Vol. 78 Friday, 

No. 230 November 29, 2013 

Part II 

Environmental Protection Agency 

40 CFR Part 80 

2014 Standards for the Renewable Fuel Standard Program; Proposed Rule 


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71732 Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 80 

[EPA–HQ–OAR–2013–0479; FRL–9900–90– 

OAR] 

RIN 2060–AR76 

2014 Standards for the Renewable Fuel 

Standard Program 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed 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 proposes the annual 

percentage standards for cellulosic 

biofuel, biomass-based diesel, advanced 

biofuel, and renewable fuels that would 

apply to all motor vehicle gasoline and 

diesel produced or imported in the year 

2014. For cellulosic biofuel, the statute 

specifies that EPA is to project the 

volume of production and must base the 

cellulosic biofuel standard on projected 

available volume if it is less than the 

applicable volume set forth in the Act. 

Today EPA is proposing a cellulosic 

biofuel volume for 2014 that is below 

the applicable volume specified in the 

Act. The statute also provides EPA the 

discretion to adjust the volumes of 

advanced biofuel and total renewable 

fuel under certain conditions. Relying 

on its Clean Air Act waiver authorities, 

EPA is proposing to adjust the 

applicable volumes of advanced biofuel 

and total renewable fuel to address 

projected availability of qualifying 

renewable fuels and limitations in the 

volume of ethanol that can be consumed 

in gasoline given practical constraints 

on the supply of higher ethanol blends 

to the vehicles that can use them and 

other limits on ethanol blend levels in 

gasoline. These adjustments are 

intended to put the program on a 

manageable trajectory while supporting 

growth in renewable fuels over time. 

Finally, the statute requires EPA to 

determine the applicable volume of 

biomass-based diesel to be used in 

setting annual percentage standards 

under the renewable fuel standard 

program for years after 2012. EPA is 

proposing the applicable volume of 

biomass-based diesel that would apply 

in 2014 and 2015. EPA is requesting 

comment on a variety of alternative 

approaches and on a range of inputs and 

methodologies relevant for setting the 

applicable standards. 

DATES: Comments must be received on 

or before January 28, 2014. 

Hearing: We intend to hold a hearing. 

Details of the location and date will be 

provided in a separate notice. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–HQ– 

OAR–2013–0479, by one of the 

following methods: 

• www.regulations.gov: Follow the 

on-line instructions for submitting 

comments. 

• Email: a-and-r-docket@epa.gov. 

• Mail: Air and Radiation Docket and 

Information Center, Environmental 

Protection Agency, Mailcode: 2822T, 

1200 Pennsylvania Ave. NW., 

Washington, DC 20460. 

• Hand Delivery: EPA Docket Center, 

EPA West Building, Room 3334, 1301 

Constitution Ave. NW., Washington, DC 

20460. Such deliveries are only 

accepted during the Docket’s normal 

hours of operation, and special 

arrangements should be made for 

deliveries of boxed information. 

Instructions: Direct your comments to 

Docket ID No. EPA–HQ–OAR–2013– 

0479. EPA’s policy is that all comments 

received will be included in the public 

docket without change and may be 

made available online at 

www.regulations.gov, including any 

personal information provided, unless 

the comment includes information 

claimed to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Do not submit information that you 

consider to be CBI or otherwise 

protected through www.regulations.gov 

or email. The www.regulations.gov Web 

site is an ‘‘anonymous access’’ system, 

which means EPA will not know your 

identity or contact information unless 

you provide it in the body of your 

comment. If you send an email 

comment directly to EPA without going 

through www.regulations.gov your 

email address will be automatically 

captured and included as part of the 

comment that is placed in the public 

docket and made available on the 

Internet. If you submit an electronic 

comment, EPA recommends that you 

include your name and other contact 

information in the body of your 

comment and with any disk or CD–ROM 

you submit. If EPA cannot read your 

comment due to technical difficulties 

and cannot contact you for clarification, 

EPA may not be able to consider your 

comment. Electronic files should avoid 

the use of special characters, any form 

of encryption, and be free of any defects 

or viruses. For additional information 

about EPA’s public docket visit the EPA 

Docket Center homepage at http://

www.epa.gov/epahome/dockets.htm. 

For additional instructions on 

submitting comments, go to Section I.B 

of the SUPPLEMENTARY INFORMATION

section of this document. 

Docket: All documents in the docket 

are listed in the www.regulations.gov 

index. Although listed in the index, 

some information is not publicly 

available, e.g., CBI or other information 

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: 

I. General Information 

A. Does this action apply to me? 

Entities potentially affected by this 

proposed 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. 


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Category NAICS1

Codes 

SIC 2

Codes Examples of potentially regulated entities 

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 proposed action. This 

table lists the types of entities that EPA 

is now aware could potentially be 

regulated by this proposed action. Other 

types of entities not listed in the table 

could also be regulated. To determine 

whether your activities would be 

regulated by this proposed action, you 

should carefully examine the 

applicability criteria in 40 CFR part 80. 

If you have any questions regarding the 

applicability of this proposed action to 

a particular entity, consult the person 

listed in the preceding section. 

B. What should I consider as I prepare 

my comments for EPA? 

1. Submitting CBI 

Do not submit confidential business 

information (CBI) to EPA through 

www.regulations.gov or email. Clearly 

mark the part or all of the information 

that you claim to be CBI. For CBI 

information in a disk or CD ROM that 

you mail to EPA, mark the outside of the 

disk or CD ROM as CBI and then 

identify electronically within the disk or 

CD ROM the specific information that is 

claimed as CBI. In addition to one 

complete version of the comment that 

includes information claimed as CBI, a 

copy of the comment that does not 

contain the information claimed as CBI 

must be submitted for inclusion in the 

public docket. Information so marked 

will not be disclosed except in 

accordance with procedures set forth in 

40 CFR part 2. 

2. Tips for Preparing Your Comments 

When submitting comments, 

remember to: 

• Identify the rulemaking by docket 

number and other identifying 

information (subject heading, Federal 

Register date and page number). 

• Follow directions—The agency may 

ask you to respond to specific questions 

or organize comments by referencing a 

Code of Federal Regulations (CFR) part 

or section number. 

• Explain why you agree or disagree, 

suggest alternatives, and substitute 

language for your requested changes. 

• Describe any assumptions and 

provide any technical information and/ 

or data that you used. 

• If you estimate potential costs or 

burdens, explain how you arrived at 

your estimate in sufficient detail to 

allow for it to be reproduced. 

• Provide specific examples to 

illustrate your concerns, and suggest 

alternatives. 

• Explain your views as clearly as 

possible, avoiding the use of profanity 

or personal threats. 

• Make sure to submit your 

comments by the comment period 

deadline identified. 

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 2014 

2. Biomass-Based Diesel Requirement in 

2014 and 2015 

3. Advanced Biofuel and Total Renewable 

Fuel in 2014 

4. Proposed Annual Percentage Standards 

for 2014 

C. Volume Requirements for 2015 and 

Beyond 

II. Proposed Cellulosic Biofuel Volume for 

2014 

A. Statutory Requirements 

B. Cellulosic Biofuel Volume Assessment 

for 2014 

1. Potential Domestic Producers with 

Approved Pathways 

2. Potential Domestic Producers without 

Existing Pathways 

3. Potential Foreign Sources of Cellulosic 

Biofuel 

4. Summary of Volume Projections for 

Individual Companies 

C. Proposed Cellulosic Biofuel Volume for 

2014 

D. Rescission of the 2011 Cellulosic Biofuel 

Standards 

III. Proposed National Volume Requirement 

for Biomass-Based Diesel in 2014 and 

2015 

A. Statutory Requirements 

B. Compliance with 2013 Volume 

Requirement of 1.28 Billion Gallons 

C. Determination of Applicable Volume for 

2014 and 2015 

IV. Proposed National Volume Requirements 

for Advanced Biofuel and Total 

Renewable Fuel for 2014 

A. Statutory Authorities for Reducing 

Volumes to Address Biofuel Availability 

and the Ethanol Blendwall 

1. Cellulosic Waiver Authority 

2. General Waiver Authority 

3. Combining Authorities for Reductions in 

Advanced Biofuel and Total Renewable 

Fuel 

B. Determination of Reductions in Total 

Renewable Fuel 

1. Estimating Ethanol Volumes that Could 

Reasonably Be Consumed 

a. Projected Composition of 2014 Gasoline 

Supply 

b. Assessment of E85 Consumption 

c. Proposed Projection of E85 Consumption 

in 2014 

d. Estimating Total Ethanol Consumption 

in 2014 

2. Estimating Availability of Non-Ethanol 

Renewable Fuel Volumes 

a. Non-Ethanol Cellulosic Biofuel 

b. Biomass-Based Diesel 

c. Non-Ethanol Advanced Biofuel 

d. Non-Ethanol Non-Advanced Renewable 

Fuel 

3. Treatment of Carryover RINs in 2014 

4. Proposed Range for the Volume 

Requirement for Total Renewable Fuel 

C. Determination of Reductions in 

Advanced Biofuel 

1. Available Volumes of Advanced Biofuel 

in 2014 

a. Cellulosic biofuel 

b. Biomass-Based Diesel 

c. Domestic Production of Other Advanced 

Biofuel 

d. Imported Sugarcane Ethanol 

e. Summary 

2. Options for Determining Appropriate 

Reductions in Advanced Biofuel 

a. Option 1: Advanced Biofuel Availability 

b. Option 2: Full Reduction in Cellulosic 

Biofuel 

c. Option 3: Availability, Growth, and 

Limits on Ethanol Consumption 

D. Summary of Proposed Volume 

Requirements for 2014 

E. Volume Requirements for 2015 and 

Beyond 

V. Proposed Percentage Standards for 2014 

A. Background 

B. Calculation of Standards 

1. How Are the Standards Calculated? 

2. Small Refineries and Small Refiners 

3. Proposed Standards 

VI. Public Participation 

A. How Do I Submit Comments? 

B. How Should I Submit CBI to the 

Agency? 

VII. 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 


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1 75 FR 14670. 

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 

VIII. 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 was 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 2014 

are shown in Table I–1. Note that 

cellulosic biofuel and biomass-based 

diesel categories are nested within 

advanced biofuel, which is itself nested 

within the renewable fuel category. 

TABLE I–1—REQUIRED APPLICABLE

VOLUMES IN BILLION GALLONS (BILL

GAL) IN THE CLEAN AIR ACT FOR

2014 

Cellulosic biofuel ........... 1.75 a

Biomass-based diesel ... ≥1.0 b

Advanced biofuel .......... 3.75 a

Renewable fuel ............. 18.15 a

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. 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, biomassbased 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 percentage standards 

are used by obligated parties (generally, 

producers and importers of 

transportation fuel) to calculate their 

individual compliance obligations. The 

percentage standards are applied to the 

volume of non-renewable transportation 

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 jet 

fuel. 

As required by statute, we are 

proposing to establish the volume for 

cellulosic biofuel based on projected 

availability of such fuel—which is 

below the statutory target for 2014. In 

addition, we have evaluated the 

availability of qualifying renewable 

fuels and factors that in some cases limit 

supplying those fuels to the vehicles 

and equipment that can consume them, 

including the set of factors referred to as 

the ethanol blendwall. Based on this 

evaluation we believe that adjustments 

to the volumes of advanced biofuel and 

total renewable fuel required under the 

statute are warranted for 2014 due to an 

inadequate domestic supply of these 

fuels (see Section IV.A for further 

detail). We are also proposing to 

maintain the same volume for biomassbased diesel for 2014 and 2015 as was 

adopted for 2013. The volumes that we 

are proposing for 2014, as well as the 

ranges on which we are seeking 

comment, are shown below. With the 

exception of the volume requirement for 

cellulosic biofuel, the proposed volumes 

correspond to the preferred approach 

described in today’s proposal, but we 

discuss and are seeking comment on 

alternative approaches as well. 

TABLE I–2—PROPOSED 2014 VOLUME REQUIREMENTS a

Proposed volume Projected range 

Cellulosic biofuel ................................................ 17 mill gal. ........................................................ 8–30 mill gal. 

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

Advanced biofuel ............................................... 2.20 bill gal ....................................................... 2.00–2.51 bill gal. 

Renewable fuel .................................................. 15.21 bill gal ..................................................... 15.00–15.52 bill gal. 

aAll volumes are ethanol-equivalent, except for biomass-based diesel which is actual. 

bEPA is requesting comment on alternative approaches and higher volumes. 

Section II contains a detailed 

discussion of the basis for our proposed 

volume of cellulosic biofuel for 2014, 

Section III contains a detailed 

discussion of the basis for our proposed 

volume of biomass-based diesel for 2014 

and 2015, and Section IV contains a 

detailed discussion of the basis for our 

proposed volumes, as well as alternative 

potential approaches on which we are 

requesting comment, for advanced 

biofuel and total renewable fuel for 

2014. 

In developing this proposal, we have 

been cognizant that Congress 

anticipated and intended the RFS 

program to promote substantial, 

sustained growth in biofuel production 

and consumption—beyond the levels 

that have been achieved to date. 

Although current gasoline demand and 

forecasts of future gasoline demand 

have decreased since EISA’s enactment 

in 2007, EPA continues to support the 

objective of continued growth in 

renewable fuel production and 

consumption, as well as the central 

policy goals underlying the RFS 

program: reductions in greenhouse gas 

emissions, enhanced energy security, 

economic development, and 

technological innovation. The approach 

reflected in today’s proposal is 

consistent with those objectives and is 

intended to put the RFS program on a 

manageable trajectory while supporting 

continued growth in renewable fuels 

over time. As emphasized throughout 

the proposal, we are seeking comment 

and information on a variety of 

alternative approaches as well as ranges 

of inputs and methodologies relevant to 

setting these standards, and look 

forward to engagement with 

stakeholders on all aspects of the 

proposal. 


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A. Purpose of this action 

EPA is today proposing annual 

volume requirements for obligated 

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

renewable fuel for 2014. Table I.A–1 

lists the statutory provisions and 

associated criteria relevant to 

determining the national applicable 

volumes used to set the applicable 

standards in today’s proposed 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 2014 ..................... 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. 

Biomass-based diesel in 2014 and 

2015.

211(o)(2)(B)(ii) and (v) ........................ Required volume for years after 2012 must be at least 1.0 bil 

gal, and must be based on a review of implementation of the 

program and an analysis of several factors. 

Advanced biofuel in 2014 .................... 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 criteria 

specified. 

211(o)(7)(A) ........................................ EPA may waive any portion of the statutory volume requirements if implementation of those requirements would severely harm the economy or environment of a State, region, 

or the United States, or there is an inadequate domestic supply. 

Total renewable fuel in 2014 ............... 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 criteria 

specified. 

211(o)(7)(A) ........................................ EPA may waive any portion of the statutory volume requirements if implementation of those requirements would severely harm the economy or environment of a State, region, 

or the United States, or there is an inadequate domestic supply. 

Under the statute, EPA must annually 

determine the projected volume of 

cellulosic biofuel production for the 

following year. If the projected volume 

of cellulosic biofuel production is less 

than the applicable volume specified in 

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

EPA must lower the applicable volume 

used to set the annual cellulosic biofuel 

percentage standard to the projected 

volume of production available during 

the year. In today’s proposed rule, we 

present our analysis of cellulosic biofuel 

production and projected volume for 

2014. This analysis is based on our 

evaluation of individual producers’ 

production plans and progress to date 

following discussions with cellulosic 

biofuel producers, the Energy 

Information Administration (EIA), the 

Department of Agriculture (USDA), and 

the Department of Energy (DOE), and 

includes an assessment of the 

probabilities associated with production 

schedules from each of these producers. 

While CAA section 211(o)(2)(B) 

specifies the volumes of biomass-based 

diesel to be used in the RFS program 

through year 2012, it directs the EPA to 

establish the applicable volume of 

biomass-based diesel for years after 

2012. The statute also lists the factors 

that must be considered in this 

determination. In today’s action we are 

proposing volume requirements for 

biomass-based diesel for both 2014 and 

2015. 

There are two different authorities in 

the statute that permit EPA to reduce 

volumes of advanced biofuel and total 

renewable fuel below the volumes 

specified in the statute. 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. We can also reduce the 

applicable volumes of advanced biofuel 

or total renewable fuel under the general 

waiver authority provided at CAA 

211(o)(7)(A) under certain conditions. 

Today’s proposal uses a combination of 

these two authorities to reduce volumes 

of both advanced biofuel and total 

renewable fuel to address two important 

realities: 

• Limitations in the volume of 

ethanol that can be consumed in 

gasoline given practical constraints on 

the supply of higher ethanol blends to 

the vehicles that can use them and other 

limits on ethanol blend levels in 

gasoline—a set of factors commonly 

referred to as the ethanol ‘‘blendwall’’ 

• Limitations in the ability of the 

industry to produce sufficient volumes 

of qualifying renewable fuel. 

As described in detail in Section IV, 

today’s action lays out a framework for 

determining the applicable volume 

requirements that addresses these two 

realities. We are proposing to use this 

framework to establish the volume 

requirements in 2014. As described in 

more detail in Section IV.E, we believe 

that this framework would also be 

appropriate for later years, subject to 

adjustments made in the course of the 

rulemaking process and taking into 

account the specific facts about the 

availability of renewable fuels at the 

time of the final rulemaking. 

In today’s proposed rule we have also 

provided the annual percentage 

standards (shown in Section I.B.4 

below) that would apply to all 

producers and importers of gasoline and 

diesel in 2014. The percentage 

standards, which establish the legal 

requirement for the obligated parties, 

are based on the 2014 applicable 

volumes that we project for the four 

types of renewable fuel and a projection 

of volumes of gasoline and diesel 

consumption in 2014 from the Energy 

Information Administration (EIA). 

B. Summary of Major Provisions in This 

Notice 

1. Cellulosic Biofuel Volume for 2014 

The cellulosic biofuel industry 

continues to transition from research 

and development (R&D) and pilot scale 

to commercial scale facilities, leading to 


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2A RIN is unique number generated by the 

producer and assigned to each gallon of a qualifying 

renewable fuel under the RFS program, and is used 

by refiners and importers to demonstrate 

compliance with the volume requirements under 

the program. 

significant increases in production 

capacity. RIN generation from the first 

commercial scale cellulosic biofuel 

facility began in March 2013.2 A second 

facility began producing fuel in July 

2013 with several others expected to 

follow in 2014. Based on information 

we have collected from these companies 

and discussions with EIA, we have 

identified five companies we expect to 

produce cellulosic biofuel in 2014. 

There are an additional three companies 

that may be in a position to produce 

cellulosic biofuel if additional pathways 

are approved by EPA. Each of the 

relevant facilities is listed in Table 

I.B.1–1 along with our estimate of their 

projected 2014 volume. Based on the 

information we have received from 

these companies, our conversations 

with other government agencies, and 

EPA’s own engineering judgment we are 

projecting that 8–30 million ethanolequivalent gallons of cellulosic biofuel 

will be available in 2014. This range 

does not account for the estimate that 

EIA is required to provide to EPA 

containing estimates of the volume of 

cellulosic biofuel projected to be sold or 

introduced into commerce in 2014. The 

projected range also does not include 

any volume from facilities that could 

use pathways which have not yet been 

approved. If production volumes from 

these facilities were included, we would 

project a production range of 53–83 

million ethanol-equivalent gallons. 

As part of estimating the volume of 

cellulosic biofuel that would be made 

available in the U.S. in 2014, 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 is expected to produce 

commercial volumes of qualifying 

cellulosic biofuel for use in 2014. To 

arrive at a projected volume for each 

facility, we developed company specific 

projections based on discussions with 

cellulosic biofuel producers, EIA, 

USDA, and DOE, and on 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 2014. 

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 proposed 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 

2014. 

TABLE I.B.1–1—PROJECTED AVAILABLE CELLULOSIC BIOFUEL PLANT VOLUMES IN MILLION GALLONS (MILL GAL) FOR 2014 

Company Location Fuel type Annual production 

capacity a First production 

Projected 

2014 available 

volume b

Companies With Approved Pathways 

Abengoa ........................ Hugoton, KS ................ Ethanol ........................ 24 ................................ 1Q 2014 c .................... 0–18 

DuPont .......................... Nevada, IA .................. Ethanol ........................ 30 ................................ 2H 2014 c ..................... 0–2 

INEOS Bio .................... Vero Beach, FL ........... Ethanol ........................ 8 .................................. 3Q 2013 ...................... 2–5 

KiOR ............................. Columbus, MS ............ Gasoline and Diesel .... 11 ................................ March 2013 ................. 0–9 

Poet ............................... Emmetsburg, IA .......... Ethanol ........................ 25 ................................ 1H 2014 c ..................... 0–6 

Total for companies 

with approved 

pathways.

..................................... ..................................... ..................................... ..................................... 8–30 d

Other Potential Cellulosic Biofuel Producers 

CNG/LNG Producers .... Various ........................ CNG/LNG .................... Various ........................ Various ........................ 35–54 

Edeniq ........................... Various ........................ Ethanol ........................ Various ........................ 1H 2014 c ..................... 0–7 

Ensyn ............................ Stanley, WI .................. Heating Oil .................. 3 .................................. 2007 ............................ 0–5 

Total for both companies with approved pathways 

and those with 

proposed pathways.

..................................... ..................................... ..................................... ..................................... 53–83 d

aFacilities are generally designed to process a given quantity of feedstock and volume capacities may vary depending on yield assumptions. bVolumes listed in million ethanol-equivalent gallons. 

cStart-up dates for these facilities are projections. 

dTotal volumes are the result of Monte Carlo simulations rather than the sum of the low and high end of the range of projected available volume for each company. See Section II.C for more detail. 

In projecting the actual volume of 

cellulosic biofuel that will be available 

for use in 2014, we have taken into 

account variation in expected start-up 

times, along with the facility production 

capacities, company production plans, 

the progress made in 2013, expected 

production distribution and a variety of 

other factors. We used this information 


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3 78 FR 49794 (August 15, 2013). 

4 In 2011 obligated parties purchased 4,248,388 

cellulosic biofuel waiver credits at a price of $1.13 

per gallon-RIN for a total cost of $4,800,678. 

5While the fuels that are subject to the percentage 

standards are currently only non-renewable 

gasoline and diesel, renewable fuels that are valid 

for compliance with the standards include those 

used as transportation fuel, heating oil, or jet fuel. 

to determine the most likely production 

ranges for each of the individual 

companies and a production probability 

distribution within the range. We then 

used a Monte Carlo simulation to 

aggregate the individual ranges into a 

production projection for the cellulosic 

biofuel industry as a whole in 2014. We 

believe this method results in a 

projected production range that better 

represents our expectations for 

cellulosic biofuel production in 2014 

than simply adding the low and high 

end of the production ranges from each 

of the individual companies. Section II 

discusses in greater detail our 

projections of cellulosic biofuel in 2014 

and the companies we expect to 

produce this volume. 

In response to a recent court decision, 

we are also proposing to rescind the 

cellulosic biofuel standards for 2011. In 

January 2013, the United States Court of 

Appeals for the District of Columbia 

Circuit issued a decision interpreting 

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, 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. See API v. EPA, 706 

F.3d 474 (D.C. Cir. 2013). EPA later 

removed the 2012 cellulosic biofuel 

requirement from the regulations.3

Since we used essentially the same 

methodology to develop the 2011 

cellulosic biofuel standard as we did to 

develop the 2012 standard, we believe 

it would be appropriate to rescind the 

2011 cellulosic biofuel standard as well 

and accordingly are proposing to do so 

in today’s action. The money paid by 

obligated parties to purchase cellulosic 

waiver credits to comply with the 2011 

cellulosic biofuel standard would be 

refunded if this action is finalized.4

2. Biomass-Based Diesel Requirement in 

2014 and 2015 

While section 211(o)(2)(B) specifies 

the volumes of biomass-based diesel 

through year 2012, it directs the EPA to 

establish the applicable volume of 

biomass-based diesel for years after 

2012. Moreover, the statute requires that 

we finalize these biomass-based diesel 

volume requirements no later than 14 

months before the first year for which 

that volume requirement will apply. We 

did not propose a volume requirement 

for biomass-based diesel in the February 

7, 2013 Notice of Proposed Rulemaking 

because at that time we were still 

evaluating the potential market impacts 

of current production levels. In order to 

provide sufficient time for this 

evaluation, as well as the other analyses 

we are required to conduct, we delayed 

our proposal for the 2014 volume 

requirement for biomass-based diesel. 

