 

reduce the applicable volumes of 

advanced biofuels and total renewable 

fuel by the same or a lesser volume. Our 

consideration of the 2013 volume 

requirements for advanced biofuels and 

total renewable fuel is presented in 

Section III. 

The United States Court of Appeals 

for the District of Columbia Circuit 

recently interpreted the statutory 

requirements for EPA’s cellulosic 

biofuel projections, in the context of 

considering a challenge to the 2012 

cellulosic biofuel standard. The Court 

found that in establishing the applicable 

volume of cellulosic biofuel for 2012, 

that EPA had used a methodology in 

which ‘‘the risk of overestimation [was] 

set deliberately to outweigh the risk of 

underestimation.’’ The Court held EPA’s 

action to be inconsistent with the statute 

because this provision required EPA to 

apply a ‘‘neutral methodology’’ aimed at 

providing a prediction of ‘‘what will 

actually happen’’. In all other respects 

the Court upheld EPA’s methodology for 

making cellulosic biofuel projections. 

For example, the Court agreed with EPA 

that the statute requires that EPA treat 

the EIA estimate with ‘‘great respect,’’ 

but ‘‘allowing deviation consistent with 

that respect’’. The Court also upheld 

EPA’s reasoned reliance on information 

provided by prospective cellulosic 

biofuel producers in formulating its 

projections. For a further discussion of 

the changes we have made to our 

approach in evaluating the information 

that forms the basis for our projection of 

cellulosic biofuel see Section C below. 

B. Status of the Cellulosic Biofuel 

Industry 

As in previous years, cellulosic 

biofuel production in the United States 

in 2012 was limited to small-scale 

research and development, pilot, and 

demonstration-scale facilities. 

Companies such as Abengoa, Blue 

Sugars, DuPont, KiOR, Poet, and others 

successfully operated small-scale 

facilities in 2012. Two of these 

companies, Blue Sugars and KiOR, 

generated a small number of RINs for 

the fuel they produced. Several of these 

facilities, including all that were part of 

our 2012 volume projections, are 

discussed in more detail in Section II.C 

below. While there were numerous 

small-scale facilities producing 

cellulosic biofuel in 2012, the total 

volume of fuel produced was very 

small. Two commercial scale facilities 

that were expected to begin fuel 

production in 2012 experienced 

unexpected delays in commissioning, 

while a third was delayed due to 

difficulties raising required funds.16

Although information is not available to 

EPA to quantify the total volume of 

cellulosic biofuel produced in 2012 at 

these research and development, pilot, 

and demonstration scale facilities if they 

do not generate RINs, based on generally 

available information we believe that 

total production in the United States 

was likely less than one mill gal across 

the industry. 

While cellulosic biofuel production in 

the United States remains limited, the 

industry continues to make significant 

progress towards producing cellulosic 

biofuel at prices competitive with 

petroleum fuels. From 2007 through the 

second quarter of 2012 venture 

capitalists invested over $3.4 billion in 

advanced biofuel companies in North 

America.17 Recent advancements in 

enzyme and catalyst technologies are 

allowing cellulosic biofuel producers to 

achieve greater yields of biofuel per ton 

of feedstock. These advancements have 

led to lower operational costs as they 

have driven down the cost for feedstock, 

energy, and other important inputs on a 

per gallon basis. For example, the 

estimated cost of producing cellulosic 

ethanol using an enzymatic hydrolysis 

process in 2007 was $4–$8 per gallon.18

By 2012 the estimated cost of cellulosic 

ethanol production using the same 

process had fallen to $2–$3.50 per 

gallon.19 The U.S. Department of Energy 

(DOE) similarly reports that 

advancements in cellulosic ethanol 

technology have resulted in a decrease 

in modeled costs from approximately $4 

per gallon (minimum ethanol selling 

price) in 2007 to approximately $2.50 

per gallon in 2011.20 The same 

technological advances have also 

lowered the capital costs of cellulosic 

biofuel production facilities per gallon 

of annual fuel production, as more 

gallons of biofuel can be produced at a 

facility without additional equipment or 

increased feedstock requirements. 

Another area where significant 

progress has been made is feedstock 

supply for commercial scale cellulosic 

biofuel production facilities. This issue 

has often been raised as a factor that 

could hinder the development of the 

cellulosic biofuel industry as many of 

the proposed facilities rely on 

feedstocks, such as agricultural residues 

or energy crops, for which supply 

chains have not previously existed. 

Over the past several years both 

Abengoa and Poet have been working 

with farmers in the regions surrounding 

their first commercial scale facilities to 

ensure the availability of the necessary 

feedstock. Because corn cobs and stover 

are only seasonally available, using 

them as a feedstock for a cellulosic 

biofuel production facility would 

require significant feedstock storage 

facilities. In the last two years Abengoa 

and Poet completed construction of 

large scale feedstock storage facilities to 

ensure adequate supply to their 

cellulosic biofuel production facilities 

throughout the year. Both companies 

successfully completed fall biomass 

harvests in 2011 and have contracted 

with local farmers to provide feedstock 

for their cellulosic ethanol facilities. 

This supply chain will not only provide 

feedstock for their first commercial scale 

facilities, but also a model that can be 

re-created at future production facilities. 

Several cellulosic biofuel producers 

are planning to use pre-commercial 

thinnings, tree residue from tree 

plantations or the cellulosic portions of 

yard waste as feedstock.21 This material 

has many qualities that make it 

desirable as a cellulosic biofuel 

feedstock. It tends to be relatively 

inexpensive and is readily available in 

some regions of the United States. It is 

also available year round rather than 

seasonally, significantly reducing the 

need for large scale feedstock storage 

facilities. Securing a sufficient quantity 

of this feedstock for a commercial scale 

facility, however, can be challenging. In 

the summer of 2011 KiOR announced it 

had signed a feedstock agreement with 

Catchlight Energy to provide all the 

necessary feedstock for their first 

commercial scale facility. While KiOR 

plans to transition to planted trees for 

mstockstill on DSK4VPTVN1PROD with RULES2

49802 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

future facilities, KiOR now has secured 

sufficient feedstock such that they can 

produce cellulosic biofuel and 

cellulosic RINs using an existing 

pathway at their first commercial scale 

facility. INEOS Bio also has a long term 

agreement with Indian River County to 

provide separated yard waste which 

will serve as the feedstock for their first 

facility. 

Another feedstock for cellulosic 

biofuel production is separated 

municipal solid waste (MSW). MSW is 

already being collected and transported 

to a centralized facility, is consistently 

available throughout the year, and can 

be obtained for a very low, or even 

negative, cost. MSW often contains 

contaminants, however, that may make 

it challenging to process for some 

cellulosic biofuel technologies. EPA also 

requires that waste separation plans be 

submitted and approved prior to any 

company generating RINs using 

separated MSW as a feedstock. In June 

2012 EPA approved the first waste 

separation plan under the RFS program 

for Fiberight’s facility in Blairstown, 

Iowa. 

In the early years of the cellulosic 

biofuel industry several small start-up 

companies announced plans to build 

large commercial scale facilities that 

were scheduled to begin production in 

the past few years. The construction of 

many of these facilities was dependent 

on the companies raising additional 

funding, either from venture capitalists, 

government grants, or loans backed by 

government guarantees. So far, few of 

the companies that made these early 

announcements have been able to 

successfully raise the necessary funds 

and begin construction. Securing this 

funding proved difficult, and when it 

did not materialize the projects were 

delayed or cancelled. However, recently 

significant progress has also been made 

by some companies towards funding the 

construction of their first commercial 

scale facilities. 

The funding profiles of the companies 

included in our projected volume for 

2013, as well as for many of the 

companies targeting production in 2014, 

are markedly different than those of the 

companies that were expected to 

produce the majority of cellulosic 

biofuel in 2010 and 2011. Many of these 

projects have already received, and in 

several cases have closed on loan 

guarantees and grants offered by DOE or 

USDA. Other companies have filed for 

and successfully executed IPOs. Several 

cellulosic ethanol projects are being 

self-financed by large companies such 

as Abengoa and Poet with significant 

experience in the biofuel, 

petrochemical, and specialty chemical 

markets. This solid financial backing 

has allowed these companies to proceed 

with construction. Both of the facilities 

included in our final volume for 2013 

have already completed the 

construction of their first commercial 

production facilities. KiOR’s facility has 

begun producing RINs and INEOS Bio 

announced that it started commercial 

production on July 31, 2013. There is 

therefore far less uncertainty as to likely 

production from these two facilities 

than has been present for EPA’s earlier 

projections. The next section provides 

additional details on the funding and 

construction status of the projects 

included in our projected cellulosic 

biofuel production volumes for 2013. 

If these first commercial scale 

cellulosic biofuel production facilities 

are successful, the potential exists for a 

rapid expansion of the industry in 

subsequent years. Having successful 

commercial scale facilities would not 

only provide useful information to help 

maximize the efficiency of future 

facilities, but would also significantly 

decrease the technology and scale-up 

risks associated with cellulosic biofuel 

production facilities and could lead to 

increased access to project funding. 

Fiberight and ZeaChem both plan to 

build larger-scale facilities (∼25 mill gal 

per year) as soon as they are able to raise 

the necessary funds. INEOS Bio plans to 

expand production by building 

additional units near sources of 

inexpensive feedstock ranging in size 

from 8 to 50 mill gal of ethanol per year. 

They are currently exploring expansion 

possibilities in the United States and 

internationally. KiOR has plans for a 

second commercial scale facility to be 

built in Natchez, MS, that will be 

approximately three times larger (∼30 

mill gal per year) than their Columbus, 

MS, plant and plans to break ground at 

their second facility after their first is 

fully operational. Abengoa currently 

anticipates construction of additional 

cellulosic ethanol facilities at multiple 

locations, likely including co-locating 

with some of their existing starch 

facilities in the US. Poet has a similar 

expansion strategy to build cellulosic 

ethanol plants at their grain ethanol 

facilities, license their technology for 

use at other grain ethanol facilities, and 

build cellulosic ethanol facilities that 

use feedstocks such as agricultural 

residue or energy crops. Poet’s goal is to 

be involved in the production of 3.5 bill 

gal of cellulosic ethanol per year by 

2022. Several other companies are also 

targeting 2014 for the start-up of 

cellulosic biofuel production facilities 

and would likely look to build 

additional facilities relatively quickly if 

their first facilities operate successfully. 

While many of these expansion plans 

are still in the early stages and are 

subject to change, they do point to the 

potential for cellulosic biofuel 

production to increase very significantly 

in future years once the initial plants 

become operational. 

C. Cellulosic Biofuel Volume 

Assessment for 2013 

In 2012 the first cellulosic biofuel 

RINs under the current regulations were 

generated. Small quantities of RINs, a 

total of approximately 22,000, were 

generated by Blue Sugars and KiOR 

from their respective demonstration 

facilities. The small volumes of fuel 

produced from these two facilities are 

typical for R&D and pilot facilities 

whose primarily purpose is to prove the 

technology is viable, provide 

information for scale-up design, and 

provide fuel for testing purposes rather 

than to generate income from 

commercial volumes of fuel. However, 

national cellulosic biofuel production 

once again fell far short of the cellulosic 

biofuel standards. Two of the companies 

expected to begin producing fuel in 

2012 experienced unexpected 

difficulties in commissioning their 

commercial scale production facilities 

following successful demonstration and 

pilot scale work, resulting in biofuel 

production being delayed until 2013. A 

third commercial facility was unable to 

secure the funds needed to convert an 

existing corn ethanol production facility 

to a cellulosic biofuel production 

facility, despite having secured a 

conditional loan guarantee from the 

United States Department of Agriculture 

(USDA). The remaining facilities that 

were included in our projected 

production volume for 2012 were small 

demonstration facilities that similarly 

experienced delays or significantly 

reduced production volumes for a 

variety of reasons. 

There are several factors indicating 

that larger volumes of cellulosic biofuel 

will be produced in 2013. Commercial 

scale cellulosic biofuel projects from 

INEOS Bio and KiOR are structurally 

complete, KiOR’s facility began 

producing cellulosic biofuel in the 

Spring of 2013, and INEOS Bio 

announced it began production at the 

end of July. Both facilities plan to 

achieve steady state production and 

achieve production rates at or near their 

nameplate capacities by the end of 2013. 

Another commercial scale facility 

backed by Abengoa, a large company 

with significant experience in biofuel 

production, is also scheduled to begin 

producing cellulosic biofuel in late 2013 

or early 2014. These facilities are 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49803 

22Letter from A. Michael Schaal, Director, Office 

of Petroleum, Natural Gas, and Biofuels Analysis, 

EIA to Christopher Grundler Director, Office of 

Transportation and Air Quality, EPA, May 8, 2013. 

23The difference between actual volume and 

ethanol-equivalent volume stems from the fact that 

cellulosic gasoline and diesel fuels generate a 

greater number of RINs than the actual gallons 

produced because of their higher energy content. 

The number of RINs generated per gallon of fuel 

produced is based on the energy content of the fuel 

relative to ethanol. 

indicative of a shift across the cellulosic 

biofuel industry from small-scale R&D 

and demonstration facilities often 

operated by small start-up companies to 

large commercial scale facilities backed 

by large companies, many of which 

have substantial experience in related 

industries. 

In order to project cellulosic biofuel 

production for 2013, we tracked the 

progress of more than 100 biofuel 

production facilities. From this list of 

facilities we used publicly available 

information, as well as information 

provided by DOE, EIA, and USDA, to 

make a preliminary determination of 

which facilities are the most likely 

candidates to produce cellulosic biofuel 

and generate cellulosic biofuel RINs in 

2013. Each of these companies was 

investigated further in order to 

determine the current status of their 

facilities and their likely cellulosic 

biofuel production and RIN generation 

volumes for the coming years. 

Information such as the funding status 

of these facilities, current status of the 

production technologies, announced 

construction and production ramp-up 

periods, and annual fuel production 

targets were all considered when we 

met with senior level representatives of 

each company to discuss cellulosic 

biofuel target production levels for 

2013. Throughout this process EPA is in 

regular contact with EIA to discuss 

relevant information and assessment of 

potential cellulosic biofuel producers. 

Our projection of the cellulosic biofuel 

production in 2013 is based on the 

estimate we received from EIA, 

information we received from EIA, DOE, 

and USDA, the individual production 

projections that emerged from these 

discussions, and comments we received 

on the NPRM. A brief description can be 

found below for each of the companies 

we believe will produce cellulosic 

biofuel and make it commercially 

available in 2013. 

To project the available volume of 

cellulosic biofuel, we have continued to 

obtain information from the potential 

producers of cellulosic biofuels to help 

inform our annual projection. We have, 

however, made several changes to the 

way that we used the information we 

gather in projecting cellulosic biofuel 

production to ensure consistency with 

the ruling of the DC Circuit Court and 

help ensure a neutral projection that 

aims at accuracy. Several of the more 

significant changes are: 

• Volumes from pilot and 

demonstration scale facilities are not 

included in our projections. Very few of 

these facilities are registered to generate 

RINs, and production volumes at those 

that are historically have been so small 

that they have no significant impact on 

our total volume projection for 2013. 

• Facilities with start-up dates near 

the end of the year are not included in 

our projections. There is a realistic 

possibility that minor delays could 

result in no production of cellulosic 

biofuel from such facilities in 2013, and 

even if these facilities start up as 

expected production volumes from the 

first month of production are expected 

to be very small. 

• Benchmarks for how quickly new 

facilities ramp up to full production, 

and for production volumes during this 

ramp-up period in a best case scenario 

have been established and used to 

assess the reasonableness of the 

production estimates received from 

producers. Production projections from 

companies that exceed the volumes 

calculated using this benchmark are not 

considered credible, even as the high 

end of a possible range of production. 

While we have considered ramp-up 

rates for cellulosic biofuel production 

facilities in the past we have added best 

case scenario benchmarks to assess the 

reasonableness of the ramp-up 

schedules we received from potential 

biofuel producers. 

• In considering all factual 

information and projections we have 

weighted uncertainty neutrally, with the 

aim of providing an accurate projection 

rather than one intended to provide an 

incentive for growth in the cellulosic 

biofuel industry. 

In our proposed rule we projected 14 

million ethanol-equivalent gallons of 

cellulosic biofuel production in 2013. 

Since this time we have considered 

comments received on the proposed 

rule, updated information from EIA 

including a new projection of cellulosic 

biofuel production for 2013,22 and 

updated information from the 

companies expected to produce 

cellulosic biofuel. The sections that 

follow discuss the comments we 

received, the updated information from 

EIA, and the current status of the 

cellulosic production facilities that are 

relevant in setting the cellulosic biofuel 

standard for 2013. Based on this 

information we are setting the cellulosic 

biofuel standard at 6 million ethanolequivalent gallons (4 million actual 

gallons) based on our current projection 

of cellulosic biofuel production in 

2013.23

1. Comments on the Proposed Rule 

EPA received many comments on the 

projected available cellulosic biofuel 

volumes in our proposed rule. Several 

commenters, including biofuel trade 

organizations and cellulosic biofuel 

production companies supported EPA’s 

methodology for projecting available 

cellulosic biofuel volumes. Some of 

these commenters further stated that 

EPA had appropriately assessed the 

status of the cellulosic biofuel industry 

and that the projected volume (14 

million ethanol-equivalent gallons) was 

likely to be achieved. Others, while 

affirming EPA’s methodology 

encouraged EPA to consider new 

information available since the 

publication of our proposed rule, 

particularly delays in the start-up of 

INEOS Bio and new production 

guidance from KiOR, and to adjust our 

projected volume accordingly. EPA has 

considered this information and 

believes the volume projected in today’s 

final rule (6 million ethanol-equivalent 

gallons) accurately represents the 

volume of cellulosic biofuel likely to be 

produced in 2013 based on the best 

available information. 

Conversely, EPA also received several 

comments stating that the projected 

available volume of cellulosic biofuel 

should be based on historical 

production rather that projections of 

future production. Using this 

methodology would result in a 

cellulosic biofuel standard for 2013 near 

zero. In effect the commenters argued 

that past production is the best and 

most sure indicator for future 

production. Adopting this methodology 

would be inconsistent with EPA’s 

charge to set the applicable volume for 

cellulosic biofuel through a neutral 

projection of the volume projected to be 

produced that aims at accuracy. Basing 

this projection solely on past production 

would not neutrally aim at accuracy, as 

it would require EPA to ignore 

significant real world information that is 

relevant to project production for 2013. 

It would also require EPA to ignore the 

production estimates we receive from 

EIA, which we are required to consider 

with great respect. Additionally, it 

would be unusual to base a future 

projection solely on past performance, 

effectively assuming no growth in the 

cellulosic biofuel industry. 

Several commenters also stated that 

the methodology used by EPA in setting 

the applicable volume for cellulosic 

biofuel is the same as that used in 

mstockstill on DSK4VPTVN1PROD with RULES2

49804 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

24 In their letter to EPA on May 8, 2013, EIA did 

not specify an ethanol-equivalent volume 

projection, nor did they specify production volumes 

from individual companies that would allow EPA 

to calculate an ethanol-equivalent volume from 

their projection of physical gallons. However, the 

EPA and EIA projection of physical gallons of 

cellulosic biofuel production for 2013 are identical. 

25Letter from Adam Sieminski, EIA 

Administrator to Lisa Jackson, EPA Administrator 

October 18, 2012. 

26 ‘‘Cellulosic biofuels begin to flow but in lower 

volumes than foreseen by statutory targets.’’ Today 

in Energy. EIA, February 26, 2013. http://www.eia.

gov/todayinenergy/detail.cfm?id=10131 

previous years and that this is 

inappropriate in light of the API v. EPA 

decision vacating the 2012 cellulosic 

biofuel standard. The process used by 

EPA to gather information on the 

relevant companies and their likely 

production is indeed similar. We 

continue to consider information 

received directly from potential 

cellulosic biofuel producers and the 

cellulosic and advanced biofuel trade 

associations. As noted above, we have 

made several changes to how we 

evaluate this information. We work 

closely with EIA in developing our 

volume projection and give their 

production estimate great weight. 

Indeed, this year we are projecting the 

same volume of cellulosic biofuel as the 

most recent estimate provided by EIA.24

Consistent with the Court’s directive, 

we are not weighing uncertainty in any 

element of our projection in a manner 

that favors a higher or a lower volume 

projection. 

EPA believes the information and 

methods used to project the production 

of cellulosic biofuel for 2013 described 

in the preceding sections appropriately 

takes neutral aim at accuracy. EPA has 

established a benchmark for the 

expected production ramp-up timeframe 

that has been used to assess the 

reasonableness of production estimates 

received from companies. We did not 

receive any comments suggesting that 

this benchmark was inappropriate. We 

have appropriately considered the 

history of delays for the cellulosic 

industry as a whole and the companies 

included in our projection in particular 

in projecting these volumes. We have 

not included any volumes from pilot or 

demonstration scale facilities, nor have 

we included any volume from 

companies currently lacking a valid 

pathway to produce cellulosic biofuel— 

despite their claims that they can and 

intend to generate cellulosic biofuel 

RINs in 2013—due to the highly 

uncertain nature of this production. 

Given the timing of this final rule this 

seems particularly appropriate for 2013. 

Finally, we have not used best case 

scenarios for the companies considered 

in determining our volume projection 

for 2013, and have not attempted to use 

this process to either promote or impede 

growth within the cellulosic biofuel 

industry. Of the seven companies and 

potential fuel producing pathways listed 

in Table II.C.6–1 that have the potential 

to produce cellulosic RINs in 2013 we 

have only included two in our volume 

projection. For the two facilities 

considered we have reduced their 

projected volume from the maximum 

possible production calculated from the 

start-up date and nameplate capacity 

taking into account expected ramp-up 

schedules and delays experienced at the 

two facilities. After using this 

information to establish projected 

ranges of production we selected a 

combined volume that represents 

production at the mid-point of our 

established ranges, as a shortfall in 

expected production from either 

company can be made up for by the 

other companies in Table II.C.6–1 

exceeding their projected production. 

We believe our volume projection of 6 

million ethanol-equivalent gallons of 

cellulosic biofuel in 2013 and the 

methodology utilized to arrive at this 

projection are our best assessment of 

production that will actually happen in 

2013. 

2. Projections From the Energy 

Information Administration 

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

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

Administrator of the Environmental 

Protection Agency an estimate, with 

respect to the following calendar year, 

of the volumes of transportation fuel, 

biomass-based diesel, and cellulosic 

biofuel projected to be sold or 

introduced into commerce in the United 

States.’’ EIA provided these estimates to 

us on October 18, 2012.25 With regard 

to cellulosic biofuel, the EIA estimated 

that the available volume in 2013 would 

be 9.6 million actual gallons (13.1 

million ethanol-equivalent gallons). A 

summary of the commercial scale plants 

they considered and associated 

production volumes is shown below in 

Table II.C.2. 

TABLE II.C.2—CELLULOSIC BIOFUEL PLANTS EXPECTED TO GENERATE BIOFUEL RINS FOR 2013 

[From EIA] 

Mechanical 

completion Company Location Product Design capacity 

EIA Forecast 

Utilization 

(percent) 

Actual 

production 

(mill gal) 

Ethanolequivalent 

production 

(mill gal) 

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

2012 ................... KiOR ................... Columbus, MS ............... Liquids ................ 11 50 5.5 9.0 

Various ............... Various Pilot 

Plants.