In today’s action we are proposing to 

maintain the applicable volume of 1.28 

bill gallons for biomass-based diesel for 

both 2014 and 2015. As required by the 

statute when setting biomass-based 

diesel volume requirements for years 

after 2012, our proposal is based on a 

consideration of the factors specified in 

the statute, including biodiesel 

production, consumption, 

infrastructure, climate change, energy 

security, the agricultural sector, air 

quality, and others. Section III provides 

additional discussion of our assessment 

of the proposed volume of 1.28 bill gal 

of biomass-based diesel. 

3. Advanced Biofuel and Total 

Renewable Fuel in 2014 

Since the RFS2 program began in 

2010, EPA has considered reductions in 

advanced biofuel and total renewable 

fuel authorized under the cellulosic 

waiver provisions of 211(o)(7)(D)(i). In 

the past we have focused primarily on 

the availability of advanced biofuels in 

determining whether reductions in the 

required volume of cellulosic biofuel 

should be accompanied by reductions in 

the required volumes of advanced 

biofuel and total renewable fuel. The 

total volume of renewable fuel in the 

form of ethanol that could reasonably be 

available and supplied to vehicles as 

either E10 or higher ethanol blends 

given various constraints, was not a 

limiting factor for years prior to 2014. 

However, for 2014 and later years, the 

total volume of ethanol that can be 

consumed, and the total volume of nonethanol renewable fuels that could 

reasonably be available, are together 

expected to be less than the volume 

requirements established in EISA for 

advanced biofuel and total renewable 

fuel. Therefore, we are proposing 

reductions in the volume requirements 

for these categories of renewable fuel to 

address these concerns. 

We evaluated three potential 

approaches for reducing the applicable 

volume requirements for advanced 

biofuel and total renewable fuel. Each of 

these approaches would require use of 

a combination of the cellulosic and 

general waiver authorities at 

211(o)(7)(D)(i) and 211(o)(7)(A), 

respectively, to address supply concerns 

associated with the blendwall. The three 

approaches differ primarily with regard 

to how the advanced biofuel 

requirement would be adjusted using 

these authorities. The first approach 

would lower the statutory volumes for 

advanced biofuels only to the extent 

that additional volumes are not 

projected to be available; the general 

waiver authority would be used to 

ensure that the total volume of 

renewable fuel would address supply 

concerns associated with the blendwall. 

The second approach would make 

reductions in advanced biofuel and total 

renewable fuel that are equal to the 

proposed reductions in cellulosic 

biofuel and would use the general 

waiver authority to make further 

reductions to the total renewable fuel 

requirement necessary to address the 

blendwall. 

The third approach that we evaluated, 

and the one that we are proposing 

today, includes both a consideration of 

the capability of the relevant industries 

to make qualifying renewable fuels 

available, either through domestic 

production or importation, and also the 

capability of the relevant industries to 

ensure that those renewable fuels are 

used as transportation fuel, heating oil, 

or jet fuel.5 The use of renewable fuels 

includes a consideration of the 

infrastructure available for distributing, 

blending, and dispensing renewable 

fuels, as well as appropriate vehicles in 

the fleet that can consume various 

renewable fuels, such as flex-fuel 

vehicles (FFVs). Our proposed 

framework for addressing both 

availability of qualifying renewable 

fuels and constraints on their 

consumption would make use of a 

combination of the cellulosic waiver 

authority at 211(o)(7)(D)(i) and the 

general waiver authority at 211(o)(7)(A). 

As described in detail in Section IV.A.2, 

we interpret the term ‘‘inadequate 

domestic supply’’ as it is used under the 

general waiver authority to include 

consideration of factors that affect 

consumption of renewable fuel. We 

believe the framework being proposed 

today best approximates the multiple 

goals that Congress intended in the RFS 


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program, and we would intend this 

framework to apply not just to 2014, but 

to later years as well. However, we are 

soliciting comment on alternative 

approaches as well. We discuss the 

proposed framework and the alternative 

approaches in Section IV. 

We believe that our proposed 

framework for determining appropriate 

volumes of total renewable fuel and 

advanced biofuel would simultaneously 

address the ethanol blendwall and 

limitations in availability of qualifying 

renewable fuels. For total renewable 

fuel, we would project the volume of 

ethanol that could reasonably be 

consumed as E10 and higher ethanol 

blends, and would add to that the 

volume of all non-ethanol renewable 

fuels that could reasonably be expected 

to be available. For advanced biofuel, 

we would sum the ethanol-equivalent 

volumes of the cellulosic biofuel 

requirement, the biomass-based diesel 

requirement, and the additional nonethanol advanced biofuels that could 

reasonably be expected to be available 

and be consumed. In this process we 

have projected ranges that encompass 

the most likely outcomes, and we 

propose several approaches to 

determining the most likely value for 

the final rule. 

4. Proposed Annual Percentage 

Standards for 2014 

The renewable fuel standards are 

expressed as a volume percentage and 

are used by each refiner, blender, or 

importer to determine their 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 prove to 

be 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. 

Four separate percentage standards 

are required under the RFS program, 

corresponding to the four separate 

volume requirements shown in Table I– 

1. The specific formulas we use in 

calculating the renewable fuel 

percentage standards are contained in 

the regulations at 40 CFR § 80.1405 and 

repeated in Section V.B.1. The 

percentage standards represent the ratio 

of renewable fuel volume to projected 

non-renewable gasoline and diesel 

volume. The projected volume of 

transportation gasoline and diesel used 

to calculate the standards in today’s 

proposed rule was derived from EIA 

projections. The proposed standards for 

2014 are shown in Table I.B.4–2. 

Detailed calculations can be found in 

Section V, including the projected 2014 

gasoline and diesel volumes used. 

TABLE I.B.4–2—PROPOSED

PERCENTAGE STANDARDS FOR 2014 

Cellulosic biofuel ............. 0.010% 

Biomass-based diesel .... 1.16% 

Advanced biofuel ............ 1.33% 

Renewable fuel ............... 9.20% 

C. Volume Requirements for 2015 and 

Beyond 

As highlighted above, EPA continues 

to support the objective—reflected in 

the statute—of continued growth in 

renewable fuel production and 

consumption, as well as the central 

goals of the RFS program: enhanced 

energy security and reductions in 

greenhouse gas emissions. We also 

recognize that issues concerning the 

availability of qualifying fuels and the 

consumption of ethanol will continue to 

be relevant in 2015 and beyond, 

particularly in light of projections that 

overall gasoline demand will continue 

to decline while the statutory volumes 

for renewable fuel volumes continue to 

increase. Our objective in this 

rulemaking is to develop a general 

approach for determining appropriate 

volume requirements that can be 

applied not only in 2014, but also for 

2015 and beyond. As we consider 

comments received in response to this 

NPRM, our intent is to develop an 

approach that puts the RFS program on 

a manageable trajectory while 

supporting continued growth in 

renewable fuels over time. The 

proposed approach described in today’s 

NPRM can and will account for new and 

improved data and changes in 

circumstances over time, including the 

substantial efforts underway to increase 

the volume of biofuel produced and 

consumed in the United States. Many 

companies, often supported by various 

government programs, are continuing to 

invest in efforts ranging from research 

and development to the construction of 

commercial scale facilities resulting in 

the ongoing growth of next generation 

biofuels. Similar efforts on the part of 

both public and private sectors are 

growing the infrastructure to enable 

expansion in the use of gasoline fuel 

blends containing greater than 10 

percent ethanol. Under the right 

circumstances, there is substantial 

potential for continued growth in the 

use of ethanol and next generation 

biofuels, both in the near term and into 

the future. As both ethanol and nonethanol renewable fuel volumes grow, 

the proposed methodology set forth in 

today’s proposed rule will incorporate 

this growth into the development of the 

standards for the following year, 

providing an ongoing incentive for 

growth of biofuels. We recognize that a 

number of challenges must be overcome 

to fully realize the potential that exists 

for increased production and 

consumption of renewable fuels in the 

United States. We also recognize that 

while the RFS program is a central 

element of our domestic biofuels policy, 

a range of other tools, programs, and 

actions have the potential to play an 

important complementary role. We 

request information and ideas on what 

actions could be taken by the variety of 

industry and other private stakeholders, 

as well by the government, to help 

overcome these challenges, continue to 

foster innovation, and minimize the 

need for adjustments in the statutory 

renewable fuel volume requirements in 

the future. 

II. Proposed Cellulosic Biofuel Volume 

for 2014 

In order to project the volume of 

cellulosic biofuel production in 2014 for 

use in setting the applicable percentage 

standard, we considered information we 

received from EIA and information we 

collected from individual facilities that 

have the potential to produce qualifying 

volumes for consumption as 

transportation fuel, heating oil, or jet 

fuel in the U.S. in 2014. This section 

describes the volumes that we project 

will be produced or imported in 2014 as 

well as some of the uncertainties 

associated with those volumes. 

In the past several years the cellulosic 

biofuel industry has continued to 

progress. The first cellulosic biofuel 

RINs under the current RFS regulations 

were produced in 2012 at two small 

demonstration scale facilities. During 

2013, the first commercial scale 

cellulosic biofuel facilities have 

successfully completed commissioning 

and began fuel production, and several 

more large scale commercial production 

facilities are expected to begin fuel 

production in 2014. Projected costs for 

the production of cellulosic biofuels 

continues to fall as a result of ongoing 

technology development and operating 

experience gained from many research 

and development and demonstrationscale facilities across the country. These 

important advances include higher 

biofuel yields per ton of feedstock as 

well as lower enzyme and catalyst costs. 

As a result of these advances, the 

projected capital costs and energy costs 

to produce a gallon of cellulosic biofuel 

have decreased. New feedstock supply 

chains, which will be necessary to 

provide the raw materials for 


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6As of July 31, 2013, 215,044 RINs that can be 

used to fulfill the cellulosic biofuel standard (D3 

and D7 RINS) have been generated. 

7For the purposes of the Monte Carlo simulation, 

discussed in more detail later, this range will be 

treated as representing the 90% confidence interval. 

anticipated commercial facilities, have 

been established, and in several cases 

companies have signed contracts to 

obtain significant quantities of 

feedstocks for their first commercial 

facilities. EPA has also approved new 

pathways to increase the variety of fuels 

for which cellulosic RINs can be 

generated and the feedstocks from 

which these fuels can be produced. 

These factors have combined to 

continue to reduce the perceived 

technical, financial, and regulatory risks 

associated with the cellulosic biofuel 

industry and place the cellulosic biofuel 

industry on firm ground for future 

growth. 

Although the cellulosic biofuel 

industry faces many challenges and 

RIN-generating cellulosic biofuel 

production continues to be limited, the 

industry is growing incrementally, both 

in the United States and around the 

world.6 New facilities projected to be 

brought online in the United States in 

2014 would increase the production 

capacity of the cellulosic industry by 

approximately 600 percent. The 

following section discusses the 

companies the EPA reviewed in the 

process of projecting cellulosic biofuel 

production for use as a transportation 

fuel in the United States in 2014. 

Information on these companies forms 

the basis for our projection that the 

volume of cellulosic biofuel produced 

in 2014 is likely to be in the range of 

8–30 million gallons. EPA will continue 

to monitor the progress of these 

facilities, as well as any others of which 

we become aware that have the 

potential for cellulosic biofuel 

production in 2014, in order to have the 

most up to date information possible to 

set the cellulosic biofuel standard in the 

final rule. 

A. Statutory Requirements 

The volumes of renewable fuel to be 

used under the RFS program each year 

(absent an adjustment or waiver by EPA) 

are specified in CAA 211(o)(2). For 

2014, the statute specifies a cellulosic 

biofuel volume requirement of 1.75 

billion gallons. The statute requires that 

if EPA determines, based on EIA’s 

estimate, that the projected volume of 

cellulosic biofuel production for the 

following year is less than the 

applicable volume 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 2014 volume 

requirements for advanced biofuels and 

total renewable fuel is presented in 

Section IV. 

B. Cellulosic Biofuel Volume 

Assessment for 2014 

In order to project cellulosic biofuel 

production for 2014, we have tracked 

the progress of several dozen potential 

cellulosic biofuel production facilities. 

As for the 2013 annual volumes, we 

have focused on facilities with the 

potential to produce commercial 

volumes of cellulosic biofuel rather than 

small R&D or pilot scale facilities as the 

larger commercial scale facilities are 

much more likely to generate RINs for 

the fuel they produce and the volumes 

they produce will have a far greater 

impact on the cellulosic biofuel 

standard for 2014. From this list of 

facilities we used publically 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 

2014. Each of these companies was 

investigated further in order to 

determine the current status of its 

facilities and its likely cellulosic biofuel 

production and RIN generation volumes 

for 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 spoke with 

representatives of each company to 

discuss cellulosic biofuel target 

production levels for 2014. Throughout 

this process EPA has been in contact 

with EIA to discuss relevant 

information. 

For each company included in our 

2014 volume projections EPA has 

established a range of potential 

production volume such that it is 

possible, but highly unlikely, that the 

actual production will be above or 

below the range.7 The low end of the 

range for each company is designed to 

represent the volume of fuel EPA 

believes each company is likely to 

produce if they are unable to begin fuel 

production on their expected start-up 

date and/or experience challenges that 

result in reduced production volumes or 

a longer than expected ramp-up period. 

Experience to date with cellulosic 

biofuel production facilities is that 

historically they have been unable to 

achieve announced start-up dates and 

production volumes in their first few 

years of expected production. To project 

a low end of the range of production 

volumes, therefore, we must consider 

the likely minimum volume of fuel new 

facilities are likely to produce if they 

experience similar delays and setbacks. 

The low end of the range for any 

facilities that have not yet begun 

producing cellulosic biofuel is set at 

zero in our assessment. This reflects the 

uncertainties related to these facilities’ 

start-up dates, the possibility that any 

remaining construction and 

commissioning timelines may be 

delayed, and the possibility that initial 

fuel volumes are likely to be small. 

If a facility has already begun 

production any uncertainty related to its 

start-up date is no longer relevant and 

the remaining uncertainty primarily 

relates to the facility’s ability to achieve 

steady state production and target yields 

as it progresses towards production 

rates that reflect the facility’s nameplate 

capacity. For these facilities, production 

history is a significant factor in 

establishing the low end of the projected 

production range. It is important to note 

that the low end of the range does not 

represent a worst-case scenario. The 

worst-case scenario for any of these 

facilities is zero, as it is always possible 

that extreme circumstances or natural 

disasters may result in extended delays, 

project cancellation, or liquidation. 

While not denying this possibility for 

any of the facilities included in our 

projections, several have made 

sufficient progress that we believe a 

non-zero value for the low end of the 

range is appropriate. For these facilities 

we believe it is highly unlikely that the 

production volume will fail to exceed 

the low end of their projected 

production range in 2014. Further 

discussion on the basis for the low end 

of the projected production range for 

each facility is included in the company 

descriptions in the following sections. 

To determine the high end of the 

range of expected production volumes 

for each company we considered a 

variety of factors, including company 

history, expected start-up date and 

ramp-up period, facility capacity, and 

others mentioned above. As a starting 

point, EPA calculated a production 

volume using the expected start-up date 

and facility capacity assuming our bestcase scenario benchmark of a six-month 

straight-line ramp-up period. Any 

production volumes that exceeded this 


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8 In 2012, approximately 20,000 gallons of 

cellulosic biofuel produced in the US was exported 

to Brazil to be used for promotional purposes. We 

believe the circumstances surrounding this export 

of cellulosic biofuel were unique, including 

significant investment in the company that 

produced the fuel by Petrobras, and are unlikely to 

be repeated by the companies included in future 

years. 

9Email from Chris Standlee, Executive Vice 

President of Institutional Affairs, Abengoa to Dallas 

Burkholder, US EPA. Received June 26, 2013. 

volume were not considered to be 

credible, even for the high end of the 

range of expected production volumes. 

If the production estimate EPA received 

from a company was lower than the 

volume calculated using the 

methodology above, EPA used the 

company production targets instead. In 

some cases these volumes were 

discounted further based on the history 

of these companies or EPA’s engineering 

judgment. More information on the 

process used to project the high end of 

the range of expected production 

volumes for each company can be found 

below. This process is similar to the 

process used in the 2013 standards 

Notice of Proposed Rulemaking (NPRM) 

to calculate the expected production for 

each company. 

We believe our range of projected 

production volumes for each company 

represents the range of what is likely to 

actually happen for each company. A 

brief description can be found below for 

each of the companies we believe will 

produce cellulosic biofuel and make it 

commercially available in 2014. We will 

continue to gather more information to 

help inform our decision regarding the 

cellulosic biofuel volume to be required 

for 2014 in the final rule. In the sections 

that follow, we first discuss domestic 

cellulosic biofuel production facilities 

with an approved RIN generating 

pathway, followed by facilities with 

pathways that have been proposed or 

are currently being evaluated by EPA, 

and finally foreign cellulosic biofuel 

producers. 

EPA has determined a range of 

potential production volumes for each 

company rather than a single value as a 

range better reflects the uncertainty 

associated with the production from 

each company. Additionally, there are a 

large number of companies that EPA 

must assess and aggregate to produce a 

single national volume covering the 

entire cellulosic biofuel industry. We 

believe that our projected production 

volume for the cellulosic biofuel 

industry as a whole is more accurate if 

it is done in such a way as to reflect the 

uncertainty associated with each of the 

companies that contribute to the 

projection. As discussed in more detail 

in Section II.C below, EPA is using a 

Monte Carlo simulation as a tool to 

combine our production projections for 

each individual company to determine 

a reasonable range of cellulosic biofuel 

production in 2014 for the entire 

industry in a way that reflects the 

uncertainty across the full suite of 

facilities. This projected range provides 

a basis for public comment and helps to 

inform our ultimate decision on the 

single value for the final rule that best 

represents the projected volume of 

cellulosic that will be available in 2014. 

Alternative methods to combine our 

production projections are discussed 

further in Section IV. 

1. Potential Domestic Producers with 

Approved Pathways 

The companies and facilities 

discussed in this section all have the 

potential to produce cellulosic biofuel 

for use as transportation fuel, heating 

oil, or jet fuel in the United States in 

2014. Both INEOS Bio and KiOR began 

producing cellulosic biofuel at 

commercial-scale in 2013. The 

remaining seven are in various stages of 

construction. All seven of these 

facilities project the successful 

completion of construction of 

commercial scale facilities and initial 

fuel production in 2014. The strong 

financial incentive provided by the 

cellulosic RINs, combined with the fact 

that all these facilities are located in the 

United States and intend to use 

approved pathways, give us a high 

degree of confidence that any fuel they 

produce will also generate 

corresponding cellulosic biofuel RINs.8

In order to generate RINs, each of 

these companies must register under the 

RFS program and comply with all 

applicable recordkeeping and reporting 

requirements. This includes using an 

approved RIN-generating pathway and 

verifying that their feedstocks meet the 

definition of renewable biomass. 

Abengoa 

Abengoa, a large international 

biofuels company, 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. 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. 

Abengoa has contracts in place to 

provide the majority of feedstocks 

necessary for the Hugoton 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 

two years 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 million 

gallons. Abengoa plans to begin 

producing fuel at the facility in January 

2014, shortly after completing 

construction in late 2013, and to be 

producing fuel at rates near the 

nameplate capacity by the end of the 

second quarter of 2014. They are 

currently projecting 17–20 million 

gallons of cellulosic ethanol production 

from this facility in 2014.9 This range of 

volumes is consistent with the 18 

million gallons EPA would project if we 

assume production starts on January 1, 

2014 and use the six-month ramp-up 

period as a benchmark best case 

scenario for new cellulosic biofuel 

production facilities. To date 

construction at the Abengoa facility has 

proceeded as expected and EPA has no 

reason to believe this facility is less 

likely to achieve their production targets 

than any other new first-of-a-kind 

cellulosic biofuel facility. EPA is 

therefore using 18 million gallons of 

cellulosic ethanol as the high end of the 

projected production range from 

Abengoa in todays proposed rule. For 

the low end of the production range, 

EPA is projecting a volume of 0 gallons, 

consistent with our projections for all 

facilities that have not yet begun 

producing commercial volumes of 

cellulosic biofuel. This significantly 

reduced volume reflects the fact that no 

commercial scale cellulosic biofuel 

facility has yet been able to achieve its 

target date for the first production of 

fuel. Any delay in the start-up date of 

this facility would have a significant 

negative impact on production in 2014 

and may result in production being 

delayed until 2015. 


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10Both slash and pre-commercial thinnings and 

tree residue from tree plantations must come from 

non-federal forestland to qualify as a feedstock in 

the RFS program. Additionally slash and precommercial thinnings must come from land that is 

not ecologically sensitive forest land. 

Cool Planet Biofuels 

Cool Planet Biofuels has developed a 

process to convert a variety of forms of 

cellulosic biomass into a renewable 

gasoline product. Their process uses 

pressure and heat to convert the 

cellulosic biomass to a hydrocarbon 

stream in a biomass fractionator which 

is then upgraded using proprietary 

catalysts into a renewable gasoline 

product. Cool Planet Biofuels plans to 

deploy relatively small scale production 

units capable of producing 10 million 

gallons of fuel per year that can be 

located near readily available sources of 

cellulosic biomass. In December 2012 

Cool Planet Biofuels began producing 

fuel from their 400,000 gallon per year 

demonstration scale facility that is 

currently being used for testing 

purposes. 

Cool Planet Biofuels plans to begin 

producing fuel at their first commercial 

scale unit, with a nameplate capacity of 

10 million gallons per year by the end 

of 2014. The location of this facility has 

not yet been announced, and it is 

unclear whether Cool Planet Biofuels 

has raised sufficient funds for the 

construction of this facility. Cool Planet 

Biofuels claims that the very short 

construction time they anticipate for 

their facility relative to cellulosic 

biofuel production facilities of similar 

size, which generally take at least two 

years to build, is made possible by their 

use of very little novel equipment. The 

majority of the facility is composed of 

units already used in commercial 

operation in other applications that will 

be purchased from vendors and 

assembled by Cool Planet Biofuels. The 

facility will be constructed on cargo 

container skids and then transported to 

the fuel production site. 

EPA believes that it may be possible 

for Cool Planet Biofuels to produce 

cellulosic biofuel from their first 

commercial scale production facility in 

2014, but any production from this 

facility is highly uncertain. Historically 

the construction of cellulosic biofuel 

production facilities has taken multiple 

years, with delays to the initial 

construction schedules common. Cool 

Planet’s unique construction plan may 

allow for a reduced construction 

timeframe; however we do not believe it 

would be appropriate to rely on this in 

projecting available volumes of 

cellulosic biofuel in 2014. We have 

therefore not included any volume from 

Cool Planet Biofuels in our projection of 

the potentially available volume of 

cellulosic biofuel in 2014 in today’s 

proposal. 

DuPont 

DuPont has developed an enzymatic 

process to convert corn stover into 

cellulosic ethanol. DuPont has invested 

hundreds of millions of dollars to 

develop this technology and since 2009 

has operated a small demonstration 

scale facility in Vonore, Tennessee. In 

addition to developing technology for 

converting cellulosic biomass to 

ethanol, DuPont has been working with 

corn producers, equipment 

manufacturers, and Iowa State 

University to develop expertise in the 

collection, transportation, and storage of 

the biomass feedstock for their 

cellulosic ethanol facilities. On March 

29, 2013 DuPont signed an agreement 

with USDA to promote the sustainable 

harvesting of feedstocks for cellulosic 

biofuel facilities. 

On November 30, 2012 DuPont began 

the construction of their first 

commercial scale cellulosic ethanol 

facility in Nevada, Iowa. When 

completed, this facility will have a 

nameplate production capacity of 30 

million gallons of cellulosic ethanol per 

year. DuPont currently plans to achieve 

mechanical completion at this facility in 

June 2014 and to begin production in 

the second half of 2014. They are 

currently projecting the production of 

approximately 3 million gallons of 

cellulosic ethanol from this facility in 

2014; however they acknowledge that 

even slight delays in their expected 

construction timeline could have 

significant impacts on their fuel 

production in 2014. Using EPA’s bestcase benchmark of a six month straightline ramp-up period assuming a 

production startup date of October 1, 

2014 would result in an expected 

production of approximately 2 million 

gallons in 2014. Due to the start-up date 

that is late in the year, however, even a 

relatively minor delay in the 

construction and commissioning 

timeline or unforeseen challenges in 

start-up would result in no production 

from this facility in 2014. We have 

projected a range or 0–2 million gallons 

of cellulosic biofuel from DuPont’s 

Nevada, Iowa facility in 2014. 

Fiberight 

Fiberight uses an enzymatic 

hydrolysis process to convert the 

biogenic portion of separated municipal 

solid waste (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 million gallons 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. Additional 

construction will be required at this 

facility before the production of 

cellulosic biofuel can begin, and the 

company expects that this construction 

will take approximately 6 months to 

complete. 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. Because 

of the uncertainty surrounding 

Fiberight’s funding status, the lack of 

progress towards the completion of the 

modifications at their Blairstown, Iowa 

facility, and their history of production 

delays EPA is not including any volume 

from Fiberight in today’s proposal. 

INEOS Bio 

INEOS Bio has developed a process 

for producing cellulosic ethanol by first 

gasifying cellulosic feedstocks into a 

synthesis gas (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 

million gallons of cellulosic biofuel as 

well as 6 megawatts (gross) of renewable 

electricity from a variety of feedstocks 

including food and yard waste, 

agricultural residues, slash and precommercial thinnings, and tree residues 

from tree plantations.10 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 


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11RIN generation would be limited to fuels 

produced using approved sources of biomass such 

as agricultural residue, tree residue from a tree 

plantation, or slash and pre-commercial thinnings. 

LanzaTech would be required to meet all 

recordkeeping and reporting requirements to 

demonstrate the feedstock is renewable biomass 

sourced from land that meets all of the land use 

requirements of the RFS program. 

completed construction on this facility 

in June 2012 and began full 

commissioning of the facility. In August 

2012 INEOS Bio received approval from 

EPA for their yard waste separation plan 

and successfully registered their Vero 

Beach, FL facility under the RFS 

program. In October 2012 the facility 

began producing renewable electricity. 

INEOS Bio entered the start-up phase of 

cellulosic ethanol production in 

November 2012. During this phase the 

facility was not run continually, as 

facility modifications continued to be 

made; however, a small volume of 

cellulosic ethanol was successfully 

produced. On July 31, 2013, INEOS Bio 

announced they had begun producing 

cellulosic ethanol at commercial scale 

from their Vero Beach facility. INEOS 

Bio currently projects cellulosic ethanol 

production at this facility to be 4–5 

million gallons in 2013. As this volume 

is less than what would be projected 

using our best-case ramp-up benchmark 

we believe it is an appropriate volume 

to represent the upper end of INEOS 

Bio’s potential production range for 

2014. 

There is, however, significant 

uncertainty in the ability of this facility 

to achieve these production volumes in 

2014. The facility has not yet reached 

production rates consistent with its 

projected production volume, and 

production ramp-up could take longer 

than expected. INEOS Bio also 

experienced several setbacks to 

production related to weather-caused 

power losses at the facility. While they 

are working to protect against these 

issues in the future by enabling the 

facility to operate in a self-sustaining 

mode, the possibility of future 

interruption due to serious weather 

events will still exist. For this proposed 

rule we are projecting a production 

range of 2–5 million gallons of 

cellulosic ethanol from INEOS Bio’s 

Vero Beach facility in 2014. The low 

end of the range accounts for the 

possibility of both an extended ramp-up 

period and interruptions to production 

continuing into 2014. 

KiOR 

KiOR is working to commercialize a 

technology capable of converting 

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 million gallons 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 

raises and supplemented by KiOR’s 

$150 million IPO in June 2011. On 

March 17, 2013 KiOR generated their 

first cellulosic biofuel RINs from this 

facility. KiOR initially announced that 

they expected the start-up period at 

their Columbus facility to last 9–12 

months, during which time they 

estimate fuel production will average 

30%–50% of the facility capacity and 

production rates at or near nameplate 

capacity following. On August 8, 2013 

KiOR reduced its production targets for 

2013 from 3–5 million gallons to 1–2 

million gallons. 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. 

In today’s proposal we are projecting 

a production range of 0–9 million 

ethanol-equivalent gallons in 2014 from 

KiOR’s Columbus, MS facility. The high 

end of our proposed production 

projection (5.5 million actual gallons or 

9 million ethanol-equivalent gallons) 

has been calculated assuming this 

facility produces at an average rate of 

50% of nameplate capacity throughout 

2014. We believe this reduced volume is 

appropriate given the low production 

volumes KiOR has achieved to date and 

KiOR’s statements, in an August 8, 2013 

conference call discussing their second 

quarter performance, that they had not 

yet begun focusing on increasing the 

efficiency and yields of the facility. The 

low end of the range (0 million gallons) 

reflects uncertainty surrounding KiOR’s 

future production levels. 

LanzaTech 

LanzaTech has developed a process 

for the production of ethanol from 

feedstock streams that contain carbon 

monoxide. The LanzaTech process can 

utilize industrial waste gas streams or 

syngas produced from the gasification of 

agricultural residues, woody biomass, or 

other cellulosic feedstocks.11 These gas 

streams are dispersed into a liquid 

medium where they are converted into 

ethanol or other chemicals by 

LanzaTech’s proprietary microbes. 

LanzaTech is currently using this 

technology at two demonstration scale 

facilities in China, producing ethanol 

from waste gasses at steel mills in 

partnership with Baosteel and Capital 

Steel. 

On January 3, 2012 LanzaTech 

purchased the former Range Fuels 

facility in Soperton, Georgia. LanzaTech 

is currently in the process of assessing 

the equipment in place at this facility. 

After making any necessary 

modifications to the existing gasifiers 

they plan to install units to allow for the 

production of ethanol from syngas 

produced from the gasification of local 

woody biomass. LanzaTech believes the 

current production capacity of the 

gasifiers when used in combination 

with their ethanol producing microbes 

is approximately 4–6 million gallons per 

year, with the potential for further 

expansion to allow for the production of 

20–30 million gallons per year at this 

site. At this point, however, LanzaTech 

is not projecting initial ethanol 

production from this facility until late 

2014 or early 2015. EPA has therefore 

not included any volume from 

LanzaTech in our cellulosic biofuel 

projections in this proposed rule. 

Poet 

Poet has 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, 

South Dakota 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 of approximately 

25 million gallons per year. In 

anticipation of the start-up of this 

facility, Poet constructed a 22-acre 

biomass storage facility and had its first 


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12 78 FR 62462. 

13At the time of this proposal, EPA has finalized 

changes to the home heating oil definition but has 

not yet completed our determination of whether or 

not the fuels discussed in this section meet all of 

the requirements to generate cellulosic biofuel 

RINs. 

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 it 

decided to proceed without the loan 

guarantee. This project is expected to be 

completed in the first half of 2014 and 

will be followed by a commissioning 

period before the plant begins cellulosic 

ethanol production. Poet currently 

projects that production from Project 

LIBERTY will be between 7 and 12 

million gallons of cellulosic ethanol in 

2014. Using the six month best-case 

ramp-up period with production 

beginning on July 1, 2014 would result 

in a volume projection of 6 million 

gallons from this facility. In today’s 

proposed rule, EPA is therefore setting 

the high end of Poet’s projected 

production range at 6 million gallons of 

cellulosic ethanol. The low end of the 

projected production range for Poet’s 

Project LIBERTY is 0 gallons in 2014. 

This number reflects the fact that any 

significant delay in the start-up date or 

difficulties encountered in the 

commissioning or start-up phases of 

production are likely to result in little 

to no production from this facility in 

2014. While EPA has no reason to 

believe this facility will be any more 

prone to these types of challenges than 

any other commercial scale cellulosic 

biofuel production facility, our 

experience suggests that these types of 

delays are common and should be 

considered when projecting the low end 

of the range for production volume in 

2014. 

Sweetwater Energy 

Sweetwater Energy has also 

developed a technology for converting 

cellulosic biomass, primarily 

agricultural residues and woody 

biomass, to cellulosic sugars. 

Sweetwater Energy uses a modular 

approach, building relatively small 

facilities near the source of feedstock 

and transporting the sugars they 

produce to a larger facility to be 

converted into renewable fuels or 

chemicals. They currently have two 

arrangements in place with corn ethanol 

facilities in the United States to provide 

cellulosic sugars in sufficient quantity 

for the production of 3.6 million gallons 

of cellulosic ethanol from each of these 

facilities. Both of Sweetwater Energy’s 

cellulosic sugar production modules are 

scheduled to begin production in the 

summer of 2014. If both these facilities 

begin producing sugars that are 

converted to cellulosic biofuel on July 1, 

2014, our best case scenario benchmark 

six month straight-line ramp-up period 

would project a volume of 2 million 

ethanol-equivalent gallons. At this time, 

however, cellulosic RINs would not be 

able to be generated for any fuel 

produced using Sweetwater Energy’s 

cellulosic sugars since the existing RFS 

registration regulations were not 

designed to allow the subdivision of 

processes between multiple facilities. 

Until this is resolved, fuel production 

processes of this type will not be able 

to generate RINs. We therefore have not 

included any volume from Sweetwater 

Energy in our projections of cellulosic 

biofuel for 2014. 

Ensyn 

Ensyn has developed a technology 

called Rapid Thermal Processing (RTP) 

that uses heat to thermally crack carbon 

based feedstocks into a liquid bio-oil 

product they call renewable fuel oil 

(RFO). This conversion takes place in 

less than two seconds and is similar to 

the fluid catalytic cracking (FCC) 

process used in many refineries. Ensyn 

is currently using this technology in two 

commercial facilities located in 

Wisconsin and Ontario, Canada to 

produce renewable chemicals, food 

additives, and heating oil. They estimate 

that they have up to 3 million gallons 

of additional capacity at these two 

facilities that could be utilized if the 

fuel were eligible to generate RINs 

under the RFS program as home heating 

oil. This facility has a history of 

consistent production and we therefore 

believe this projection of 3 mill gal, or 

5 million ethanol-equivalent gallons, is 

an appropriate number to use as the 

high end of the projected range. 

Until recently the RFS regulations 

required that to qualify as ‘‘heating oil’’ 

for which RINs may be generated the 

fuel must be #1 diesel fuel, #2 diesel 

fuel, or any non-petroleum diesel blend 

that is sold for use in furnaces, boilers, 

and similar applications and which is 

commonly or commercially known or 

sold as heating oil, fuel oil, and similar 

trade names, and that is not jet fuel, 

kerosene, or motor vehicle, nonroad, 

locomotive or marine diesel fuel 

(MVNRLM). On October 22, 2013, EPA 

finalized a rule to amend this definition 

to include: 

A fuel oil that is used to heat interior 

spaces of homes or buildings to control 

ambient climate for human comfort. The fuel 

oil must be liquid at 60 degrees Fahrenheit 

and 1 atmosphere of pressure, and contain no 

more than 2.5% mass solids.12

This amendment allows the RFO 

produced by Ensyn to qualify for RINs 

if it were used to heat buildings where 

people live, work, recreate, or conduct 

other activities and it meets the other 

required components of the proposed 

definition. However, even if the fuel 

produced using the RTP process meets 

the new definition, Ensyn still faces 

several challenges to generating 

cellulosic biofuel RINs. Ensyn must still 

secure approved sources of renewable 

feedstock for their existing production 

facilities, increase production at these 

facilities, and find customers willing to 

make the modifications necessary to use 

Ensyn’s RFO as home heating oil. Any 

of these steps could result in delays in 

the increased production or qualifying 

use of RFO until 2015. For this proposal 

EPA is projecting a range of production 

of 0–3 million gallons (0–5 million 

ethanol-equivalent gallons) from 

Ensyn’s facilities in 2014. This volume 

has not been included in EPA’s primary 

projection of cellulosic biofuel 

projection for 2014 due to the 

outstanding issues mentioned above, 

but has been considered in our 

projection of all potentially available 

cellulosic biofuel, including companies 

without existing pathways for 

generating cellulosic biofuel RINs. In 

light of the recent amendments to the 

home heating oil definition, EPA will 

review this projection and make 

adjustments as necessary in the final 

rule. 

2. Potential Domestic Producers without 

Existing Pathways 

In addition to the facilities discussed 

above, there are a number of companies 

with the potential to produce cellulosic 

biofuel from domestic facilities in 2014 

from pathways that have not been 

approved for RIN generation by EPA. 

Some of these pathways were addressed 

in a notice of proposed rulemaking 

published by EPA on June 14, 2013, 

while others are currently being 

evaluated by EPA. As the companies 

discussed in this section do not yet have 

approved RIN generating pathways for 

the fuels they plan to produce, there is 

additional uncertainty regarding RIN 

production from them in 2014.13

Nevertheless, if the pathways are 

approved by EPA these facilities 

represent a significant potential source 

of cellulosic biofuel. The ranges 

projected for each company reflect only 

the uncertainty associated with 


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14 In projecting potential production volumes 

EPA has assumed that the pathways are all 

approved as of January 1, 2014. Approval 

subsequent to that date would reduce potential 

volumes, depending on the producer at issue. 

15EIA Annual Energy Outlook 2013. 

Transportation Sector Energy Use by Mode and 

Type, Reference case. 

16See CFR 80.1426 for requirements for 

generating RINs from biogas 

production volumes, assuming pathway 

approval occurs.14 EPA will decide 

whether or not to include any volume 

from these pathways based on the status 

of these pathways and the progress 

made by the companies towards 

commercial cellulosic biofuel 

production at the time of the final rule. 

Compressed Natural Gas (CNG) and 

Liquified Natural Gas (LNG) Producers 

One of the new pathways proposed by 

EPA for the production of cellulosic 

biofuel is for the production of CNG or 

LNG from landfill biogas if used as a 

transportation fuel. The production 

potential for this type of cellulosic 

biofuel is very large with many landfills 

currently capturing biogas. The use of 

CNG and LNG as a transportation fuel 

in 2014 is expected to be approximately 

700 million ethanol-equivalent 

gallons.15 To generate RINs for landfill 

biogas, however, companies must be 

able to demonstrate that any fuel for 

which they generate RINs is used as 

transportation fuel. This can be done by 

fueling vehicles with CNG/LNG onsite 

or through contractual mechanisms. 

In this proposed rule, we are 

projecting a production range of 35–54 

million ethanol-equivalent gallons from 

landfill biogas in 2014. The high end of 

the range represents the actual peak 

capacity of all of the facilities that 

produced advanced RINs from landfill 

biogas while the low end represents the 

current production rate of advanced 

biofuel from landfill biogas. In the case 

of CNG and LNG from landfill biogas, 

we believe a different methodology for 

projecting the high end of the 

production range is appropriate as the 

uncertainties surrounding RIN 

generation are significantly different. 

The only change at issue in the proposal 

to approve this pathway for the 

generation of cellulosic biofuel RINs is 

a change in the type of RIN that is 

generated, allowing for the generation of 

cellulosic biofuel instead of advanced 

biofuel RINs based on new information 

of the composition of the feedstock. In 

this case production facilities already 

exist and are already capturing landfill 

biogas at or near their registered 

capacities. Similarly, the amount of 

CNG and LNG currently being used as 

transportation fuel far exceeds the 

combined production capacity of all of 

the registered facilities. RIN generation 

is therefore limited by the companies’ 

ability to demonstrate the use of the 

biogas as a transportation fuel.16 As part 

of the registration process for the 

generation of advanced biofuel RINs, 

each of these facilities submitted 

documentation that included contracts 

with parties capable of using CNG/LNG 

as transportation fuel who had access to 

the same common carrier pipeline 

network as the biofuel producers. 

We believe the sum of the actual peak 

capacities of all of the facilities that 

produced advanced biofuel RINs from 

landfill biogas in 2013 is an appropriate 

volume to use for the high end of the 

projected production range. It is also the 

case, however, that these facilities 

would appear to have the capability to 

realize value from advanced RIN 

production if they were to produce at 

their facility capacity and are not 

currently doing so. There may be 

additional factors that EPA is unaware 

of at this time that is limiting 

production. To account for this, we are 

setting the low end of the range for the 

production of cellulosic RINs from 

CNG/LNG produced from landfills equal 

to 35 million gallons, the current 

production rate when projected over a 

full year. 

Edeniq 

Edeniq has developed a proprietary 

process that would allow corn ethanol 

producers to generate cellulosic ethanol 

from corn kernel fiber at the producers’ 

existing production facilities. Their 

process involves the addition of the 

CellunatorTM, a proprietary milling 

technology designed to increase the 

uniformity of the feedstock particles, 

along with a unique combination of 

enzymes to convert the cellulosic 

material in the corn kernel into sugars 

and ultimately cellulosic ethanol. 

Edeniq claims that their technology 

would not only allow corn ethanol 

producers to produce cellulosic ethanol 

from low value feedstock already 

present in their facility, but also would 

increase the yields of ethanol produced 

from starch by 2–4%. Several 

commercial plants are currently using 

the Cellunator technology to increase 

their yields of ethanol from starch. 

Edeniq has been testing their 

technology, including both the 

Cellunator and the additional enzymes, 

at a demonstration scale facility in 

Visalia, California since June 2012 and 

announced in May 2013 that they had 

successfully completed a trial run at this 

facility with a continuous run time of 

greater than 1000 hours. 

Several plants are evaluating Edeniq’s 

proprietary system to produce cellulosic 

ethanol from corn kernel fiber. These 

evaluations have included commercial 

scale trials. If the pathway for the 

production of cellulosic ethanol from 

corn kernel fiber is approved, these 

facilities would be in position to begin 

generating cellulosic RINs shortly after 

approval. Other facilities currently 

using the Cellunator would only have to 

make minor modifications to their 

operations, including the addition of 

Edeniq’s suite of enzymes to produce 

cellulosic ethanol. Edeniq currently 

projects approximately 7 million gallons 

of cellulosic ethanol production using 

their technology in 2014 and has 

provided EPA with detailed information 

on the expected production volumes 

and dates of initial cellulosic ethanol 

production for facilities expected to 

utilize their technology. In today’s 

proposed rule, we have included a 

projected production volume of 0–7 

million gallons. The low end of this 

range reflects the fact that Edeniq’s 

technology has not yet been used to 

generate commercial scale volumes of 

cellulosic biofuel. The high end of the 

range reflects Edeniq’s own projections, 

which EPA has reviewed and believes 

are reasonable given the nature of 

Edeniq’s technology, the deals they 

currently have in place, and their 

experience with the installation and 

operation of the various components of 

their technology. This volume is also 

dependent on the finalization of EPA’s 

proposed rule clarifying that the 

definition of crop residue includes corn 

kernel fiber. 

3. Potential Foreign Sources of 

Cellulosic Biofuel 

In addition to the potential sources of 

cellulosic biofuel located in the United 

States discussed above there are several 

foreign cellulosic biofuel companies 

that may produce cellulosic biofuel in 

2014. All of these facilities utilize fuel 

production pathways that have been 

approved by EPA for cellulosic RIN 

generation provided eligible sources of 

renewable feedstock are used. These 

companies would therefore be eligible 

to register these facilities under the RFS 

program and generate RINs for any fuel 

imported into the United States. 

Currently, however, none of these 

facilities have successfully completed 

the registration process for the RFS 

program. Further, demand for the 

cellulosic biofuels they produce is 

expected to be high in local markets. 

Production volumes from these foreign 

facilities have therefore not been 

included in our projection of potentially 

available volume for 2014. EPA plans to 


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continue to monitor the progress of 

these foreign facilities and may include 

volumes from these facilities should 

their plans change in the future. 

Beta Renewables 

Beta Renewables has developed a 

biochemical technology to convert 

cellulosic biomass into cellulosic 

sugars, which can then be used in the 

production of fuels or chemicals. Their 

first commercial scale facility was built 

in Crescentino, Italy and began 

producing cellulosic ethanol in 

commercial quantities in June 2013. 

This facility uses Arundo donax and 

wheat straw as feedstocks and has an 

annual production capacity of 20 

million gallons of ethanol per year. 

Ethanol produced at this facility would 

be eligible to generate cellulosic RINs if 

Beta Renewables registers its facility 

and imports the cellulosic ethanol into 

the United States for use as a 

transportation fuel. Beta Renewables is 

also planning to build a cellulosic 

ethanol production facility in North 

Carolina. This facility is not expected to 

begin ethanol production in 2014, 

however, and has therefore not been 

included in our projection of available 

volume for 2014. 

Enerkem 

Enerkem plans to use a 

thermochemical process to produce 

syngas from MSW and other waste 

materials and then catalytically convert 

the syngas to methanol. The methanol 

can then be sold directly or upgraded to 

ethanol or other chemical products. 

Their first commercial scale facility in 

Edmonton, Alberta, Canada is 

scheduled to complete construction and 

begin producing methanol in 2013 with 

ethanol production following in 2014. 

At full capacity this facility will be 

capable of producing 10 million gallons 

of cellulosic ethanol per year. Despite 

their relative close proximity to the 

United States, Enerkem has indicated to 

EPA that they do not intend to export 

cellulosic biofuel into the United States 

from their Edmonton facility. 

GranBio 

GranBio began construction on its 

first commercial cellulosic ethanol 

production facility in Sa ̃o Miguel dos 

Campos, Brazil in December 2012. It is 

largely funded by a 300.3 million Reais 

loan from BNDES, Brazil’s national 

social and economic development bank. 

This facility, which will use technology 

licensed from Beta Renewables, will 

have a nameplate capacity of 22 million 

gallons of ethanol per year and is 

scheduled to be completed in the first 

half of 2014. The feedstock for this 

facility will be excess bagasse not 

currently used to provide process heat 

or electricity at sugarcane ethanol 

production facilities. 

Raizen 

Raizen, a joint venture between Royal 

Dutch Shell and Cosan SA, is planning 

to build a 10.5 million gallon per year 

cellulosic ethanol plant attached to their 

Costa Pinto sugarcane mill in 

Piracicaba, Brazil. This facility will use 

a biochemical conversion technology 

developed by Iogen and Codexis to 

convert sugarcane bagasse to ethanol. 

The facility is currently scheduled to 

complete construction in the second 

half of 2014 and if successful will be the 

first of up to 8 cellulosic ethanol 

production facilities built by Raizen in 

Brazil. 