Various ........................... Ethanol ............... 1 10 0.1 0.1 

Total Capacity and Production for 2013 .................................................................. 20 48 9.6 13.1 

Several commenters noted a Today in 

Energy article that appeared on EIA’s 

Web site on February 26, 2013 that 

stated that cellulosic biofuel production 

‘‘could grow to more than 5 mill gal in 

2013, as operations ramp up at several 

plants.’’ 26 The commenters stated that 

as this article was more recent than the 

letter EPA received in October 2012 it 

represented an updated volume 

projection from EIA and that EPA 

should base our volume projection on 

this smaller volume (5 million actual 

gallons). A significant amount of time 

has passed since we received EIA’s 

initial cellulosic biofuel volume 

projections and any changes in 

projected volumes since this time 

should be considered as we determine 

the appropriate cellulosic biofuel 

volume projection. To ensure that we 

are using the most up to date 

information EPA requested and received 

from EIA an updated projection of 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49805 

27Letter from A. Michael Schaal, Director, Office 

of Petroleum, Natural Gas, and Biofuels Analysis, 

EIA to Christopher Grundler Director, Office of 

Transportation and Air Quality, EPA, May 8, 2013. 

cellulosic biofuel production in 2013 on 

May 8, 2013.27 In this letter EIA 

projected that 4 million actual gallons of 

cellulosic biofuel would be produced in 

2013. 

EIA’s projection of cellulosic biofuel 

production in 2013 is very similar to 

EPA’s projection discussed above and 

summarized in Section II.C.6 below. 

The lists of companies (KiOR and 

INEOS Bio) that EIA and EPA expect to 

generate cellulosic biofuel RINs in 2013 

are the same. EIA’s estimate also no 

longer includes volumes from pilot 

facilities due to their highly uncertain 

production and the fact that these 

facilities are unlikely to generate RINs 

in 2013 for any fuel they do produce. 

While the total volume of cellulosic 

biofuel that EIA expects will be 

produced in 2013 is identical to the 

volume projected by EPA (4 million 

actual gallons), EIA does not specify 

how much of this production will be 

ethanol and how much will be 

renewable hydrocarbons. Because of 

this EPA is unable to calculate the 

ethanol-equivalent volume represented 

by EIA’s projection. Since this volume 

includes renewable gasoline and diesel 

produced by KiOR, however, EIA’s 

projection represents an implied 

ethanol-equivalent volume greater than 

4 mill gal and is consistent with EPA’s 

6 million ethanol-equivalent gallon 

projection. 

The approach we have taken in 

setting the applicable volume for 

cellulosic biofuel for 2013 is 

appropriate. Section CAA 211(o)(7)(D) 

vests the authority for making the 

projection with EPA. As described in 

past rulemakings, the statute provides 

that the projection is ‘‘determined by 

the Administrator based on the estimate 

provided [by EIA].’’ Congress did not 

intend that EPA simply adopt EIA’s 

projection without an independent 

evaluation. EPA’s consideration of EIA’s 

estimate in developing this final rule is 

consistent with EPA’s consideration of 

EIA’s estimate in the past rulemakings 

involving a reduction of the volume 

standard for cellulosic biofuel. EPA’s 

interpretation and implementation of 

the obligation to base its projection on 

the EIA estimate recently was upheld in 

API v. EPA, 706 F.3d at 478 (DC Cir. 

2013). 

3. Current Status of Cellulosic Biofuel 

Production Facilities 

In the January 9, 2012, final rule that 

established the applicable volume of 

cellulosic biofuel for 2012, we identified 

six production facilities that we 

projected would produce cellulosic 

biofuel and make that fuel commercially 

available in 2012. Five of these 

production facilities are currently 

structurally complete and one is 

planning to retrofit an existing corn 

ethanol plant with construction 

beginning in the summer of 2013. The 

current status of each of these facilities, 

including target production levels for 

each facility in 2013, is discussed 

below. Two additional facilities that are 

expected to begin producing cellulosic 

biofuel near the end of 2013 or in early 

2014 are also discussed. 

API 

American Process Inc. (API) is 

developing a project in Alpena, 

Michigan capable of producing up to 

900,000 gallons of cellulosic ethanol per 

year from pre-commercial thinnings and 

tree residue from tree plantations. This 

facility will use a technology developed 

by API called GreenPower+TM. This 

technology extracts the hemicellulose 

portion of woody biomass using hot 

water and hydrolyzes it into sugars. 

These sugars are then converted to 

ethanol or other alcohols, while the 

remaining portion of the woody 

biomass, containing mostly cellulose 

and lignin, is processed into wood 

paneling at a co-located facility. At 

future, larger-scale facilities API 

anticipates burning the residual biomass 

in a boiler to produce steam and 

electricity as well as cellulosic biofuel. 

In January 2010 API received a grant 

from DOE for up to $18 million for the 

construction of their demonstration 

facility. Construction of the Alpena, 

Michigan facility began in March 2011 

and API began commissioning 

operations at their facility in the 

summer of 2012. API encountered 

several unexpected difficulties in 

commissioning their facility resulting in 

production delays; however they 

anticipate production of cellulosic 

biofuel from this facility in 2013. EPA 

has not included production from API 

in our projections due to the facility’s 

history of delays, uncertain start-up 

date, and small potential production 

volume. 

Fiberight 

Fiberight uses an enzymatic 

hydrolysis process to convert the 

biogenic portion of separated MSW and 

other waste feedstocks into ethanol. 

They have successfully completed five 

years of development work on their 

technology at their small pilot plant in 

Lawrenceville, Virginia. In 2009 

Fiberight purchased an idled corn 

ethanol plant in Blairstown, Iowa with 

the intention of making modifications to 

this facility to allow for the production 

of 6 mill gal of cellulosic ethanol per 

year from separated MSW and industrial 

waste streams. These modifications 

were scheduled to be completed in 

2011, but difficulties in securing 

funding have resulted in construction at 

this facility being delayed. In January 

2012 Fiberight was offered a $25 million 

loan guarantee from USDA. Closing on 

this loan would provide substantially all 

of the remaining funds required for 

Fiberight to complete the required 

modifications at their Blairstown 

facility. Fiberight plans to begin 

construction in the second quarter 2013. 

Fiberight expects that it will take 

approximately 6 months to complete 

construction and that fuel production 

will begin in early 2014. Additionally, 

Fiberight’s waste separation plan for 

this facility was approved in June 2012 

allowing Fiberight to generate RINs for 

the cellulosic ethanol they produce 

using separated MSW as a feedstock. 

Fiberight is also currently developing a 

second commercial scale project based 

on their MSW ‘‘hub and spoke’’ 

concept. They anticipate that this 

facility will produce approximately 25 

mill gal of cellulosic ethanol per year 

when fully built out. Since Fiberight 

currently does not expect cellulosic 

biofuel production to begin until 2014 

no volume from their facility has been 

included in EPA’s projections. 

INEOS Bio 

INEOS Bio has developed a process 

for producing cellulosic ethanol by first 

gasifying cellulosic feedstocks into a 

syngas and then using naturally 

occurring bacteria to ferment the syngas 

into ethanol. In January 2011 USDA 

announced a $75 million loan guarantee 

for the construction of INEOS Bio’s first 

commercial facility to be built in Vero 

Beach, Florida. This loan was closed in 

August 2011. This was in addition to 

the grant of up to $50 million INEOS 

Bio received from DOE in December 

2009. At full capacity, this facility will 

be capable of producing 8 mill gal of 

cellulosic biofuel as well as 6 megawatts 

(gross) of renewable electricity from a 

variety of feedstocks including yard, 

agricultural, and wood waste. The 

facility also plans to use a limited 

quantity of separated MSW as a 

feedstock after initial start-up. 

On February 9, 2011, INEOS Bio 

broke ground on this facility. INEOS Bio 

completed construction on this facility 

in June 2012 and began full 

commissioning of the facility. In August 

2012 INEOS Bio received approval from 

EPA for their yard waste separation plan 

mstockstill on DSK4VPTVN1PROD with RULES2

49806 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

28 Given the recent start-up of the INEOS Bio 

facility, we do not expect that zero gallons would 

be produced in 2013. However, we have decided to 

base our projections (including ranges) in million 

gallon increments in 2013, since uncertainty does 

not allow a more precise worst-case projection. Our 

projection for INEOS Bio, therefore, remains 

between zero and 1 million gallons, recognizing 

that zero could only occur in the unlikely event that 

they chose not to generate RINs for volume already 

produced. 

and successfully registered their Vero 

Beach, FL facility under the RFS 

program. In September 2012 the facility 

began producing renewable electricity. 

In April 2013 comments to the proposed 

rule INEOS Bio stated that their facility 

was in the final start-up phase and that 

they expected to produce cellulosic 

ethanol at full production rates by the 

end of the year. The company issued a 

press release on July 31, 2013, stating 

that they had begun commercial 

production. For this final rule we 

project 0–1 mill gal of cellulosic ethanol 

from INEOS Bio in 2013. Applying the 

six month straight-line ramp-up period, 

which we consider a best case scenario 

as discussed above, with a start-up date 

in August results in a projection of 

approximately 1 mill gal in 2013. EPA 

believes this is a reasonable benchmark 

to use as a best case scenario when 

assessing the ramp-up of cellulosic 

biofuel facilities. When compared to the 

expected ramp-up rates of grain ethanol 

facilities, which are generally 1–2 

months this is a conservative 

benchmark, but one we believe is 

appropriate given the challenges of 

scaling up new technologies. Given the 

uncertainty in the first production from 

INEOS Bio’s facility and the history of 

delays for this facility, EPA believes a 

further discount to a projected volume 

of 0–1 mill gal is warranted. 28 INEOS 

Bio is also exploring several 

opportunities for additional cellulosic 

biofuel production facilities, both in the 

United States and internationally. 

INEOS Bio is targeting sources of 

inexpensive feedstock, primarily waste 

materials, and sees a market for plants 

with production capacities ranging from 

8 to 50 mill gal per year per facility. 

KiOR 

KiOR is using a technology that 

converts biomass to a biocrude using a 

process they call Biomass Fluid 

Catalytic Cracking (BFCC). BFCC uses a 

catalyst developed by KiOR in a process 

similar to Fluid Catalytic Cracking 

currently used in the petroleum 

industry. The first stage of this process 

produces a renewable crude oil which is 

then upgraded to produce primarily 

gasoline, diesel, and jet fuel as well as 

a small quantity of fuel oil, all of which 

are nearly identical to those produced 

from petroleum. 

KiOR’s first commercial scale facility 

is located in Columbus, Mississippi and 

is capable of producing approximately 

11 mill gal of gasoline, diesel, and jet 

fuel per year. Construction on this 

facility began in May 2011 and was 

completed in September 2012. This 

facility is funded, in large part, with 

funds acquired through private equity 

and supplemented by KiOR’s $150 

million IPO in June 2011. KiOR 

announced that the first renewable 

transportation fuel produced at this 

facility was shipped to customers on 

March 18, 2013. KiOR had intended to 

begin producing fuel at their Columbus 

facility in 2012. Unexpected difficulties 

during the commissioning of this 

facility, due in large part to an 

interruption in electricity supply to the 

facility during commissioning resulted 

in delays in fuel production. KiOR’s 

current expectations at their Columbus 

facility are for a start-up period lasting 

9–12 months. During this period they 

estimate fuel production will average 

30%–50% of the facility capacity after 

which they plan to approach full 

production rates at the facility. KiOR’s 

expected production from their 

Columbus facility in 2013, recently 

confirmed in their quarterly update on 

May 9th, 2013, is between 3 and 5 

million actual gallons of cellulosic 

gasoline and diesel. KiOR has feedstock 

supply agreements in place to supply all 

of the required feedstock for their 

Columbus facility with slash and precommercial thinning. They also have 

off-take agreements with several 

companies for all of the fuel that will be 

produced. KiOR has also announced 

plans to begin work on their second 

commercial scale biofuel production 

facility in Natchez, Mississippi upon the 

successful start-up of their first facility. 

It is unlikely this second facility will 

begin production of biofuel in 2013. For 

2013 our production projection is for 3– 

4 million actual gallons (5–6 million 

ethanol-equivalent gallons) of cellulosic 

biofuel from KiOR’s Columbus facility. 

This volume is significantly lower than 

the volume of fuel that would be 

produced assuming our best case 

scenario benchmark of a 6 month 

straight-line ramp-up period starting in 

mid March (∼9 million ethanolequivalent gallons). However, EPA 

believes this lower projection is 

appropriate based on the guidance 

received from KiOR and the progress 

achieved at their facility to date. 

Blue Sugars 

Blue Sugars, formerly KL Energy, has 

developed a process to convert cellulose 

and hemicellulose into sugars and 

ethanol using a combined chemical/ 

thermal-mechanical pretreatment 

process followed by enzymatic 

hydrolysis, co-fermentation of C5 and 

C6 sugars, and distillation to fuel-grade 

ethanol. This production process is 

versatile enough to allow for a wide 

variety of cellulosic feedstocks to be 

used, including woody biomass and 

herbaceous biomass such as sugarcane 

bagasse. In August 2010 Blue Sugars 

announced a joint development 

agreement with Petrobras America Inc. 

As part of the agreement Petrobras has 

invested $11 million to modify Blue 

Sugars’ 1.5 mill gal per year 

demonstration facility in Upton, 

Wyoming to allow it to process bagasse 

and other biomass feedstocks. The 

modifications to Blue Sugars’ facility 

were completed in the spring of 2011. 

In April 2012 Blue Sugars generated 

approximately 20,000 cellulosic biofuel 

RINs, the first RINs generated under the 

RFS program for fuel made from 

cellulosic feedstock. Blue Sugars has 

indicated, however, that the cellulosic 

ethanol they produced was exported to 

Brazil for promotional efforts at the Rio 

+20 conference in Brazil. These RINs 

therefore had to be retired and were not 

be available to obligated parties to meet 

their cellulosic biofuel requirements in 

2012. In October 2012 Western Biomass 

Energy LLC, a subsidiary of Blue Sugars 

that owned the Upton, Wyoming 

demonstration facility, filed for Chapter 

11 bankruptcy. This was changed to 

Chapter 7 bankruptcy on May 2, 2013 

and was followed by a Chapter 7 

bankruptcy filing for Blue Sugars on 

May 10th. 

ZeaChem 

ZeaChem successfully completed 

construction of their demonstrationscale facility in Boardman, Oregon, in 

October 2012, allowing for the 

production of ethanol from sugars 

derived from cellulose and hemicellulose. On March 12, 2013 they 

announced that they had successfully 

produced ethanol from cellulosic 

feedstocks at their biorefinery, which 

has a nameplate capacity of 250,000 

gallons of cellulosic ethanol per year. 

ZeaChem’s production process uses a 

combination of biochemical and 

thermochemical technologies to 

produce ethanol and other renewable 

chemicals from cellulosic materials. The 

feedstock is first fractionated into two 

separate streams, one containing sugars 

derived from cellulose and 

hemicellulose and the other containing 

lignin. The sugars are fermented into an 

intermediate chemical, acetic acid, 

using a naturally occurring acetogen. 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49807 

29EPA has not yet approved planted trees from 

tree plantations as a RIN generating feedstock. 

Unless and until EPA approves a pathway using 

planted trees from tree plantations as a feedstock 

ZeaChem will be unable to generate RINs for any 

biofuel produced using this feedstock. 

The acetic acid is then converted into 

ethyl acetate, which can then be 

hydrogenated into ethanol. The 

hydrogen necessary for this process is 

produced by gasifying the lignin stream 

from the cellulosic biomass. 

ZeaChem’s process is flexible and is 

capable of producing a wide range of 

renewable chemicals and fuels from 

many different feedstocks. They plan to 

use both agricultural residues and precommercial thinnings and tree residue 

from tree plantations at their 

demonstration facility and have 

contracts in place for these feedstocks, 

as well as planted trees from tree 

plantations, at their first commercial 

scale facility.29 In January 2012 

ZeaChem announced that they had 

received a $232.5 million conditional 

loan guarantee offer from USDA for the 

construction of their first commercial 

scale facility, which will have a capacity 

of at least 25 mill gal per year. ZeaChem 

currently has agreements in place to 

provide all of the necessary feedstock 

for this facility. This facility, however, 

is not expected to begin producing 

cellulosic biofuel until late 2014 at the 

earliest. We therefore have not included 

any volume for this facility in our 2013 

projection. 

Abengoa 

Abengoa has developed an enzymatic 

hydrolysis technology to convert corn 

stover and other agricultural waste 

feedstocks into ethanol. After 

successfully testing and refining their 

technology at a pilot scale facility in 

York, Nebraska as well as in a 

demonstration-scale facility in 

Salamanca, Spain, Abengoa is now 

working towards the completion of their 

first commercial scale cellulosic ethanol 

facility in Hugoton, Kansas. Abengoa 

has contracts in place to provide the 

majority of feedstocks necessary for this 

facility for the next 10 years and 

successfully completed their first 

biomass harvest in the fall of 2011. 

Construction at this facility, which 

began in September 2011, is expected to 

take approximately 24 months and be 

completed in the fourth quarter of 2013. 

All of the major process equipment for 

this project has been purchased and all 

of the required permits for construction 

have been approved. Abengoa’s 

Hugoton facility is being partially 

funded by a $132 million Department of 

Energy (DOE) loan guarantee. 

When completed, the Hugoton plant 

will be capable of processing 700 dry 

tons of corn stover per day, with an 

expected annual ethanol production 

capacity of approximately 24 mill gal. 

Abengoa plans to begin ramping up 

production at the facility shortly after 

completing construction in late 2013 

and to be producing fuel at rates near 

the nameplate capacity in the summer 

of 2014. After successfully proving their 

technology at commercial scale in 

Hugoton, Abengoa currently plans to 

construct additional similar cellulosic 

ethanol production facilities, either on 

greenfield sites or co-locating these new 

facilities with their currently existing 

starch ethanol facilities around the 

United States. While this facility could 

produce a small volume of cellulosic 

ethanol in 2013, commissioning of the 

facility is expected to last through the 

first quarter of 2014, during which only 

small volumes of ethanol will be 

produced. Given the small volume 

potential and high degree of uncertainty 

of production from this facility in 2013, 

we have not included any of this 

volume in our projected available 

volume for 2013. 

Poet 

Poet has also developed an enzymatic 

hydrolysis process to convert cellulosic 

biomass into ethanol. Poet has been 

investing in the development of 

cellulosic ethanol technology for more 

than a decade and began producing 

small volumes of cellulosic ethanol at 

pilot scale at their plant in Scotland, SD 

in late 2008. In January 2012, Poet 

formed a joint venture with Royal DSM 

of the Netherlands called Poet-DSM 

Advanced Biofuels to commercialize 

and license their cellulosic ethanol 

technology. 

The joint venture’s first commercial 

scale facility, called Project LIBERTY, 

will be located in Emmetsburg, Iowa. 

This facility is designed to process 770 

dry tons of corn cobs, leaves, husks, and 

some stalk per day into cellulosic 

ethanol. The facility is projected to have 

an annual production capacity 

beginning at approximately 20 mill gal 

per year, increasing over time to 25 mill 

gal per year. In anticipation of the startup of this facility, Poet constructed a 22- 

acre biomass storage facility and had its 

first commercial harvest in 2010, 

collecting 56,000 tons of biomass. 

Site prep work for Project LIBERTY 

began in the summer of 2011, and 

vertical construction of the facility 

began in the spring of 2012. Poet was 

awarded a $105 million loan guarantee 

offer for this project from DOE in July 

2011, but with the joint venture decided 

to proceed without the loan guarantee. 

This project is expected to be completed 

in the first half of 2014. After the 

completion of Project LIBERTY, Poet 

plans to build additional cellulosic 

ethanol facilities at many of their 

existing corn ethanol plants. They are 

also planning to license their technology 

for use at other grain ethanol plants, as 

well as build additional plants that will 

process wheat straw, rice hulls, woody 

biomass or herbaceous energy crops. By 

2022 Poet has a goal of producing 3.5 

bill gal of cellulosic ethanol per year. 

Given the projected completion date of 

2014 for the Emmetsburg, Iowa facility, 

we have not included any of this 

volume ion our projected available 

volume for 2013. 

Other Companies 

There are several more companies 

planning to begin producing cellulosic 

biofuel from commercial scale facilities 

in 2014 including Cool Planet Biofuels, 

DuPont, and Ensyn. Along with the 

companies discussed above, these 

facilities represent approximately 100 

mill gal of additional cellulosic biofuel 

production capacity. Most of these 

companies have already begun to 

develop plans for their successive 

facilities to follow after the successful 

completion of their initial projects. 

4. Other Potential Sources of Domestic 

Cellulosic Biofuel 

Each of the companies listed in the 

previous two sections is planning to 

generate cellulosic biofuel RINs using 

one of the valid RIN-generating 

pathways listed in Table 1 to 40 CFR 

§ 80.1426. To generate RINs, each 

company must comply with all 

applicable registration, recordkeeping, 

and reporting requirements in the RFS 

regulations, including requirements to 

verify that the feedstocks used are 

renewable biomass and are sourced 

from approved land. EPA is not 

approving any additional feedstocks or 

processes in today’s rule. We are also 

aware of several companies that may be 

in a position to produce cellulosic 

biofuel in 2013 but intend to use a 

production pathway that is not 

currently approved for RIN generation. 

Pathways that are currently under 

evaluation by EPA include 

transportation fuels derived from 

landfill biogas such as CNG, cellulosic 

ethanol produced from corn kernel fiber 

and cellulosic heating oil. If these or 

other cellulosic biofuel pathways are 

approved by EPA, they may be used to 

generate on the order of 3 million 

cellulosic biofuel RINs in 2013. Because 

EPA has not yet made a final 

determination on these pathways no 

volume of cellulosic fuel from these 

mstockstill on DSK4VPTVN1PROD with RULES2

49808 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

pathways has been included in our 2013 

cellulosic biofuel projection. 

5. Imports of Cellulosic Biofuel 

While domestically produced 

cellulosic biofuels are the most likely 

source of cellulosic biofuel available in 

the United States in 2013, imports of 

cellulosic biofuel produced in other 

countries may also generate RINs and 

participate in the RFS program. While 

the demand provided by the RFS 

program provides a financial incentive 

for companies to import cellulosic 

biofuels into the United States, the 

combination of local demand, financial 

incentives from other governments, and 

transportation costs for the cellulosic 

biofuel has resulted in no cellulosic 

biofuel being imported to the United 

States thus far. We believe this situation 

is likely to continue in the near future 

and have not included any cellulosic 

biofuel imports in our projections of 

available volume in 2013. 

As in the United States, the 

production of cellulosic biofuels 

internationally is mostly limited to 

small-scale research and development, 

pilot, and demonstration facilities at 

this time. This is likely to continue to 

be the case throughout 2013. Two 

notable exceptions are facilities built 

and operated by Beta Renewables and 

Enerkem. Beta Renewables completed 

construction of their first commercial 

scale facility located in Crescentino, 

Italy in the summer of 2012. This 

facility is currently in a commissioning 

phase and is designed to produce 

approximately 20 mill gal of cellulosic 

ethanol per year. Beta Renewables uses 

an enzymatic hydrolysis process to 

produce ethanol from local agricultural 

residues and herbaceous energy crops. Enerkem is also in the process of 

building their first commercial scale 

facility in Edmonton, Alberta and plans 

to begin operations in 2013. Enerkem’s 

facility will use a thermochemical 

process to produce syngas from MSW 

and then catalytically convert the 

syngas to methanol. The methanol can 

then be sold directly or upgraded to 

ethanol or other chemical products. At 

full capacity this facility will be capable 

of producing 10 mill gal of cellulosic 

ethanol per year. At this point, neither 

Beta Renewables nor Enerkem have 

registered their facilities under the RFS 

program, a necessary step that must be 

completed before these companies can 

generate RINs for any fuel they import 

into the United States. Both are 

planning to locate additional plants in 

the United States in the future and are 

likely to generate RINs for production 

from domestic facilities in future years. 

6. Summary of Volume Projections 

The information we have gathered on 

cellulosic biofuel producers, described 

above, allows us to project production 

volumes for each facility in 2013. For 

the purposes of this final rulemaking we 

have focused on commercial scale 

cellulosic biofuel production facilities. 

We believe our focus on commercial 

scale facilities is appropriate as the 

industry transitions from small-scale 

R&D and pilot facilities to large scale 

commercial production. It is likely that 

several small-scale facilities such as 

API, DuPont, ZeaChem, and others will 

also produce some cellulosic biofuel in 

2013. While RINs may be generated for 

any cellulosic biofuel produced from 

these small R&D and pilot facilities, 

historically many have chosen not to do 

so for a variety of reasons. We are 

therefore not including a volume 

projection from these facilities. 

In 2013 as many as seven cellulosic 

biofuel companies have the potential to 

produce fuel at commercial scale. Each 

of these facilities is discussed above, 

and the facility production targets for 

each are summarized in Table II.C.6–1 

below. Of the two companies from 

which we are basing our 2013 cellulosic 

biofuel projection one has already begun 

producing cellulosic biofuel at their 

commercial scale facility and the other 

is expected to begin production soon. 

This gives us increased confidence in 

their production capabilities as they 

have already achieved significant 

milestones. The other companies that 

have the potential to produce cellulosic 

biofuel in 2013, Abengoa, EdeniQ, 

Ensyn, Fiberight, and companies 

producing biogas from landfills for 

transportation use, either do not yet 

have a valid RIN generating pathway or 

are not planning on beginning fuel 

production until late 2013 or early 2014. 

Even a small delay in their expected 

production timeline could result in their 

failure to produce any cellulosic biofuel 

in 2013 and any volumes of fuel 

produced are likely to be very small. For 

this final rule, therefore, we are not 

projecting production from these 

facilities in 2013 consistent with EIA’s 

projection. The fact that our projection 

only includes volumes from facilities 

that have already completed 

construction of commercial scale 

facilities is in large part due to the delay 

in finalizing the RFS standards for 2013 

and is not intended to set a precedent 

for future rulemakings. Volumes from 

facilities that have not yet completed 

construction may be considered in 

EPA’s volume projections in future 

rulemakings if appropriate under the 

circumstances, recognizing that EPA’s 

goal is a projection of what will actually 

happen in the year at issue, taking a 

neutral aim at accuracy. 

When considering together all the 

potential sources of cellulosic biofuel, 

the total projected production volume 

from commercial scale production 

facilities in the United States in 2013 is 

4 million actual gallons (6 million 

ethanol-equivalent gallons). This is the 

mid-point of the range of values 

projected for the two facilities. This 

number represents EPA’s projection of 

expected cellulosic RIN production in 

2013, taking into account the EIA 

estimates and the many factors 

described in detail above. 

TABLE II.C.6–1—PROJECTED AVAILABLE CELLULOSIC BIOFUEL FOR 2013 

Company 

name Location Feedstock Fuel 

Design 

capacity 

(MGY) 

First production 

(projected) 

2013 

Projected 

available 

actual 

volume 

(Mill gal) 

2013 

Projected 

available 

volume 

(million 

ethanolequivalent 

gallons) 

Abengoa ... Hugoton, KS .......... Corn Stover ........... Ethanol .................. 24 1st Quarter 2014b .. 0 0 

EdeniQa .... Various .................. Corn Kernel Fiber .. Ethanol .................. 10 4th Quarter 2013b 0 0 

Ensyna ...... Rhinelander, WI; 

Ontario, CA.

Woody Biomass .... Heating Oil ............ 4 Currently Producing 0 0 

Fiberight ... Blairstown, IA ........ MSW ...................... Ethanol .................. 6 1st Quarter 2014b 0 0 

INEOS Bio Vero Beach, FL ..... Vegetative Waste .. Ethanol .................. 8 Mid 2013b .............. 0–1 0–1 

KiOR ......... Columbus, MS ....... Wood Waste .......... Gasoline and Diesel.11 March 18, 2013 ..... 3–4 5–6 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49809 

30 In general, the term ‘‘blendwall’’ refers to the 

total volume of ethanol that can be consumed as 

either E10 or higher ethanol blends given various 

constraints. 

TABLE II.C.6–1—PROJECTED AVAILABLE CELLULOSIC BIOFUEL FOR 2013—Continued 

Company 

name Location Feedstock Fuel 

Design 

capacity 

(MGY) 

First production 

(projected) 

2013 

Projected 

available 

actual 

volume 

(Mill gal) 

2013 

Projected 

available 

volume 

(million 

ethanolequivalent 

gallons) 

Variousa .... N/A ........................ Landfill Biogas ....... Biogas ................... N/A Currently Producing 0 0 

Various 

Pilot/ 

Demo 

Plants.

Various .................. Various .................. Various .................. Various Various .................. 0 0 

Total .. ................................ ................................ ................................ 49 ................................ 4 6 

a Companies do not currently have valid pathways for RIN generation. 

bStart-up dates for these facilities are projections. 

D. Cellulosic Biofuel Volume for 2013 

In today’s final rule we are setting the 

applicable volume for cellulosic biofuel 

for 2013 that is based on EIA’s estimate, 

projected production volumes 

developed in consultation with the 

companies expected to produce 

cellulosic biofuel from commercial scale 

facilities in 2013, comments we 

received in response to the NPRM, and 

EPA’s judgment. Many factors have 

been taken into consideration in 

developing these projections, such as 

the EIA estimate, the current status of 

project funding, the status of the 

production facility, anticipated 

construction timelines, the anticipated 

start-up date and ramp-up schedule, 

feedstock supply, intent to generate 

RINs, and many others. Moreover, all of 

the companies included in our 2013 

volume projections have invested a 

significant amount of time and 

resources developing their technologies 

at R&D and demonstration-scale 

facilities prior to the design and 

construction of their first commercial 

scale facilities. The projects have solid 

financial backing. We believe the sum of 

these individual projected available 

volumes (6 million ethanol-equivalent 

gallons) is a reasonable projection of 

expected actual production. This 

projection reflects EPA’s best estimate of 

what will actually happen in 2013. 

III. Assessment of Advanced Biofuel 

and Total Renewable Fuel for 2013 

As described in Section I, the volumes 

of renewable fuel required for use under 

the RFS program each year (absent an 

adjustment or waiver by EPA) are 

generally specified in CAA 211(o)(2) 

through 2022. For 2013, the applicable 

volume of advanced biofuel is 2.75 bill 

gal, and the applicable volume of total 

renewable fuel is 16.55 bill gal. 

In the NPRM, we proposed a 

reduction in the applicable volume of 

cellulosic biofuel. Under section 

211(o)(7)(D)(i), when EPA reduces the 

volume of cellulosic biofuel EPA may 

reduce the applicable volume of total 

and advanced biofuel by an amount up 

to the reduction in cellulosic biofuel. 

We proposed no reduction in the 

volumes of advanced biofuel and total 

renewable fuel for 2013. However, we 

requested comment on whether the 

advanced biofuel and total renewable 

fuel requirements should be reduced 

under section 211(o)(7)(D)(i) to account 

for uncertainty in availability of 

advanced biofuel, specifically asking 

whether a reduction of 200 mill gal 

would be appropriate. We also 

requested comment on whether the 

blendwall 30 would present any 

difficulty in terms of compliance with 

the volume requirements in 2013. No stakeholders supported the 

specific reduction of 200 mill gal in the 

advanced biofuel and total renewable 

fuel volume requirements on which we 

sought comment in our proposal. 

Instead, stakeholders were generally in 

favor of either much larger reductions or 

no reduction at all. Those requesting 

much larger reductions most commonly 

pointed to the authority under the 

cellulosic waiver authority to reduce 

advanced biofuel and total renewable 

fuel by up to the same amount as the 

reduction in cellulosic biofuel, which 

was 986 mill gal in the NPRM. 

Depending on the stakeholder, 

justifications for such large reductions 

included cost, availability, and the E10 

blendwall. Some went further, 

suggesting that the required volume of 

total renewable fuel should be reduced 

more than 986 mill gal since reductions 

in advanced biofuel would likely be 

insufficient to address the E10 

blendwall. Of those that cited the E10 

blendwall as a reason to reduce the 

required volumes, most requested that 

the total volume of ethanol demand 

created by the standards be no more 

than 10% of all gasoline, though some 

conceded that accounting for reasonably 

achievable volumes of E15–E85 would 

be appropriate. Those stakeholders requesting that the 

applicable standards be based on the 

statutory volumes without any 

reductions typically cited sufficiency of 

available biofuels and opportunities for 

growth in consumption of E15–E85. 

Some also pointed to the need to 

promote growth in the advanced biofuel 

and non-ethanol markets and expressed 

concern that any reductions in the 

standards would jeopardize 

investments. 

A. Statutory Authorities for Reducing 

Volumes 

1. Cellulosic Waiver Authority 

Under CAA section 211(o)(7)(D)(i), if 

EPA determines that the projected 

volume of cellulosic biofuel production 

for the following year is less than the 

applicable volume provided in the 

statute, then EPA must reduce the 

applicable volume of cellulosic biofuel 

to the projected volume available during 

that calendar year. Under such 

circumstances, EPA also has the 

discretion to reduce the applicable 

volumes of advanced biofuel and total 

renewable fuel by an amount not to 

exceed the reduction in cellulosic 

biofuel. 

Section 211(o)(7)(D)(i) provides that 

‘‘For any calendar year in which the 

Administrator makes such a reduction, 

the Administrator may also reduce the 

applicable volume of renewable fuel 

and advanced biofuels requirement 

established under paragraph (2)(B) by 

the same or a lesser volume.’’ Thus 

Congress authorized EPA to reduce the 

mstockstill on DSK4VPTVN1PROD with RULES2

49810 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

volume of total renewable fuel ‘‘and’’ 

advanced biofuels. As EPA has 

discussed before, this indicates a clear 

Congressional intention that EPA may 

reduce both the total renewable and 

advanced biofuel volume together, not 

one or the other. 

As described in the May 2009 NPRM 

for the RFS regulations, we do not 

believe it would be appropriate to lower 

the advanced biofuel standard but not 

the total renewable standard, as doing 

so would allow conventional biofuels to 

effectively be used to meet the standards 

that Congress specifically set for 

advanced biofuels. See 74 FR 24914–15. 

We interpret this provision as 

authorizing EPA to reduce both total 

renewable fuel and advanced biofuel, by 

the same amounts, if EPA reduces the 

volume of cellulosic biofuel. Using this 

authority the reductions in total 

renewable fuel and advanced biofuel 

can be up to but no more than the 

amount of reduction in the cellulosic 

biofuel volume. 

The National Biodiesel Board (NBB) 

commented that the language of CAA 

211(o)(7)(D)(i) does not require 

advanced biofuel and total renewable 

fuel volumes to be reduced together. 

NBB cited several other legal decisions 

to support their assertion that advanced 

biofuel and total renewable fuel could 

be reduced by different amounts under 

the cellulosic waiver authority. While 

we agree that in some other contexts 

wording similar to that in 211(o)(7)(D)(i) 

has taken on a different meaning, in 

none of those other contexts was there 

a nested set of requirements such as 

there are in the RFS program. In the RFS 

program, cellulosic biofuel is also used 

to satisfy the advanced biofuel standard 

and the total renewable fuel standard. 

Similarly, advanced biofuel is used to 

satisfy the volume obligation for total 

renewable fuel. Thus any reductions in 

the applicable volume of cellulosic 

biofuel will also simultaneously affect 

the means through which obligated 

parties comply with these two other 

standards, and any reductions in 

advanced biofuel volume will affect the 

means through which obligated parties 

comply with the total renewable fuel 

volume. Congress structured the 

volumes such that total renewable fuel 

volume requirements were increasing in 

coordination with the increase in 

advanced biofuel. Congress established 

the volume requirements for advanced 

biofuel and total renewable fuel as 

interrelated standards. Therefore it is 

appropriate to consider a possible 

reduction in both the advanced biofuel 

and total renewable fuel applicable 

volumes when EPA reduces the 

cellulosic biofuel volume below the 

applicable volume for cellulosic biofuel 

set forth in the statute. Thus to the 

extent circumstances warrant a 

reduction in advanced biofuel and total 

renewable fuel based on the reductions 

in cellulosic biofuel pursuant to section 

211(o)(7)(D)(i), we believe it will best 

reflect the goals and objectives of the 

Act for the advanced biofuel and total 

renewable fuel volumes to both be 

reduced by the same amount, 

maintaining the volume relationship 

between the two renewable fuel 

categories. In this way, if the 

circumstances in a specific year warrant 

not reducing the advanced biofuel and 

total renewable fuel volumes by the 

amount that the cellulosic biofuel 

volume is reduced, then to the extent 

that the shortfall in cellulosic biofuel 

production is replaced it would be 

through advanced biofuel, which comes 

significantly closer to the GHG 

reductions achieved by cellulosic 

biofuel. It is important to note, however, 

that this discussion does not address 

whether or under what circumstances 

the advanced and total volume 

requirements should be reduced under 

section 211(o)(7)(D)(i), but solely 

whether any such reductions would be 

for both categories of fuel under section 

211(o)(7)(D)(i). 

NBB also argued that any 

consideration of a reduction in 

advanced biofuel should be 

accompanied by an equivalent 

reduction in total renewable fuel, but 

that the reverse was not true. We agree 

that a reduction in the total renewable 

fuel requirement that is considered 

under the general waiver authority at 

211(o)(7)(A) need not necessarily be 

accompanied by an equivalent 

reduction in the advanced biofuel 

requirement. It is possible that there 

could be an inadequate supply of total 

renewable fuels that would justify a 

waiver of the total renewable fuel 

standard, for example, without there 

also being an inadequate supply of 

advanced biofuels. However, we are 

currently setting the annual RFS 

standard and are not responding to a 

petition that we assert the general 

waiver authority. 

In 2013, the applicable volume of 

cellulosic biofuel specified in the statute 

represents more than a third of the 

advanced biofuel volume (1.0 bill gal 

out of 2.75 bill gal), a higher fraction 

than in any previous year. A substantial 

reduction in the applicable volume of 

cellulosic biofuel could potentially also 

have a substantial impact on the 

sufficiency of volumes to meet the 

advanced biofuel and total renewable 

fuel standards. As described in Section 

II.D above, we are establishing an 

available volume of cellulosic biofuel 

for 2013 of 6 mill ethanol-equivalent 

gallons, significantly below the statutory 

applicable volume of 1.0 bill gal. As a 

result, we have the discretion under 

CAA section 211(o)(7)(D)(i) to reduce 

the advanced biofuel and total 

renewable fuel applicable volumes by 

up to 994 mill gallons (ethanolequivalent). 

The statute does not provide any 

explicit criteria that must be met or 

factors that must be considered when 

making a determination as to whether 

and to what degree to reduce the 

advanced biofuel and total renewable 

fuel applicable volumes based on a 

reduction in cellulosic biofuel volumes 

under CAA section 211(o)(7)(D)(i). In 

comments on the NPRM, stakeholders 

differed in their views about which 

factors EPA should consider when 

making a determination about whether 

and to what degree to reduce volumes 

of advanced biofuel and total renewable 

fuel under the cellulosic waiver 

authority. Some indicated that the only 

factor that should be considered is 

whether the volumes in question are 

available. Others indicated that the 

criteria that apply under the general 

waiver authority at section 211(o)(7)(A) 

should also apply to the cellulosic 

waiver authority at section 

211(o)(7)(D)(i). The Clean Air Task 

Force and the Union of Concerned 

Scientists both suggested that the 

criteria in section 211(o)(2)(B)(ii), which 

are required to be used to determine 

applicable volumes for years not 

specified in the statute, should also be 

considered in the context of the 

cellulosic waiver authority. The criteria 

in section 211(o)(2)(B)(ii) are described 

more fully in Section III.A.3 below. 

We agree that nothing in the Act 

precludes EPA from considering the 

criteria described in sections 

211(o)(2)(B)(ii) and 211(o)(7)(A) in 

determining appropriate reductions in 

advanced biofuel and total renewable 

fuel under the cellulosic waiver 

authority at section 211(o)(7)(D)(ii). 

Moreover, it may be appropriate to do 

so in certain circumstances, as 

described more fully below. However, 

we do not believe that there is any legal 

requirement to apply the criteria of 

those provisions as binding criteria for 

purposes of section 211(o)(7)(D)(ii). It is 

clear that these three statutory 

provisions are separate and independent 

provisions, with no cross-references. 

Congress did not include the criteria in 

those other waiver provisions in the 

separate waiver provision for cellulosic 

biofuel. In the case of the general waiver 

authority at section 211(o)(7)(A), we do 

not agree with the comment that it 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49811 

provides criteria that must be met in 

order to reduce cellulosic and advanced 

volumes under 211(o)(7)(D)(i). If it did, 

the waiver language in 211(o)(7)(D)(i) 

would be superfluous, since 

211(o)(7)(A) would already provide the 

discretionary authority to reduce 

advanced biofuel and total renewable 

fuel in the circumstances where the 

criteria in 211(o)(7)(A) are satisfied. 

Moreover, if the criteria in 211(o)(7)(A) 

apply to the cellulosic waiver authority 

in 211(o)(7)(D)(i), then it would also 

logically apply to the biomass-based 

diesel waiver authority in 

211(o)(7)(E)(ii), also rendering that 

section superfluous. We do not believe 

that the Act can or should be interpreted 

in this manner. 

We believe that the applicable 

volumes for total and advanced biofuel 

identified in the statute should be 

retained for 2013 as there are reasonably 

available volumes of renewable fuel to 

achieve the statutory volumes. EPA has 

also considered the comments 

concerning factors other than 

availability, as discussed below. EPA 

has determined that under the 

circumstances discussed below for 

2013, it is appropriate to retain the 

statutory volumes. 

One stakeholder suggested that 

uncertainty in potential imports of 

sugarcane ethanol from Brazil should 

not be a factor when projecting the 

volumes expected to be available to 

meet the statutory volume requirements 

for advanced biofuel. The stakeholder 

pointed to a recent decision from the 

U.S. Court of Appeals indicating that 

EPA need not present specific 

numerical projections of available 

volumes of advanced biofuel if it did 

not intend to reduce the required 

volumes below the volumes specific in 

the statute. In that case the court stated 

that: 

Nothing in the text of § 7545(o)(7)(D)(i), or 

any other applicable provision of the Act, 

plainly requires EPA to support its decision 

not to reduce the applicable volume of 

advanced biofuels with specific numerical 

projections. This stands in contrast to the 

Act’s explicit instructions that EPA make a 

numerical projection for cellulosic biofuel. 

Certainly EPA must provide a reasoned 

explanation for its actions, but rationality 

does not always imply a high degree of 

quantitative specificity. 

API v. EPA, 706F.3d at 481 (D.C. Cir 

2013) 

In the 2012 RFS standards rule at 

issue in the referenced Court decision, 

EPA did not present individual numeric 

projections of available volumes of 

advanced biofuel, but instead described 

historical data, production capacity, 

competing publicly-available 

projections and qualitative information 

to conclude that sufficient volumes 

could be produced without lowering the 

applicable volume set forth in the 

statute. The Court upheld EPA’s 

approach as reasonable. However, the 

Court decision does not preclude EPA 

from deriving and seeking comment on 

numeric projections where EPA believes 

it is appropriate to do so. In this case 

EPA believed it would facilitate its 

decision-making to derive and seek 

comment on a numeric projection of 

sugarcane ethanol imports for 2013. 

This approach is consistent with the 

statute and the API opinion. 

2. General Waiver Authority 

Under CAA 211(o)(7)(A), EPA can 

reduce the amount of any of the four 

volume requirements specified in the 

statute if one of the following 

determinations is made: 

• Implementation of the requirement 

would severely harm the economy or 

the environment of a State, a region, or 

the United States; 

• There is an inadequate domestic 

supply. 

In order to make such a reduction in the 

required volumes, EPA would need to 

consult with the Secretary of 

Agriculture and the Secretary of Energy, 

and would need to provide public 

notice and opportunity for comment. 

3. Modification of Applicable Volumes 

for 2016 and Beyond 

Under certain specified conditions, 

CAA section 211(o)(7)(F) requires EPA 

to modify the applicable volume 

provided in the statute for calendar 

years 2016 and beyond if EPA has 

waived a volume requirement using the 

waiver authorities provided in CAA 

section 211(o)(7)(A), (D), or (E). This 

requirement to modify the applicable 

volumes is triggered when one of the 

following occurs: 

• EPA waives at least 20 percent of the 

applicable volume requirement for 

two consecutive years 

• EPA waives at least 50 percent of the 

applicable volume requirement for a 

single year 

This requirement to modify the 

applicable volumes applies separately 

for each of the four volume 

requirements in CAA section 

211(o)(2)(B), 

Volume modifications made pursuant 

to CAA 211(o)(7)(F) would differ from 

waivers in several important ways. First, 

while waivers leave the statutory 

volume mandates at CAA 211(o)(2)(B)(i) 

intact and merely reduce them for the 

purposes of calculating the applicable 

annual percentage standards for that 

year, the volume modifications under 

211(o)(7)(F) would instead modify the 

applicable volumes that are provided in 

the statute. Once modified, the new 

volumes would replace those in the 

statute for the applicable years. Second, 

waivers are generally determined and 

applied for one year at a time, while the 

volume modifications could be done at 

one time for multiple years after 2015. 

Third, CAA 211(o)(7)(F) provides 

explicit direction concerning those 

factors that EPA must consider in 

modifying the statutory volumes for 

2016 and beyond, incorporating by 

reference the requirements in CAA 

section 211(o)(2)(B)(ii): 

• The impact of the production and 

use of renewable fuels on the 

environment, including on air quality, 

climate change, conversion of wetlands, 

ecosystems, wildlife habitat, water 

quality, and water supply; 

• The impact of renewable fuels on 

the energy security of the United States; 

• The expected annual rate of future 

commercial production of renewable 

fuels, including advanced biofuels in 

each category (cellulosic biofuel and 

biomass-based diesel); 

• The impact of renewable fuels on 

the infrastructure of the United States, 

including deliverability of materials, 

goods, and products other than 

renewable fuel, and the sufficiency of 

infrastructure to deliver and use 

renewable fuel; 

• The impact of the use of renewable 

fuels on the cost to consumers of 

transportation fuel and on the cost to 

transport goods; and 

• The impact of the use of renewable 

fuels on other factors, including job 

creation, the price and supply of 

agricultural commodities, rural 

economic development, and food prices. 

To modify the required volumes under 

211(o)(7)(F), EPA is also required to 

coordinate with the Secretary of Energy 

and the Secretary of Agriculture and 

review the implementation of the 

program to date. Any modification 

under this provision would be made 

through rulemaking. 

In response to the NPRM, one 

stakeholder requested that EPA use the 

authority under CAA 211(o)(7)(F) as 

soon as possible, or by 2014, to modify 

the required future volumes for 

cellulosic biofuel as a way of providing 

more long-term certainty to the market. 

However, we do not believe that taking 

action sooner would provide such longterm certainty since the authority under 

CAA 211(o)(7)(D) would continue to 

apply and we would still be required to 

reduce the applicable volume of 

cellulosic biofuel if the volume 

mstockstill on DSK4VPTVN1PROD with RULES2

49812 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

31Any exercise of the general waiver authority 

requires notice and the opportunity for comment. 

The NPRM did not propose a waiver under the 

general waiver authority, and only discussed 

volume adjustments made under the cellulosic 

waiver authority. We are not in a position to 

address in this final rule all of the issues that would 

be relevant under a notice and comment proceeding 

under the general waiver provisions. This final rule 

thus focuses on the exercise of our authority under 

the cellulosic biofuel waiver provision. 

32 2012 data from the EPA-Moderated Transaction 

System (EMTS). 

33 77 FR 1320, published on January 9, 2012. 

projected to be available for any one 

calendar year was less than the volumes 

for that calendar year as modified under 

CAA 211(o)(7)(F). 

B. Available Volumes of Advanced 

Biofuel in 2013 

In the NPRM we discussed the 

cellulosic waiver authority provided in 

CAA 211(o)(7)(D)(i), which provides 

that EPA may reduce the applicable 

volume of advanced biofuel and total 

renewable fuel up to the amount of the 

reduction in required cellulosic biofuel 

volumes (986 mill gal in the NPRM). We 

clarified that, if we were to reduce the 

required volume of advanced biofuel 

under this statutory authority, we would 

also reduce the required volume of total 

renewable fuel by the same amount, 

with the net effect being that the volume 

of non-advanced biofuel needed to meet 

the statutory required volumes would be 

unchanged. In the NPRM we did not 

discuss reductions in any of the 

statutory volume requirements under 

the general waiver authority. 