4. Summary of Volume Projections for 

Individual Companies 

The information we have gathered on 

cellulosic biofuel producers, described 

above, allows us to project a range of 

production volumes for each facility in 

2014. As in 2013, we have once again 

focused on commercial scale cellulosic 

biofuel production facilities. This focus 

is appropriate, as the volume of 

cellulosic biofuel produced from R&D 

and pilot scale facilities is quite small in 

relation to that expected from the 

commercial scale facilities for which we 

have projected volumes in 2014 and 

historically R&D and demonstration 

scale facilities have not generated RINs 

for any fuel they have produced. 

In 2014 as many as twelve domestic 

cellulosic biofuel production facilities 

have the potential to produce fuel at 

commercial scale. Each of these 

facilities is discussed above, and the 

projected available volumes for each are 

summarized in Table II.B.4–1 below. 

Two of the companies that have the 

potential to produce cellulosic biofuel 

in 2014, INEOS Bio and KiOR, are 

currently producing cellulosic biofuel. 

The production of RIN generating fuel 

from the remaining 10 facilities is more 

uncertain as these facilities have either 

yet to complete construction or do not 

currently have a valid pathway for 

generating cellulosic RINs. 

We have also identified four foreign 

facilities with the potential to produce 

cellulosic ethanol in 2014. At this point 

we do not believe any of these facilities 

are likely to export any of the fuel they 

produce to the United States. We will 

continue to monitor the status of these 

facilities and may include volume from 

them in our final rule if appropriate. We 

ask for comment on this analysis and 

are especially interested in data that 

would support cellulosic volume 

estimates. 

TABLE II.B.4–1—PROJECTED AVAILABLE CELLULOSIC BIOFUEL FOR 2014 

Company name Location Feedstock Fuel 

Design 

capacity 

(MGY) a

First production 

2014 Projected 

available volume 

(ethanolequivalent) 

Domestic Facilities; Approved Pathways 

Abengoa ................ Hugoton, KS ......... Corn Stover .......... Ethanol ........... 24 .......................... 1st Quarter 2014 .. 0–18 

CoolPlanet Biofuels TBD ...................... TBD ...................... Gasoline ......... 10 .......................... 2nd Half 2014 ....... 0 

DuPont .................. Nevada, IA ............ Corn Stover .......... Ethanol ........... 30 .......................... 2nd Half 2014 ....... 0–2 

Fiberight ................ Blairstown, IA ....... MSW ..................... Ethanol ........... 6 ............................ Unknown ............... 0 

INEOS Bio ............. Vero Beach, FL .... Vegetative Waste Ethanol ........... 8 ............................ 3rd Quarter 2013 .. 2–5 

KiOR ...................... Columbus, MS ...... Wood Waste ......... Gasoline and 

Diesel.

11 .......................... 1st Quarter 2013 .. 0–5.5 

(0–9) 

LanzaTech ............. Soperton, GA ........ Wood Waste ......... Ethanol ........... 5 ............................ 1st Half 2015 ........ 0 

Poet ....................... Emmetsburg, IA .... Corn Stover .......... Ethanol ........... 25 .......................... 1st Half 2014 ........ 0–6 

Sweetwater Energy Various ................. Ag. Residue .......... Ethanol ........... 7 ............................ 1st Half 2014 ........ 0 


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TABLE II.B.4–1—PROJECTED AVAILABLE CELLULOSIC BIOFUEL FOR 2014—Continued 

Company name Location Feedstock Fuel 

Design 

capacity 

(MGY) a

First production 

2014 Projected 

available volume 

(ethanolequivalent) 

Domestic Facilities; All Potential Producers 

Ensyn .................... Stanley, WI ........... Wood Waste ......... Heating Oil ..... 3 ............................ 2007 ...................... 0–3 

(0–5) 

CNG/LNG Producers.Various ................. Biogas from Landfills.CNG/LNG ....... Various ................. N/A ........................ 35–54 

Edeniq ................... Various ................. Corn Kernel Fiber Ethanol ........... Various ................. 1st Half 2014 ........ 0–7 

Foreign Facilities 

Beta Renewables .. Crescentino, Italy .. Wheat straw, 

Arundo Donax.

Ethanol ........... 20 .......................... 2Q 2013 ................ 0 

Enerkem ................ Edmonton, Alberta Separated MSW ... Methanol, Ethanol.10 .......................... 1st Half 2014 ........ 0 

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

Campos, Brazil.

Bagasse ................ Ethanol ........... 22 .......................... 1st Half 2014 ........ 0 

Raizen ................... Piracicaba, Brazil .. Bagasse ................ Ethanol ........... 10.5 ....................... 2nd Half 2014 ....... 0 

aFacilities are generally designed to process a given quantity of feedstock and volume capacities may vary depending on yield assumptions. 

C. Proposed Cellulosic Biofuel Volume 

for 2014 

As discussed in the preceding 

sections we have used information from 

a variety of sources, including EIA, 

USDA, and the companies themselves, 

to determine a projected range of 

production of cellulosic biofuel for each 

company in 2014. These volumes are 

summarized in Table II.B.4–1 above. 

These volumes form the basis for our 

projection of cellulosic biofuel 

production in 2014. We do not believe, 

however, that a simple summation of 

the low end and high end of the 

projected production volumes for each 

company would result in an appropriate 

projected range of production volumes 

across the cellulosic biofuel industry. It 

is highly unlikely that every company 

will produce at or near the low end, or 

conversely the high end, of its range of 

projected production volumes. It is also 

the case that the production 

expectations within the projected ranges 

differ for facilities in different stages. 

The uncertainties associated with 

cellulosic biofuel production vary in 

both type and degree among facilities 

that have already begun production, 

those that are currently in or will soon 

be approaching the commissioning of 

their facilities, and those that are still 

undergoing significant construction 

operations. 

EPA is using a Monte Carlo 

simulation to account for the need to 

aggregate across several ranges, with 

different producers having different 

production probability distributions 

across their expected production range. 

As discussed above, the high and the 

low end of each range represents values 

such that it is possible but highly 

unlikely that volumes would be higher 

or lower than this range. EPA will 

therefore treat these individual ranges as 

representing the 90% confidence 

interval of a distribution of possible 

volumes. In other words, the low end of 

the range for a producer would 

represent the 5th percentile and the 

high end of the range would represent 

the 95th percentile. This approach is 

consistent with EPA’s judgment that, 

while the ranges shown in Table II.B.4– 

1 are intended to encompass the vast 

majority of possible volumes, there 

remains a small possibility that volumes 

outside of those ranges are possible. We 

believe it is reasonable to treat these 

values as a 90% confidence interval for 

purposes of the Monte Carlo analysis, 

though we request comment on treating 

them as a different confidence interval 

such as 80% or 95%. 

For the purposes of the Monte Carlo 

analysis, EPA must also identify an 

uncertainty distribution for production 

for each facility. These distributions 

reflect our expectation for the most 

likely distribution of production 

volumes within the projected range 

when taking into account the many 

different uncertainties associated with 

the production volume from each 

facility. While each facility faces its own 

set of unique circumstances and 

challenges in producing cellulosic 

biofuels at commercial scale, many can 

be grouped into one of several general 

categories, the impact of which will 

vary with the progress achieved at that 

facility to date. One source of 

uncertainty in the projected production 

volume of a new cellulosic biofuel 

facility is related to the completion of 

the construction and commissioning 

phases of the facility. This includes 

uncertainty in the construction 

schedules, modifications to the design 

during the construction or 

commissioning phase, challenges 

encountered in scaling up the 

technology to commercial scale, 

unexpected delays or repairs due to 

weather events, or any of a number of 

other reasons. Delays of this type will 

result in a later than expected start-up 

date which may result in significantly 

decreased production volumes in 2014 

or the start of production being delayed 

until 2015. The uncertainty related to 

delays in the completion of the 

construction of a facility decreases the 

closer the project is to completion, and 

is entirely irrelevant to facilities that 

have already begun production. 

A second source of uncertainty is that 

associated with the ramp-up phase of 

new facilities. Lower than expected 

product yields, feedstock supply and 

handling challenges, contamination of 

chemical or biological catalysts, and a 

number of other issues can cause 

reduced production during the ramp-up 

phase and/or a longer than expected 

ramp-up period before reaching 

production levels that correspond to the 

nameplate capacity of the facility. 

Facilities that face these types of 

challenges during the ramp-up phase of 

production are very likely to still 

achieve some level of production, but 

that level may vary depending on the 

severity and duration of the challenges 

they face. The closer a facility is to 

achieving production rates that 

correspond to the nameplate capacity of 

the facility, the less likely they are to see 


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reductions in their expected production 

due to challenges in the ramp-up phase. 

A third source of uncertainty is the 

ability of the facility to maintain 

consistent production at or near 

nameplate capacity after the ramp-up 

phase has been successfully completed. 

A number of factors including, but not 

limited to feedstock supply 

interruption, significant issues with 

feedstock quality, loss of power or other 

essential utilities at the facility, and 

interruptions in production due to 

accidents, operator error, or weather 

events could cause fuel production at a 

facility to decrease or cease altogether. 

While the uncertainty associated with 

these issues is never completely absent, 

it does decrease over time if a facility is 

able to consistently achieve production 

levels at or near nameplate capacity 

with few or no interruptions to 

production. 

The degree to which these three 

sources of uncertainty impact expected 

production of cellulosic biofuel in 2014 

varies greatly with the progress 

achieved by the facility to date. To 

represent this uncertainty for facilities 

expected to begin operations in different 

timeframes, we used three different 

standardized uncertainty distributions. 

The three standard curves that represent 

the expected production distributions 

from cellulosic biofuel production 

facilities are shown in Figure II.C–1 

below. We request comment on how 

well these three curves represent the 

expected production distributions of the 

various cellulosic biofuel producers 

discussed above or if other curves may 

be more appropriate. 

As described more fully in Section 

IV.B.4, we believe that these three 

standardized distributions provide a 

mechanism for representing the regions 

within each projected volume range 

where the greatest likelihood of 

reasonably achievable volumes lie. 

Facilities that have already begun 

producing cellulosic biofuel in 2012 or 

earlier and have at least a full year of 

production history do not face 

uncertainty associated with delays in 

the construction and commissioning of 

the facility. They may, however, face 

some uncertainty in their ramp-up 

schedule relative to the progress they 

have achieved to date, as well as the risk 

of unexpected shutdown or slowdown 

faced by all facilities. For facilities 

facing these uncertainties we expect that 

the most likely production volume is 

towards the middle of the range, with 

decreasing production probabilities as 

the high and low ends of the production 

ranges are approached. A normal curve 

is appropriate for this expected 

production distribution. In 2014, 

however, there are no commercial scale 

cellulosic biofuel production facilities 

that meet these criteria. 

Facilities that began producing 

cellulosic biofuel in 2013 no longer face 

uncertainty due to potential delays in 

the completion of construction and the 

commissioning of the facility. There is, 

however, uncertainty regarding these 

facilities ramp-up schedules which can 

have a significant impact on the 

production volumes from these 

facilities. We believe that the expected 

production of these facilities would be 

best represented by a right-skewed or 

Weibull curve, with the most likely 

production volume near, but not at, the 

low end of the range and the production 

probabilities gradually towards the high 

end of the range. 

Facilities not expected to begin 

producing cellulosic biofuel until 2014 

face uncertainty associated with a delay 

in the completion in the construction 

and commissioning of the facility. Given 

this uncertainty, we believe that the 

most likely production volume is at the 


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17Because the low end of each range represents 

the 5th percentile, negative volumes are selected 

approximately 5% of the time when the low end of 

the range is zero. 

low end of the range with decreasing 

probability as the high end of the range 

is approached. To represent this 

asymmetrical uncertainty, we believe a 

half-normal curve is a reasonable 

representation of the expected 

production distribution from these 

facilities. 

The type of uncertainty distribution 

used to represent the expected 

production within the projected range 

for each company is shown in Table 

II.C–1. 

TABLE II.C–1—STANDARD DISTRIBUTIONS USED TO PROJECT CELLULOSIC BIOFUEL PRODUCTION IN 2014 

Company Distribution curve 

5th Percentile 

volume 

(mill ethanolequivalent gal) 

95th Percentile 

volume 

(mill ethanolequivalent gal) 

Abengoa ....................................................................... Half-Normal ................................................................... 0 18 

DuPont .......................................................................... Half-Normal ................................................................... 0 2 

INEOS Bio .................................................................... Right-Skewed ............................................................... 2 5 

KiOR ............................................................................. Right-Skewed ............................................................... 0 9 

Poet .............................................................................. Half-Normal ................................................................... 0 6 

CNG/LNG Producers .................................................... Normal .......................................................................... 35 54 

Edeniq ........................................................................... Half-Normal ................................................................... 0 7 

Ensyn ............................................................................ Normal .......................................................................... 0 5 

To aggregate the production 

distributions for each of the companies 

into a single distribution representing 

cellulosic biofuel production across the 

entire industry, we performed two 

Monte Carlo simulations in which each 

of the distributions was randomly 

sampled in an iterative fashion. Each of 

the distributions was sampled 3000 

times and the results of all the iterations 

were then summed to produce a 

distribution for cellulosic biofuel. For 

the uncertainty distributions where the 

low end of the projected range was zero 

it was possible for the Monte Carlo 

simulation to select a negative volume 

for these companies.17 Whenever 

negative volumes were selected in the 

Monte Carlo simulations these negative 

volumes were reset to zero. 

We generated two separate aggregate 

distributions to represent total cellulosic 

biofuel using the Monte Carlo process. 

Given the uncertainty surrounding the 

timing and approval of the proposed 

RIN-generating pathways that would be 

used by CNG/LNG producers, Edeniq, 

and Ensyn, the first aggregate 

distribution only included volumes 

from those facilities using RINgenerating pathways that have already 

been approved. The result of this Monte 

Carlo simulation forms the basis for the 

range of cellulosic biofuel production 

included in this proposal. 


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The second Monte Carlo simulation 

included volumes from all eight 

facilities for which we have projected a 

range of volumes in 2014. The results of 

this simulation would be more 

representative of the volume of 

cellulosic biofuel included in our final 

rule in the event that the proposed RINgenerating pathways discussed above 

are approved for RIN generation before 

the 2014 applicable volumes are 

finalized. 


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18These volumes are also the result of our Monte 

Carlo simulation. Similar to the individual 

company production projections, the low and high 

ends of the ranges cannot be simply added together 

to calculate the high and low ends of our total 

cellulosic biofuel production projection in 2014. 

Cellulosic hydrocarbons include both cellulosic 

gasoline and cellulosic diesel. 19See API v. EPA, 706 F.3d 474 (D.C. Cir. 2013). 

20This could be the case if there was reason to 

believe there was a systematic bias such that the 

ranges tended to over or under estimate the actual 

production volumes. 

In today’s NPRM we are proposing a 

volume for the 2014 cellulosic biofuel 

standard of 8—30 million ethanolequivalent gallons. This volume is 

expected to be comprised of 5—26 

million gallons of ethanol and 0—9 

million ethanol-equivalent gallons of 

cellulosic hydrocarbons.18 The 

proposed range is derived from the 90% 

confidence interval of the Monte Carlo 

simulation that includes all the 

companies we expect to produce 

commercial volumes of cellulosic 

biofuel in 2014 using pathways in the 

current RFS regulations. As discussed in 

Section II.B, many factors have been 

taken into consideration in developing 

the individual company projections, 

such as the information from EIA, 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, and many 

others. We have also used distribution 

curves weighted towards the low end of 

the expected production range for each 

company to account for the fact that 

previous projections of cellulosic 

biofuel production have exceeded actual 

production. We believe the range of 

volumes proposed (8—30 million 

ethanol-equivalent gallons) resulting 

from the Monte Carlo simulation is a 

reasonable representation of expected 

production in 2014 across the industry. 

Our proposed range reflects EPA’s 

best estimate of the range of cellulosic 

biofuel volumes that will actually be 

produced in 2014. In the final rule EPA 

will determine a single volume that 

represents EPA’s best estimate of the 

volume that will actually be produced 

in 2014.19 EPA invites comment on the 

best approach to determine a single 

value from a range developed using the 

approach described above. For example, 

EPA could use the mean (average value), 

median (50th percentile), or mode (the 

volume that occurs most frequently). It 

may also be reasonable to use a value 

representing higher or lower values in 

the distribution, such as the 25th or 

75th percentile if there is reason to 

believe these would provide a more 

accurate projection of actual production 

in 2014.20 We have determined the 

volumes represented by each of these 

methods and presented the values in 

Tables II.C–2 and II.C–3 below. 

TABLE II.C–2—POTENTIAL APPROACHES TO DETERMINING THE

FINAL CELLULOSIC BIOFUEL REQUIREMENT (APPROVED PATHWAYS

ONLY) a

[million ethanol-equivalent gallons] 

Mean ................................................... 17 

50th percentile .................................... 16 

Mode ................................................... 16 

25th percentile .................................... 12 

75th percentile .................................... 21 

aAll volumes are ethanol-equivalent gallons 

TABLE II.C–3—POTENTIAL APPROACHES TO DETERMINING THE

FINAL CELLULOSIC BIOFUEL REQUIREMENT (ALL POTENTIAL CELLULOSIC BIOFUEL PRODUCERS) a

[million ethanol-equivalent gallons] 

Mean ................................................... 67 

50th percentile .................................... 67 


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21 78 FR 36042 (June 14, 2013). 

22Since EPA is proposing to reduce the 

applicable volume of cellulosic biofuel under 

section 211(o)(7)(D), EPA will be required to make 

available cellulosic biofuel credits. EPA will set the 

price for the cellulosic biofuel credits in the final 

rule, using the same approach to applying the 

criteria in section 211(o)(7)(D)(ii) that was used in 

setting the price for cellulosic biofuel credits for 

2013. See 78 FR 49794. 

23 77 FR 59458 (September 27, 2012). 

24Letter dated November 20, 2012 to Honorable 

Lisa Jackson from Richard Moskowitz, American 

Fuel & Petrochemical Manufacturers, ‘‘Re: Petition 

for Reconsideration—Docket No. EPA–HQ–OAR– 

2010–0133. Letter dated November 26, 2012 to 

Honorable Lisa Jackson from Robert L. Greco, III, 

American Petroleum Institute, ‘‘Re: Request for 

Reconsideration of EPA’s Final Rulemaking ‘2013 

biomass-Based Diesel Renewable Fuel Volume.’ ’’ 

25 78 FR 49411, August 14, 2013. 

26For example, EPA may waive a given standard 

in whole or in part following the provisions at CAA 

211(o)(7). 

TABLE II.C–3—POTENTIAL APPROACHES TO DETERMINING THE

FINAL CELLULOSIC BIOFUEL REQUIREMENT (ALL POTENTIAL CELLULOSIC BIOFUEL PRODUCERS) a— 

Continued 

[million ethanol-equivalent gallons] 

Mode ................................................... 67 

25th percentile .................................... 61 

75th percentile .................................... 73 

aAll volumes are ethanol-equivalent gallons 

In today’s NPRM, we are proposing to 

use the mean value for the final volume 

requirement for cellulosic because we 

believe it best represents a neutral aim 

at the volumes that could reasonably be 

supplied. However, we request 

comment on whether one of the 

alternative values shown in Table II.C– 

2 would be more appropriate as the 

basis for the required volume of 

cellulosic biofuel in the final rule. 

It is important to note that the final 

cellulosic biofuel standard for 2014 may 

be set at a volume outside the proposed 

range of 8–30 million ethanolequivalent gallons. If EPA finalizes the 

pathways discussed in the recent 

proposed rulemaking 21 before the 

applicable volume of cellulosic biofuel 

for 2014 is finalized, volumes of fuel 

from companies intending to utilize 

these pathways may be included in our 

projected available volume for 2014 as 

discussed above. Foreign producers of 

cellulosic biofuel who inform EPA of 

their intent to export the fuel they 

produce to the United States may also 

be included. Finally, a variety of factors 

may affect our production projections 

for the companies considered in this 

proposal, including unexpected project 

modifications or cancellations or the 

inclusion of volumes of cellulosic 

biofuel from sources other than those 

listed above. 

We will continue to monitor the 

progress of the cellulosic biofuel 

industry, in particular the progress of 

the companies which form the basis of 

our proposed 2014 volume projection. 

We expect that for the final rule there 

will be greater certainty on the 

appropriate volume of fuel that we can 

reasonably expect to be produced and 

made commercially available in 2014. 

We request comment on our analysis 

and estimates.22

D. Rescission of the 2011 Cellulosic 

Biofuel Standards 

On January 25, 2013, the United 

States Court of Appeals for the District 

of Columbia Circuit issued its decision 

concerning a challenge to the 2012 

cellulosic biofuel standard. 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, and we removed the 

2012 requirement from the regulations 

in a previous action. Industry had also 

challenged the 2011 cellulosic biofuel 

standard by, first, filing a petition for 

reconsideration of that standard, and 

then seeking judicial review of our 

denial of the petition for 

reconsideration. This matter was still 

pending at the time of the DC Circuit’s 

ruling on the 2012 cellulosic biofuel 

standard. Since we used essentially the 

same methodology to develop the 2011 

cellulosic biofuel standard as we did to 

develop the 2012 standard, we 

requested, and the Court granted, a 

partial voluntary remand to enable us to 

reconsider our denial of the petition for 

reconsideration of the 2011 cellulosic 

biofuel standard. Given the Court’s 

ruling that the methodology EPA used 

in developing the 2012 cellulosic 

biofuel standard was flawed, we have 

decided to grant reconsideration of the 

2011 cellulosic biofuel standard, and are 

today proposing to rescind the 2011 

cellulosic biofuel standard. If this 

proposal is finalized, the money paid by 

obligated parties to purchase cellulosic 

waiver credits to comply with the 2011 

cellulosic biofuel standard would be 

refunded. 

III. Proposed National Volume 

Requirement for Biomass-Based Diesel 

in 2014 and 2015 

EPA set the national volume 

requirement for biomass-based diesel for 

2013 at 1.28 bill gal of biomass-based 

diesel.23 This national volume is then 

used to determine the applicable 

percentage standard that determines the 

specific renewable volume obligations 

for refiners and importers. 

Subsequently, EPA received two 

Petitions for Reconsideration requesting 

that EPA reconsider the final rule 

setting the 2013 biomass-based diesel 

volume requirement at 1.28 bill gal.24

After review and consideration of the 

issues raised by petitioners, EPA denied 

both petitions.25

In today’s action we are proposing an 

applicable volume of 1.28 bill gal 

biomass-based diesel for 2014 and 2015. 

In proposing the 2015 applicable 

volume of biomass-based diesel, we are 

not at this time proposing the 

percentage standards that would apply 

to obligated parties in 2015. The 

percentage standards for 2015 will be 

proposed in a subsequent rulemaking as 

required by the statute once the 

requisite gasoline and diesel fuel 

volumes for 2015 are determined. 

A. Statutory Requirements 

Section 211(o)(2)(B)(i) of the Clean 

Air Act specifies the applicable volumes 

of renewable fuel on which the annual 

percentage standards must be based, 

unless the applicable volumes are 

waived or adjusted by EPA in 

accordance with the Act.26 Applicable 

volumes are provided in the statute for 

years through 2022 for cellulosic 

biofuel, advanced biofuel, and total 

renewable fuel. For biomass-based 

diesel, applicable volumes are provided 

through 2012. For years after those 

specified in the statute (i.e. 2013+ for 

biomass-based diesel and 2023+ for all 

others), EPA is required under 

211(o)(2)(B)(ii) to determine the 

applicable volume, in coordination with 

the Secretary of Energy and the 

Secretary of Agriculture, based on a 

review of the implementation of the 

program during calendar years for 

which the statute specifies the 

applicable volumes and on analysis of 

the following factors: 

• 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 


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27Fuels and Fuel Additives 2012 EMTS Data, 

http://www.epa.gov/otaq/fuels/rfsdata/ 

2012emts.htm (last accessed September 16, 2013). 

28Fuels and Fuel Additives 2013 EMTS Data, 

http://www.epa.gov/otaq/fuels/rfsdata/ 

2013emts.htm (last accessed September 16, 2013). 29The U.S. Energy Information Administration as 

part of it responsibilities under section 1508 of the 

2005 Energy Policy Act, amended its ICR and has 

begun collecting and publishing biodiesel 

production information on a monthly basis 

including production of biodiesel in a given month, 

the number of plants operating and contributing to 

the monthly total volume by state, and their total 

operating capacity for the year. U.S. Energy 

Information Administration/Monthly Biodiesel 

Production Report, Form EIA–22m Monthly 

Biodiesel Production Survey. U.S. Energy 

Information Administration, Monthly Biodiesel 

Production Report, For 2012 data collected showed 

that 2012 production was 969 mil gallons, which 

was up from production 967 million gallons during 

2011. 

30EIA data indicates that in December 2011, after 

the close of the comment period, 103 biodiesel 

plants existed with an operating capacity of 2.1 bill 

gal per year. In March 2012, 104 biodiesel plants 

were operational and the report indicates that for 

the first quarter of 2012 production was up 78% 

over the first quarter of 2011. As EPA finalized the 

2013 volume mandates in September 2012 there 

were 105 biodiesel producers operating in the U.S. 

By late November 2012 that number had increased 

to 112. 

31http://www.eia.gov/biofuels/biodiesel/ 

production/ (last accessed September 16, 2013). 

32 77 FR 59458 (September 27, 2012). 

33 78 FR 49411, August 14, 2013. 

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. 

The statute also specifies that the 

applicable volume of biomass-based 

diesel cannot be less than the applicable 

volume for calendar year 2012, which is 

1.0 bill gallons. The statute does not, 

however, establish any other numeric 

criteria or overarching goals for EPA to 

achieve in setting the applicable 

volumes in years after those specifically 

set forth in the provision. 

Finally, the statute also specifies the 

timeframe within which these volumes 

must be promulgated: the applicable 

volumes must be established no later 

than 14 months before the first year for 

which such applicable volume will 

apply. We did not propose a 2014 

volume for biomass-based diesel in the 

February 7, 2013 NPRM because at that 

time we were still evaluating the 

potential market impacts of current 

production levels. In order to provide 

sufficient time for this evaluation, we 

delayed our proposal for the 2014 

volume requirement for biomass-based 

diesel. Consequently, today we are 

proposing volume requirements for both 

2014 and 2015. 

B. Compliance With 2013 Volume 

Requirement of 1.28 Billion Gallons 

In making a determination regarding 

the volume requirement for biomassbased diesel to propose for 2014 and 

2015, we first investigated the recent 

historical and current circumstances in 

the biodiesel market. According to data 

collected through the EPA-Moderated 

Transaction System (EMTS) production 

of biodiesel in 2012 exceeded 1.14 bill 

gal.27 This demonstrates that the 

industry was able to meet the applicable 

2012 volume requirement of 1 bill gal. 

It also provides evidence that the 

industry will meet the 1.28 bill gal 

requirement in 2013. Additional 

volumes above 1.28 bill gal are possible 

in 2013, and may be used to help meet 

the advanced biofuel standard. Indeed 

current production rates in the biodiesel 

industry for the first seven months of 

2013 were 25% above monthly 

production rates for the same time 

period in 2012 and are consistent with 

a total production volume of at least 1.6 

bill gal for 2013.28

While annual production volume has 

been increasing, a review of EIA’s 

Monthly Biodiesel Production 

Reports 29 since 2009 indicates that 

there has been some variability both in 

monthly production volume and in the 

number of facilities producing that 

volume. For example, there were 

significant biodiesel facility closures 

during the 2009 and 2010 calendar 

years. Since that time the overall 

number of biodiesel facilities in 

operation has stabilized and overall 

capacity in the biodiesel industry has 

remained stable from 2009–2012 at 

more than 2 bill gal. It is also clear that 

overall industry-wide utilization rates 

have increased during this time period 

from 25% in 2009 to approximately 

46% in both 2011 and 2012. Thus it is 

clear that total production capacity at 

facilities already operating is above 1.28 

bill gal. There are also indications that 

new or idle facilities have begun 

production in response to the 1.28 bill 

gal mandate for 2013. Specifically, EIA’s 

monthly reports indicate that nine 

additional producers have become 

operational in the U.S. since the rule for 

2013 biomass-based diesel was 

finalized.30 The latest EIA monthly 

biodiesel report, available for July 2013, 

indicates that U.S. production was 128 

million gallons in July, and came from 

111 biodiesel plants in 38 states with 

total operating capacity of 2.1 bill gal 

per year.31 As described in Section 

IV.B.2.b, total biodiesel production by 

the end of 2013 could be as high as 1.7 

bill gal, and the facilities contributing to 

this production collectively have a 

capacity of well over 2 bill gal. 

Further discussion of the factors we 

must consider in the context of the 

biomass-based diesel volume of 1.28 bill 

gallons for 2013 is contained in both the 

final rule adopting this level for 2013 32

and in EPA’s denial of two petitions 

requesting the Agency reconsider the 

2013 biomass-based diesel final rule.33

As discussed in that final rule, the 

assessment of these factors supported a 

volume of 1.28 bill gallons for 2013. As 

we would expect that the impacts of 

1.28 bill gal in 2014 and 2015 would not 

be materially different, we are not 

repeating the discussion of those 

analyses here. However, we specifically 

request data and analyses suggesting 

that the factors we considered in 2013 

have changed significantly for 2014 or 

2015. 

C. Determination of Applicable Volume 

for 2014 and 2015 

The biodiesel industry has clearly 

demonstrated that it can produce the 

volumes of biomass-based diesel up to 

the minimum required by the statute, 

and that 1.28 bill gal of biodiesel is 

readily attainable. We have no real 

concerns that a level of 1.28 bill gal will 

be achieved effectively in 2013, and that 

once it is met this level of production 

and consumption can also be achieved 

in years after 2013. Production costs 

associated with 1.28 bill gal of biodiesel 

could be affected by various factors, 

including the expiration of the biodiesel 

tax credit and projected lower soy oil 

prices. 

EPA’s evaluation of the applicable 

volume that we should set for biomassbased diesel takes into account the 

context of the larger advanced biofuel 

and total renewable fuel volume 

requirements. The biomass-based diesel 

standard is a subset of both the 

advanced biofuel and total renewable 

fuel standards, and biomass-based 

diesel volumes can be used to meet all 

three standards. As discussed in Section 

IV below, we are proposing to reduce 

the applicable volumes of advanced 

biofuel and total renewable fuel. The 

reductions are designed to address 

several factors that affect achievement of 


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34 77 FR 59458 (September 27, 2012), especially 

Sections IV and V of the preamble. 

35While the statute requires EPA to establish the 

applicable volume of cellulosic biofuel at projected 

production levels, this is not the case with respect 

to the applicable volume of biomass-based diesel. 

For biomass based-diesel, EPA may set the 

applicable volume at any level above 1 bill gal after 

consideration of the factors set forth in the statute 

and consultation with the Departments of 

Agriculture and Energy. 

the volume goals that Congress 

established in the statute for these 

categories of renewable fuel. These 

factors include limitations in 

production or importation of the 

necessary volumes, and factors that 

limit supplying those volumes to the 

vehicles that can consume them. These 

same factors impact our consideration of 

the biomass-based diesel volume 

requirement for 2014. For example, EPA 

considers the availability of feedstocks 

for production of biodiesel. 

More importantly, the production and 

use of biomass-based diesel can be 

supported by both the need to comply 

with the required volume for biomassbased diesel as well as the need to 

comply with the required volume for 

advanced biofuel or even the volume for 

total renewable fuel. This provides EPA 

additional flexibility in considering the 

appropriate national volume to set for 

the biomass-based diesel volume 

requirement, as this requirement is not 

the only mechanism in the RFS program 

that can support production and use of 

biomass-based diesel. For example, 

while the applicable volume that EPA 

sets for biomass-based diesel will ensure 

that at least that volume of biomassbased diesel would be produced and 

used, the advanced biofuel standard 

provides an alternative potential source 

of support for production and use of 

additional volumes of biomass-based 

diesel. It does this because obligated 

parties have discretion whether to 

choose biomass-based diesel or another 

advanced biofuel to satisfy their 

advanced biofuel obligation, and 

because the diesel pool can 

accommodate considerably more than 

1.28 bill gal of biodiesel. EPA believes 

there is value in providing obligated 

parties increased flexibility in how they 

meet their required volume obligations 

in 2014. As discussed in Section IV, 

EPA is reducing the statutory volumes 

of advanced biofuel and total renewable 

fuel based on concerns of inadequate 

domestic supply of these renewable 

fuels. Providing obligated parties 

additional flexibility to address future 

supply circumstances is of increased 

importance under these circumstances. 

In setting the applicable volume for 

biomass-based diesel for 2013, EPA 

discussed various impacts of requiring 

volumes of biomass-based diesel in light 

of the relevant factors to be considered 

under CAA section 211(o)(2)(B)(ii).34

We believe this analysis continues to be 

appropriate, and supports the proposed 

applicable volume of biomass-based 

diesel for 2014. In considering all of 

these factors, we see no need to reduce 

the minimum biomass-based diesel 

volume requirement from 2013 levels. 

We have a high degree of confidence 

that this volume of 1.28 bill gal could 

be achieved effectively without any real 

risk of production or supply problems. 

At the same time, as discussed above, 

the volume requirement for biomassbased diesel is nested within the 

advance biofuel standards that we are 

proposing to reduce in 2014. We believe 

that volumes of biomass-based diesel 

above 1.28 bill gal can, and likely will, 

be produced in 2014 to meet the 

requirements of the advanced biofuel 

standard, though the degree to which 

this occurs will also depend on whether 

the biodiesel tax subsidy is extended 

beyond December 31, 2013. We do not 

expect that there would be a significant 

difference between additional volumes 

of biomass-based diesel above 1.28 bill 

gal and other advanced biofuels, as far 

as the overall impact of those fuels in 

terms of the factors we are required to 

consider under section 211(o)(2)(B)(ii). 

Any such differences would also be 

hard to quantify. At the same time, 

providing obligated parties the 

discretion to choose the method to 

comply with their advanced biofuel 

volume requirement most appropriate 

for their circumstances is likely to 

reflect the most effective or efficient 

way to achieve the advanced biofuel 

volume requirements given the market 

circumstances present in 2014. In 

addition, as noted above, providing 

obligated parties additional flexibility to 

address the 2014 supply circumstances 

is of increased importance under the 

circumstances surrounding supply and 

consumption as discussed in Section IV. 

Therefore we are not proposing to 

increase the volume of biomass-based 

diesel that will be required in 2014 and 

2015.35

We invite comment on any different 

approaches that might be appropriate 

for balancing the factors noted above, 

including requiring an increase in the 

minimum volume of biomass-based 

diesel above 1.28 bill gal in both 2014 

and 2015. As discussed above, volumes 

above 1.28 bill gal should be available, 

whether to meet a minimum biomassbased diesel requirement or the 

advanced biofuel requirement. 

Requiring a minimum volume of 

biomass-based diesel greater than 1.28 

bill gal would place less emphasis on 

the benefits of preserving flexibility in 

how the required volume of advanced 

biofuel is achieved, and more emphasis 

on production of biomass-based diesel, 

without specific regard to the existence 

of a tax subsidy or to potential supplies 

of carryover biomass-based diesel RINs 

generated in 2013. We invite comment 

on all aspects of this issue, including 

information related to the statutory 

factors that we must consider as 

described in Section III.A. We also 

invite comment on the extent to which 

carryover biomass-based diesel RINs 

from 2013 would affect production 

levels of biomass-based diesel or other 

advanced biofuels in 2014, whether to 

meet the 1.28 bill gal biomass-based 

diesel volume or to achieve higher 

levels as a part of achieving the 

advanced biofuel requirement. We also 

seek comment on how EPA should take 

such information on biomass-based 

diesel carryover RINs into account when 

setting these volume requirements and 

the degree to which those carryover 

RINs support the goal of maintaining 

flexibility in how obligated parties meet 

the advanced biofuel mandate. 

In the overall context of the RFS 

program, the level of the biomass-based 

diesel applicable volume can be seen as 

the minimum amount of biomass-based 

diesel that is required, recognizing that 

additional volumes of biomass-based 

diesel may be used, along with other 

advanced biofuels, to satisfy the volume 

requirements for advanced biofuel and 

total renewable fuel. Having considered 

the statutory factors, in the context of 

proposing the volume requirements for 

advanced biofuel and total renewable 

fuel, we believe the minimum required 

volume of biomass-based diesel should 

be set at the same level as 2013. This 

approach would also recognize that 

volumes of biomass-based diesel could 

be produced and consumed above the 

required volume level, and that 

obligated parties could well choose to 

use more biomass-based diesel than is 

required to satisfy their volume 

obligations for advanced and total 

renewable fuel. A volume requirement 

of 1.28 bill gal for biomass-based diesel 

in 2014 and 2015 would provide an 

assured minimum volume level for 

biomass-based diesel while also 

providing a clear opportunity for greater 

growth as part of the advanced biofuel 

category. Greater use of biomass-based 

diesel would be a recognized 

compliance path for the advanced and 

total renewable fuel volume obligations 

being proposed today. The proposed 

levels of those standards provide a 


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36See CAA section 211(o)(7)(D) and (A). 

significant opportunity for greater 

volumes of biomass-based diesel to be 

produced and used if the market 

chooses them. We request comment on 

this proposed approach to the biomassbased diesel volume requirement for 

2014 and 2015. 

IV. Proposed National Volume 

Requirements for Advanced Biofuel 

and Total Renewable Fuel for 2014 

As described in Section I, the national 

volumes of renewable fuel to be used 

under the RFS program each year are 

specified in CAA 211(o)(2). For 2014, 

the applicable volume of advanced 

biofuel is 3.75 bill gal and the 

applicable volume of total renewable 

fuel is 18.15 bill gal. However, two 

statutory provisions authorize EPA to 

reduce these volumes. EPA may reduce 

these volumes if it reduces the 

applicable volume for cellulosic biofuel, 

or if the criteria are met under the 

general waiver authority.36 We are 

proposing to exercise our discretion 

under these provisions to reduce the 

applicable volumes of advanced biofuel 

and total renewable fuel to address 

several factors that affect achievement of 

the volume goals that Congress 

established in the statute. These factors 

include limitations in production or 

importation of the necessary volumes, 

and factors that limit supplying those 

volumes to the vehicles that can 

consume them. Based on a detailed 

analysis of these limitations, we are 

proposing reductions in the statutory 

volumes of both advanced biofuel and 

total renewable fuel as shown below. 

TABLE IV–1—PROPOSED VOLUMES FOR 2014 

[billion gallons] 

Statutory 

volume 

Proposed volume 

Range Mean 

Advanced biofuel ......................................................................................................................... 3.75 2.00–2.51 2.20 

Total renewable fuel .................................................................................................................... 18.15 15.00–15.52 15.21 

We are proposing to use a 

combination of the cellulosic biofuel 

waiver authority and the general waiver 

authority to ensure that the proposed 

volumes are reasonably achievable 

given limitations in the volume of 

ethanol that can be practically 

consumed in motor vehicles considering 

constraints on the supply of higher 

ethanol blends to the vehicles that can 

use them and other limits on ethanol 

blend levels approved for use in motor 

vehicles and the volume of non-ethanol 

renewable fuels that we expect would 

be reasonably achievable. To 

accomplish this, we are proposing an 

approach involving the following three 

steps: 

• First, we would determine the total 

volume of ethanol that can reasonably 

be supplied to and consumed in the 

transportation sector as both E10 and 

higher ethanol blends such as E85. We 

would then add to this the volume of all 

non-ethanol biofuels that we expect 

could be reasonably available for 

meeting all four of the applicable 

volume requirements (cellulosic biofuel, 

biomass-based diesel, advanced biofuel, 

and total renewable fuel). This first step 

would determine the volume of 

renewable fuel that can adequately be 

produced and supplied to consumers in 

light of limitations on the consumption 

of ethanol (commonly referred to as the 

‘‘ethanol blendwall’’) and other relevant 

constraints, and would form the basis 

for the required volume of total 

renewable fuel as adjusted pursuant to 

EPA’s waiver authorities. 

• Second, we would determine the 

volumes of all sources of advanced 

biofuel that could be reasonably 

achieved to ensure that the required 

volume of advanced biofuel be set no 

higher than the volume that is projected 

to be reasonably available. 

• Third, we would determine an 

appropriate volume of advanced biofuel 

at or below the projected available 

volume determined in the second step. 

This volume would include the required 

volume of cellulosic biofuels and 

biomass-based diesel, which are set 

separately, as well as any additional 

volumes of non-ethanol advanced 

biofuels projected to be reasonably 

achievable. This approach would 

account for the contribution of ethanol 

volumes in the advanced biofuel 

category to the supply concerns related 

to total renewable fuel, including 

considerations of both production and 

consumption. While ensuring that both 

advanced biofuel and non-advanced 

renewable fuels play a role in 

addressing the ethanol blendwall, it 

would also support Congress’s goal in 

the RFS program of continued growth in 

the advanced biofuel category as 

reflected in the volume requirements 

established in the statute. As discussed 

in detail in Section IV.C.2, we have 

examined several alternative approaches 

to this third step, but we believe this 

approach best accommodates the 

objectives of the RFS program, while 

accounting for the limitations in the 

ability to produce and consume 

renewable fuels. We request comment, 

however, on alternative approaches and 

on all aspects of the framework 

discussed in this section. 

We anticipate that the framework 

described in this section would apply 

not only to 2014, but to subsequent 

years as well. The specific estimates of 

volumes for each potential source of 

renewable fuel would be different in 

each future year, but the manner in 

which we aggregate those estimates to 

determine appropriate volume 

requirements would follow the overall 

approach described above. If 

circumstances differ substantially from 

those described here, or if further 

analysis suggests that our proposed 

approach is inadequate, we may 

consider the need for additional 

measures. 

A. Statutory Authorities for Reducing 

Volumes To Address Biofuel 

Availability and the Ethanol Blendwall 

In establishing the annual volume 

objectives in the statute, Congress 

intended that volumes of renewable 

fuel, advanced biofuel, and cellulosic 

biofuel increase every year through 

2022, and that volumes of biomassbased diesel be at least equal to the 

statutory volume for 2012, while 

granting EPA discretion to increase the 

biomass-based diesel volume based on 

consideration of several specified 

factors. However, Congress recognized 

that circumstances could arise that 

might require a reduction in the volume 

objectives specified in the statute as 

evidenced by the different waiver 

provisions in CAA 211(o)(7). As 

described in more detail below, we 


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37See 74 FR 24914–15 

38 78 FR 49794, August 15, 2013. 

39EPA has applied the waiver provision in 

section 211(o)(7)(A)(i) related to severe harm to the 

economy. See 77 FR 70752 (November 27, 2012), 73 

FR 47168 (August 13, 2008). 

40For example, see http://

oxforddictionaries.com/us/definition/american_

english/supply (a stock of a resource from which a 

person or place can be provided with the necessary 

amount of that resource: ‘‘There were fears that the 

drought would limit the exhibition’s water 

Continued 

believe that limitations in production or 

importation of qualifying renewable 

fuels, and factors that limit supplying 

those volumes to the vehicles that can 

consume them, both constitute 

circumstances that warrant a waiver 

under section 211(o)(7) as discussed 

below. With regard to the ethanol 

blendwall, a decrease in total gasoline 

consumption since EISA was enacted in 

2007, coupled with limitations in the 

number and geographic distribution of 

retail stations that offer higher ethanol 

blends such as E85 and the number of 

FFVs that have access to E85, as well as 

other market factors, combine to place 

significant restrictions on the volume of 

ethanol that can be supplied to and 

consumed in the transportation sector. 

Based on the types of renewable fuel 

that we project are likely to be available 

in 2014 and the volume that is likely to 

be non-ethanol, we believe that the 

ethanol blendwall represents a 

circumstance that warrants a reduction 

in the mandated volumes for 2014. 

The statute provides two separate 

authorities that permit EPA to reduce 

volumes of advanced biofuel or total 

renewable fuel under certain conditions: 

The cellulosic waiver authority and the 

general waiver authority. Applying a 

combination of these two authorities is 

the most appropriate way to address 

limitations in production or importation 

of the necessary volumes, and factors 

that limit supplying those volumes to 

the vehicles that can consume them, 

including the ethanol blendwall. This 

section discusses both of these statutory 

authorities and the manner in which we 

believe they can be used together to set 

standards for 2014. 

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 

‘‘[f]or any calendar year in which the 

Administrator makes such a reduction, 

the Administrator may also reduce the 

applicable volume of renewable fuel 

and advanced biofuels requirement 

established under paragraph (2)(B) by 

the same or a lesser volume.’’ Thus 

Congress authorized EPA to reduce the 

volume of total renewable fuel and 

advanced biofuel. As EPA has discussed 

before, this indicates a clear 

Congressional intention that under this 

provision EPA may reduce both the total 

renewable and advanced biofuel volume 

together, not one or the other. 

As described in the May 26, 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.37 EPA 

interprets this provision as authorizing 

EPA to reduce both total renewable fuel 

and advanced biofuel, by the same 

amounts, if EPA reduces the volume of 

cellulosic biofuel. Using this authority 

the reductions in total renewable fuel 

and advanced biofuel can be up to but 

no more than the amount of reduction 

in the cellulosic biofuel volume. Further 

discussion of this provision can be 

found in the final rule establishing the 

2013 RFS standards.38

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). EPA 

can consider the criteria described in 

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

in determining appropriate reductions 

in advanced biofuel and total renewable 

fuel under the cellulosic waiver 

authority at section 211(o)(7)(D)(ii), or 

any other factors that may be relevant. 

However, EPA must provide a reasoned 

explanation for any decision to reduce 

the advanced biofuel and total 

renewable fuel volume requirements 

under the cellulosic biofuel waiver 

authority. 

2. General Waiver Authority 

CAA 211(o)(7)(A) provides that EPA, 

in consultation with the Secretary of 

Agriculture (USDA) and the Secretary of 

Energy (DOE), may waive the applicable 

volume requirements of the Act in 

whole or in part based on a petition by 

one or more States, by any person 

subject to the requirements of the Act, 

or by the EPA Administrator on her own 

motion. Such a waiver must be based on 

a determination by the Administrator, 

after public notice and opportunity for 

comment, that: 

• Implementation of the requirement 

would severely harm the economy or 

the environment of a State, a region, or 

the United States; or 

• There is an inadequate domestic 

supply. 

In today’s NPRM, we are proposing to 

use the general waiver authority to 

waive the applicable volume 

requirements based on the statute’s 

authorization for the Administrator to 

act on her own motion. We have 

initiated discussions with both USDA 

and DOE on the proposed approach to 

determining the applicable volume 

requirements that is described in this 

section. 

Because this provision provides EPA 

the discretion to waive the volume 

requirements of the Act ‘‘in whole or in 

part,’’ we interpret this section as 

granting authority to waive any or all of 

the four applicable volume 

requirements in appropriate 

circumstances. Thus, for example, 

unlike the cellulosic waiver authority, a 

reduction in total renewable fuel 

pursuant to the general waiver authority 

would not automatically result in the 

same reduction in advanced biofuel, 

and would not be limited by the 

reduction in cellulosic biofuel. 