Our focus in the NPRM was on the 

availability of advanced biofuel in 

comparison to the volume needed to 

meet the statutory volume of 2.75 bill 

gal in light of the substantial reduction 

in cellulosic biofuel. Based on our 

assessment of availability of advanced 

biofuel, we proposed no reduction in 

the advanced biofuel and total 

renewable fuel volumes. We continue to 

believe that the availability of advanced 

biofuel is a critical component in 

determining whether the statutory 

volume requirement of 2.75 bill gal 

should be reduced. However, we 

recognize that we can also consider 

other factors in this determination. For 

instance, in response to our request for 

comment on whether the E10 blendwall 

might present difficulty in meeting the 

statutory volume requirements, a 

number of stakeholders indicated that 

we should use one of the statutory 

waiver authorities to reduce the 

required volumes of advanced biofuel 

and total renewable fuel to account for 

limitations in the volume of ethanol that 

can be consumed. Other stakeholders 

suggested that we reduce advanced and 

total volumes because of environmental 

or cost concerns. 

We have the discretion under 

211(o)(7)(D)(i) to reduce the advanced 

biofuel and total renewable fuel 

volumes by up to the amount we reduce 

the applicable volume of cellulosic 

biofuel, and such a reduction would 

contribute to reducing complications 

associated with the E10 blendwall. The 

net effect of such a change would be 

that the volume of non-advanced biofuel 

needed to meet the required volumes for 

total renewable fuel would be 

unaffected. We discuss the E10 

blendwall and the treatment of total 

renewable fuel in Section III.C below, 

and we discuss a longer-term strategy 

for combining considerations of biofuel 

availability and the ethanol blendwall 

in Section III.E. In this section we focus 

on the availability of advanced biofuels 

in our determination of whether to 

reduce the advanced biofuel and total 

renewable fuel volumes using the 

cellulosic waiver authority.31

Renewable fuels that can be used to 

meet the standard for advanced biofuel 

include those with Renewable 

Identification Number (RIN) codes of 3, 

4, 5, or 7. Table III.B–1 shows the 

number of each of these types of RIN 

that was generated in 2012. 

TABLE III.B–1—2012 RINS THAT QUALIFIED TO MEET THE 2012 ADVANCED BIOFUEL STANDARD 32

[Million ethanol-equivalent gallons] 

D code Category Ethanol Biodiesel Renewable 

diesel 

Biogas and 

heating oil 

3 .................................... Cellulosic biofuel ................................................. 0 .02 0 0 0 

4 .................................... Biomass-based diesel ........................................ 0 1,579 147 0 

5 .................................... Advanced biofuel ................................................ 588 0 20 3 

7 .................................... Cellulosic diesel .................................................. 0 0 0 0 

Total ....................... 2,337 

The total of 2,337 mill ethanolequivalent gallons is higher than the 

2,000 mill gal of advanced biofuel 

required in 2012. This result supports 

our projection in the rulemaking setting 

the 2012 standards 33 that there was no 

need to reduce the 2012 advanced 

biofuel requirement despite the 

significant reduction in the applicable 

volume of cellulosic biofuel. 

The applicable volume in the statute 

for advanced biofuel in 2013 is 2,750 

mill gal, an increase of 750 mill gal over 

the 2012 requirement of 2,000 mill gal, 

and 413 mill gal above the volume 

actually produced or imported in 2012. 

In order to determine the sufficiency of 

advanced biofuel volumes to meet a 

requirement for 2,750 mill gal in 2013, 

we first accounted for biomass-based 

diesel and cellulosic biofuels that would 

be required under the standards we are 

setting today. As shown in Table III.B– 

2, the result is that there would need to 

be 824 mill ethanol-equivalent gallons 

of other advanced biofuels in order to 

meet the total advanced biofuel 

requirement of 2,750 mill gal. 

TABLE III.B–2—NECESSARY VOLUME

OF ADVANCED BIOFUEL

[Mill gal ethanol-equivalent] 

2013 Advanced biofuel applicable 

volume ......................................... 2,750 

Cellulosic biofuel requirement ........ 6 

TABLE III.B–2—NECESSARY VOLUME

OF ADVANCED BIOFUEL—Continued 

[Mill gal ethanol-equivalent] 

Biomass-based diesel requirement a 1,920 

Necessary volume of additional advanced biofuel ............................. 824 

aWe have assumed that the 1.28 bill gal requirement is composed entirely of biodiesel 

with an equivalence value of 1.5 based on historical production. If significant quantities of renewable diesel, with an equivalence value of 

1.6 or 1.7 are used to satisfy the biomassbased diesel requirement this number will be 

larger. 

We have identified a variety of sources 

of advanced biofuel that could meet the 

need for 824 mill gal of additional 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49813 

34 77 FR 59458, September 27, 2012 

35Assuming most of this volume will be 

comprised of biodiesel, the required volume of 1.28 

bill gal equates to approximately 1.92 bill ethanolequivalent gallons. 

36The complete list of biodiesel production 

companies and their associated production 

capacities is provided in the docket. It is based on 

an aggregation of plant lists from the National 

Biodiesel Board, EIA, and EPA’s registration 

database, and includes both operational facilities 

and those that are not. For comparison, EIA’s data 

derived from their EIA–22 survey yielded 116 

operating biodiesel facilities that are operational 

with a total capacity of 2.2 billion gallons. 

37All values from EMTS. 2010 estimate consists 

of approximately 209 mill gallons as recorded 

through EMTS for volume produced under the 

RFS2 regulations in July through December of 2010, 

and approximately 171 mill gallons as recorded 

through RIN generation reports submitted by 

producers for volume produced under the RFS1 

regulations in January through June of 2010. 

38See comments in docket EPA–HQ–OAR–2010– 

0133 from the American Petroleum Institute, 

Marathon Petroleum Company, and the National 

Petrochemical Refiners Association. 

39 ‘‘Congress Votes to Reinstate Biodiesel Tax 

Incentive,’’ January 2, 2013. http://biodiesel.org/

news/biodiesel-news/news-display/2013/01/02/

congress-votes-to-reinstate-biodiesel-tax-incentive. 

40EIA’s ‘‘Monthly Biodiesel Production Report’’ 

published on March 28, 2013 indicates that total 

2012 production of biodiesel was 969 mill gal. The 

same report indicates that 2011 production was 967 

mill gal. 

41EMTS, or EPA’s Moderated Transaction System 

is the system established by EPA to track all RIN 

generation information and other RIN transactions. 

42EIA indicates that about 80% of biomass-based 

diesel was produced from soybean oil and waste 

oils/fats/greases in 2012, with the majority being 

from soybean oil. The difference between the EIA 

and EMTS values is likely due to the categorization 

of some canola and/or corn oil as waste oils/fats/ 

greases. See EIA Monthly Biodiesel Production 

Report released on June 27, 2013. 

advanced biofuel, including the 

following: 

• Biodiesel in excess of that required to 

meet the volume requirement of 1.28 

bill gal 

• Domestically produced advanced 

biofuels such as renewable diesel that 

does not qualify as biomass-based 

diesel, biogas from landfills, sewage 

waste treatment plants, and manure 

digesters, heating oil, sorghum 

ethanol produced at dry mill facilities 

using specified forms of biogas for 

both process energy and most 

electricity production, and ethanol 

and other qualifying renewable fuels 

from separated food wastes 

• Imports of advanced biofuels, 

including sugarcane ethanol and 

renewable diesel 

Taken together, and as discussed in 

more detail below, there is the potential 

for well over 1.0 bill gal of these 

additional advanced biofuels in 2013. 

Moreover, there are also a significant 

number of carryover RINs from 2012 

that could be used to fulfill part of the 

2013 advanced biofuel requirement. 

These carryover RINs alone could meet 

more than 500 mill gal of the 824 mill 

gal volume shown in Table III.B–2. 

TABLE III.B–3—ADVANCED BIOFUEL

CARRYOVER RINS FROM 2012 INTO

2013 (MILLION) 

D Code RINs 

Biomass-Based Diesel 4 353 

Advanced Biofuel .......... 5 196 

1. Biomass-Based Diesel 

In a separate action, we have finalized 

a biomass-based diesel volume of 1.28 

bill gal for 2013.34 35 However, biomassbased diesel volumes above 1.28 billion 

physical gallons are possible. As of 

February 2013, the aggregate production 

capacity of registered biodiesel plants in 

the U.S. was 2.8 bill gal per year across 

171 facilities.36 Of this production 

capacity, 2.4 bill gallons is represented 

by companies that actually produced 

some biodiesel in 2012. For all facilities 

that produced biodiesel at 20% or more 

of their capacity in 2012, the total 

production capacity is 1.6 bill gallons. 

The biodiesel industry has 

demonstrated that it can increase 

production quickly under appropriate 

circumstances. Total domestic 

production of biomass-based diesel in 

2011 exceeded 1.0 bill gal, compared to 

a 2010 production of about 380 mill 

gallons.37 In response to the NPRM on 

the 2012 RFS standards that was 

published on July 1, 2011, some 

stakeholders expressed doubts that the 

industry could substantially increase 

production over historic levels in order 

to permit compliance with the proposed 

2012 advanced biofuel standard of 1.0 

bill gal.38 Nevertheless, the industry 

responded to RFS mandates with 

substantial production increases. Based 

on the single-year increase of more than 

600 mill gal in 2011 and the total 

capacity of existing plants described 

above, we believe it is possible that the 

industry could, if the statutory 

applicable volume of advanced biofuel 

is not reduced, achieve increases in 

production above the 280 mill gallon 

increment that is reflected in the 

biomass-based diesel requirement for 

2013. 

Recently, the tax credit for biodiesel 

was reinstated after having expired at 

the end of 2011.39 This tax credit, 

applicable retroactively to 2012 and 

through the end of 2013, may provide 

additional incentive to produce and 

consume biodiesel volumes in excess of 

the 1.28 bill gal requirement. While one 

party commented that the biodiesel tax 

credit should not be a relevant factor, 

the existence of a tax credit affects the 

likelihood that biodiesel volumes in 

excess of 1.28 bill gal will be produced. 

Therefore, it is a relevant consideration 

in determining whether there are likely 

to be sufficient volumes of advanced 

biofuel available to meet the statutory 

volume requirement of 2.75 bill gal. 

Because the 2013 volume requirement 

of 1.28 bill gal for biomass-based diesel 

was established in a final rulemaking 

published on September 27, 2012, we 

did not take comment on this volume in 

the NPRM. Nevertheless, in their 

comments on the NPRM, several 

refiners and their associations requested 

that the 2013 volume requirement for 

biomass-based diesel be reduced from 

1.28 bill gal to the statutory minimum 

of 1.0 bill gal. They cited concerns about 

the industry’s ability to produce this 

volume and pointed to a DOE study 

indicating that 2012 production was 

below the 1.0 bill gal requirement.40

However, according to EMTS 41 the total 

volume of RIN-generating biodiesel 

produced in 2012 was 1.05 bill gal. 

a. Feedstocks 

i. Feedstock Availability 

In response to the NPRM, some 

parties expressed concern that there 

would not be sufficient feedstocks 

available for production of biomassbased diesel in excess of 1.28 bill gal in 

2013. Recognizing that there was some 

uncertainty regarding production in 

excess of 1.28 bill gal, we did not make 

a specific numerical projection in the 

NPRM. Nevertheless, we continue to 

believe that the availability of qualifying 

feedstocks is not likely to be a 

hindrance to excess biodiesel 

production in 2013. 

According to EMTS, in 2012 nearly 

90% of biomass-based diesel was 

produced from soybean oil and waste 

oils/fats/greases.42

TABLE III.B.1.A.I–1—FEEDSTOCKS

USED TO MAKE BIODIESEL AND RENEWABLE DIESEL IN 2012 

Fraction of 

2012 

production 

(percent) 

Soybean oil ........................... 47 

Biogenic waste oils/fats/ 

greases ............................. 41 

Canola oil .............................. 8 

Non-food grade corn oil ........ 2 

Oil from annual covercrops .. 1 

Non-cellulosic portions of 

separated food wastes ...... 1 

Since the supply of waste oils/fats/ 

greases is generally considered to be 

mstockstill on DSK4VPTVN1PROD with RULES2

49814 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

43Pete Riley, ‘‘Grains and Oilseeds Outlook; 2013 

Agricultural Outlook Forum,’’ USDA/Farm Service 

Agency, February 22, 2013. The increased 

production of soy oil in 2013 is projected on a crop 

year with the 2013/14 marketing year being October 

2013 through September 30, 2014. Consequently, 

the 13% increase in production would only begin 

to be available to the market beginning in October 

2013. 

44See comments from Union of Concerned 

Scientists, International Council on Clean 

Transportation, Clean Air Task Force, Grocery 

Manufacturers Association, Actionaid, NRDC and 

the National Wildlife Federation. 

inelastic, it is reasonable to assume that 

any increases in biomass-based diesel 

production after 2012 will come from 

soybean oil. Overall production and use 

of soybean oil in 2012 is shown below. 

TABLE III.B.1.A.I–2—PRODUCTION AND

USE OF SOYBEAN OIL IN 2012 

[Mill gal] 

Domestic production of soy oil ....... 2,471 

Net exports of soy oil ..................... 254 

Soy oil used to make biodiesel ...... 524 

Soy oil used for non-biodiesel purposes ........................................... 1,693 

Source: USDA/ERS, Oil Crops Yearbook, 

Table 5. Assumes 7.68 lb/gal. http://www.ers.

usda.gov/data-products/oil-cropsyearbook.aspx. 

According to USDA, domestic 

soybean production is expected to 

increase by 13% in the 2013 soybean 

marketing year compared to the 2012 

marketing year, or about 3% for 

calendar year 2013.43 If this occurs, then 

domestic production of soy oil would 

increase by about 80 mill gal. Combined 

with the soy oil that could be diverted 

from exports to biodiesel production 

and the fact that biodiesel production in 

2012 was 1.05 bill gal, we project that 

the requirement for 1.28 bill gal of 

biodiesel in 2013 could be met and 

exceeded by about 100 mill gal while 

having essentially no impact on the 

volume of soy oil used for non-biodiesel 

purposes. 

In addition to soy oil, it is also 

possible that other qualifying feedstocks 

could be available to produce biodiesel 

in excess of 1.28 bill gal in 2013. For 

instance, while production of non-food 

grade corn oil has been relatively 

constant over the last several years, 

exports have risen over this same time 

period. In 2012, more than one third of 

the 320 mill gal of corn oil produced 

was exported instead of being used 

domestically. These exports could be 

diverted to biodiesel production 

depending on relative prices and other 

factors. Taken together, the use of both 

soy oil and corn oil could potentially 

provide about 300 mill ethanolequivalent gal of biodiesel in excess of 

the 1.28 bill gal requirement. 

ii. Impacts From Feedstock Use 

A number of stakeholders commented 

that the NPRM overly relies on biofuel 

production availability as a criterion for 

setting the standards and fails to 

consider other criteria and potential 

impacts. With respect to biodiesel, for 

example, commenters argued that 

maintaining the advanced standard at 

statutory levels could lead to increased 

production and use of biodiesel for 

compliance purposes, and that this 

increased biodiesel would likely be 

produced from soybean oil. Commenters 

argued that EPA failed to consider the 

follow-on, or indirect, effects, namely 

that world demand for other 

replacement food-grade oils, 

particularly for palm oil, would 

increase.44 Commenters asserted that 

the net impact of these indirect impacts 

would be an increase in lifecycle GHG 

emissions associated with soy biodiesel 

production. They further claimed that 

because EPA failed to assess or properly 

model such impacts, soy biodiesel 

shouldn’t qualify as an advanced 

biofuel. 

In making this argument, commenters 

made a number of assertions with 

respect to the modeling and lifecycle 

analysis EPA conducted as part of the 

March 2010 final RFS rulemaking. For 

example, commenters argued that EPA 

did not adequately account for 

substitutions in the vegetable oil 

markets, and therefore did not fully 

account for the potential GHG emissions 

associated with clearing of forests and 

draining of peat lands in Malaysia or 

Indonesia. Commenters also asserted 

that market data suggests the increase in 

biodiesel production has had more of an 

impact on global palm oil production 

than increased U.S. soybean production, 

as modeled in EPA’s March 2010 

lifecycle analysis of soybean oil 

biodiesel. 

Commenters further argued that EPA’s 

modeling for the March 2010 final rule 

was based on volume projections that 

are inconsistent with the potential 

growth in advanced biofuels, including 

biodiesel, should EPA determine that 

the advanced and total required 

volumes should not be reduced. As a 

result, commenters stated, EPA’s 

assessments of the lifecycle GHG 

emissions associated with various 

advanced biofuels are flawed, and 

relying on them is inappropriate. If we 

were to reassess soybean oil lifecycle 

impacts, as at least one commenter 

recommended, commenters argued that 

such an analysis would show soybean 

oil biodiesel not meeting the statutory 

50 percent reduction threshold in 

lifecycle GHGs needed to qualify as an 

advanced biofuel under the RFS 

program. 

With respect to commenters’ 

arguments regarding the GHG impacts of 

biodiesel, we note that the lifecycle 

GHG threshold determinations 

conducted for various categories of 

biofuels (as required by statute) were 

completed as part of the March 2010 

final RFS rule. We made the 

determination in that rulemaking that 

biomass-based diesel from soy oil meets 

the greenhouse gas reduction threshold 

for advanced biofuel. We are not 

revisiting that determination as part of 

this action. Instead this rulemaking 

addresses the applicable volume 

requirements for the various categories 

of renewable fuels, in the context of 

applying the provision for a waiver of 

the cellulosic biofuel volumes. Thus we 

are not reconsidering or reopening the 

GHG threshold determinations made in 

the 2010 RFS final rule. Instead, we are 

considering this comment solely in the 

context of exercising our discretion 

under CAA section 211(o)(7)(D)(i). 

We disagree with commenters’ 

assertion that the indirect effects of 

using biodiesel have not been accurately 

accounted for in the 2010 lifecycle 

determination for biomass-based diesel. 

In response, we first note that we here 

discuss the 2010 lifecycle GHG 

emissions analysis for the purpose of 

assessing the 2013 volume standards; 

this discussion is not intended for 

purposes of reexamining the lifecycle 

analysis that led to the GHG 

determinations. When conducting our 

GHG emissions lifecycle analysis in 

2010, we used the FAPRI-Iowa State 

model to examine the impacts that an 

increase in biomass-based diesel in the 

U.S. would have on world demand for 

oils. That analysis specifically allowed 

for the ability for palm oil production to 

respond to increased soybean biodiesel 

demand. Our analysis showed that the 

increased demand for soybean based 

biodiesel led primarily to an increase in 

soybean production, though the results 

also showed some increase in palm oil 

production. Taking all the GHG impacts 

of these effects together, the analysis 

showed lifecycle GHG emissions 

associated with soy biodiesel 

production and use met the 50 percent 

threshold required for qualifying as an 

advanced biofuel under the RFS 

program. The data provided by 

commenters does not isolate the impact 

that changes in biodiesel demand have 

on vegetable oil markets, which are 

driven by multiple factors, including 

population growth, changes in eating 

habits, and economic growth. 

Commenters do not provide new 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49815 

45 77 FR 59463, September 27, 2012. 

46 Jung, Zoltan, ‘‘Estimating Potential Biodiesel 

Consumption Under Cold Weather Limitations,’’ 

memorandum to docket EPA–HQ–OAR–2012–0546. 

information that would change our 

lifecycle emissions analysis. The March 

2010 analysis captured the long-term 

market reaction to a sustained higher 

demand over many years for biomassbased diesel in the U.S., which 

primarily resulted in an increase in 

soybean oil biomass-based diesel 

production. We continue to believe that 

over the long-term, expansion of 

soybean production is a realistic 

reaction to increased demand for 

biodiesel in the U.S., thus supporting 

our analysis that soybean biodiesel 

reduces GHG emissions over the long 

run. 

Commenters also stated that the 

volumes of advanced biofuels that 

would be needed to fill the cellulosic 

void are larger than the volumes EPA 

modeled in the 2010 lifecycle analysis. 

EPA notes that we analyzed 1.7 billion 

gallons of biodiesel in our 2010 

analysis, which is within the range of 

volumes being considered in this annual 

rule. Commenters also stated that the 

volumes of advanced biofuels that 

would be needed to fill the cellulosic 

void are larger than the volumes EPA 

modeled in the 2010 lifecycle analysis. 

EPA notes that we analyzed 1.7 billion 

gallons of biodiesel in our 2010 

analysis, which is within the range of 

volumes being considered in this annual 

rule. In addition, commenters suggested 

that EPA quantify the impacts for the 

criteria described in section 211 

(o)(2)(B)(ii) of the Clean Air Act. 

However, conducting such a 

comprehensive quantification was not 

practical for this rulemaking. We also 

note that the RFS program is a long-term 

program aimed at replacing substantial 

volumes of fossil-based transportation 

fuels with low-GHG renewable fuels 

over a multi-year period of time. In that 

context, the analysis of various impacts 

conducted for the March 2010 final RFS 

rule considered the effects of the 

program over the long term. 

Specifically, our analysis focused on 

quantifying the GHG impacts of an 

increase in biomass-based diesel 

demand in 2022, when the full volumes 

of the RFS program would be 

implemented. 

In their comments on the NPRM, the 

American Cleaning Institute (ACI) 

expressed concern that demand for 

biodiesel and/or renewable diesel could 

adversely affect the oleochemical 

industry by diverting animal fats away 

from the production of soaps, 

detergents, and general cleaning 

supplies. ACI requested that the 

advanced biofuel volume requirement 

be reduced to ensure that such diversion 

of animals fats does not occur, or 

alternatively that animal fats be 

explicitly prohibited as a valid 

feedstock option for the production of 

biofuels. In our response to comments 

from ACI in the final rule setting the 

required volume biomass-based diesel 

for 2013,45 we pointed out that under 

the statutory definition of renewable 

biomass, valid feedstocks include 

animal waste material and animal 

byproducts. We believe that animal fats 

fall into these categories, and as a result 

we do not have the authority to exclude 

or limit volumes of animal fats that are 

used for production of biofuel. 

Moreover, ACI did not provide any 

information indicating that a reduction 

in the required volume of biomass-based 

diesel would result in a reduction in the 

use of animal fats to produce biodiesel. 

Indeed, as discussed above, volumes of 

biodiesel above the 1.0 bill gal 

minimum established in the statute may 

be produced from soy oil and corn oil 

instead of animal fats. 

Since the biomass-based diesel 

volume of 1.28 bill gal was established 

previously, the NPRM only requested 

comment on volumes of biomass-based 

diesel in excess of 1.28 bill gal. 

Although we believe it is likely that 

such excess volumes would be 

produced from soybean oil as described 

above, it is possible that they could be 

produced from animal fats. The only 

way to influence whether or not animal 

fats would be used to make excess 

biodiesel above the 1.28 bill gal 

biomass-based diesel applicable volume 

would be to reduce the advanced 

biofuel standard to 1.926 bill gal, which 

is the ethanol-equivalent sum of the 

biomass-based diesel and cellulosic 

biofuel applicable volumes. Even then, 

it would not prevent animal fats from 

being used to produce biodiesel. 

For the reasons discussed above, we 

conclude that the volumes of excess 

biomass-based diesel available for use in 

2013 as advanced biofuel are reasonably 

projected as 300 mill gal or more. In 

addition, the arguments for reducing the 

advanced biofuel standard to reduce the 

reliance on excess biomass-based diesel 

are not of a nature to warrant changing 

the conclusions we would draw. 

b. Limitations in the Use of Biodiesel 

While we are not projecting a specific 

volume of biodiesel in excess of 1.28 

bill gal for 2013, we do acknowledge 

that there may be potential limitations 

on biodiesel consumption that could be 

imposed by manufacturer warranties 

and cold-weather operation. 