EPA has not previously interpreted or 

applied the waiver provision in CAA 

section 211(o)(7)(A)(ii) related to 

‘‘inadequate domestic supply.’’ 39 As 

explained in greater detail below, we 

believe that this ambiguous provision is 

reasonably and best interpreted to 

encompass the full range of constraints 

that could result in an inadequate 

supply of renewable fuel to the ultimate 

consumers, including fuel infrastructure 

and other constraints. This would 

include, for instance, factors affecting 

the ability to produce or import 

qualifying renewable fuels as well as 

factors affecting the ability to distribute, 

blend, dispense, and consume those 

renewable fuels. 

The waiver provision at CAA 

211(o)(7)(A)(ii) is ambiguous in several 

respects. First, it does not specify what 

the general term ‘‘supply’’ refers to. The 

common understanding of this term is 

an amount of a resource or product that 

is available for use by the person or 

place at issue.40 Hence the evaluation of 


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supply.’’); http://www.macmillandictionary.com/

us/dictionary/american/supply (‘‘A limited oil 

supply has made gas prices rise.’’ and ‘‘Aquarium 

fish need a constant supply of oxygen.’’). 

the supply of renewable fuel, a product, 

is best understood in terms of the 

person or place using the product. In the 

RFS program, various parties interact 

across several industries to drive the 

ultimate use of renewable fuel by 

consumers of transportation fuel. For 

example, supplying renewable fuel to 

obligated parties and terminal blenders 

is one part of this process, while 

supplying renewable fuel to the ultimate 

consumer as part of transportation fuel 

is a different and later aspect of this 

process. This is clearly the case with 

respect to the renewable fuels ethanol 

and biodiesel, which are typically 

supplied to the obligated parties and 

terminals as a neat fuel, but in almost 

all cases are supplied to the consumer 

as a blend with conventional fuel 

(ethanol and gasoline or biodiesel and 

diesel). The waiver provision does not 

specify what product is at issue (for 

example, neat renewable fuel or blended 

renewable fuel with transportation fuel) 

or the person or place at issue (for 

example, obligated party or ultimate 

consumer), in determining whether 

there is an ‘‘inadequate domestic 

supply.’’ 

The waiver provision also does not 

specify what factors are relevant in 

determining the adequacy of the supply. 

Adequacy of the supply would logically 

be seen in terms of the parties who use 

the supply of renewable fuel. Adequacy 

of supply could affect various parties, 

including obligated parties, terminal 

operators, and consumers. Adequacy of 

supply with respect to the consumer 

might well involve consideration of 

factors different from those involved 

when considering adequacy of supply to 

the obligated parties. We believe that 

interpreting this waiver provision as 

authorizing EPA to consider the 

adequacy of supply of renewable fuel to 

all of the relevant parties, including the 

adequacy of supply to the ultimate 

consumer of transportation fuel, is 

consistent with the common 

understanding of the terms used in this 

waiver provision, especially in the 

context of a fuel program that is aimed 

at increasing the use of renewable fuel 

by consumers. In our view, this is the 

most reasonable and appropriate 

construction of this ambiguous language 

in light of the overall policy goals of the 

RFS program. 

EPA has reviewed other fuel related 

provisions of the Clean Air Act with 

somewhat similar waiver provisions, 

and they highlight both the ambiguity of 

the RFS general waiver provision and 

the reasonableness of applying it 

broadly to include adequacy of supply 

to the ultimate consumer of 

transportation fuel. For example, CAA 

section 211(k)(6)(A)(ii) allows EPA to 

defer application of reformulated 

gasoline (RFG) requirements in a state 

that opts in to the RFG program if EPA 

determines that ‘‘there is insufficient 

domestic capacity to produce 

reformulated gasoline.’’ A related RFG 

waiver provision concerning the 

application of RFG requirements in the 

Ozone Transport Region, section 

211(k)(6)(B)(i) and (iii), provides for a 

waiver of RFG requirements based on 

‘‘insufficient capacity to supply 

reformulated gasoline.’’ For these RFG 

waiver provisions, Congress more 

clearly and explicitly indicated that the 

capacity to supply RFG could include 

consideration of factors beyond those 

concerning the capacity to produce 

RFG. In the language of the RFS general 

waiver provision, in comparison, 

Congress used a single, broader and 

clearly ambiguous phrase—‘‘inadequate 

domestic supply’’—without elaboration 

or clarification as to whether it refers 

solely to production capacity or also 

includes additional factors relevant to 

the ability to supply the fuel to various 

persons such as the ultimate consumer. 

As in the RFG provision, however, the 

adequacy of supply referred to in the 

RFS general waiver provision can 

logically—and we believe should—be 

read to include factors beyond capacity 

to produce that impact the ability of 

consumers to use the fuel as a 

transportation fuel. 

CAA section 211(c)(4)(C)(ii) provides 

EPA with waiver authority to address 

‘‘extreme and unusual fuel or fuel 

additive supply circumstances . . . 

which prevent the distribution of an 

adequate supply of the fuel or fuel 

additive to consumers.’’ The supply 

circumstances must be the result of a 

natural disaster, an Act of God, a 

pipeline or refinery equipment failure or 

another event that could not reasonably 

have been foreseen, and granting the 

waiver must be ‘‘in the public interest.’’ 

In this case, Congress clearly specified 

that the adequacy of the supply is 

judged in terms of the availability of the 

fuel for use by the ultimate consumer, 

and includes consideration of the ability 

to distribute the required fuel or fuel 

additive to the ultimate consumer. 

Although the RFS waiver provision does 

not contain any such explicit 

clarification from Congress, its broad 

and ambiguous wording provides EPA 

the discretion to reasonably interpret 

the scope of the RFS waiver provision. 

EPA’s interpretation of the RFS waiver 

provision is consistent with the view, 

expressed more explicitly in the section 

211(c) waiver, that the adequacy of the 

supply of a fuel or fuel additive can 

reasonably be judged in terms of 

availability for use by the consumer, 

and can include consideration of the 

capacity to distribute the product to the 

ultimate consumer. 

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

to delay the effective date of oxygenated 

gasoline requirements for certain carbon 

monoxide nonattainment areas if EPA 

finds ‘‘an inadequate domestic supply 

of, or distribution capacity for, 

oxygenated gasoline . . . or fuel 

additives’’ needed to make oxygenated 

gasoline. Here, Congress chose to 

expressly differentiate between 

‘‘domestic supply’’ and ‘‘distribution 

capacity,’’ indicating that each of these 

elements was to be considered 

separately. This would indicate that the 

term inadequate supply, although 

ambiguous for the reasons discussed 

above, could in appropriate 

circumstances be read as more limited 

in scope. In contrast to the RFS waiver 

provision, the section 211(m) waiver 

provision includes additional text that 

makes clear that EPA’s authority 

includes consideration of distribution 

capacity—reducing the ambiguity 

inherent in using just the general phrase 

‘‘inadequate domestic supply.’’ 

Presumably this avoids a situation 

where ambiguity would result in an 

overly narrow administrative 

interpretation. The oxygenated gasoline 

waiver provision is also instructive in 

that it clarifies that it applies separately 

to both finished oxygenated fuel and to 

oxygenated fuel blending components. 

That is, there could be an adequate 

supply of the oxygenate, such as 

ethanol, but not an adequate supply of 

the blended fuel which is sold to the 

consumer. The RFS waiver provision 

employs the phrase ‘‘inadequate 

domestic supply’’ without further 

specification or clarification, thus 

providing EPA the discretion to 

determine whether the adequacy of the 

supply of renewable fuel can reasonably 

be judged in terms of availability for use 

by the ultimate consumer, including 

consideration of the capacity to 

distribute the product to the ultimate 

consumer. In contrast to the section 

211(m) waiver provision, Congress 

arguably did not mandate that the RFS 

waiver provision be interpreted as 

providing authority to address problems 

affecting the supply of renewable fuel to 

the ultimate consumer. However, the 

RFS waiver provision does provide EPA 

the discretion to adopt such an 


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41 In CAA section 211(h)(5)(C)(ii), Congress 

authorized EPA to delay the effective date of certain 

changes to the federal requirements for Reid vapor 

pressure in summertime gasoline, if the changes 

would result in an ‘‘insufficient supply of gasoline’’ 

in the affected area. As with the RFS general waiver 

provision, Congress did not specify what 

considerations would warrant a determination of 

insufficient supply. EPA has not been called upon 

to apply this provision to date and has not 

interpreted it. 

42H.R. 6 and S. 606 as reported by Senate Envt. 

& Public Works in Senate Report 109–74. 

43There are, for example, legal constraints on the 

amount of certain renewable fuels that may be 

blended into transportation fuels. 

44See CAA section 211(o)(1)(I) (renewable fuel 

defined as ‘‘fuel . . . used to replace or reduce the 

quantity of fossil fuel present in a transportation 

fuel’’), section 211(o)(2)(A)(i) (EPA’s regulations 

must ‘‘ensure that transportation fuel sold or 

introduced into commerce in the United States . . . 

contains at least the applicable volume of 

[renewable fuels]’’). Also see CAA section 

211(o)(1)(A), definition of ‘‘additional renewable 

fuel.’’ As one example, in the RFS program fuels 

with multiple end uses such as biogas or electricity 

are not considered a renewable fuel absent a 

demonstration that they will be used by the 

ultimate consumers as transportation fuel. As noted 

above, ethanol is almost always used as a renewable 

fuel in the form of E10 or higher, not as neat 

ethanol. The supply of neat ethanol, or biogas or 

electricity, does not by itself determine the supply 

of the fuel ethanol used as a transportation fuel. 

interpretation, resulting in a policy 

approach consistent with that required 

by the less ambiguous section 211(m) 

waiver provision.41

As the above review of various waiver 

provisions in Title II of the Clean Air 

Act makes clear, Congress has used the 

terms ‘‘supply’’ and ‘‘inadequate 

supply’’ in different waiver provisions. 

In the RFS general waiver provision, 

Congress spoke in general terms and did 

not address the scope of activities or 

persons or places that are the focus in 

determining the adequacy of supply. In 

other cases, Congress provided, to 

varying degrees, more explicit direction. 

Overall, the various waiver provisions 

lend support to the view that it is 

appropriate, where Congress has used 

just the ambiguous phrase ‘‘inadequate 

domestic supply’’ in the general waiver 

provision, to consider supply in terms 

of distribution and use by the ultimate 

consumer, and that the term 

‘‘inadequate supply’’ of a fuel need not 

be read as referring to just the capacity 

to produce renewable fuel or the 

capacity to supply it to the obligated 

parties. 

We are aware that prior to final 

adoption of the Energy Independence 

and Security Act of 2007, Congress had 

before it bills that would have provided 

for an EPA waiver in situations where 

there was ‘‘inadequate domestic supply 

or distribution capacity to meet the 

requirement.’’ 42 EPA is not aware of any 

conference or committee reports, or 

other legislative history, explaining why 

Congress ultimately enacted the 

language in EISA in lieu of this 

alternative formulation. There is no 

discussion, for example, of whether 

Congress did or did not want EPA to 

consider distribution capacity, whether 

Congress believed the phrase 

‘‘inadequate domestic supply’’ was 

sufficiently broad that a reference to 

distribution capacity would be 

unnecessary or superfluous, or whether 

Congress considered the alternative 

language as too limiting, since it might 

suggest that other types of constraints 

on delivering renewable fuel to the 

ultimate consumer should not be 

considered for purposes of granting a 

waiver.43 Given the lack of interpretive 

value typically given to a failure to 

adopt a legislative provision, and the 

lack of explanation in this case, we find 

the legislative history to be 

uninformative with regard to 

Congressional intent on this issue. It 

does not change the fact that the text 

adopted by Congress, whether viewed 

by itself or in the context of other fuel 

waiver provisions, is clearly ambiguous. 

We believe the term ‘‘inadequate 

domestic supply’’ should be interpreted 

to authorize EPA to consider the full 

range of constraints, including fuel 

infrastructure and other constraints, that 

could result in an inadequate supply of 

renewable fuels to consumers. Under 

this interpretation, we would not limit 

ourselves to consideration of the 

capacity to produce or import renewable 

fuels but would also consider practical 

and other constraints related to the fuel 

delivery infrastructure and their effect 

on the volume of qualifying renewable 

fuel that would be supplied to the 

ultimate consumer. 

This interpretation is consistent with 

the provisions of section 211(o) and 

promotes Congress’s purposes in 

establishing the RFS program, which are 

to ensure that certain volumes of 

renewable fuel are used by the ultimate 

consumer as a replacement for the use 

of fossil based transportation fuel.44 The 

RFS program does not achieve the 

desired benefits unless renewable fuels 

are actually used to replace fossil based 

transportation fuels. For example, the 

greenhouse gas reductions and energy 

security benefits that Congress sought to 

promote through this program are 

realized only through the use by 

consumers of renewable fuels that 

reduce or replace fossil fuels present in 

transportation fuel. Imposing RFS 

volume requirements on obligated 

parties without consideration of the 

ability of the obligated parties and other 

parties to deliver the renewable fuel to 

the ultimate consumers, would achieve 

no such benefits and would fail to 

account for the complexities of the fuel 

system that delivers transportation fuel 

to consumers. We do not believe it 

would be appropriate to interpret the 

RFS general waiver provision more 

narrowly and limit EPA’s consideration 

of factors related to the distribution and 

use of renewable fuels by the ultimate 

consumers of these fuels. 

We invite comment on all aspects of 

our proposed interpretation of the 

waiver provision based on ‘‘inadequate 

domestic supply.’’ Whether or not 

circumstances projected for 2014 justify 

a waiver on this basis is discussed in 

Sections IV.B and IV.C. 

3. Combining Authorities for Reductions 

in Advanced Biofuel and Total 

Renewable Fuel 

The two primary drivers that we have 

considered in today’s NPRM for 

reductions in the required volumes are 

limitations in the availability of 

qualifying renewable fuels and factors 

that constrain supplying those volumes 

to the vehicles that can consume them. 

These two drivers are both relevant 

forms of inadequate domestic supply, 

which authorize reductions under the 

general waiver authority and can also 

justify reductions under the cellulosic 

biofuel waiver authority. We believe 

that reducing both total renewable and 

advanced biofuel are appropriate 

responses to these circumstances, and 

we propose to use a combination of the 

two waiver authorities discussed above 

to achieve this result as neither 

authority independently is sufficient to 

justify the necessary volume reductions. 

As discussed in Section II, EPA is 

proposing to reduce the applicable 

volume of cellulosic biofuel based on a 

projection of production for 2014. Given 

this reduction in the cellulosic biofuel 

volumes, EPA is also proposing to 

reduce the applicable volume of 

advanced biofuel using the cellulosic 

biofuel waiver authority in Section 

211(o)(7)(D)(i). We are proposing a 

larger reduction in total renewable fuel 

volume than in the advanced biofuel 

volume. In effect one part of the 

reduction in total renewable fuel would 

be based on both the general waiver 

authority and the cellulosic biofuel 

waiver authority, and the remainder of 

the reduction in total renewable fuel 

would be based solely on the general 

waiver authority. Below we discuss the 

basis for each of the proposed volume 

reductions. 


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45Renewable fuels in heating oil and jet fuel are 

also valid under the RFS program, but ethanol is 

not used in these contexts. See CAA section 

211(o)(1)(J) (the definition of renewable fuel), and 

CAA section 211(o)(2)(A) (the rulemaking authority 

related to ensuring renewable fuels are sold or 

introduced into commerce). 

B. Determination of Reductions in Total 

Renewable Fuel 

As a first step in our proposed 

framework for setting the applicable 

volumes for total renewable fuel and 

advanced biofuel, we would estimate 

the volume of ethanol that can 

reasonably be expected to be available 

and consumed and the volume of nonethanol renewable fuel that can 

reasonably be expected to be available 

and consumed. Taken together, these 

two considerations provide the basis for 

the volume of total renewable fuel that 

we are proposing to require. Our 

objective is that the proposed 

requirement would reflect a realistic 

projected estimate of renewable fuel 

supply, based to the greatest extent 

possible on data and real world 

circumstances. 

For ethanol, the primary issue is the 

use of the fuel in the transportation 

sector, as the purpose of the RFS 

program is to ensure that renewable 

fuels are used to replace or reduce the 

use of fossil fuel based transportation 

fuel.45 For ethanol blends, there are 

legal constraints on the amount of 

ethanol that can be blended into 

gasoline and practical constraints on the 

volume of ethanol that can be consumed 

as transportation fuel, notwithstanding 

the ability to produce higher volumes. 

For non-ethanol renewable fuels, the 

primary issue is the availability of 

volumes of the renewable fuel, and 

much less so the ability to consume it 

in the transportation sector if it is 

available. For purposes of this proposal, 

we generally refer to the consumption 

concerns related to ethanol, and the 

availability concerns related to nonethanol forms of renewable fuel, 

recognizing the primary concern that is 

raised for each of these types of 

renewable fuel. 

With regard to consumption concerns 

related to ethanol, it is important to note 

that the overall pool of gasoline into 

which ethanol must be blended to 

achieve EISA’s statutory volume 

requirements is significantly smaller 

now than it was projected to be prior to 

enactment of EISA in 2007, which 

established both the revised RFS 

program requirements and the 

mandated significant increases in 

vehicle fuel economy standards. The 

total demand for gasoline has been 

decreasing over the intervening years 

due to the recent GHG and CAFE 

standards for vehicles, fuel prices, and 

broader factors affecting the economy. 

In the summer of 2006, when the 

reference case for EIA’s Annual Energy 

Outlook 2007 (AEO2007) was 

developed, the projected 2014 gasoline 

energy demand was 18.68 Quad Btu and 

could have absorbed 15.43 bill gal of 

ethanol as E10. By comparison, in the 

summer of 2012 when the AEO2013 

reference case was developed, the 

projected 2014 gasoline energy demand 

was 15.94 Quad Btu and could absorb 

13.17 bill gal ethanol as E10. The 

difference between these two 

projections thus represents about 2.3 

bill gal of ethanol. That is, the gasoline 

pool will be able to absorb about 2.3 bill 

gal less ethanol as E10 in 2014 than it 

would have been possible to absorb if 

the gasoline use projection in AEO2007 

had been realized. If 15.43 bill gal of 

ethanol were to be consumed in 2014, 

the gasoline energy demand projected in 

AEO2013 would require about 3.4 bill 

gal of E85 if it is assumed that 

intermediate blends such as E15 do not 

penetrate the market to any significant 

extent. 

TABLE IV.B–1—REDUCED GASOLINE DEMAND IN 2014 

Motor gasoline 

(Quad Btu) a

E85 

(Quad Btu) a

Total energy 

(Quad Btu) a

Equivalent E10 

volume (bill gal) c

AEO2007 b ............................................................................... 18.67 0.004 18.68 154.30 

AEO2013 b ............................................................................... 15.84 0.097 15.94 131.67 

Difference ................................................................................. .............................. .............................. .............................. 22.63 

a Higher heating value. 

bTable 2 of EIA’s Annual Energy Outlook, total delivered energy consumption for all sectors. 

cAssumes conversion factors of 3.561 mill Btu per barrel for ethanol and 5.253 mill Btu per barrel for gasoline. 

We recognize that EIA’s most current 

projections for motor fuel use are 

provided in the Short-term Energy 

Outlook (STEO), which is updated 

monthly, rather than in the AEO2013 

reference case that was prepared in the 

summer of 2012. EPA understands that 

the estimate of 2014 transportation fuel 

use that EIA is required to provide to 

EPA for purposes of determining the 

applicable percentage standards will be 

based on the latest available STEO 

forecast rather than the Annual Energy 

Outlook. The forecast for 2014 gasoline 

use in the October 2013 STEO is about 

1.5 percent higher that the AEO2013 

reference case projection for 2014, while 

the implicit level of E85 use from the 

combined gasoline and ethanol forecasts 

in STEO is less than half of the 

AEO2013 E85 projection for 2014. 

1. Estimating Ethanol Volumes That 

Could Reasonably Be Consumed 

The total volume of ethanol that could 

reasonably be consumed is a function of 

three factors: 

• The overall demand for gasoline. 

• The consumption of ethanol as E10, 

E15, and E85. 

• The presence of non-oxygenated 

gasoline (E0). 

In this section, we provide our 

assessment of the likely distribution of 

ethanol in gasoline, with a particular 

emphasis on potential volumes of E85 

that could reasonably be achievable. We 

discuss and request comment on the 

assumption that the overall pool of 

gasoline is comprised of E10 and E85 in 

2014. 

a. Projected Composition of 2014 

Gasoline Supply 

For the purposes of this proposed 

rule, we have assumed that all gasolinepowered vehicles and FFVs would use 

either E10 or E85. EPA has taken a 

series of regulatory steps to enable E15 

to be sold in the U.S. In 2010 and 2011, 

EPA issued partial waivers to enable use 

of E15 in model year 2001 and newer 

vehicles, and in June of 2011, EPA 

finalized regulations to prevent 

misfueling of vehicles, engines, and 

equipment not covered by the partial 

waiver decisions. However, based on 

information currently available to the 

Agency, the volume of E15 being 

supplied in the market to date has been 

very limited. Therefore, to simplify the 

calculations and the discussion, we 

have assumed that the volume of E15 


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46EIA, ‘‘U.S. Refinery and Blender Net 

Production’’, April 29, 2013. 

47 Korotney, David, ‘‘Extrapolation of E85 

production in the first half of 2013 to the remainder 

of 2013 and through 2014,’’ memorandum to EPA 

docket EPA–HQ–OAR–2013–0479 

that is consumed in 2014 will be 

negligible, as there are currently very 

few retail stations offering E15. Any 

volumes of other intermediate blends, 

such as E30, are assumed to be sold 

through blender pumps into FFVs and 

are thus assumed to be part of the E85 

volume consumed by FFVs. 

We have not assumed that any 

gasoline would be E0 in 2014, since E10 

is commonly used in nonroad engines 

just as it is used in cars and trucks. 

However, it is possible that a limited 

amount of E0 will be consumed if 

refiners are willing to provide it. If so, 

it would likely appear in premium 

gasoline, gasoline sold at marinas, or 

possibly unleaded motor gasoline used 

in light aircraft that do not require 

leaded aviation gasoline. There are also 

several states that require unblended 

gasoline to be provided to terminals, 

though the intention of these 

requirements is to ensure that terminals 

have the option to blend ethanol into 

that gasoline. We are not aware of any 

data that would provide a direct 

estimate of the demand for E0, and 

given that any ongoing demand for E0 

is likely to be small, we have not 

included it in our calculations of the 

total volume of ethanol that can be 

consumed in 2014. Nevertheless, we 

request information and data that would 

permit us to determine the volume of E0 

used in the gasoline pool and the 

appropriateness of incorporating some 

estimate of E0 into the final standards. 

Aside from the volume of E85 that 

could reasonably be consumed in 2014, 

discussed in more detail in the next 

section, the gasoline pool would be 

comprised of E10. We have assumed 

that gasoline contains 10.0% denatured 

ethanol. This is consistent with survey 

data collected by the Alliance of 

Automobile Manufacturers indicating 

that the average ethanol content of all 

gasoline containing at least 5vol% 

ethanol is about 9.74%. This estimate is 

based on the use of ASTM test method 

D–5599, which measures only the 

alcohol portion of the gasoline, not any 

denaturant that would have been 

included with the ethanol before it was 

blended into gasoline. Since the 

denaturant portion of ethanol is at least 

2%, ethanol that is blended into 

gasoline contains less than 98% ethanol. 

When blended into gasoline, therefore, 

the E98 would result in a gasolineethanol blend containing no more than 

9.8% pure ethanol, or 10.0% denatured 

ethanol. Since all RFS ethanol volumes 

and RINs are also calculated on a 

denatured ethanol basis, it is thus 

appropriate to assume 10.0 percent. We 

request comment, however, on the 

accuracy of this assessment, including 

information with regard to whether and 

to what extent there are real world 

constraints that limit the denatured 

ethanol content of E10 to a level lower 

than 10.0 percent, and if so, what the 

implications are with regard to the 

volume of ethanol that can reasonably 

be consumed in 2014. 