Most diesel engines are warranted by 

their manufacturer to B5. That is, the 

use of biodiesel in concentrations above 

5vol% may void these commercial 

warranties. While not a legal limitation 

on the use of biodiesel, it does present 

a practical limitation. Assuming a total 

diesel consumption volume of about 50 

bill gal for 2013, B5 for the diesel pool 

as a whole would correspond to a 

biodiesel volume of 2.5 bill gal. 

However, some diesel truck engines 

have been warranted by their 

manufacturers to consume B20, starting 

in 2011. Model-specific sales data for 

these vehicles was not available, so we 

could not directly estimate the volume 

of B20 consumed by these trucks. Nor 

were we able to assess the ability of the 

retail and distribution system to supply 

higher biodiesel blends for a subset of 

the fleet. But in the extreme, assuming 

all MY 2011 and newer trucks were 

designed for operation on B20 and that 

these trucks could always fuel on B20, 

it would only account for approximately 

30% of the nationwide biodiesel volume 

in 2012. 

At the same time, even B5 blends 

cannot be utilized year-round due to 

cold weather constraints. If biodiesel 

was not used at all in the 20 most 

northern states from December through 

March, the nation as a whole could still 

consume 1.9 bill gal annually.46

However, this is likely to be a 

conservative estimate of the volume of 

biodiesel that can be consumed since 

infrastructure does exist in many 

northern states to permit the use of B5 

in the winter. Moreover, another 

estimate of the impact of cold 

temperatures on biodiesel use can be 

derived from the cloud point. The cloud 

point for B5 soy methyl ester (SME) 

blended with No. 2 diesel is estimated 

to be approximately 5 °F. Thus, any 

region wherein temperatures regularly 

drop below 5 °F would present a 

difficulty for the use of B5. Assuming 

that biodiesel cannot be blended in such 

regions during any month where the 

temperature falls below 5 °F at least 

10% of the time would result in a 

reduction of the volume of biodiesel 

that can be consumed annually by only 

about 3%. Thus, it appears that for 

2013, the ability to consume biodiesel in 

the vehicle fleet does not provide a 

constraint. 

2. Domestic Production of Advanced 

Biofuel Other Than Biomass-Based 

Diesel and Cellulosic Biofuel 

Generic pathways that have been 

approved for the generation of RINs are 

specified in the regulations in Table 1 

mstockstill on DSK4VPTVN1PROD with RULES2

49816 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

47Pathways may also be approved for RIN 

generation in response to petitions submitted 

pursuant to 80.1416. 

48While the individual reports have not been 

published since they include company-specific 

information that could impact the competitive 

nature of the industry, we are providing aggregate 

results in this NPRM. 

49 78 FR 14190, March 5, 2013. 

to § 80.1426.47 There are currently six 

pathways through which advanced 

biofuel RINs can be generated. These 

pathways are shown in Table III.B.2–1. 

TABLE III.B.2–1—PATHWAYS FOR ADVANCED BIOFUEL

Fuel type Feedstock Production process requirements D-Code 

H Biodiesel, renewable 

diesel, jet fuel and heating oil.

Soy bean oil; ...........................................................

Oil from annual covercrops; 

Trans-Esterification 

Algal oil; 

Biogenic waste oils/fats/greases; 

Non-food grade corn oil 

Camelina sativa oil 

One of the following: ...............................................

Trans-Esterification. 

Hydrotreating. 

Includes only processes that co-process renewable biomass and petroleum. 

5 

I Naphtha, LPG .............. Camelina sativa oil .................................................. Hydrotreating ........................................................... 5 

J Ethanol ........................ Sugarcane ............................................................... Fermentation ........................................................... 5 

P Ethanol, renewable 

diesel, jet fuel, heating 

oil, and naphtha.

The non-cellulosic portions of separated food 

waste.

Any .......................................................................... 5 

Q Biogas ........................ Landfills, sewage waste treatment plants, manure 

digesters.

Any .......................................................................... 5 

S Ethanol ....................... Grain Sorghum ........................................................ Dry mill process, using only biogas from landfills, 

waste treatment plants, and/or waste digesters 

for process energy and for on-site production of 

all electricity used at the site other than up to 

0.15 kWh of electricity from the grid per gallon 

of ethanol produced, calculated on a per batch 

basis.

5 

In the NPRM, we projected that the 

total volume of other advanced biofuel 

could be 150 mill gal in 2013. Some 

stakeholders expressed their belief that 

this was a reasonable volume to project 

for domestic advanced biofuel 

producers for 2013, and Clean Energy 

Renewable Fuels provided information 

supporting their view that we had 

significantly underestimated the 

potential for biogas. Nevertheless, others 

expressed concern that 150 mill gal was 

too aggressive, pointing to the fact that 

the actual domestic production of other 

advanced biofuel in 2012 was only 50 

mill gal. Consistent with our approach 

to cellulosic biofuel projections, we do 

not believe that future projections of 

advanced biofuel should be based 

strictly on actual historical production 

volumes. Nevertheless, we agree with 

stakeholders that expressed concern that 

we based our projections in part on 

information from registered producers 

that did not submit a Production 

Outlook Report as required under 

§ 80.1449 for all registered producers. 

For this final rule, we have not 

considered production volumes from a 

specific producer if that producer did 

not provide a projection for 2013 in a 

Production Outlook Report. 

In order to estimate the volumes of 

other advanced biofuels that could be 

produced in 2013, we reviewed the 

most recent set of Production Outlook 

Reports. These reports were submitted 

in the summer of 2012 and contain 

projections of renewable fuel 

production for each of the next five 

years.48 Based on this review, we 

identified approximately 30 domestic 

companies that expect to produce 

advanced biofuel (with a D code of 5) 

in 2013. The total projected production 

volume for these companies in 2013 is 

245 million ethanol-equivalent gallons, 

as shown in Table III.B.2–2. 

TABLE III.B.2–2—PROJECTED DOMESTIC PRODUCTION OF ADVANCED

BIOFUELa IN 2013 

[Million ethanol-equivalent gallons] 

Biogas ............................................. 44 

Naphtha .......................................... 8 

Renewable diesel ........................... 57 

Ethanol ............................................ 136 

Total ......................................... 245 

a Includes only volumes that would be assigned a D code of 5. 

We recognize that these volumes are 

higher than the 150 mill gal that we 

projected in the NPRM. Nevertheless, 

we believe that they provide a 

reasonable estimate of the volumes that 

can be achieved in 2013. Because 

Production Outlook Reports are 

provided directly to the EPA and are not 

made public (except in the aggregate), 

producers have less incentive to 

overstate volume projections. These 

projected volumes also do not account 

for imports of renewable diesel from 

foreign producers which have the 

capacity to produce hundreds of 

millions of gallons per year. More 

importantly, the projected volumes in 

Table III.D.2–2 were made in June 2012. 

Since that time, we have established 

additional valid pathways for the 

generation of advanced biofuel RINs 

using camelina oil and grain sorghum.49

Recent annual production of ethanol 

from grain sorghum was about 350 mill 

gal, though only a minority of these 

production facilities might be expected 

to install the requisite equipment 

allowing the use of biogas for process 

energy in 2013, thus allowing them to 

generate advanced biofuel RINs. 

We also investigated a variety of other 

potential RIN-generating pathways for 

advanced biofuel that could result in 

additional volumes in 2013. In addition 

to potential new pathways for cellulosic 

biofuel that would also count towards 

the advanced biofuel volume 

requirement as discussed in Section 

II.D, new pathways are also under 

review that may provide additional 

advanced biofuel volumes in 2013. 

These include pathways for renewable 

diesel from jatropha oil, ethanol from 

barley and biomass sorghum, and a 

number of others. We have not yet 

determined, either through rulemaking 

or approval of an industry petition, 

whether these pathways are valid for the 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49817 

50Some portion of Brazilian ethanol exports to 

the U.S. is non-fuel ethanol (i.e., for industrial use). 

U.S. Department of Commerce data indicates that of 

2012 Brazilian ethanol exports to the U.S., 85% 

were fuel ethanol. http://dataweb.usitc.gov./ 

51 Gain Report BR110016, October 3, 2011, USDA 

Agricultural Service. See http://gain.fas.usda.gov/

Recent%20GAIN%20Publications/Sugar%20Semiannual_Sao%20Paulo%20ATO_Brazil_10-3- 

2011.pdf. 

52The sugar marketing year in Brazil’s centersouth sugar-producing region, where the large 

majority of production occurs, runs from May 

through April. 

53On the margin, the high sugar prices may have 

also encouraged some growers to divert their crop 

from ethanol production to sugar production. But 

most cane growers do not have this flexibility with 

sugarcane mills designed for fixed amounts of 

refined sugar or ethanol so high sugar prices was 

likely a contributing factor but not a major cause 

of reduced sugarcane ethanol production in Brazil. 

54UNICA, ‘‘Estimate for 2012/2013 Sugarcane 

Harvest of Brazilian South-Central Region’’, 

September 20, 2012, http://www.unicadata.com.br/ 

listagem.php?idMn=39. 

55UNICA, ‘‘Final Report of 2012/2013 Harvest 

Season, South-Central Region,’’ http://www.

unicadata.com.br/listagem.php?idMn=83. 

56See http://www.platts.com/RSSFeedDetailed

News/RSSFeed/Oil/8987702. 

57See http://www.bloomberg.com/news/2012-03- 

08/santa-terezinha-invests-283-million-in-brazilethanol-projects.html. 

58UNICA, ‘‘South-Central brazil cane crush 

projected at 589.60 million tons for 2013/2014,’’ 

http://www.unicadata.com.br/listagem.php?

idMn=80. 

generation for advanced biofuel RINs. 

However, approval of such advanced 

biofuel pathways could potentially 

result in the production of more than 50 

million ethanol-equivalent gallons in 

2013. Insofar as any of these pathways 

are approved in time to be used in 2013, 

it would increase the volume of 

domestically-produced advanced 

biofuels available for 2013 compliance 

above the volumes shown in Table 

III.B.2–2. 

3. Imported Sugarcane Ethanol 

In the NPRM we projected that the 

volume of imported sugarcane ethanol 

in 2013 would need to reach about 670 

mill gal in order for the statutory 

volume of 2.75 bill gal to be met. Given 

the availability of carryover RINs from 

2012, potential for excess biomass-based 

diesel, and domestic production of other 

advanced biofuel, the amount of 

imported sugarcane ethanol needed to 

reach the statutory volume of 2.75 bill 

gallons could be significantly below 670 

mill gal. Here we evaluate whether the 

actual 2012 import volume of 580 mill 

gal could also be imported in 2013. 

a. Brazilian Ethanol Export Capacity 

Total exports of ethanol from Brazil 

depend on ethanol production and 

demand within Brazil and have varied 

significantly over the last decade. The 

historical maximum occurred in 2008 

when 1.35 bill gal was exported, and 

ongoing efforts to upgrade distribution 

infrastructure mean that Brazil has the 

infrastructure in place to export at least 

this volume annually. 

In response to the NPRM, 

stakeholders provided widely diverging 

views on the volumes of imported 

sugarcane ethanol that could be 

expected in 2013. Some stakeholders 

suggested that the advanced biofuel 

standards should be set based on an 

assumption that there would be no more 

than a few hundred mill gal of imported 

sugarcane ethanol available in 2013, and 

others indicated that imported 

sugarcane ethanol should be excluded 

entirely from consideration. The 

Brazilian Ministry of Mines and Energy 

(MME) provided a detailed assessment 

supporting their view that Brazil can 

supply at least 670 mill gal to the U.S. 

in 2013, and the Brazilian sugarcane 

industry association UNICA likewise 

indicated that at least 670 mill gal could 

be expected 50 No stakeholders 

supported our suggestion that a 200 mill 

gal reduction in the advanced biofuel 

requirement might be warranted to 

account for potential uncertainty in the 

availability of imported sugarcane 

ethanol. To assess Brazil’s potential 

export capacity for 2013, we considered 

multiple factors, including sugarcane 

and ethanol production capacity, 

Brazilian domestic ethanol demand, and 

historical data on sugarcane ethanol 

exports. 

i. Brazilian Sugarcane and Ethanol 

Production Capacity 

From the supply perspective, 

production of sugarcane in Brazil in the 

years just preceding 2013 has been 

lower than normally expected due to 

two factors. First, adverse weather 

conditions reduced production.51 For 

example, adverse weather conditions 

are estimated to have reduced cane 

production by about 4% in the 2011/ 

2012 marketing year.52 Thus, a return to 

normal weather conditions in the time 

frame that this rulemaking considers by 

itself would restore approximately 4% 

of production. 

Second, the general global economic 

downturn in recent years made 

obtaining credit more difficult in the 

Brazilian sugar cane industry, resulting 

in delayed replanting of existing fields. 

Normally sugarcane fields are replanted 

every five or six years to maximize 

yield. However, the lack of available 

credit caused some growers to delay the 

expense of this replanting, resulting in 

older fields losing production.53

Perhaps in part due to easing credit 

conditions, as noted below, more direct 

investment in sugar cane production 

and milling in Brazil is occurring. 

In the proposal, EPA cited data from 

September and December 2012 in 

estimating that the South Central region, 

the dominant region for ethanol 

production in Brazil, would produce a 

total of 5.56 bill gal for the 2012/13 

year.54 Other regions contributed 

roughly another 565 mill gal in 2011/12. 

Based on this production data, we 

concluded that 6.1 bill gal would be a 

reasonable conservative estimate for 

total 2013 production, assuming no 

growth at all in production outside the 

South Central region. Subsequent to 

issuance of the proposal, UNICA 

released its final report on the 2012/ 

2013 harvest season, which confirmed 

an increase in the sugarcane harvest 

relative to 2011/12. That report showed 

that the 2012/2013 harvest for the South 

Central region was approximately 8% 

larger than the 2011/12 harvest.55

Some parties expected a more typical 

trend in sugarcane ethanol production 

for both the 2012/2013 and 2013/2014 

harvest years, with replanted fields 

beginning to boost sugarcane production 

in existing plantations and, in response 

to increased worldwide demand, a 

growth in the acres planted with 

sugarcane. Increased production is 

supported by the Brazilian government 

which announced in February 2012 

support for a plan to invest over $8 

billion annually to boost cane and 

ethanol production.56 Private 

investment in Brazil may also be 

increasing. For example, Usina de 

Acucar Santa Terezinha, a Brazilian 

ethanol producer, last year announced 

plans to invest almost $300 million in 

a new mill and sugarcane plantation.57

As stated in the proposal, such 

information suggested that sugarcane 

and ethanol production in the 2013/14 

harvest year could be higher than 

production over the last two years. 

The 2012/2013 harvest year in Brazil’s 

South Central region has ended, and 

EPA now has early estimates concerning 

the 2013/2014 harvest year, which 

began in April 2013. UNICA now 

projects an increased 2013/2014 harvest 

for the South Central region of 10.7% 

over the 2012/2013 harvest.58

With respect to ethanol production, 

analyses supplied in comment to the 

proposal by the Brazilian Ministry of 

Mines and Energy (MME) indicate it is 

projecting 2013/14 ethanol production 

to range from 7.2 to 7.5 bill gal, 

reflecting improvements in yield, 

additional acres planted and the 

expected market for sugar from 

sugarcane. MME’s projections are in line 

with other data sources referenced in 

MME’s comments that projected ethanol 

mstockstill on DSK4VPTVN1PROD with RULES2

49818 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

59Platts, ‘‘Brazil to raise ethanol mix in gasoline 

to 25% from 20% May 1,’’ http://www.platts.com/ 

RSSFeedDetailedNews/RSSFeed/Oil/8194390. 

60EIA, U.S. Imports from Brazil of Fuel Ethanol. 

http://www.eia.gov/dnav/pet/hist/LeafHandler.

ashx?n=pet&s=mfeim_nus-nbr_1&f=m. 

61The data from EIA and the U.S. Department of 

Commerce are generally consistent, but slight 

differences may arise due to differences in the 

survey population, the reporting methodology, the 

reporting schedules, and the timing of updates. 

62 In 2012, 90% of the 403 million imported 

gallons occurred in June through December. 

63EIA, U.S. Imports from Brazil of Fuel 

Ethanol.http://www.eia.gov/dnav/pet/hist/Leaf

Handler.ashx?n=pet&s=mfeim_nus-nbr_1&f=m. 

64EIA, Exports by Destination. http://www.eia.

gov/dnav/pet/pet_move_expc_a_EPOOXE_EEX_

mbbl_a.htm. 

production for 2013/14 ranging from 7.1 

to 7.2 bill gal. These sources include 

projections by UNICA which in separate 

comment defended its analysis 

projecting 7.1 bill gal. This production 

rate would support the conclusion that 

enough ethanol should be available to 

meet Brazil’s domestic demand 

(discussed following) as well as supply 

580 mill gal or more to the U.S. during 

calendar year 2013. 

ii. Brazilian Domestic Demand for 

Ethanol 

Brazil’s sugarcane ethanol production 

serves both its domestic market as well 

as the export market. The government of 

Brazil sets a minimum ethanol 

concentration for its gasoline. In 2011, 

the Brazilian government lowered this 

concentration to 20%, reflecting in part 

the decrease in domestic ethanol 

production. However, given the more 

optimistic production outlook, Brazil 

raised the minimum ethanol 

concentration to 25% effective May 1, 

2013.59 The ability of the Brazilian 

government to reset the minimum 

ethanol content introduces some 

uncertainty in projecting future 

Brazilian demand. However, 

historically, adjustments have been 

infrequent, relatively small in degree (a 

few percent), and largely been 

influenced by the price of ethanol (high 

prices leading to a reduction in the 

minimum). Since reinvestment in 

sugarcane stock is already underway, a 

considerable resurgence in Brazilian 

ethanol export potential in the 2013 

calendar year seems likely. Assuming 

that the 25% blending rate remains in 

effect through the 2013/14 sugarcane 

season, the analyses referenced above by 

MME and UNICA suggest that more 

than enough ethanol should be available 

assuming normal weather patterns to 

allow for at least 580 mill gallons of 

exports to the U.S. in 2013. 

iii. Additional Market Factors 

Aside from production capability and 

domestic demand within Brazil, market 

conditions generally determine the 

amount of sugarcane ethanol imported 

into the U.S. from Brazil. Approved as 

an advanced biofuel pathway, ethanol 

produced from sugarcane benefits from 

the RIN value associated with advanced 

biofuel but also has to compete with 

other sources of ethanol used for 

blending with gasoline in the U.S., most 

notably ethanol made from corn starch 

(which does not qualify as an advanced 

biofuel). The expiration of the tariff 

applicable to imported ethanol has 

helped make imported sugarcane 

ethanol more cost competitive in the 

U.S., and any volumes of Brazilian 

sugarcane ethanol imported into 

California to meet the requirements of 

their Low Carbon Fuel Standard (LCFS) 

would also count towards meeting the 

requirements of the RFS program. 

b. United States-Brazil Ethanol Trade 

In both calendar years 2011 and 2012 

there was some two-way trade in 

ethanol between the United States and 

Brazil. A number of stakeholders raised 

concerns about this two-way ethanol 

trade between the U.S. and Brazil. Some 

suggested that we should adjust the 

advanced biofuel standard to reduce or 

eliminate such outcomes. 

According to currently available 

Energy Information Administration 

(EIA) data, 2013 U.S. fuel ethanol 

imports from Brazil through May were 

75.9 million gallons compared to 36.1 

million gallons during the same period 

in 2012, a 110% rise.60 The U.S. 

Department of Commerce also collects 

data on U.S. imports of Brazilian fuel 

ethanol. They too report a significant 

increase in 2013 imports—105 million 

gallons through May 2013, up from 42.6 

million gallons through the same period 

in 2012, a 147% increase.61 This 

increase, combined with the fact that 

the majority of Brazilian ethanol exports 

to the United States have historically 

occurred in the second half of the 

calendar year, suggests that Brazilian 

ethanol exports to the U.S. are on a 

trajectory that would readily enable 

Brazil to supply 580 million gallons to 

the U.S. in 2013.62

2013 exports of fuel ethanol from the 

U.S. to Brazil have been relatively small. 

EIA data indicates that 26 million 

gallons of fuel ethanol have been 

exported from the U.S. to Brazil 

between January 1 and May 31, 2013. 

TABLE III.B.3.b–1—U.S. FUEL ETHANOL TRADE WITH BRAZIL

[Mill gal] 

2008 2009 2010 2011 2012 

U.S. Fuel Ethanol Imports from Brazil 63 ......................................................................................... 203 5 0 101 403 

U.S. Fuel Ethanol Exports 64

Total .......................................................................................................................................... N/A N/A 398 1195 742 

To Brazil .................................................................................................................................... N/A N/A 23 396 86 

Both the EIA and U.S. Department of 

Commerce data consider fuel ethanol 

that is transported directly from Brazil 

to the United States. However, 

significant volumes of fuel ethanol 

originating from Brazil and imported by 

the United States pass through 

Caribbean Basin Initiative (CBI) 

countries for dehydration before 

continuing on to the U.S. Such volumes 

are not included in the Table III.B.3–1. 

EIA data indicates that the U.S. 

imported 40 million gallons of fuel 

ethanol from CBI countries in 2012; 

most of this originated in Brazil, though 

determining the specific quantity is 

difficult. 

Comments on this two-way trade 

focused on associated GHG impacts, 

both direct impacts from transportationrelated emissions, and the indirect GHG 

impacts resulting from the market 

dynamics that could potentially result 

as a consequence of EPA’s volume 

determinations. 

i. Direct Transportation Emissions 

With respect to direct emissions, 

commenters noted that GHG emissions 

occur as a result of shipping sugarcane 

ethanol to the U.S. and shipment of 

corn-based ethanol to Brazil. We 

recognize that there are GHG emissions 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49819 

65 In addition, as discussed below, in this action 

EPA is not revisiting or reopening the 

determination made in the 2010 RFS final rule that 

imported sugar cane ethanol meets the greenhouse 

gas reductions threshold for advanced biofuel. 

associated with shipping sugarcane 

ethanol from Brazil to the U.S. as well 

as the subsequent emissions associated 

with distributing this fuel from the port 

of entry to likely blending locations. 

These transportation emissions were 

taken into account as part of the 

lifecycle assessment of sugarcane 

ethanol adopted as part of the 2010 final 

rule, and represent approximately (3%) 

of total lifecycle emissions for sugarcane 

ethanol. Regarding the emissions 

associated with potential shipments of 

corn ethanol from the U.S. to Brazil, 

these would be small in magnitude 

compared to the overall emission 

reductions from the use of sugarcane 

ethanol, as the transportation emissions 

are a small part of the lifecycle 

emissions, whether the emissions are for 

fuel imported from Brazil or exported to 

Brazil. Also, as noted below, the 

commenter provides no basis for EPA to 

determine the magnitude of the 

emissions they are concerned about, 

given the multiple factors that lead to 

wide variability in import and export 

levels of ethanol between the U.S. and 

Brazil. 

ii. Indirect Emissions 

Stakeholder’s comments regarding 

sugarcane ethanol and U.S.-Brazil trade 

concern the annual standard-setting 

process for 2013 and the indirect GHG 

impacts associated with the use of 

imported sugarcane ethanol as an 

advanced biofuel. Commenters raised 

two major issues associated with the 

potential GHG impacts associated with 

sugarcane ethanol demand in the U.S. 

(1) In the long-run (e.g., 2022), if EPA 

were to maintain the full statutory 

advanced standard while reducing the 

cellulosic standard to levels seen in 

recent years based on availability, more 

than 10 bill gal of imported ethanol 

would be required to meet the advanced 

standard. At those volumes, based on 

studies by the OECD and FAPRIMissouri, commenters state that it is 

likely that a majority of the imported 

ethanol gallons would be diverted from 

Brazilian consumption of ethanol, and 

that much of the sugarcane ethanol 

would be backfilled by corn ethanol 

imports from the U.S. As a result, 

commenters argue that imported 

sugarcane would not meet the 50 

percent GHG emissions reductions 

required for an advanced biofuel. (2) In 

the short-run, commenters claim that 

there are limited options for increasing 

the supply of sugarcane ethanol, many 

of which would undermine the GHG 

emission reductions included in EPA’s 

lifecycle analysis. Commenters claim 

that in the 2013 time period, increased 

sugarcane ethanol imports to the U.S. 

could only be supplied if Brazil 

decreases gasoline consumption, Brazil 

replaces sugarcane ethanol with fossil 

gasoline, Brazil replaces sugarcane 

ethanol with another ethanol 

(presumably corn), sugar production in 

Brazil increases, or stocks of sugar are 

reduced to meet increased demand. 

Commenters claim that if replacement 

of sugarcane ethanol is with gasoline or 

corn ethanol, sugarcane ethanol would 

not meet the GHG emission reductions 

required for an advanced biofuel. 

Regarding the first issue, it is 

premature and would be speculation to 

consider at this time what emissions 

might result were EPA to maintain the 

statutory advanced standard over the 

next several years. That issue is also not 

relevant for this rulemaking action. For 

each calendar year, EPA may reduce the 

required volumes of advanced biofuel 

and total renewable fuel if it reduces the 

volume required for cellulosic biofuel. 

This rulemaking addresses only 

calendar year 2013, and does not 

establish or set a precedent for what 

actions EPA may or may not take for 

future calendar years. Therefore, we 

believe the analysis presented by 

commenters on future scenarios that 

rely on imported volumes of sugarcane 

ethanol that exceed current Brazilian 

production are not relevant to this 2013 

rulemaking.65

The second issue raised in this 

context pertains to the question of how 

the national applicable volume for 

advanced biofuel influences ethanol 

production and trade patterns (along 

with concomitant indirect GHG 

emissions effects) in a given year. A 

comprehensive analysis of those effects 

is challenging, as there are a variety of 

economic and other factors at play. A 

thorough analysis of this issue would 

require complex economic and 

emissions modeling for multiple market 

sectors, which is impractical, 

particularly for a rule that establishes a 

yearly volume requirement. 

Furthermore, we do not believe that the 

data commenters submitted provides an 

adequate basis for drawing the 

conclusion, as commenters do, that 

retaining the statutory 2013 advanced 

biofuel requirement would result in an 

overall increase in GHG emissions due 

to ethanol trade. For example, in the 

comments submitted by ICCT, no data is 

provided indicating whether it is more 

likely that increased sugarcane exports 

will result in increased petroleum 

gasoline consumption or increased corn 

ethanol imports in Brazil, or if the 

market response will be an increase in 

sugar production or drawing down 

sugar stocks. 

Each of these different market 

implications would have significantly 

different GHG emissions impacts. 

Multiple reasons exist for the volume of 

trade between the US and Brazil beyond 

the RFS program’s requirements, 

including other US demand for 

sugarcane ethanol (e.g., California’s 

LCFS); seasonal production of sugarcane 

which results in off-season demand for 

ethanol; and regional infrastructure 

constraints in Brazil, which makes it 

easier for parts of Brazil to import corn 

ethanol in some regions. As shown by 

Table III.B.3–1 above, there is no clear 

correlation at all between corn ethanol 

exports to Brazil and sugarcane ethanol 

imports from Brazil. There is no basis to 

assume that each gallon of sugarcane 

ethanol imported into the U.S. would be 

offset by a gallon of corn ethanol 

exported to Brazil. Furthermore, 

fluctuations in the sugar markets could 

lead to increased sugarcane ethanol 

supply without increasing sugarcane 

production. As discussed in the UNICA 

comments, world sugar prices are 

currently down 36% since 2011, which 

creates an additional incentive for 

producers, to the extent possible, to 

shift from sugar production to ethanol 

production. In fact, UNICA expects 

ethanol production to increase by 18– 

20% in 2013/2014, even though 

sugarcane production will only increase 

by 10%. To the extent that the increase 

in sugarcane ethanol to the U.S. results 

in increased sugarcane production, 

decreased sugar production, or a 

drawdown of sugar stocks, it is not 

likely that the increase in U.S. imports 

of sugarcane ethanol would lead to 

increased exports of corn ethanol to 

Brazil or a significant change in GHG 

emissions. 

We also note that Congress 

established the RFS as a long-term 

program aimed at replacing substantial 

volumes of fossil-based transportation 

fuels with low-GHG renewable fuels 

over time. The annual standard-setting 

process however involves a decision for 

a single year, which may not reflect the 

long-term effects of the program. For 

example, our emissions analysis 

conducted for the March 2010 final RFS 

rule focused not on yearly decisions on 

standards, but rather the effects of the 

program over the long term. That 

analysis did not attempt to answer the 

question of what the GHG emissions 

impacts would be of increasing or 

lowering the volume mandates in any 

one year. Instead, our analysis focused 

on quantifying the GHG impacts of an 

mstockstill on DSK4VPTVN1PROD with RULES2

49820 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

66 In the proposal, we requested comment on the 

degree to which the E10 blendwall might present 

a difficulty in meeting the applicable volume 

requirements in 2013. 

67 77 FR 59458, September 27, 2012. 

increase in sugarcane ethanol demand 

in 2022, when the full volumes of the 

RFS program were implemented. The 

March 2010 analysis captured the longterm market reaction to a sustained 

higher demand over many years for 

sugarcane ethanol in the U.S., which 

primarily resulted in an increase in 

Brazilian sugarcane production. We 

continue to believe that over the longterm, expansion of Brazilian sugarcane 

production is a realistic reaction to 

increased demand for sugarcane ethanol 

in the U.S., thus supporting our analysis 

that sugarcane ethanol reduces GHG 

emissions over the long run. 

In sum, we believe that the import of 

sugar cane ethanol as an advanced 

biofuel in 2013 should produce 

reductions in GHGs compared to the 

fossil-based gasoline it will replace, 

which would not occur if the advanced 

biofuel standard were reduced. While 

the points raised by commenters 

indicate there is some uncertainty about 

the magnitude of these reductions on a 

year-by-year basis, the evidence and 

arguments they present do not warrant 

a conclusion that there would be any 

significant change in GHG benefits. In 

addition, as noted above, the ongoing 

demand for advanced biofuels is part of 

a long-term approach to achieving major 

GHG reductions from the RFS program. 

Finally, with respect to commenters’ 

arguments regarding the GHG impacts of 

imported sugarcane ethanol, we note 

that the lifecycle threshold 

determinations conducted for various 

biofuels pathways (as required by 

statute) were completed as part of the 

March 2010 final RFS rule. We made the 

determination in that rulemaking that 

imported sugar cane ethanol meets the 

greenhouse gas reductions threshold for 

advanced biofuel. We are not revisiting 

those determinations as part of this 

action. Instead this rulemaking 

addresses the applicable volume 

requirements for the various categories 

of renewable fuels, in applying the 

provision for a waiver of the cellulosic 

biofuel volumes. Thus we are not 

reconsidering or reopening the GHG 

threshold determinations made in the 

2010 RFS final rule. Instead, we are 

considering this comment solely in the 

context of exercising its discretion 

under CAA section 211(o)(7)(D)(i). 

For the reasons discussed above, we 

conclude that the volumes of sugarcane 

ethanol that are available for use in 2013 

as advanced biofuel are reasonably 

projected as at least as much as 580 mill 

gallons. We continue to place primary 

weight on this factor in determining 

whether to maintain the statutory levels 

for advanced biofuel. In addition, the 

arguments and reasons for reducing the 

advanced biofuel standard to reduce the 

reliance on imported sugar cane ethanol 

are not of a nature to warrant changing 

the conclusions we would draw based 

on the available supply of sugarcane 

ethanol as an advanced biofuel. 

C. Compliance With the Total 

Renewable Fuel Standard in 2013 

As described in Section III.B above, 

the NPRM addressed potential 

reductions in advanced biofuel and total 

renewable fuel under the cellulosic 

waiver authority. In this context, any 

reduction in advanced biofuel would be 

matched gallon-for-gallon (on an 

ethanol-equivalent basis) by reductions 

in total renewable fuel, effectively 

having no impact on volumes of nonadvanced biofuel such as corn ethanol. 

In response to the NPRM, many 

stakeholders expressed concern about 

the E10 blendwall and the possibility 

that the applicable standards for 2013, 

absent a reduction in the advanced 

biofuel and total renewable fuel volume 

requirements, could require the 

consumption of more volumes of higher 

ethanol blends (E15–E85) than can 

reasonably be absorbed by the market.66

In order to evaluate these concerns, we 

estimated the volumes of ethanol that 

could be needed to meet the statutory 

volume requirements in 2013 and 

whether or not that volume could 

reasonably be used. 

In the NPRM we proposed a 

significant reduction in the required 

volume of cellulosic biofuel. For today’s 

final rule we are adjusting this volume 

requirement downward to 6 mill gal as 

described in Section II.D above. We also 

set a volume requirement for biomassbased diesel of 1.28 bill gal in a separate 

rulemaking.67 Table III.C–1 shows what 

the four volume requirements would be 

without any reductions in the statutory 

volumes of advanced biofuel or total 

renewable fuel. 

TABLE III.C–1—VOLUMES OF RENEWABLE FUEL FOR 2013 ABSENT REDUCTIONS IN ADVANCED BIOFUEL AND TOTAL

RENEWABLE FUEL

[Million ethanol-equivalent gallons] 

D codes that can 

be used to meet 

this standard 

Required volume 

Cellulosic biofuel .............................................................................................................................................. 3, 7 6 

Biomass-based diesel ...................................................................................................................................... 4, 7 1,920 

Advanced biofuel ............................................................................................................................................. 3, 4, 5, 7 2,750 

Total renewable fuel ................................................................................................................................. 3, 4, 5, 6, 7 16,550 

Based on these volume requirements, 

we estimated the volumes of both 

ethanol and non-ethanol that could be 

used to satisfy these standards if there 

were no biomass-based diesel produced 

in excess of the 1.28 bill gal 

requirement. As such, these estimates 

may overstate the volume of ethanol 

that would have to be consumed 

because, as discussed above, there is 

significant capacity for biodiesel 

production beyond the 1.28 bill gal 

requirement for 2013. This scenario also 

does not consider the availability of 

substantial numbers of carryover RINs 

from 2012, which is discussed in greater 

detail below. 

TABLE III.C–2—POTENTIAL VOLUMES

OF RENEWABLE FUEL FOR 2013 

[Million ethanol-equivalent gallons] 

D code Ethanol Nonethanol 

Cellulosic biofuel 3 1 5 

Biomass-based 

diesel ............. 4 0 a 1,920 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49821 

68Calculated from EIA Annual Energy Outlook 

2013, Transportation Table 37 (converted to lower 

heating value (LHV)). 

69To simplify this analysis we have not assumed 

any other ethanol blend levels and no E0. 

70EIA, ‘‘U.S. Refinery and Blender Net 

Production,’’ 3/15/13. 

71E85 in this rulemaking is assumed to contain 

74% ethanol on an annual average basis, consistent 

with EIA. However, this value can vary in-use from 

51% to 83%, and greater ethanol content will 

correspond to lower energy content of E85 in 

comparison to E10. 

72Through April 2013 approximately 4.1 billion 

D6 RINs have been produced. This production rate 

projected through 2013 would indicate the 

production of approximately 12.3 billion D6 RINs. 

In addition, the production rate at ethanol facilities 

has been increasing. EIA’s weekly fuel ethanol 

production data shows that ethanol production had 

Continued 

TABLE III.C–2—POTENTIAL VOLUMES

OF RENEWABLE FUEL FOR 2013— 

Continued 

[Million ethanol-equivalent gallons] 

D code Ethanol Nonethanol 

Other advanced 

biofuel 

—Domestically produced ......... 5 b 136 b 109 

—Imported .... ............ c 580 0 

Conventional 

Biofuel ........... 6 13,800 0 

Total ........... ............ 14,517 2,034 

aBased on the applicable volume requirement of 1.28 bill gal, and assuming no excess. bFrom Production Outlook Reports as listed 

in Table III.B.2–2. cBalance of advanced biofuel standard of 

2.75 bill gal that is estimated to come from imported sugarcane ethanol. 

In order to determine the volume of 

ethanol that would need to be 

consumed in blends higher than E10 in 

order to meet this standard, we assumed 

a total 2013 energy consumption for all 

gasoline-powered vehicles and engines 

of 14.58 Quadrillion Btu.68 Based on a 

denatured ethanol energy content of 

77,000 Btu/gal and a gasoline energy 

content of 115,000 Btu/gal, we 

determined that the 14.5 bill gal of 

ethanol shown in Table III.C–2 would 

require 129.5 bill gal of E10 and 2.1 bill 

gal of E85.69 This volume of E85 would 

contain about 1.6 bill gal of ethanol. By 

contrast, if no E85 were consumed, the 

total volume of E10 would be 131.1 bill 

gal and the maximum volume of ethanol 

that could be consumed would thus be 

13.1 bill gal. As shown in Table III.C– 

2, the conventional biofuel volume 

alone exceeds this level. In the absence 

of carryover RINs from 2012, it would 

be extremely challenging to meet this 

standard. 

In their comments on the NPRM, a 

number of refiners contended that E85 

is not a viable strategy for consuming 

volumes of ethanol in excess of the E10 

blendwall. Some called for reducing the 

required volumes of renewable fuel so 

that ethanol would comprise no more 

than 10% of the gasoline fuel pool. We 

agree that, historically, E85 

consumption has been very low. In 2012 

EIA estimated that E85 consumption 

was about 40 mill gal, and in prior years 

it was less.70 In its Annual Energy 

Outlook 2013, EIA projects that E85 

consumption may increase to 176 mill 

gal in 2013 under the demand pressure 

created by the RFS program and without 

consideration of carryover RINs from 

2012, but even so this is still 

significantly less than the 2.1 bill gal 

that we estimate would need to be 

consumed under the limitations of the 

scenario described above. We expect 

that consumption of E85, and perhaps 

blends with other concentrations of 

ethanol, will grow over time. 

While recent consumption of E85 

(approximately 40 mill gal in 2012) has 

been considerably lower than the 2.1 

bill gal that would be needed in the 

scenario outlined above, we note that 

the price of E85 has historically only 

been about 15% lower than the price of 

E10. Since the average volumetric 

energy content of E85 71 is about 22% 

below that of E10, the historical price of 

E85 has actually been higher than the 

price of E10 on an energy equivalent 

basis. Moreover, the price gap between 

E10 and E85 may be perceived as larger 

to consumers who might assume that a 

gallon of E85 will contain 85% ethanol, 

having an energy content 25% lower 

than E10. Those flex-fuel vehicle (FFV) 

owners that have been purchasing E85 

have thus been doing so for reasons 

other than the economic benefit (e.g. 

personal values or government fleet 

mandates) or because they are unaware 

of the extent that E85 contains less 

energy than E10. If the price of E85 were 

to fall relative to the price of E10, we 

would expect consumption of E85 to 

increase. Significant reductions in the 

price of E85 could result in higher 

volumes of E85 consumption, provided 

there is adequate availability of 

infrastructure for distribution of E85, 

availability of FFVs, consumer 

awareness of the availability of E85, its 

cost in comparison to E10, and the 

energy difference between E85 and E10. 

Such a reduction in the price of E85 

could occur with a significant reduction 

in the price of corn relative to the price 

of oil. Historically during periods of 

lower corn prices the desire to 

maximize profit has resulted in an 

increase in ethanol blending. With the 

E10 market saturated, lower corn prices 

could result in lower E85 prices. At 

higher corn prices, as described more 

fully in Section III.D below, a long-term 

increase in E85 consumption would still 

need to come through a reduction in the 

price of E85 relative to E10, which 

would entail an increase in the price of 

RINs. Based on this, some increase in 

volumes of higher ethanol blends could 

be accomplished, with the extent of the 

required subsidy to E85 consumers 

through higher RINs prices depending 

on E85 infrastructure, consumer 

acceptance, and the price of corn 

relative to the price of oil. 

There are also mechanisms other than 

increased volumes of E85 through 

which obligated parties could comply 

with the applicable volume 

requirements in the absence of 

reductions in the advanced biofuel and 

total renewable fuel volume 

requirements. One of those options is 

carryover RINs from 2012. EMTS was 

examined after the February 28, 2013 

deadline for compliance with the 2012 

standards to determine the total number 

of 2012 RINs that had not been used for 

compliance in 2012 or retired for any 

other reason. The totals are shown 

below. 

TABLE III.C–3—CARRYOVER RINS

FROM 2012 INTO 2013 

[Million] 

D Code RINs 

Biomass-Based Diesel 4 353 

Advanced Biofuel .......... 5 196 

Conventional Biofuel ..... 6 2,117 

Total ....................... .............. 2,666 

Although the rollover provisions in 

§ 80.1427(a)(5) limit the carryover of 

RINs to 20% of the next year’s volume 

obligations for individual obligated 

parties, the values in Table III.C–3 are 

less than 20% of the values shown in 

Table III.C–1 for the nation as a whole. 

As discussed above, compliance with 

the statutory volume requirements for 

advanced biofuel and total renewable 

fuel in 2013 could in theory be met by 

the consumption of 2.1 bill gal of E85 

containing about 1.6 bill gal of ethanol. 

However, given that there are over 2.6 

bill carryover RINs available, there are 

more than enough in the market to 

permit compliance with the 2013 

advanced biofuel and total renewable 

fuel volume requirements even if E85 

consumption does not increase in 2013. 

These carryover RINs are also available 

to address any potential shortfalls in 

production of corn-based ethanol that 

may result from the 2012 drought.72

mstockstill on DSK4VPTVN1PROD with RULES2

49822 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

dropped to 770, 000 barrels per day in late January 

but had recovered to 875,000 barrels per day by the 

third week of May. This later number projects to an 

annual production rate of approximately 13.4 bill 

gal of ethanol per year. When considered together 

with the estimated 2.1 billion carry over RINs we 

project there will be sufficient D6 RINs to satisfy the 

unadjusted total renewable fuel standard. 

73RIN prices continued to rise after the comment 

period for the NPRM closed. 

74See also: Irwin, Scott and Good, Darrel. ‘‘High 

Gasoline and Ethanol RINs Prices: Is There a 

Connection?’’ Farmdoc Daily. Department of 

Agricultural and Consumer Economics, University 

of Illinois-Champaign. 27 March 2013. Web. 15 June 

2013. 

We recognize that in some cases 

carryover RINs from 2012 may not be 

available to an individual obligated 

party that needs them. There are 

indications from some stakeholders that 

those who own carryover RINs may opt 

to not sell them, instead carrying them 

over to help assure compliance with 

their own obligations in a future year. 

There is no way to determine what 

fraction of carryover RINs may fall into 

this category. However, we note that the 

14.5 bill gal of ethanol that might need 

to be consumed in 2013 (Table III.C–2) 

is only 1.4 bill gal above the E10 

blendwall. This is significantly less than 

the number of available carryover RINs 

available. Thus only about half of the 

carryover RINs in existence would need 

to be made available in order for the full 

statutory volume requirements for 

advanced biofuel and total renewable 

fuel to be met in 2013. 

In response to the NPRM, one 

stakeholder indicated that carryover 

RINs should not be considered in the 

process of setting standards. Instead, 

this stakeholder argued, carryover RINs 

were intended only to provide 

flexibility to enable companies to 

remain in compliance in years when 

circumstances such as drought or other 

biofuel supply shortage limit the 

availability of RINs. However, the final 

rulemaking for the RFS1 program did 

not describe the purpose of carryover 

RINs in such narrow terms. Droughts 

were indeed provided as an example of 

a market circumstance that could limit 

the production of renewable fuels, but 

the RFS1 final rule also described the 

use of carryover RINs more broadly as 

a means for protecting against any 

potential supply shortfalls that could 

limit the availability of RINs. The rule 

also put this flexibility in terms of 

availability of RINs and the potential for 

waivers: 

The availability of excess previous-year 

RINs would thus provide compliance 

certainty in the event that the supply of 

current-year RINs falls below the RFS 

program requirements and the Agency does 

not waive any portion of the program 

requirements. (72 FR 23935, May 1, 2007) 

In addition, carryover RINs are a valid 

compliance mechanism, and they will 

either be used for compliance purposes 

or eventually retired. The issue here is 

estimating the adequacy of the 

availability and use of ethanol in 2013 

for compliance purposes, and the 

availability of carryover RINs is 

certainly relevant in analyzing that 

issue. Therefore, we believe that it is 

appropriate to consider carryover RINs 

in the context of evaluating the 

comments received on the need for 

further compliance relief to address the 

E10 blendwall. 

Carryover RINs and increased E85 are 

not the only available mechanisms that 

obligated parties have for meeting the 

2013 standards. There are also 

additional sources for non-ethanol 

biofuels that could potentially be used 

for compliance in 2013 instead of 

relying on increased volumes of E85. As 

discussed in Section III.B.1 above, there 

is unused biodiesel production capacity 

and sufficient feedstocks available to 

permit biodiesel production in excess of 

1.28 bill gal if demand for it exists. In 

addition, various feedstocks not 

currently identified in Table 1 to 

80.1426 can be used in facilities that 

have been grandfathered under 

§ 80.1403 to produce biodiesel that is 

categorized as renewable fuel, but not 

advanced biofuel, providing these 

feedstocks meet the definition of 

renewable biomass. 

Several commenters indicated that the 

recent rise in D6 RIN prices, from 

approximately 5 ¢/RIN in early January 

2013 to approximately 70 ¢/RIN by 

March 2013 73, is evidence that the E10 

blendwall had been reached and that 

obligated parties would have significant 

difficulty complying with the proposed 

renewable fuel volumes. We recognize 

that the approaching E10 blendwall and 

the related anticipation of future 

scarcity of RINs in the context of 

currently high feedstock prices is the 

primary driver for these price increases, 

though other factors and market 

mechanisms may also contribute to the 

increase in the price of D6 RINs. As 

discussed previously in this section, 

however, we project that there will be 

sufficient RINs available to obligated 

parties to satisfy their advanced biofuel 

and total renewable fuel obligations in 

2013 despite the challenge represented 

by the blendwall. 

One commenter also suggested that 

this increase in RIN prices would 

increase the cost of transportation fuel 

to U.S. consumers by about $17 billion. 

We do not believe this is a credible 

program cost increase resulting from 

high RIN prices even if it does represent 

the market value of RINs required for 

compliance with the RFS program. It is 

incorrect to assume a direct correlation 

between the increase in RIN prices and 

a rise in average transportation fuel 

costs. The cost of the RFS program is 

driven by the cost of renewable fuels 

relative to the petroleum fuels they 

displace. The effect of increasing RIN 

prices is not to increase overall 

transportation fuel costs, but rather to 

reduce the price of more renewable-fuel 

intensive fuels (e.g. E85) relative to the 

price of fuels with a lower renewable 

content (e.g. E10). Since the cost of 

renewable fuels did not increase over 

this time period, we do not believe that 

recent higher RIN prices have caused a 

significant increase in the total cost of 

transportation fuels in 2013.74

We recognize, however, that high RIN 

prices may impact individual fuel 

market participants differently. For 

example, high D6 RIN prices are likely 

to have differing effects on how various 

levels of gasoline/ethanol blends and 

diesel fuel are priced. The refining 

industry has raised concerns that in 

response to high RIN prices, individual 

refiners may choose to export fuel, and 

individual importers may reduce 

imports in order to reduce their RIN 

obligations. These actions could 

increase the cost of transportation fuels 

if increased exports and/or decreased 

imports significantly reduce the 

available supply of transportation fuel 

in the United States. We believe this is 

highly unlikely as increased exports or 

decreased imports by one company 

would provide the opportunity for 

another obligated party to increase sales 

volumes and market share within the 

U.S. and offset any change in 

transportation fuel supply. EPA will 

continue to monitor RIN prices and 

potential impacts closely. 