For E85 volumes, we recognize that 

the ethanol content could range from 

51% to 83% according to ASTM D– 

5798–13. In today’s NPRM we have 

assumed that the ethanol content of E85 

is 74% consistent with the average 

value used by EIA in its Annual Energy 

Outlook. As for E10, we are treating the 

ethanol content of E85 as representing 

denatured ethanol. 

b. Assessment of E85 Consumption 

For purposes of determining the total 

renewable fuel volume requirement for 

2014, consistent with the waiver 

authorities we are proposing to exercise 

in this action, we have assessed the 

volume of E85 that can reasonably be 

supplied to and consumed in the 

transportation sector, based on a variety 

of factors that limit supplying E85 in the 

transportation sector. Our assessment of 

the range of E85 volumes that can be 

reasonably consumed in 2014 considers 

factors such as infrastructure and 

consumer acceptance limitations as well 

as the impact that the applicable 

standards could have on the relative 

price of E85 and E10. In projecting the 

likely range of E85 consumption in 

2014, we are not mandating that this 

amount of E85 be produced and 

consumed. The industries involved will 

decide what actually occurs in the 

marketplace. Obligated parties can take 

actions to facilitate the sale of E85, to 

the extent they can and choose to do so, 

or they can obtain RINs from nonethanol sources of renewable fuel such 

as excess biodiesel, renewable diesel, 

heating oil, and biogas. We expect that 

the parties involved will resolve this 

through their business decisions. 

Nevertheless, we acknowledge that the 

renewable fuel volumes established in 

this rulemaking will have an impact on 

the volume of E85 consumed in 2014. 

There are a variety of sources we have 

considered in developing our estimate 

of the volume of E85 that could 

reasonably be supplied in the 

transportation sector in 2014. To begin 

with, we investigated available sources 

of information on E85 production in 

2012 and 2013. One report from EIA 

reported an E85 production volume of 

about 37 mill gal in 2012.46 This volume 

is based on EIA survey data from forms 

EIA–810 (Monthly Refinery Report) and 

EIA–815 (Monthly Bulk Terminal and 

Blender Report). It likely underestimates 

actual E85 consumption as these 

surveys do not capture other sources of 

E85 production, such as the following: 

• E85 produced using reformulated 

gasoline (RFG) or reformulated gasoline 

blendstock (RBOB) as the petroleum 

component of the fuel. 

• E85 produced by refiners or 

blenders producing small quantities of 

E85. 

• E85 produced by parties such as 

ethanol production facilities. 

For the last category, we were able to 

estimate the potential volume of E85 

produced in 2012 by ethanol facilities 

using data collected in the EPAModerated Transaction System (EMTS). 

Ethanol production facilities are in 

general prohibited from separating RINs 

from the ethanol that they produce. 

However, if an ethanol producer blends 

its ethanol into gasoline to make a 

transportation fuel, it can separate the 

RINs from the ethanol used in this 

blending. If they do produce 

transportation fuel, it is very likely to be 

E85 rather than E10. Therefore, we 

assumed that all RINs separated by 

ethanol producers represent ethanol 

blended as E85. Under this assumption, 

we determined that ethanol production 

facilities separated about 22 million 

RINs in 2012, which would correspond 

to about 30 mill gal of E85. When 

combined with the 37 mill gal estimate 

from EIA for E85 produced by refineries 

and blenders, the total 2012 E85 

production is estimated to be about 70 

mill gal. 

At this time, available information 

regarding the volume of E85 production 

in 2013 is limited to the first half of the 

year. Using the same two sources of 

information described above—EIA 

survey data for E85 production by 

refineries and blenders, and EMTS data 

to estimate E85 production at ethanol 

facilities—we have estimated that total 

E85 production for the first half of 2013 

was about 36 mill gal. However, both of 

these data sources demonstrate a 

strongly increasing trend over this 

timeframe. If this trend continues 

through the end of 2013, total E85 

production could reach 100 mill gal in 

2013. Furthermore, if this trend 

continued throughout 2014, total E85 

production would reach 240 mill gal in 

2014.47 If this trend were further 

augmented to account for the rate of 

ongoing growth in both the number of 


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48Based on 25% annual growth in E85 

consumption as described in memo entitled, 

‘‘Application of one-in-four E85 access 

methodology to 2014’’, Memorandum from David 

Korotney to EPA docket EPA–HQ–OAR–2013–0479. 

49 2013 NACS Retail Fuels Report. 

50 ’’E85 motor fuel is increasingly pricecompetitive with gasoline in parts of the Midwest.’’ 

Today in Energy. EIA, 19 September 2013. 

<http://www.eia.gov/todayinenergy/

detail.cfm?id=13031>. Study compared daily 

average observed E85 and regular gasoline prices at 

the same stations in the states of Iowa, Illinois, 

Indiana, Kentucky, Michigan, Minnesota, and Ohio. 

51See Table IV.B.1–2. 

52Memorandum from David Korotney to EPA 

docket EPA–HQ–OAR–2013–0479. 

53EIA Annual Energy Outlook 2013, Table 40. 

Increase in Ethanol-Flex Fuel Cars and Light Trucks 

from 2013 to 2014. 

54Other factors, including Federal and State 

taxes, subsidies and distribution costs, and relative 

convenience costs may also affect the price 

relationship. It is therefore very difficult to 

accurately predict fuel prices. 

55 ’’E85 motor fuel is increasingly pricecompetitive with gasoline in parts of the Midwest.’’ 

Today in Energy. EIA, 19 September 2013. <http:// 

www.eia.gov/todayinenergy/detail.cfm?id=13031>. 

E85 prices have fallen steadily since the beginning 

of 2013 relative to E10 prices. 

retail stations offering E85 and in the 

number of FFVs in the fleet that would 

occur over the remainder of 2013 and 

2014, the projection for 2014 could be 

as high as 300 mill gal.48 We anticipate 

that better and more detailed 

information will be available— 

including through this notice and 

comment process—by the time we 

promulgate the final rule. We solicit 

comment and information on 2013 

consumption of E85 and its relevance to 

projecting reasonable levels of 

consumption in 2014. 

It should be noted that historical 

consumption of E85 represents a small 

fraction of the consumption capacity of 

the FFVs currently in use. Even 

counting only those FFVs which have 

reasonable access to stations offering 

E85, their total consumption capacity is 

at least 1 bill gal. The low historical 

consumption was most likely due to a 

combination of factors including limited 

access to retail stations offering E85, the 

reduced range of vehicles operating on 

E85, and the fact that E85 has 

historically been more expensive than 

E10 on an energy-content adjusted basis. 

A survey conducted by the National 

Association of Convenience Stores 

found that 71% of customers indicated 

that price was the most important factor 

in determining where they buy 

gasoline.49 We believe the volume of 

E85 that can and will be sold in the 

future is likely highly dependent on the 

price relationship between E10 and E85 

and the availability of the fuel. 

While historically E85 has been more 

expensive than E10 on an energycontent adjusted basis, recent data 

collected by EIA suggests that at least in 

some parts of the country this price 

relationship between E10 and E85 may 

be changing. In a Today in Energy 

article published on September 19, 

2013, EIA presented data showing that 

in a collection of Midwestern states E85 

retail prices were less than E10 retail 

prices on an energy-content adjusted 

basis in July 2013, the most recent 

month for which information was 

available.50 This change in price 

relationship between E10 and E85 

coincides with reported increases in 

sales volumes of E85 in Iowa and 

Minnesota, two states in which E85 

sales volumes are publically available.51

If the conditions that have led to this 

price relationship continue in the future 

E85 sales volumes are likely to continue 

to increase. 

Moreover, as more gasoline stations 

sell E85 and more FFVs are sold in the 

United States the potential market for 

E85 will continue to increase. Through 

2013 the number of stations selling E85 

has been increasing at a rate of over 300 

stations per year.52 The size of the FFV 

fleet also increased by approximately 1 

million vehicles in 2013.53 If the recent 

pricing trends noted above persist and 

spread to other parts of the country the 

potential growth in E85 sales could be 

significant. Increasing E85 sales due to 

favorable pricing may also incentivize 

increasing growth rates in the number of 

stations selling E85 and the size of the 

FFV vehicle fleet. Such a scenario, 

however, is dependent on E85 being 

widely available at a price that is 

sufficiently lower than E10 to offset the 

lower energy content, increased 

refueling frequency requirements, and 

other factors. If the price relationship 

between E10 and E85 reverts to historic 

levels significant growth in E85 sales 

volumes is unlikely. 

The price relationship between E85 

and E10 depends on many factors, but 

three of the most significant are the 

prices of corn, crude oil, and RINs.54

Corn and crude oil are the primary 

contributors to the cost of production of 

the ethanol and gasoline, respectively, 

used in the United States. The RIN price 

functions as a mechanism to subsidize 

the price of ethanol sold as E85 until it 

is at or below price parity with gasoline 

on an energy-equivalent basis even if 

the relative prices of corn and oil would 

not otherwise support such a pricing 

structure. The net effect of a reduction 

in the price of ethanol is that the price 

of E85 should fall relative to the price 

of E10, since E85 contains more ethanol 

than E10. The significant rise in the 

price of D6 (non-advanced) RINs and 

the subsequent drop in the retail price 

of E85 relative to E10 over the course of 

2013 55 occurred at a time when corn 

and thus ethanol was relatively 

expensive, indicating that RINs are 

already functioning in this manner. The 

recent shift in E85 prices relative to E10 

and the simultaneous increase in E85 

sales suggest the importance of paying 

careful attention to more recent data 

concerning E85 prices and sales 

volumes when projecting E85 volumes 

in 2014. While the more recent data is 

available from such a short period of 

time that it limits the confidence in 

using it to make projections for 2014, it 

nevertheless provides a basis for 

expecting that directionally, the lower 

the price of E85 compared to the price 

of E10, the greater the likelihood that 

FFV owners will opt to purchase E85. In 

addition to the volumetric energy 

content of E85 compared to E10, the 

price difference may also need to 

accommodate the inconvenience of a 

greater frequency of refuelings for a 

vehicle operating on E85, the potentially 

the greater driving distance to a station 

offering E85, the unfamiliarity that FFV 

owners may have with E85 or their own 

vehicle’s capabilities, and differences in 

the mix of vehicle types among FFVs 

compared to conventional (not flex fuel) 

vehicles. These factors may also vary 

from region to region across the U.S. 

based on state and local policies, 

making it challenging to develop 

correlations representing the nation as a 

whole. While we currently have 

insufficient data to allow us to correlate 

sales volumes of E85 with its price 

relative to gasoline on an energy basis 

for the nation as a whole, information 

from Minnesota indicates a moderately 

strong correlation between E85/E10 

price differential and E85 sales volumes. 

To further aid our projections for the 

final rule, we request comment on the 

manner and extent to which RIN prices 

are affecting gasoline and E85 prices for 

the nation as a whole, and any 

associated changes in E85 consumption. 

EPA is not in a position to estimate 

E85 consumption based on data or 

modeling involving the price 

relationship between E10 and E85. 

Therefore, in addition to information on 

E85 consumption in 2012 and 2013 

discussed above, we have considered 

other sources in developing our estimate 

of the volume of E85 that could 

reasonably be consumed. The following 

discussion presents the various sources 

and approaches used to inform our 

estimate. 

To begin with, we considered that 

even without further reductions in the 

price of E85 relative to the price of E10, 


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Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules 71761 

56This estimate is based on two years of growth 

in stations offering E85 and two years of growth in 

in-use FFVs. Growth factors are discussed further 

in a memo entitled, ‘‘Application of one-in-four E85 

access methodology to 2014’’, Memorandum from 

David Korotney to EPA docket EPA–HQ–OAR– 

2013–0479. 

57See discussion at 75 FR 14761, March 26, 2010. 

58This estimate includes energy consumed from 

all fuel sources, including both E10 and E85. 

59 ‘‘Application of one-in-four E85 access 

methodology to 2014,’’ Memorandum from David 

Korotney to EPA docket EPA–HQ–OAR–2013–0479. 

60 ‘‘Department of Energy Analyses in Support of 

the EPA Evaluation of Waivers of the Renewable 

Fuel Standard’’, November 2012, EPA–HQ–OAR– 

2012–0632–2544. 61 In generating this estimate, DOE assumed that 

the number of retail stations offering E85 would be 

about 2,300. We estimate that the number of 

stations offering E85 will be closer to 3,300 in 2014, 

which would correspond to a maximum E85 

throughput of about 860 mill gal. 

higher E85 consumption in 2014 could 

reasonably be expected compared to 

2012 and 2013 based on business-asusual growth in the number of FFVs inuse and the number of retail stations 

offering E85. The combined effect of 

these two factors could raise the total 

E85 consumption volume from our 2013 

estimate of about 100 mill gal to about 

125 mill gal in 2014 if the purchasing 

behavior of individual FFV owners 

remains constant.56

In the March 2010 RFS final rule we 

presented a means for estimating the 

E85 consumption capacity of FFVs 

based on historical market practices 

with diesel fuel.57 We defined 

‘‘reasonable access’’ to E85 as a situation 

in which one out of every four service 

stations to which an FFV owner had 

access offered E85, such that an FFV 

owner could be considered to have a 

reasonable option of refueling on E85. 

All other FFVs would then be assumed 

not to have reasonable access to E85, 

and would therefore always refuel on 

gasoline (here presumed to be E10). 

Following this one-in-four access 

approach, we estimated that 

approximately 8.6% of FFVs would 

have access to E85 in 2014 based on 

projections of the number of retail 

stations likely to offer E85. Similarly, 

the total amount of energy 58 consumed 

by all FFVs in 2014 would be about 9% 

of all the energy consumed by all lightduty vehicles and trucks. If the price of 

E85 reflected only the energy difference 

between it and E10, the total volume of 

E85 consumed under this approach 

could be about 160 mill gal. If the price 

of E85 was lower than this level and as 

a result half of all FFV owners with 

access used E85, the total volume of E85 

consumed could reach 640 mill gal. 

Details of these calculations can be 

found in a memorandum in the 

docket.59

We have also considered other 

projections of E85 usage, recognizing 

the varying assumptions made in 

developing these projections as well as 

the differing purposes of the projections. 

For example, in their comments on the 

NPRM for the 2013 standards, the 

University of Illinois included an article 

from the February 13, 2013 issue of 

Farmdoc Daily in which E85 

consumption in 2014 was assumed to be 

300 mill gal if E85 prices were 

sufficiently low in comparison to E10 

prices, though they did not quantify the 

prices needed to reach this E85 

consumption level. 

Finally, in the context of EPA’s 

response to requests for a waiver of the 

2012 renewable fuel volume 

requirements due to drought, the 

Department of Energy provided its own 

analysis of the maximum volume of E85 

that could be consumed based on a 

technical analysis of retail station 

throughput.60 Based on assumptions 

about E85 tank sizes at retail stations 

and the associated refill frequencies, 

DOE estimated that the maximum sales 

of E85 would be 600 mill gal.61 This 

DOE analysis focused on the potential 

throughput at E85 stations given certain 

underground tank refueling frequencies, 

and did not consider such things as 

vehicle refueling frequencies. DOE’s 

analysis also noted that to achieve its 

potential, E85 may need to be priced at 

a greater discount than it would be 

based on the energy content differential 

between E85 and gasoline alone to 

account for the more frequent refueling 

that E85 requires. We request comment 

on how DOE’s analysis could be refined 

to better estimate potential E85 

consumption. 

c. Proposed Projection of E85 

Consumption in 2014 

Our goal for this proposal is to 

generate a realistic estimate of the 

amount of E85 that could reasonably be 

supplied to and consumed in the 

transportation sector in 2014 in light of 

the various circumstances involved with 

distribution and sale of E85. As with 

other volumes of renewable fuel, we 

believe that it is most appropriate to 

project a range of E85 volumes that 

reflects the volume that could 

reasonably be consumed in 2014. This 

projected range for E85 is used to 

determine a range for the total volume 

of ethanol that can be consumed, which 

is further combined with projected 

ranges for non-ethanol renewable fuels 

to determine a range for the total 

renewable fuel standard. For the final 

rule, we will determine a single value 

within the projected range that is our 

best estimate of a realistic projection of 

total renewable fuel in 2014 for 

purposes of exercising the waiver 

authority. Once the applicable volume 

requirements are set, the parties in the 

market will determine whether our 

estimated volume of E85 is in fact 

consumed, or whether other renewable 

fuels are consumed instead of the 

volume of ethanol that we estimate 

could be consumed as E85. 

Based on our analysis of the available 

information described above, we are 

estimating a range of 100–300 mill gal 

of E85 consumption for 2014. We 

believe that this estimated range of E85 

encompasses the most likely 

possibilities. Volumes below 100 mill 

gal are possible, but we believe that they 

are unlikely given that we expect such 

volumes to be reached in 2013 and the 

market conditions that resulted in these 

values to continue. Likewise volumes 

above 300 mill gal are possible, but we 

believe that they are unlikely. As 

described above, we believe that 300 

mill gal of E85 could be consumed in 

2014 if the monthly trends from the first 

half of 2013 continue unabated through 

both 2013 and 2014, and further 

increase due to growth in both retail 

stations offering E85 and FFVs in the 

fleet. E85 consumption above 300 mill 

gal in 2014 would require that these 

trends increase even further, and in a 

sustained fashion, through the end of 

2014. Therefore 300 mill gal is the 

highest value we would consider at this 

time as an upper end of the range of 

possible volumes of E85 for 2014. 

However, we acknowledge that the 

volume of E85 sold into the market is 

likely also a function of the standard for 

total renewable fuel that we set. We 

request comment and data from the 

public that would help estimate the 

impact of lowering the volumetric 

requirements on the incentive to sell 

ethanol blends higher than E10. 

In light of current uncertainties and 

the limited information available at this 

time, we are proposing that the specific 

volume of E85 that we would use in 

determining total ethanol consumption 

for 2014 would be based on the mean 

value from the Monte Carlo analysis 

within the range of potential E85 

volumes. As explained in Section IV.B.4 

below, the Monte Carlo analysis for E85 

is based on a half-normal distribution, 

consistent with our view that a 

reasonable level of E85 consumption is 

more likely to be towards the lower end 

of the proposed range. Based on this 

analysis, the mean value for E85 

consumption would be about 180 mill 

gal. The mean provides a balance 

between the projected higher and lower 

volumes of E85 that could be reasonably 

achievable. While we believe that 


sroberts on DSK5SPTVN1PROD with PROPOSALS
71762 Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules 

62EIA Annual Energy Outlook 2013, Table 37. 

Represents lower heating value. For determining 

the total volume of ethanol that can be consumed 

in 2014, AEO provides 2014 gasoline consumption 

projections in the required energy units. However, 

EIA’s Short-Term Energy Outlook provides 2014 

projections that are more recent, but in units of 

volume. EPA understands that the estimate of 2014 

transportation fuel use that EIA is required to 

provide to EPA for purposes of determining the 

applicable percentage standards will be based on 

the latest available STEO forecast rather than the 

Annual Energy Outlook. 

63 77 FR 59458, September 27, 2012 (establishing 

the national applicable volume for BBD). 

64 ‘‘Biodiesel plant list 2–6–13’’ in docket EPA– 

HQ–OAR–2013–0479. 

volumes of E85 at the high end of our 

proposed range are achievable and well 

within the capabilities of the existing 

vehicle and refueling infrastructure, 

basing the total renewable fuel volume 

on E85 volumes at the high end of what 

is achievable could present an increased 

risk of non-compliance for obligated 

parties if more E85 is called for than 

was projected in setting the percentage 

standards. This could occur, for 

example, if uncertainties in projected 

gasoline and diesel consumption for 

2014 led to a requirement for more than 

300 mill gal E85. By using the mean, we 

would reduce the likelihood of potential 

outcomes such as this. 

The proposed mean volume of 180 

mill gal for E85 is consistent with the 

recent upward trend in E85 production 

described above, where E85 is estimated 

to have been about 70 mill gal in 2012 

and could reach and potentially exceed 

100 mill gal in 2013. With regard to 

2013, the increase is also consistent 

with available state-specific data on E85 

production increases in the first two 

quarters. 

TABLE IV.B.1.C–2—E85 PRODUCTION IN 2013 

[Mill gal] 

First quarter Second 

quarter % change 

Minnesota .................................................................................................................................... 1.9 3.0 +58% 

Iowa ............................................................................................................................................. 1.8 2.6 +44% 

We request comment more generally 

on the range of E85 consumption that 

could reasonably be achieved under 

appropriate conditions in 2014, 

including the methodologies and 

approaches that would provide a 

projection of E85 that could reasonably 

be consumed in light of the various 

factors affecting the distribution and 

sale of E85. We reiterate our recognition 

that there is a short time period in 

which to achieve infrastructural and 

market changes that would affect E85 

consumption in 2014 and that the 

approach to estimating E85 

consumption described above, 

consistent with best available 

information, is appropriate. We request 

comment in particular on 

methodologies and approaches that 

would be appropriate in light of these 

considerations. 

d. Estimating Total Ethanol 

Consumption in 2014 

To estimate the total volume of 

ethanol that could reasonably be 

consumed in 2014, we assumed that 

volumes of E0 and E15 would be 

essentially zero, that E85 consumption 

would be in the range of 100–300 mill 

gal and contain 74% denatured ethanol, 

and that all remaining gasoline would 

be E10 with a denatured ethanol content 

of 10%. We assumed that the total 

energy consumption for all gasolinepowered vehicles and engines would be 

14.33 Quadrillion Btu,62 and that this 

amount of total energy consumption is 

fixed regardless of the relative amounts 

of E10 and E85. Based on a denatured 

ethanol energy content of 77,000 Btu/gal 

and a gasoline (E0) energy content of 

115,000 Btu/gal, we determined that an 

E85 consumption range of 100–300 mill 

gal would correspond to a total ethanol 

consumption volume of 12.95–13.09 bill 

gal. This ethanol volume would include 

non-advanced ethanol such as that 

made from corn as well as advanced 

biofuels such as sugarcane ethanol or 

other domestically-produced advanced 

ethanol. 

2. Estimating Availability of NonEthanol Renewable Fuel Volumes 

In addition to the volume of ethanol 

that could reasonably be consumed in 

2014, the total volume of renewable fuel 

depends on the volume of non-ethanol 

renewable fuels that are projected to be 

available in 2014. These include both 

advanced and non-advanced nonethanol renewable fuels of all types that 

could reasonably be supplied to meet all 

four standards. 

a. Non-Ethanol Cellulosic Biofuel 

The production of non-ethanol 

cellulosic biofuel in 2014 is projected to 

be between 0 and 9 million ethanolequivalent gallons. This volume could 

be significantly greater if additional 

pathways for the generation of cellulosic 

biofuel RINs are approved and 

additional volumes of heating oil 

generate cellulosic RINs. For more 

details on the potential production of 

non-ethanol cellulosic biofuels in 2014, 

and the companies expected to produce 

these fuels, see Section II. 

b. Biomass-Based Diesel 

Obligated parties are required to 

fulfill a Renewable Volume Obligation 

(RVO) based on a national applicable 

volume for biomass-based diesel of 1.28 

bill gal of biodiesel (1.92 bill ethanolequivalent gallons) in 2013.63 As 

described in Section III, in today’s 

NPRM we are proposing that the 

national applicable volume for biomassbased diesel remain the same for 2014. 

However, this proposed requirement is 

not based exclusively on projected 

availability and we recognize that 

greater volumes could be available for 

purposes of satisfying the advanced 

biofuel and total renewable fuel volume 

requirements. 