For all of the reasons discussed above, 

we conclude that for 2013 adequate 

volumes of renewable fuel and 

carryover RINs are available to meet the 

requirements for total and advanced 

biofuel, and that the E10 blendwall is 

not a barrier to compliance with these 

volumes given the various alternative 

methods to comply besides the blending 

of ethanol as E10. This conclusion is 

specific to the circumstances present for 

2013. 

D. Final Applicable Volume 

Requirements for 2013 

As shown in Table III.B–2, in order 

for an advanced biofuel requirement of 

2.75 bill gal to be met, there would need 

to be 824 mill gal of advanced biofuels 

in addition to the volumes that would 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49823 

75This volume is calculated using EIA’s 2013 

Annual Energy Outlook assuming ethanol 

represents 10% of total motor gasoline consumption 

by volume. 

need to be produced or imported to 

meet the biomass-based diesel and 

cellulosic biofuel requirements. After 

reviewing the projected availability of 

advanced biofuel volumes from various 

sources, we have determined that it is 

likely that there will be sufficient 

volumes available to produce or import 

this 824 mill gal. First, we have 

determined that there are more than 500 

million advanced biofuel carryover RINs 

from 2012 that can be used for 

compliance in 2013. With regard to 

excess biodiesel, we have determined 

that there could potentially be up to 100 

mill gal of excess soy oil and up to 100 

mill gal of excess corn oil available, 

which together could provide 300 

million or more advanced biofuel RINs. 

With regard to other advanced biofuels, 

we project that up to 245 mill gal could 

be produced, and another 50 mill gal if 

pathways under consideration are 

approved in enough time for them to be 

used by producers in 2013. Finally, we 

project that the volume of imported 

sugarcane ethanol from Brazil can reach 

the actual import volumes in 2012, 

which was 580 mill gal, and potentially 

considerably more. It is clear that, in the 

aggregate, these sources of advanced 

biofuel RINs are substantially more than 

what is needed to meet the advanced 

biofuel requirement of 2.75 bill gal. 

Therefore, we do not believe that there 

is a compelling reason to reduce the 

required volume of 2.75 bill gal 

advanced biofuel for 2013. Moreover, 

we do not believe that the blendwall 

will represent an impediment to 

compliance in 2013 due to the 

availability of carryover RINs from 2012, 

opportunities for some increase in 

consumption of E85, and opportunities 

for non-ethanol biofuels. 

E. Volume Requirements for 2014 

As described in the NPRM, we 

recognize that ethanol will likely 

continue to predominate the renewable 

fuel pool in the near future, and that for 

2014 the ability of the market to 

consume ethanol in higher blends such 

as E85 is constrained as a result of 

infrastructure- and market-related 

factors. Most stakeholders that 

submitted comments in response to the 

NPRM made reference to the impending 

E10 blendwall, though they differed on 

how EPA should address it. A number 

of obligated parties and other 

stakeholders have communicated to 

EPA that while the E10 blendwall may 

be manageable in 2013, in 2014 

compliance is expected to become 

significantly more difficult. We agree 

with that assessment. In 2014 the 

applicable volume of total renewable 

fuel set forth in the statute rises to 18.15 

billion ethanol-equivalent gallons, of 

which 14.4 bill gal would be nonadvanced biofuel comprised primarily 

of corn-ethanol, and 3.75 bill gal would 

be advanced biofuel. A significant 

portion of the fuel available to meet the 

advanced biofuel requirement would 

also likely be ethanol, including 

domestically produced cellulosic and 

advanced ethanol, along with advanced 

ethanol imported from Brazil. However, 

the maximum volume of ethanol that 

could be consumed as E10 in 2014 is 

projected to be just 13.2 bill gal.75 Given 

the history of the market and relevant 

constraints, EPA does not currently 

foresee a scenario in which the market 

could consume enough ethanol sold in 

blends greater than E10, and/or produce 

sufficient volumes of non-ethanol 

biofuels (biodiesel, renewable diesel, 

biogas, etc.), to meet the volumes of 

total renewable fuel and advanced 

biofuel stated in the statute. 

Given these challenges, EPA 

anticipates that in the 2014 proposed 

rule, we will propose adjustments to the 

2014 volume requirements, including to 

both the advanced biofuel and total 

renewable fuel categories. We expect 

that in preparing the 2014 proposed 

rule, we will estimate the available 

supply of cellulosic and advanced 

biofuel, assess the E10 blendwall and 

current infrastructure and market-based 

limitations to the consumption of 

ethanol in gasoline-ethanol blends 

above E10, and then propose to 

establish volume requirements that are 

reasonably attainable in light of these 

considerations and others as 

appropriate. EPA believes that the 

statute provides EPA with the 

authorities and tools needed to make 

appropriate adjustments in the national 

volume requirements to address these 

challenges. We are currently evaluating 

a variety of options and approaches 

consistent with our statutory authorities 

for use in establishing RFS requirements 

for 2014. We will discuss these options 

in detail in the forthcoming NPRM for 

the 2014 standards and expect to utilize 

the notice and comment process to fully 

engage the public in consideration of a 

reasonable path forward that 

appropriately addresses the blendwall 

and other constraints. 

We received a number of comments 

suggesting that because EPA was late in 

issuing these final RFS standards for 

2013, and in light of concerns over the 

blendwall and RIN prices, that the 

Agency should take action to relieve or 

reduce burdens associated with RFS 

compliance in 2013. While we do not 

believe that it would be appropriate to 

remove or further reduce the statutory 

volume obligations for 2013 as some 

suggested, we do agree with the 

commenter who suggested that EPA 

provide additional time for obligated 

parties to demonstrate compliance with 

the 2013 standards. Knowledge of the 

volume requirements for 2014 is crucial 

to the strategies that obligated parties 

may implement when purchasing RINs 

and wet gallons of fuel for compliance 

with their individual 2013 RVOs. Given 

this, EPA’s view is that delaying the 

compliance demonstration for the 2013 

compliance period would alleviate some 

of the uncertainty and concerns that 

obligated parties have regarding the 

tardiness of the final rule and its effect 

on their decisions regarding RIN 

acquisition. 

Therefore, we are extending the RFS 

compliance deadline for the calendar 

year 2013 RFS standards to June 30, 

2014. This change affects § 80.1451(a)(1) 

and adds a new paragraph (a)(1)(xiv). In 

addition to providing obligated parties 

with more time to demonstrate 

compliance, we believe that this 

extension will allow obligated parties to 

implement various purchasing and 

allocation strategies that help them 

comply on an individual basis given the 

tardiness of this final rule. The 

compliance demonstration deadline 

extension is for the 2013 compliance 

year only, and does not extend the 

compliance demonstration deadline in 

any subsequent year. Additionally, 

given the extension of the compliance 

demonstration deadline for the 2013 

compliance period, we are extending 

the deadline for submitting reports for 

the attest engagement requirement for 

the corresponding compliance year until 

September 30, 2014. This change affects 

§ 80.1464(d) and adds a new paragraph 

(g). The attest engagement deadline 

extension is likewise for the 2013 

compliance year only, and does not 

extend the deadline in any subsequent 

year. 

IV. Applicable Percentage Standards 

for 2013 

A. Background 

The renewable fuel standards are 

expressed as volume percentages and 

are used by each refiner, blender, or 

importer to determine their renewable 

volume obligations (RVO). Since there 

are four separate standards under the 

RFS2 program, there are likewise four 

separate RVOs applicable to each 

obligated party. Each standard applies 

to the sum of all gasoline and diesel 

mstockstill on DSK4VPTVN1PROD with RULES2

49824 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

produced or imported. The applicable 

percentage standards are set so that if 

every obligated party meets the 

percentages, then the amount of 

renewable fuel, cellulosic biofuel, 

biomass-based diesel, and advanced 

biofuel used will meet the volumes 

required on a nationwide basis. 

As discussed in Section II.D, we are 

projecting a volume of cellulosic biofuel 

for 2013 of 4 million gallons (6 million 

ethanol-equivalent gallons). This is the 

volume we have used as the basis for 

setting the percentage standard for 

cellulosic biofuel for 2013. We are 

maintaining the advanced biofuel and 

total renewable fuel volumes at the 

applicable volumes specified in the 

statute. The biomass-based diesel 

volume for 2013 has been established at 

1.28 billion gallons through a separate 

rulemaking. The volumes used to 

determine the four final percentage 

standards are shown in Table IV.A–1. 

TABLE IV.A–1—FINAL VOLUMES FOR

USE IN SETTING THE APPLICABLE

PERCENTAGE STANDARDS FOR

2013 a

Cellulosic biofuel ................ 6 mill gal. 

Biomass-based diesel ....... 1.28 bill gal. 

Advanced biofuel ............... 2.75 bill gal. 

Renewable fuel .................. 16.55 bill gal. 

a Due to the manner in which the percentage standards are calculated, all volumes are 

given in terms of ethanol-equivalent except for 

biomass-based diesel which is given in terms 

of physical volume 

As with previous years’ renewable 

fuels standards determinations, the 

formulas used in deriving the annual 

standards are based in part on estimates 

of the volumes of gasoline and diesel 

fuel, for both highway and nonroad 

uses, that are projected to be used in the 

year in which the standards will apply. 

Producers of other transportation fuels, 

such as natural gas, propane, and 

electricity from fossil fuels, are not 

subject to the standards, and volumes of 

such fuels are not used in calculating 

the annual standards. Since the 

standards apply to producers and 

importers of gasoline and diesel, these 

are the transportation fuels used to set 

the standards, and then again to 

determine the annual volume 

obligations of an individual gasoline or 

diesel producer or importer. 

B. Calculation of Standards 

1. How are the standards calculated? 

The following formulas are used to 

calculate the four percentage standards 

applicable to producers and importers 

of gasoline and diesel (see § 80.1405): 

Where: 

StdCB,i = The cellulosic biofuel standard for 

year i, in percent. 

StdBBD,i = The biomass-based diesel standard 

(ethanol-equivalent basis) for year i, in 

percent. 

StdAB,i = The advanced biofuel standard for 

year i, in percent. 

StdRF,i = The renewable fuel standard for year 

i, in percent. 

RFVCB,i = Annual volume of cellulosic 

biofuel required by section 211(o) of the 

Clean Air Act for year i, in gallons. 

RFVBBD,i = Annual volume of biomass-based 

diesel required by section 211(o) of the 

Clean Air Act for year i, in gallons. 

RFVAB,i = Annual volume of advanced 

biofuel required by section 211(o) of the 

Clean Air Act for year i, in gallons. 

RFVRF,i = Annual volume of renewable fuel 

required by section 211(o) of the Clean 

Air Act for year i, in gallons. 

Gi = Amount of gasoline projected to be used 

in the 48 contiguous states and Hawaii, 

in year i, in gallons. 

Di = Amount of diesel projected to be used 

in the 48 contiguous states and Hawaii, 

in year i, in gallons. This value excludes 

diesel used in ocean-going vessels. 

RGi = Amount of renewable fuel blended into 

gasoline that is projected to be consumed 

in the 48 contiguous states and Hawaii, 

in year i, in gallons. 

RDi = Amount of renewable fuel blended into 

diesel that is projected to be consumed 

in the 48 contiguous states and Hawaii, 

in year i, in gallons. 

GSi = Amount of gasoline projected to be 

used in Alaska or a U.S. territory in year 

i if the state or territory opts-in, in 

gallons. 

RGSi = Amount of renewable fuel blended 

into gasoline that is projected to be 

consumed in Alaska or a U.S. territory in 

year i if the state or territory opts-in, in 

gallons. 

DSi = Amount of diesel projected to be used 

in Alaska or a U.S. territory in year i if 

the state or territory opts-in, in gallons. 

RDSi = Amount of renewable fuel blended 

into diesel that is projected to be 

consumed in Alaska or a U.S. territory in 

year i if the state or territory opts-in, in 

gallons. 


mstockstill on DSK4VPTVN1PROD with RULES2ER15AU13.005</GPH>
Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49825 

76Letter, A. Michael Schaal, Director, Office of 

Petroleum, Natural Gas, and Biofuels Analysis, U.S. 

Energy Information Administration, to Christopher 

Grundler, Director, Office of Transportation and Air 

Quality, U.S. EPA, May 8, 2013. 

77 72 FR 23900, May 1, 2007. 

78 DOE report ‘‘EPACT 2005 Section 1501 Small 

Refineries Exemption Study’’, (January, 2009). 

79 ‘‘Small Refinery Exemption Study: An 

Investigation into Disproportionate Economic 

Hardship,’’ U.S. Department of Energy, March 2011. 

80Since the standards are applied on an annual 

basis, the exemptions are likewise on an annual 

basis even though the determination of which 

refineries would receive an extension to their 

exemption did not occur until after January 1, 2011. 

GEi = Amount of gasoline projected to be 

produced by exempt small refineries and 

small refiners in year i, in gallons, in any 

year they are exempt per §§ 80.1441 and 

80.1442, respectively. For 2013, this 

value is non-zero. See further discussion 

in Section IV.B.2 below. 

DEi = Amount of diesel projected to be 

produced by exempt small refineries and 

small refiners in year i, in gallons, in any 

year they are exempt per §§ 80.1441 and 

80.1442, respectively. For 2013, this 

value is non-zero. See further discussion 

in Section IV.B.2 below. 

The Act requires EPA to base the 

standards on an EIA estimate of the 

amount of gasoline and diesel that will 

be sold or introduced into commerce for 

that year. The four separate renewable 

fuel standards for 2013 are based on the 

gasoline, ethanol, diesel, and biodiesel 

consumption volumes projected by 

EIA.76 We adjusted these nationwide 

values to represent the 49 states that 

participate in the RFS program (neither 

Alaska nor any U.S. territory 

participates). 

2. Small Refineries and Small Refiners 

In CAA section 211(o)(9), enacted as 

part of the Energy Policy Act of 2005, 

Congress provided a temporary 

exemption to small refineries (those 

refineries with a crude throughput of no 

more than 75,000 barrels of crude per 

day) through December 31, 2010. In our 

initial rulemaking to implement the new 

RFS program,77 we exercised our 

discretion under section 211(o)(3)(B) 

and extended this temporary exemption 

to the few remaining small refiners that 

met the Small Business 

Administration’s (SBA) definition of a 

small business (1,500 employees or less 

company-wide) but did not meet the 

statutory small refinery definition as 

noted above. 40 CFR 80.1141, 80.1142. 

Because EISA did not alter the small 

refinery exemption in any way, the 

RFS2 program regulations maintained 

the exemptions for gasoline and diesel 

produced by small refineries and small 

refiners through 2010 (unless the 

exemption was waived). See 40 CFR 

80.1441, 80.1442. 

Congress provided two ways that 

small refineries can receive a temporary 

extension of the exemption beyond 

2010. One is based on the results of a 

study conducted by the Department of 

Energy (DOE) to determine whether 

small refineries would face a 

disproportionate economic hardship 

under the RFS program. The other is 

based on EPA determination of 

disproportionate economic hardship on 

a case-by-case basis in response to 

refiner petitions. 

In January 2009, DOE issued a study 

which did not find that small refineries 

would face a disproportionate economic 

hardship under the RFS program.78 The 

conclusions were based in part on the 

expected robust availability of RINs and 

EPA’s ability to grant relief on a case-bycase basis. As a result, beginning in 

2011 small refiners and small refineries 

were required to participate in the RFS 

program as obligated parties, and there 

was no small refiner/refinery volume 

adjustment to the 2011 standards as 

there was for the 2010 standards. 

Following the release of DOE’s 2009 

small refinery study, Congress directed 

DOE to complete a reassessment and 

issue a revised report. In March of 2011, 

DOE re-evaluated the impacts of the 

RFS program on small entities and 

concluded that some small refineries 

would suffer a disproportionate 

hardship.79 As a result, EPA exempted 

these refineries from being obligated 

parties for two additional years, 2011 

and 2012.80 The 2012 standards 

established in the January 9, 2012, final 

rulemaking reflected the exemption of 

these refineries. 

EPA may also extend the exemption 

for individual small refineries or small 

refiners on a case-by-case basis if they 

demonstrate disproportionate economic 

hardship. 40 CFR §§ 80.1441(e)(2), 

80.1442(h). EPA has granted some 

exemptions pursuant to this process that 

apply in 2011 and 2012. EPA has 

granted one exemption for 2013. 

However, any requests for exemption 

that are approved after the release of 

today’s final rulemaking will not affect 

the 2013 standards. As stated in the 

final rule establishing the 2011 

standards, ‘‘EPA believes the Act is best 

interpreted to require issuance of a 

single annual standard in November 

that is applicable in the following 

calendar year, thereby providing 

advance notice and certainty to 

obligated parties regarding their 

regulatory requirements. Periodic 

revisions to the standards to reflect 

waivers issued to small refineries or 

refiners would be inconsistent with the 

statutory text, and would introduce an 

undesirable level of uncertainty for 

obligated parties.’’ Thus, any additional 

exemptions for small refineries or small 

refiners that are issued after today will 

not affect the 2013 standards. 

EPA requested comment on two areas 

related to small refiner/refinery 

exemptions. The first was whether it 

would be appropriate to extend the two 

year exemption for small refineries. Two 

commenters stated that EPA should not 

provide such an extension to small 

refineries. Both referenced the number 

of years the program has been in place, 

leading to the conclusion that small 

entities have had time to prepare to 

meet the standards. One of the 

commenters also stated that small 

refiners likely have been blending 

renewable fuel for years given market 

incentives. One of these commenters 

stated that the relief provided was 

meant to be temporary and not ‘‘ongoing.’’ A third commenter suggested 

that EPA not only continue to provide 

hardship waivers, but extend the 

opportunity for waivers to mid-size 

refiners, on the basis that these refiners, 

like small refiners, do not own ethanol 

facilities and have little control of the 

RIN and ethanol markets. In addition, 

the location of several small and midsize refineries prohibits the export of 

gasoline, thus reducing their 

compliance options in the face of 

limited RIN availability. However, it is 

the limited financial resources of such 

entities that provide overarching 

hardship to such entities, according to 

the commenter. This commenter also 

stated that EPA’s granting of hardship 

relief is based on whether the refinery 

cannot remain economically viable 

without said relief. The commenter 

believes the decision point should be 

based on whether the refiner suffers 

disproportionately to others in the 

industry. 

The Act specifically provides for a 

temporary RFS exemption for small 

refineries, and for the possibility of 

extensions of those temporary 

exemptions. EPA used its discretion in 

the RFS1 program regulations, and again 

in the RFS2 regulations, to extend the 

temporary exemption (and possibility of 

extensions) to a few small refiners 

meeting criteria established in prior 

EPA fuels rules based on general 

authority to provide appropriate lead 

time in establishing implementing 

regulations and based on the language 

in section 211(o) directing EPA to apply 

RFS requirements to refineries, 

blenders, distributors, and importers ‘‘as 

appropriate.’’ Regarding EPA’s use of 

‘‘economic viability’’ (in the 

commenter’s words) as a decision point, 

the Agency has interpreted this to be a 

mstockstill on DSK4VPTVN1PROD with RULES2

49826 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

81 75 FR 14716, March 26, 2010. 

82To determine the 49-state values for gasoline 

and diesel, the amounts of these fuels used in 

Alaska is subtracted from the totals provided by 

DOE. The Alaska fractions are determined from the 

most recent (2011) EIA State Energy Data, 

Transportation Sector Energy Consumption 

Estimates. The gasoline and transportation distillate 

fuel oil fractions are approximately 0.2% and 0.7%, 

respectively. Ethanol use in Alaska is estimated at 

11.2% of its gasoline consumption (based on the 

same State data), and biodiesel use is assumed to 

be zero. 

severe impact—large enough to create a 

hardship and threaten the viability of 

the company. Thus, absent such 

hardship, the agency does not believe it 

is appropriate to extend the exemption 

for small refineries. 

EPA also requested comment on 

whether it is appropriate for the agency 

to change the standards if small refiner 

exemptions are granted after the final 

rule is issued. As discussed above, EPA 

has heretofore considered and rejected 

this option for the primary reason of 

wanting to provide certainty to 

obligated parties regarding the levels of 

the standards. One commenter stated 

that, though they were opposed to 

further extending exemptions to small 

entities, that—lawfully, the standards 

must be adjusted whenever a waiver is 

granted. In the rule establishing the 

2011 standards, we stated that ‘‘EPA 

believes the Act is best interpreted to 

require issuance of a single annual 

standard . . . thereby providing 

advance notice and certainty to 

obligated parties . . .’’ The Agency 

continues to believe that this is the 

single best approach; the commenter did 

not provide new information to cause us 

to re-evaluate this position. 

3. Final Standards 

As specified in the March 26, 2010 

RFS2 final rule,81 the percentage 

standards are based on energyequivalent gallons of renewable fuel, 

with the cellulosic biofuel, advanced 

biofuel, and total renewable fuel 

standards based on ethanol equivalence 

and the biomass-based diesel standard 

based on biodiesel equivalence. 

However, all RIN generation is based on 

ethanol-equivalence. More specifically, 

the RFS2 regulations provide that 

production or import of a gallon of 

qualifying biodiesel will lead to the 

generation of 1.5 RINs. In order to 

ensure that demand for 1.28 billion 

physical gallons of biomass-based diesel 

will be created in 2013, the calculation 

of the biomass-based diesel standard 

provides that the required volume be 

multiplied by 1.5. The net result is a 

biomass-based diesel gallon being worth 

1.0 gallon toward the biomass-based 

diesel standard, but worth 1.5 gallons 

toward the other standards. 

The levels of the percentage standards 

would be reduced if Alaska or a U.S. 

territory chooses to participate in the 

RFS2 program, as gasoline and diesel 

produced in or imported into that state 

or territory would then be subject to the 

standard. Neither Alaska nor any U.S. 

territory has chosen to participate in the 

RFS2 program at this time, and thus the 

value of the related terms in the 

calculation of the standards is zero. 

Note that because the gasoline and 

diesel volumes estimated by EIA 

include renewable fuel use, we must 

subtract the total renewable fuel 

volumes from the total gasoline and 

diesel volumes to get total nonrenewable gasoline and diesel volumes. 

The values of the variables described 

above are shown in Table IV.B.3–1.82

Terms not included in this table have a 

value of zero. 

TABLE IV.B.3–1—VALUES FOR TERMS

IN CALCULATION OF THE STANDARDS

[Bill gal] 

Term Value 

RFVCB,2013 ......................... 0.006. 

RFVBBD,2013 ....................... 1.28. 

RFVAB,2013 ......................... 2.75. 

RFVRF,2013 ......................... 16.55. 

G2013 .................................. 132.80. 

D2013 .................................. 51.76. 

RG2013 ............................... 13.31. 

RD2013 ............................... 1.23. 

GEi ..................................... Confidential.a

DEi ..................................... Confidential.a

aThis information is not published because 

it reflects an exemption for a single entity and 

publishing such information would reveal confidential business information. 

Using the volumes shown in Table 

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

percentage standards for 2013 as shown 

in Table IV.B.3–2. 

TABLE IV.B.3–2—FINAL PERCENTAGE

STANDARDS FOR 2013 

Percent 

Cellulosic biofuel ............................. 0.004 

Biomass-based diesel .................... 1.13 

Advanced biofuel ............................ 1.62 

Renewable fuel ............................... 9.74 

V. Annual Administrative 

Announcements 

In the RFS2 final rule, we stated our 

intent to make two announcements each 

year: 

• Set the price for cellulosic biofuel 

waiver credits that will be made 

available to obligated parties in the 

event that we reduce the volume of 

cellulosic biofuel below the applicable 

volume specified in the Clean Air Act 

(CAA), and 

• Announce the results of our annual 

assessment of the aggregate compliance 

approach for U.S. planted crops and 

crop residue. 

The biofuel waiver credit price being 

announced today was calculated in 

accordance with the specifications in 

§ 80.1456(d). The manner in which EPA 

calculates the waiver credit price is 

precisely set forth in EPA regulations, 

and EPA’s assessment of the aggregate 

compliance approach is based on data 

sources, methodology, and criteria that 

were identified and explained in the 

preamble to the RFS2 final rule. For 

these reasons we would not typically 

include these administrative 

announcements in a Notice of Proposed 

Rulemaking. However, given that the 

NPRM for the 2013 standards was not 

published prior to 2013, we determined 

that regulated parties would benefit 

from knowing the waiver credit price 

and our conclusions regarding the 

aggregate compliance approach as soon 

as possible. Therefore, the February 7, 

2013 NPRM included both of these 

administrative announcements. In 

today’s rulemaking we are finalizing 

both announcements, and responding to 

a number of comments we received on 

the aggregate compliance approach. 

A. 2013 Price for Cellulosic Biofuel 

Waiver Credits 

Section 211(o)(7)(D) of the CAA 

requires that whenever EPA sets the 

applicable volume of cellulosic biofuel 

at a level lower than that specified in 

the Act, EPA is to provide a number of 

cellulosic credits for sale that is no more 

than the EPA-determined applicable 

volume. Congress also specified the 

formula for calculating the price for 

such waiver credits: adjusted for 

inflation, the credits must be offered at 

the price of the higher of 25 cents per 

gallon or the amount by which $3.00 per 

gallon exceeds the average wholesale 

price of a gallon of gasoline in the 

United States. The inflation adjustment 

is for years after 2008. EPA regulations 

provide that the inflation adjustment is 

calculated by comparing the most recent 

Consumer Price Index for All Urban 

Consumers (CPI–U) for the ‘‘All Items’’ 

expenditure category as provided by the 

Bureau of Labor Statistics that is 

available at the time EPA sets the 

cellulosic biofuel standard to the 

comparable value that was reported 

soonest after December 31, 2008. 

In contrast to its directions to EPA for 

setting the price of a cellulosic biofuel 

waiver credit, Congress afforded the 

Agency considerable flexibility in 

designing regulations specifying the 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49827 

permissible uses of the credits. The 

CAA states that EPA regulations ‘‘shall 

include such provisions, including 

limiting the credits’ uses and useful life, 

as the Administrator deems appropriate 

to assist market liquidity and 

transparency, to provide appropriate 

certainty for regulated entities and 

renewable fuel producers, and to limit 

any potential misuse of cellulosic 

biofuel credits to reduce the use of other 

renewable fuels, and for such other 

purposes as the Administrator 

determines will help achieve the goals 

of this subsection.’’ The final RFS2 

regulations provide a detailed 

discussion of how we designed the 

provisions for cellulosic biofuel waiver 

credits in keeping with the statutory 

language. In short, 2013 cellulosic 

biofuel waiver credits (or’’waiver 

credits’’) are only available for the 2013 

compliance year. Waiver credits will 

only be made available to obligated 

parties, and they are nontransferable 

and nonrefundable. Further, obligated 

parties may only purchase waiver 

credits up to the level of their cellulosic 

biofuel RVO less the number of 

cellulosic biofuel RINs that they own. A 

company owning cellulosic biofuel RINs 

and cellulosic waiver credits may use 

both types of credits if desired to meet 

their RVOs, but unlike RINs, waiver 

credits may not be carried over for use 

in the next calendar year. Obligated 

parties may not use waiver credits to 

meet a prior year deficit obligation. 

Finally, unlike cellulosic biofuel RINs 

which may also be used to meet an 

obligated party’s advanced and total 

renewable fuel obligations, waiver 

credits may only be used to meet a 

cellulosic biofuel RVO. An obligated 

party will still need to additionally and 

separately acquire RINs to meet their 

advanced biofuel and total renewable 

fuel obligations. 

For the 2013 compliance period, since 

the applicable volume of cellulosic 

biofuel used to set the annual cellulosic 

biofuel standard is lower than the 

volume for 2013 specified in the CAA, 

we are making cellulosic waiver credits 

available to obligated parties for end-ofyear compliance should they need them 

at a price of $0.42 per credit. To 

calculate this price, EPA first 

determined the average wholesale 

(refinery gate) price of gasoline using 

the most recent 12 months of data 

available from the EIA Web site on 

September 30, 2012. Based on this data, 

we calculated an average price of 

gasoline for the period July 2011 to June 

2012 of $2.85. In accordance with the 

Act, we then calculated the difference of 

the inflation-adjusted value of $3.00, or 

$3.27, and $2.85, which yielded $0.42. 

Next, we compared the value of $0.42 to 

the inflation-adjusted value of $0.25, or 

$0.27. The Act requires EPA to use the 

greater of these two values as the price 

for cellulosic biofuel waiver credits. 

The derivation of this value is more 

fully explained in a memorandum 

submitted to the docket for this 

rulemaking, and a more complete 

description of the statutory 

requirements and their application can 

be found in the RFS2 final rule. 

B. Assessment of the Domestic 

Aggregate Compliance Approach 

The RFS2 regulations contain a 

provision for renewable fuel producers 

who use planted crops and crop residue 

from U.S. agricultural land that relieves 

them of the individual recordkeeping 

and reporting requirements concerning 

the specific land from which their 

feedstocks were harvested. To enable 

this approach, EPA established a 

baseline number of acres for U.S. 

agricultural land in 2007 (the year of 

EISA enactment) and determined that as 

long as this baseline number of acres 

was not exceeded, it was unlikely that 

new land outside of the 2007 baseline 

would be devoted to crop production 

based on historical trends and economic 

considerations. We therefore provided 

that renewable fuel producers using 

planted crops or crop residue from the 

U.S. as feedstock in renewable fuel 

production need not comply with the 

individual recordkeeping and reporting 

requirements related to documenting 

that their feedstocks are renewable 

biomass, unless EPA determines 

through one of its annual evaluations 

that the 2007 baseline acreage of 

agricultural land has been exceeded. 

In the final RFS2 regulations, EPA 

committed to make an annual finding 

concerning whether the 2007 baseline 

amount of U.S. agricultural land has 

been exceeded in a given year. If the 

baseline is found to have been 

exceeded, then producers using U.S. 

planted crops and crop residue as 

feedstocks for renewable fuel 

production would be required to 

comply with individual recordkeeping 

and reporting requirements to verify 

that their feedstocks are renewable 

biomass. 

In response to the NPRM, we received 

two comments criticizing the aggregate 

compliance approach, including a 

comment questioning transparency 

surrounding the data and methodology. 

EPA continues to believe that USDA 

cropland and reserve program acreage 

data are the most appropriate and 

applicable sources of data on which to 

base our annual evaluation for whether 

the 2007 baseline has been exceeded for 

aggregate compliance. The USDA data 

along with a description of our 

evaluation has been provided in the 

rulemaking dockets for each annual RFS 

standard. 

Based on data provided by the USDA 

Farm Service Agency (FSA) and Natural 

Resources Conservation Service (NRCS), 

we have estimated that U.S. agricultural 

land reached approximately 384 million 

acres in 2012, and thus did not exceed 

the 2007 baseline acreage. This acreage 

estimate is based on the same 

methodology used to set the 2007 

baseline acreage for U.S. agricultural 

land in the RFS2 final rulemaking. 

Specifically, we started with FSA crop 

history data for 2012, from which we 

derived a total estimated acreage of 384 

million acres. We then subtracted the 

amount of land estimated to be 

participating in the Grasslands Reserve 

Program (GRP) and Wetlands Reserve 

Program (WRP) by the end of Fiscal 

Year 2012, 230,550 acres, to yield an 

estimate of approximately 384 million 

acres of U.S. agricultural land in 2012. 

The USDA data used to make this 

calculation can be found in the docket 

to this rule. 

C. Assessment of the Canadian 

Aggregate Compliance Approach 

On March 15, 2011, EPA issued a 

notice of receipt of and solicited public 

comment on a petition for EPA to 

authorize the use of an aggregate 

approach for compliance with the 

Renewable Fuel Standard renewable 

biomass requirements, submitted by the 

Government of Canada. The petition 

requested that EPA determine that an 

aggregate compliance approach will 

provide reasonable assurance that 

planted crops and crop residue from 

Canada meet the definition of renewable 

biomass. After thorough consideration 

of the petition, all supporting 

documentation provided and the public 

comments received, EPA determined 

that the criteria for approval of the 

petition were satisfied and approved the 

use of an aggregate compliance 

approach to renewable biomass 

verification for planted crops and crop 

residue grown in Canada. 

The Government of Canada utilized 

several types of land use data to 

demonstrate that the land included in 

their 124 million acre baseline is 

cropland, pastureland or land 

equivalent to U.S. Conservation Reserve 

Program land that was cleared or 

cultivated prior to December 19, 2007, 

and was actively managed or fallow and 

nonforested on that date (and is 

therefore RFS2 qualifying land). The 

total agricultural land in Canada in 2012 

mstockstill on DSK4VPTVN1PROD with RULES2

49828 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

83See API v. EPA, No. 12–1139, slip op. at 5–9 

(D.C. Cir. January 25, 2013) 

is estimated at 120.9 million acres. This 

total agricultural land area includes 97.3 

million acres of cropland and summer 

fallow, 13.8 million acres of pastureland 

and 9.8 million acres of agricultural 

land under conservation practices. This 

acreage estimate is based on the same 

methodology used to set the 2007 

baseline acreage for Canadian 

agricultural land in the RFS2 response 

to petition. The data used to make this 

calculation can be found in the docket 

to this rule. 

D. Vacatur of 2012 Cellulosic Biofuel 

Standard 

On January 25, 2013 a DC circuit 

court ruled that the EPA’s projection of 

cellulosic biofuel production was in 

excess of the agency’s statutory 

authority and vacated the cellulosic 

biofuel standards.83 Very few cellulosic 

biofuel RINs were generated in 2012 and 

of those that were the majority of these 

RINs were required to be retired when 

the cellulosic biofuel they represented 

was exported. EPA is therefore 

eliminating the cellulosic biofuel 

requirement for 2012 in accordance 

with the order from the DC circuit court. 

Cellulosic biofuel RINs generated in 

2012 may still be used to satisfy up to 

20% of an obligated party’s cellulosic 

biofuel obligation in 2013. 

VI. Comments Outside the Scope of 

This Rulemaking 

In their comments responding to the 

NPRM, a number of parties used the 

opportunity to raise concerns that were 

not directly related to the issues and 

provisions we were addressing in the 

NPRM, namely the determination of the 

applicable volume requirements and 

associated percentage standards for 

cellulosic biofuel, biomass-based diesel, 

advanced biofuel, and total renewable 

fuel. Instead, they addressed issues 

associated with the following: 

• EPA’s petition process in § 80.1416 

for approving new fuel pathways and 

requests that the review of certain 

pathways be expedited 

• Requests for clarification regarding 

whether certain feedstocks qualify as 

renewable biomass 

• Requests for new EPA initiatives to 

promote FFVs and blender pumps 

• Possible legislative changes to the 

RFS program 

• E15 waivers and EPA policy on E15 

• Requests for new or revised lifecycle 

GHG assessments 

• Impacts of ethanol on small engines 

• Impacts of ethanol on air quality and 

use of corn for food 

• Comments on specific regulatory 

provisions in 40 CFR Part 80, Subpart 

M 

• Comments on the 1.28 bill gal volume 

requirement for biomass-based diesel 

We also received some comments 

addressing the impacts of ethanol on air 

quality and the use of corn for food. 

These issues were addressed in the 

RFS2 final rule released in 2010 and 

were not revisited in the February 7, 

2013 NPRM. 

While we are taking these comments 

under consideration as we continue to 

implement the RFS2 program, these 

comments are outside the scope of 

today’s action, and we are not providing 

substantive responses to them at this 

time. With regard to comments on the 

1.28 bill gal requirement for biomassbased diesel, we will take them into 

consideration in the context of our 

response to the petition for 

reconsideration submitted by the 

American Fuels and Petrochemical 

Manufacturers. 

VII. Public Participation 

Many interested parties participated 

in the rulemaking process that 

culminates with this final rule. This 

process provided opportunity for 

submitting written public comments 

following the proposal that we 

published on February 7, 2013 (78 FR 

9282), and we also held a public hearing 

on March 8, 2013 at which a number of 

parties provided both verbal and written 

testimony. All comments received, both 

verbal and written, are available in EPA 

docket EPA–HQ–OAR–2012–0546 and 

we considered these comments in 

developing the final rule. Public 

comments and EPA responses are 

discussed throughout this preamble. 

VIII. Statutory and Executive Order 

Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

Under Executive Order 12866 (58 FR 

51735, October 4, 1993), this action is a 

‘‘significant regulatory action’’ because 

it raises novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive Order. 

Accordingly, EPA submitted this action 

to the Office of Management and Budget 

(OMB) for review under Executive 

Orders 12866 and 13563 (76 FR 3821, 

January 21, 2011) and any changes made 

in response to OMB recommendations 

have been documented in the docket for 

this action. 

The economic impacts of the RFS2 

program on regulated parties, including 

the impacts of the required volumes of 

renewable fuel, were already addressed 

in the RFS2 final rule promulgated on 

March 26, 2010 (75 FR 14670). With the 

exception of cellulosic biofuel, this 

action proposes the percentage 

standards applicable in 2013 based on 

the volumes that were analyzed in the 

RFS2 final rule. 

B. Paperwork Reduction Act 

This action does not impose an 

information collection burden under the 

provisions of the Paperwork Reduction 

Act, 44 U.S.C. 3501 et seq. Burden is 

defined at 5 CFR 1320.3(b). This final 

rule does not impose any additional 

reporting requirements on regulated 

parties beyond those already required 

under the RFS program; therefore, there 

will not be any additional reporting 

burdens on entities impacted by this 

regulation. This action merely 

establishes the RFS annual standards for 

2013 as required by section 211(o) of the 

Clean Air Act. 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency to prepare 

a regulatory flexibility analysis of any 

rule subject to notice and comment 

rulemaking requirements under the 

Administrative Procedure Act or any 

other statute unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. Small entities 

include small businesses, small 

organizations, and small governmental 

jurisdictions. 

For purposes of assessing the impacts 

of today’s rule on small entities, small 

entity is defined as: (1) A small business 

as defined by the Small Business 

Administration’s (SBA) regulations at 13 

CFR 121.201; (2) a small governmental 

jurisdiction that is a government of a 

city, county, town, school district or 

special district with a population of less 

than 50,000; and (3) a small 

organization that is any not-for-profit 

enterprise which is independently 

owned and operated and is not 

dominant in its field. 

Today’s rule is an annual rulemaking 

implementing a long-term program that 

was finalized in 2010. Under that 

program small refiners and small 

refineries were already granted two 

years of relief that could be extended 

upon demonstration of ongoing 

hardship. EPA, with the assistance of 

DOE, has continued to implement these 

provisions and provide relief when 

warranted. 

mstockstill on DSK4VPTVN1PROD with RULES2

Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 49829 

84Estimates from RFS2 final rule, 75 FR 14867. 

After considering the economic 

impacts of today’s final rule on small 

entities, we certify that this action will 

not have a significant economic impact 

on a substantial number of small 

entities. This rule sets the annual 

standard for cellulosic biofuel for 2013 

at 6 mill gal. Since small refiners and 

small refineries collectively comprise 

about 11.9% of gasoline and 15.2% of 

diesel production 84, for an average of 

12.9% for the entire gasoline + diesel 

pool, small refiners and small refineries 

would only be required to collectively 

meet a cellulosic biofuel requirement of 

about 0.8 mill gal (6 × 12.9%). At the 

cellulosic biofuel waiver credit price of 

$0.42, established in this rule for 2013, 

the cost of complying with this 

requirement would total about $0.33 

million for the approximately 60 

obligated parties that would be affected, 

or about $5,500 per facility on average. 

The impacts of the RFS2 program on 

small entities were already addressed in 

the RFS2 final rule promulgated on 

March 26, 2010 (75 FR 14670), and this 

final rule will not impose any additional 

requirements on small entities. 

D. Unfunded Mandates Reform Act 

This final action contains no Federal 

mandates under the provisions of Title 

II of the Unfunded Mandates Reform 

Act of 1995 (UMRA), 2 U.S.C. 1531– 

1538 for State, local, or tribal 

governments or the private sector. This 

action implements mandate(s) 

specifically and explicitly set forth by 

the Congress in Clean Air Act section 

211(o) without the exercise of any 

policy discretion by EPA. Therefore, 

this action is not subject to the 

requirements of sections 202 or 205 of 

the UMRA. 

This action is also not subject to the 

requirements of section 203 of UMRA 

because it contains no regulatory 

requirements that might significantly or 

uniquely affect small governments. This 

final rule only applies to gasoline, 

diesel, and renewable fuel producers, 

importers, distributors and marketers 

and merely sets the 2013 annual 

standards for the RFS program. 

E. Executive Order 13132: Federalism 

This action does not have federalism 

implications. It will not have substantial 

direct effects on the States, on the 

relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. This action sets 

the 2013 annual standards for the RFS 

program and only applies to gasoline, 

diesel, and renewable fuel producers, 

importers, distributors and marketers. 

Thus, Executive Order 13132 does not 

apply to this rule. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

This action does not have tribal 

implications, as specified in Executive 

Order 13175 (65 FR 67249, November 9, 

2000). This final rule will be 

implemented at the federal level and 

affects transportation fuel refiners, 

blenders, marketers, distributors, 

importers, exporters, and renewable fuel 

producers and importers. Tribal 

governments would be affected only to 

the extent they purchase and use 

regulated fuels. Thus, Executive Order 

13175 does not apply to this action. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

EPA interprets EO 13045 (62 FR 

19885, April 23, 1997) as applying only 

to those regulatory actions that concern 

health or safety risks, such that the 

analysis required under section 5–501 of 

the EO has the potential to influence the 

regulation. This action is not subject to 

EO 13045 because it does not establish 

an environmental standard intended to 

mitigate health or safety risks and 

because it implements specific 

standards established by Congress in 

statutes (section 211(o) of the Clean Air 

Act). 

H. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This action is not a ‘‘significant 

energy action’’ as defined in Executive 

Order 13211, ‘‘Actions Concerning 

Regulations That Significantly Affect 

Energy Supply, Distribution, or Use’’ (66 

FR 28355 (May 22, 2001)) because it is 

not likely to have a significant adverse 

effect on the supply, distribution, or use 

of energy. This action simply sets the 

annual standards for renewable fuel 

under the RFS program for 2013. 

I. National Technology Transfer and 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (‘‘NTTAA’’), Public Law 

104–113, 12(d) (15 U.S.C. 272 note) 

directs EPA to use voluntary consensus 

standards in its regulatory activities 

unless to do so would be inconsistent 

with applicable law or otherwise 

impractical. Voluntary consensus 

standards are technical standards (e.g., 

materials specifications, test methods, 

sampling procedures, and business 

practices) that are developed or adopted 

by voluntary consensus standards 

bodies. NTTAA directs EPA to provide 

Congress, through OMB, explanations 

when the Agency decides not to use 

available and applicable voluntary 

consensus standards. 

This final rulemaking does not 

involve technical standards. Therefore, 

EPA is not considering the use of any 

voluntary consensus standards. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order (EO) 12898 (59 FR 

7629 (Feb. 16, 1994)) establishes federal 

executive policy on environmental 

justice. Its main provision directs 

federal agencies, to the greatest extent 

practicable and permitted by law, to 

make environmental justice part of their 

mission by identifying and addressing, 

as appropriate, disproportionately high 

and adverse human health or 

environmental effects of their programs, 

policies, and activities on minority 

populations and low-income 

populations in the United States. 

EPA has determined that this final 

rule will not have disproportionately 

high and adverse human health or 

environmental effects on minority or 

low-income populations because it does 

not affect the level of protection 

provided to human health or the 

environment. This action does not relax 

the control measures on sources 

regulated by the RFS regulations and 

therefore will not cause emissions 

increases from these source. 

K. Congressional Review Act 

The Congressional Review Act, 5 

U.S.C. 801 et seq., as added by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, generally provides 

that before a rule may take effect, the 

agency promulgating the rule must 

submit a rule report, which includes a 

copy of the rule, to each House of the 

Congress and to the Comptroller General 

of the United States. EPA will submit a 

report containing this rule and other 

required information to the U.S. Senate, 

the U.S. House of Representatives, and 

the Comptroller General of the United 

States prior to publication of the rule in 

the Federal Register. A major rule 

cannot take effect until 60 days after it 

is published in the Federal Register. 

This action is not a ‘‘major rule’’ as 

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

this rule will be effective on the date of 

publication. 

mstockstill on DSK4VPTVN1PROD with RULES2

49830 Federal Register / Vol. 78, No. 158 / Thursday, August 15, 2013 / Rules and Regulations 

IX. Statutory Authority 

Statutory authority for this action 

comes from section 211 of the Clean Air 

Act, 42 U.S.C. 7545. Additional support 

for the procedural and compliance 

related aspects of today’s Final rule, 

come from Sections 114, 208, and 301(a) 

of the Clean Air Act, 42 U.S.C. Sections 

7414, 7542, and 7601(a). 

List of Subjects in 40 CFR Part 80 

Administrative practice and 

procedure, Air pollution control, Diesel 

fuel, Environmental protection, Fuel 

additives, Gasoline, Imports, Oil 

imports, Petroleum. 

Dated: August 6, 2013. 

Gina McCarthy, 

Administrator. 

For the reasons set forth in the 

preamble, 40 CFR part 80 is amended as 

follows: 

PART 80—REGULATION OF FUELS 

AND FUEL ADDITIVES 

■ 1. The authority citation for part 80 

continues to read as follows: 

Authority: 42 U.S.C. 7414, 7542, 7545, and 

7601(a). 

■ 2. Section 80.1405 is amended by 

removing and reserving paragraph 

(a)(3)(i) and by adding paragraphs (a)(4) 

and (d)(4) to read as follows: 

§ 80.1405 What are the Renewable Fuel 

Standards? 

(a) * * * 

(4) Renewable Fuel Standards for 

2013. 

(i) The value of the cellulosic biofuel 

standard for 2013 shall be 0.004 percent. 

(ii) The value of the biomass-based 

diesel standard for 2013 shall be 1.13 

percent. 

(iii) The value of the advanced biofuel 

standard for 2013 shall be 1.62 percent. 

(iv) The value of the renewable fuel 

standard for 2013 shall be 9.74 percent. 

* * * * * 

(d) * * * 

(4) The 2013 price for cellulosic 

biofuel waiver credits is $0.42 per 

waiver credit. 

■ 3. Section 80.1451 is amended by 

revising paragraph (a)(1) introductory 

text and by adding paragraph (a)(1)(xiv) 

to read as follows: 

§ 80.1451 What are the reporting 

requirements under the RFS program? 

(a) * * * 

(1) Annual compliance reports for the 

previous compliance period shall be 

submitted by February 28 of each year 

except as provided in paragraph (xiv) 

below, and shall include all of the 

following information: 

* * * * * 

(xiv) For the 2013 compliance year, 

annual compliance reports shall be 

submitted by June 30, 2014. 

* * * * * 

■ 4. Section 80.1464 is amended by 

revising paragraph (d) and by adding 

paragraph (g) to read as follows: 

§ 80.1464 What are the attest engagement 

requirements under the RFS program? 

(d) For each compliance year, each 

party subject to the attest engagement 

requirements under this section shall 

cause the reports required under this 

section to be submitted to EPA by May 

31 of the year following the compliance 

year, except as provided in paragraph 

(g) below. 

* * * * * 

(g) For the 2013 compliance year, 

reports required under this section shall 

be submitted to EPA by September 30, 

2014. 

[FR Doc. 2013–19557 Filed 8–14–13; 8:45 am] 

BILLING CODE P 

mstockstill on DSK4VPTVN1PROD with RULES2