There is a large amount of excess 

production capacity for biomass-based 

diesel, including at facilities that were 

in operation in 2012. While the total 

production capacity for all registered 

and unregistered biodiesel facilities is 

about 3.6 bill gal, the production 

capacity for only those facilities that 

produced some volume in 2012 is 2.4 

bill gal, and the production capacity for 

facilities that utilized at least 20% of 

their individual production capacities 

in 2012 was about 1.6 bill gal.64


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65See Section 405. 

While there is a large amount of 

excess production capacity, the degree 

to which it will be used to produce 

biodiesel in excess of 1.28 bill gal 

depends on a variety of factors. One of 

those factors is the federal tax credit for 

biodiesel that was most recently 

extended through the end of 2013 under 

the American Taxpayer Relief Act of 

2012. Under this Act, parties that 

produce a mixture of biodiesel and 

diesel fuel can claim a $1.00-per-gallon 

credit against their tax liability.65 This 

tax credit has enabled biodiesel to be 

more competitive with other advanced 

biofuels. However, as of this writing it 

is unclear if this tax credit will apply in 

2014. Since many expect the tax credit 

to have a direct impact on the economic 

attractiveness of biodiesel, the fact that 

it does not yet apply in 2014 adds 

uncertainty to the volume of biodiesel 

above 1.28 bill gal that may be produced 

and consumed in the U.S. As discussed 

further in Section IV.B.4–2 below, we 

have assumed that the tax subsidy for 

biodiesel will not be extended past 

2013. This is reflected in an upper end 

of the range for biomass-based diesel no 

higher than the volume that may be 

used in 2013, and through the use of a 

half-normal distribution in the context 

of the Monte Carlo process. We request 

comment on the degree to which the 

presence of the biodiesel tax credit in 

2014 would affect our projections of the 

volumes that could be reasonably 

available in 2014. To the extent we have 

new information on the status of the tax 

credit in 2014, EPA will consider that 

information in the development of the 

final rule. 

According to production data 

available through EMTS, the total 

volume of biomass-based diesel 

produced through August 2013 was 

1,053 million gallons. Depending on 

how monthly production continues 

through the remainder of 2013, we 

would expect total 2013 biodiesel 

production to be between 1.6 and 1.8 

bill gal. A projection of 1.8 bill gal 

results from the assumption that the 

August production rate continues 

through the rest of 2013. If the trend in 

production follows the downward trend 

that occurred in 2012 in the September– 

December timeframe (representing, for 

example, potential seasonality of 

available feedstocks or demand), the 

total 2013 production would be 1.6 bill 

gal. 


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71764 Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules 

66EIA Annual Energy Outlook 2013, Table 11. 

67 Very few engine models are warrantied by 

manufacturers to consume B20 have been sold in 

the U.S. As such, this volume of biodiesel was 

assumed to be negligible for purposes of this 

estimate. 

68See http://www.usda.gov/oce/commodity/ 

wasde/index.htm (last accessed June 7, 2013); The 

WASDE report is a monthly report published by the 

U.S. Department of Agriculture (USDA) providing 

comprehensive forecast of supply and demand for 

major crops both for the U.S. and globally. 

Throughout the growing season and afterwards, 

estimates are compared with new information on 

production and utilization, and historical revisions 

are made as necessary. It is widely considered to 

be the benchmark to which all other private and 

public agricultural forecasts are compared. 

69Compare Cf 77 FR 59458 at 59465 with the May 

10, 2013 WASDE Report released on May 10, 2013, 

Table 518–15. See http://www.usda.gov/oce/ 

commodity/wasde/index.htm (last accessed June 7, 

2013). 

These 2013 biodiesel production 

volumes are occurring in the context of 

a $1/gal tax credit. While they provide 

a clear indication of the production 

capabilities of the industry, they do not 

provide an accurate indicator of the 

volumes that would be produced in the 

absence of the tax credit. 

In the past some stakeholders have 

expressed concern that there may be 

limitations in biodiesel consumption 

that could be imposed by manufacturer 

warranties and cold-weather operation, 

and that this could impact use of 

biodiesel above 1.28 bill gal. However, 

we do not believe that this is the case 

for 2014. For instance, most diesel 

engines are warrantied by their 

manufacturer to B5. That is, the use of 

biodiesel in concentrations above 5vol% 

will void these 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 56 bill gal for 2014,66

B5 for the diesel pool as a whole would 

correspond to a biodiesel volume of 2.8 

bill gal. However, some diesel truck 

engines have been warrantied by their 

manufacturers to consume B20, starting 

in 2011.67 This could potentially raise 

the limit on biodiesel consumption even 

higher, assuming retailers would 

dedicate a pump exclusively to B20 for 

this pool of diesel fuel consumers. Since 

2.8 bill gal is significantly higher than 

the range of biodiesel volumes we are 

considering in this proposal, 

manufacturer warranties do not 

represent a limitation on biodiesel use 

in 2014. 

Production of biodiesel in 2014 is 

likely to be impacted significantly by 

feedstock prices. Since their peak in 

August and September of 2012 during 

the height of uncertainty about the 

effects of the 2012 drought, prices of 

soybeans and soybean products have 

been trending downward. The USDA 

World Agricultural Supply and Demand 

Estimates (WASDE) Report’s estimate 68

of soybean prices for the 2012/2013 

marketing year have declined from an 

August 2012 range of $15–17 per bushel 

to a June 2013 estimate of $14.35 per 

bushel for the 2012/2013 marketing 

year. WASDE’s June Outlook Report 

estimates that for the 2013/2014 

marketing year (which includes the 

months of October through December 

2013) soybean prices will range from 

$9.75–$11.75 per bushel which is in 

line with the projections used by EPA 

in the 2013 biomass-based diesel 

volume final rule.69

At the same time, even biodiesel 

blends as low as B5 cannot be utilized 

year-round due to cold weather 

constraints. The cloud point for B5 soy 

methyl ester (SME) blended with No. 2 

diesel is estimated to be approximately 

5 °F. Thus, the use of B5 is highly 

unlikely in any region where 

temperatures regularly drop below 5 °F. 

Assuming that biodiesel cannot be 

blended in such regions during any 

month where the 10% percentile 

temperature falls below 5 °F would 

result in a reduction of the 2014 

biomass-based diesel volume by only 

about 3%. This would still permit more 

than 2 bill gal of biodiesel to be 

consumed in 2014. Thus, it appears that 

for 2014, the ability to consume 

biodiesel in the vehicle fleet is not 

constrained by cold weather. 

There are a variety of other sources 

that provide benchmarks for what 

volumes of biodiesel could be 


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70 78 FR 49794, August 15, 2013. 

71Pete Riley, ‘‘Grains and Oilseeds Outlook; 2013 

Agricultural Outlook Forum,’’ USDA/Farm Service 

Agency, February 22, 2013. 13% is assumed to 

apply only during the first 9 months of 2014. 

72For example, as of June 2013, EPA had 5 

petitions for new biodiesel pathways under review 

and had approved 3 additional petitions for new 

biodiesel pathways. 73See for example the final rules adding giant 

reed and napier grass feedstocks (74 FR 41703) and 

final rule adding camelina and energy cane as 

feedstocks and renewable gasoline and renewable 

gasoline pathways (74 FR 14190). 

74 John R. Kruse, ‘‘Biodiesel Production Prospects 

for the Next Decade’’, March 11, 2011. 

reasonably available in 2014 in excess of 

1.28 bill gal. For instance, in the 2013 

standards final rule,70 we assessed 

potential feedstocks for biodiesel 

production, concluding that excess soy 

oil and corn-oil could be used to 

produce an additional 200 mill gal of 

biodiesel in 2013 above the 1.28 bill gal 

requirement. For 2014 the additional 

biodiesel from these sources could be 

higher. According to USDA, domestic 

soybean production is expected to 

increase by 13% in the 2013 soybean 

marketing year which extends through 

September 2014, in comparison to the 

2012 marketing year.71 If this occurs, 

then domestic production of soy oil 

could increase by about 240 mill gal. 

Regarding corn-oil, more than one third 

of the 320 mill gal total production was 

exported in 2012. These exports could 

be diverted to biodiesel production 

depending on relative prices and other 

factors. Taken together, the use of both 

additional soy oil production and the 

diversion of corn oil exported could 

bring the total biodiesel production 

volume to about 1.62 bill gal. 

We continue to receive requests for 

approval of additional RIN-generating 

pathways for new feedstocks to expand 

the availability of feedstock types and 

for new production processes to 

produce biodiesel.72 While the degree to 

which these new processes and 

feedstocks may be viable for the 2014 

production year is uncertain, given their 

directional impacts on lowering cost 

and improving feedstock availability, 

we would expect that approval of such 

new pathways would add biodiesel 

production volume in 2014. For 

example, since the adoption of the final 

rule in March 2010, we have added 

canola and camelina oil as valid 

biodiesel feedstocks and analyzed the 

potential to produce up to 600 million 

gallons of biodiesel from these new 

feedstocks by 2022 through expanded 

crop production.73 These feedstocks 

were added in response to industry 

requests based on their intention to 

expand production of these feedstocks 

to support biodiesel production. Since 

canola and camelina are established 

crops that can be grown for biodiesel 

use today, some portion of these 

maximum volumes could be produced 

in 2014, adding to the volume of 

feedstock otherwise available for 

biodiesel production. 

We are aware of three other sources 

that provide potential benchmarks for 

biodiesel production volume in 2014. In 

2011, IHS Global Insight estimated the 

potential for biodiesel production over 

the following decade.74 Under specified 

assumptions for crude oil price, crop 

yields, technology, and tax policies, this 

report concluded that it would be 

economically feasible to produce 1.54 

bill gal biodiesel in the U.S. in calendar 

year 2014. This estimate assumed that 

the biodiesel tax credit would be 

extended beyond 2013, and did not 

examine a case in which the tax credit 

is not extended. 

In their comments on the NPRM for 

the 2013 standards, the University of 

Illinois provided the results of an 

analysis of both production and 

consumption limitations for ethanol and 

biodiesel. They concluded that 1.7 bill 

gal of biodiesel could be available 

without overwhelming feedstock 

supplies, but provided little detail on 

the limits of feedstock supply. It also 

assumed the extension of the biodiesel 

tax credit. Darling International, Inc. 

also evaluated available feedstocks and 

concluded that 1.9 bill gal of biodiesel 

could be produced without diverting 

feedstocks from domestic food 

requirements. Their analysis, however, 

was silent with respect to whether it 

assumed the extension of the tax credit. 

Finally, we note that there are also 

international sources of biodiesel that 

could be imported into the U.S. and 

which could be eligible to generate 

either D4 (biomass-based diesel) or D6 

(renewable fuel) RINs in 2014. While 

there is a significant volume of biodiesel 

that is produced around the globe, it is 

unclear how much could potentially be 

imported into the U.S. in 2014 and 

accordingly we have not included these 

sources in our analysis of available 

supply. 

Based on the discussion above, we 

have good reason to believe that the 

volume of biodiesel that can be 

produced in 2014 will be higher than 

the applicable volume requirement of 

1.28 bill gal. A summary of all of the 

sources we have considered is provided 

below. 

TABLE IV.B.2.b–1—PROJECTIONS OF 2014 BIOMASS-BASED DIESEL ORDERED FROM LOWEST TO HIGHEST

[Million gallons] 

Biomass-based diesel volume requirement ................................................................................................................................ 1,280 

IHS Global Insight report ............................................................................................................................................................. 1,540 

Extrapolated 2013 production ...................................................................................................................................................... 1,570 

All registered biodiesel facilities that operated at least 20% of capacity in 2012 ....................................................................... 1,600 

Additional soy oil production and diversion of exported corn oil to biodiesel production ........................................................... 1,620 

University of Illinois estimate in their comments ......................................................................................................................... 1,700 

Darling International, Inc. estimate in their comments ................................................................................................................ 1,900 

Production capacity of all registered biodiesel facilities that produced some biodiesel in 2012 ................................................ 2,400 

As with E85, we believe that it would 

be most appropriate to project a range of 

possible biodiesel production volumes 

for 2014, using the values in Table 

IV.B.2.b–1 as a guide. As explained 

above, the volumes in the table above 

represent potential technical 

availability. We recognize that multiple 

factors would ultimately influence 

actual production volumes. For the 

purposes of this NPRM, we are 

estimating a range of 1.28–1.6 bill gal of 

biodiesel production for 2014. While it 

would not be below 1.28 bill gal, as that 

is the required volume, it could be 

above the high end of 1.6 bill gal. 

However we estimate that it would be 

unlikely to be above this value, 

especially if the federal tax credit is not 

extended beyond 2013. For instance, the 

1.9 bill gal estimate from Darling 

international, Inc. was based on 

extrapolating the historically high 

production rate from December 2011 

into the future. The circumstances in 

December 2011 were unique: the tax 

credit for biodiesel was to expire at the 


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71766 Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules 

75Urbanchuk, John, ‘‘Economic Impact of 

Removing the Biodiesel Tax Credit for 2010 and 

Implementation of RFS2 Targets Through 2015,’’ 

Prepared by Cardno Entrix for the National 

Biodiesel Board, June 8, 2011 (revised). 

76Biodiesel and renewable diesel that is coprocessed with petroleum does not meet the 

requirements for biomass based diesel (D4 RIN), 

however it may qualify as an advanced biofuel (D5 

RIN). 

77Based on list of operational landfill gas (LFG) 

energy projects provided at http://www.epa.gov/ 

lmop/projects-candidates/operational.html. 

78EIA’s Short-Term Energy Outlook, Table 5a, 

released in September 2013. Projection of 0.093 bill 

cubic feet per day for 2014. Conversion factor is 

0.96 thousand Btu per cubic foot. 79 78 FR 49794, August 15, 2013. 

end of that month, prompting a jump in 

production. Thus while it is possible 

that the production rate from December 

2011 might be sustained in the future, 

we believe it is unlikely if the biodiesel 

tax credit is not extended past 2013. 

Likewise the analysis provided by the 

University of Illinois which projected 

1.7 bill gal biodiesel in 2014 assumed 

that the tax credit would be extended 

beyond 2013. A 2011 report prepared on 

behalf of the National Biodiesel Board 

indicated that the expiration of the tax 

credit at the end of 2010 caused a 

substantial reduction in biodiesel 

production in 2011 compared to 2010.75

For the purposes of this NPRM, we 

have assumed that the biodiesel tax 

credit will not be extended beyond 

2013. As a result, we believe that 

biodiesel production volumes in 2014 

are more likely to be towards the lower 

end of our proposed range of 1.28–1.6 

bill gal. To reflect this assumption, we 

have used a half-normal distribution to 

represent biomass-based diesel in the 

context of the Monte Carlo process 

described in Section IV.B.4 below. This 

distribution has a mean value of 1,405 

mill gal for biodiesel. 

c. Non-Ethanol Advanced Biofuel 

Non-ethanol advanced biofuel other 

than cellulosic biofuel and biomassbased diesel has a D code of 5, and 

could include biodiesel and renewable 

diesel that is co-processed with 

petroleum ,76 heating oil, biogas, jet fuel, 

naphtha, and LPG. In 2012, RINs were 

generated for only three of these fuel 

types, as summarized in the following 

table. 

TABLE IV.B.2.c–1—OTHER NON-ETHANOL ADVANCED BIOFUEL PRODUCED IN 2012 

[Million ethanol-equivalent gallons] 

Heating oil ......................................... 0.2 

Biogas ............................................... 2.9 

Renewable diesel ............................. 20.5 

Total .............................................. 23.6 

These volumes were produced 

domestically and there were no volumes 

of non-ethanol advanced biofuel 

imported into the U.S. in 2012. 

In order to estimate a range of 

possible volumes of other non-ethanol 

advanced biofuel for 2014, we examined 

the Production Outlook Reports that are 

required to be submitted by all 

registered renewable fuel producers 

under § 80.1449. 

TABLE IV.B.2.c–2—PROJECTIONS

FROM PRODUCTION OUTLOOK REPORTS FOR OTHER NON-ETHANOL

ADVANCED BIOFUEL PRODUCTION IN

2014 

[Million ethanol-equivalent gallons] 

Biogas ............................................... 45.8 

Naphtha ............................................ 6.6 

Renewable diesel ............................. 79.1 

Total .............................................. 131.7 

Because biogas cannot be used in 

conventional gasoline or diesel vehicles, 

we investigated more closely whether 

the 45.8 mill gal shown in the above 

table was realistic for 2014. According 

to EPA’s Landfill Methane Outreach 

Program, about 360 mill ethanolequivalent gallons of biogas is currently 

being purified and injected into existing 

natural gas pipelines.77 Under § 80.1426 

this biogas can generate advanced 

biofuel RINs if it is demonstrated to 

have been used to fuel CNG vehicles 

and meets all other regulatory 

requirements. However, this amount of 

biogas is on the same order of 

magnitude as the total volume of CNG 

used in all CNG vehicles each year, 

which is about 420 mill ethanolequivalent gallons.78 While establishing 

contracts to ensure that all CNG vehicles 

are fueled with landfill biogas rather 

than fossil-based natural gas is highly 

unlikely to occur in the short term given 

the rapid expansion underway of CNG 

vehicles in the marketplace, we believe 

it is reasonable that some smaller 

portion of all CNG vehicles could be 

fueled with landfill biogas in 2014. 

Since the 45.8 mill ethanol-equivalent 

gallons of biogas from the Production 

Outlook Reports, shown in Table 

IV.B.2.c–2, represents about 11% of the 

annual CNG vehicle consumption, it is 

reasonable to expect that this volume 

could be used in 2014 to fuel CNG 

vehicles and thus generate advanced 

biofuel RINs. We request comment, 

however, on whether this level of 

consumption can reasonably be 

achieved within the relevant time frame. 

Therefore, based on the actual 

production in 2012 and the projected 

production for 2014, for this NPRM we 

have used a range of 24–132 mill gal to 

represent non-ethanol advanced biofuel 

with a D code of 5. While the actual 

volume could be above 132 mill gal, we 

believe this is unlikely as this volume 

is based on the projections made by the 

producers themselves in light of their 

assessment of their own capabilities and 

plans. Likewise, while the actual 

volume could be below 24 mill gal, we 

believe this is unlikely since the 

industry has demonstrated that it can 

produce at this level. For the final rule 

we will update this range based on more 

recent data on actual production in 2013 

and more recent versions of the 

Production Outlook Reports. 

d. Non-Ethanol Non-Advanced 

Renewable Fuel 

To determine a range for the nonethanol non-advanced renewable fuel 

volume, we used the same approach as 

for the non-ethanol advanced biofuel 

volume. That is, we used actual 2012 

production to represent the low end of 

the range and 2014 projections from 

Production Outlook Reports to represent 

the high end of the range. This approach 

resulted in a range of 1–25 mill gal, 

mostly representing production of 

biodiesel at facilities that have been 

grandfathered under § 80.1403 and 

which may use feedstocks for which 

there is currently no valid RINgenerating pathway, such as sunflower 

or cottonseed oil. For the final rule we 

will update this range based on more 

recent data on actual production in 2013 

and more recent versions of the 

Production Outlook Reports. 

3. Treatment of Carryover RINs in 2014 

In the final rule establishing the 

applicable standards for 2013, we 

estimated the volume of ethanol that 

would need to be consumed to meet the 

statutory volume requirements prior to 

consideration of RINs carried over from 

2012 in 2013.79 The total estimated 

volume of ethanol was 14.5 bill gal. If 

no ethanol blends higher than E10 were 

consumed in 2013, the total volume of 

E10 would be 131.1 bill gal (ignoring 

small amounts of E0) and the maximum 

volume of ethanol that could be 

consumed would thus be 13.1 bill gal. 

On the basis of these estimates, the 

volume of ethanol that is estimated to 

exceed the amount that could be 

consumed as E10 in 2013 was 1.4 bill 

gal. 

In addition to the option of using E85 

and/or more non-ethanol renewable 

fuels, the 2013 standards final rule also 

pointed to the substantial number of 


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80 72 FR 23900, May 1, 2007. 

RINs carried over from 2012 into 2013 

that could be used in lieu of physical 

volumes. We determined that there 

would be about 2.6 billion such 

carryover RINs available in 2013. If the 

1.4 bill gal of ethanol that is in excess 

of that which can be consumed as E10 

in 2013 is covered entirely by carryover 

RINs, then there would still be at least 

1.2 billion RINs that could be carried 

over from 2013 and available for use in 

2014. 

As described in the 2007 rulemaking 

establishing the RFS program,80

carryover RINs are intended to provide 

flexibility in the face of a variety of 

circumstances that could limit the 

availability of RINs. More specifically, 

carryover RINs provide a mechanism for 

offsetting the negative effects of 

fluctuations in either supply of or 

demand for renewable fuels. The 

flexibility afforded by these carryover 

RINs was evidenced in the recent 

response of the market to the drought in 

2012. The flexibility of these carryover 

RINs is also what we highlighted in the 

2013 standards final rulemaking as 

providing the opportunity for 

compliance despite potential constraints 

on physical ethanol consumption. 

In the context of determining the 

appropriate volume requirements for 

2014, as for 2013 it would be 

appropriate to consider carryover RINs 

that may be available. However, we 

believe it is also important to the 

viability of the market that some 

reasonable amount of carryover RINs 

continue to be available. Carryover RINs 

act as a buffer, and allow the regulated 

parties to address unforeseen 

circumstances that could limit the 

availability of RINs, and to address 

renewable fuel supply circumstances 

that differ from those assumed in the 

process of generating the projected 

volume ranges discussed above. The 

provision for carryover RINs recognizes 

that Congress structured the RFS 

program to provide a degree of 

flexibility for the obligated parties. In 

2013 preserving such a buffer was not 

a concern, since even if the 1.4 bill gal 

of ethanol that is estimated to be in 

excess of that which can be consumed 

as E10 in 2013 is covered entirely by 

carryover RINs, there would remain at 

least 1.2 billion additional, unused 

carryover RINs. For 2014, however, if 

we accounted for all 1.2 billion 

carryover RINs in setting the applicable 

standards, obligated parties would be 

left with no flexibility for addressing 

other unforeseen circumstances. We 

believe that a standard-setting process 

that included an assumption that the 

carryover RIN balance would be 

reduced to zero would be contrary to the 

original intention of the provision for 

providing a degree of flexibility through 

carryover RINs. For this reason, we have 

not accounted for carryover RINs in our 

assessment of the reductions in the 

statutory volume requirements that 

would be appropriate in setting the RFS 

standards for 2014. For years after 2014, 

if circumstances differ substantially 

from those described here, we may 

again consider the existence of 

carryover RINs in the standard-setting 

process depending on the number of 

carryover RINs expected to be available 

and projections of supply and 

consumption of renewable fuels. We 

request comment on whether and how 

to account for carryover RINs in setting 

the standards. 

4. Proposed Range for the Volume 

Requirement for Total Renewable Fuel 

As discussed in the preceding 

sections, we have estimated volume 

ranges for five different categories of 

renewable fuel as a step towards 

estimating the volume requirement for 

total renewable fuel for 2014. These 

ranges are summarized below. 

TABLE IV.B.4–1—VOLUME RANGES FOR ESTIMATING TOTAL RENEWABLE FUEL VOLUME FOR 2014 

[Million ethanol-equivalent gallons] 

Ethanol that can be consumed .................................................................................................................................................... 12,954–13,087 

Available volumes of non-ethanol cellulosic biofuel .................................................................................................................... 0–9 

Available volumes of biomass-based diesel ............................................................................................................................... a 1,920–2,400 

Available volumes of non-ethanol advanced biofuel ................................................................................................................... 24–132 

Available volumes of non-ethanol non-advanced renewable fuel ............................................................................................... 1–25 

a Represents a physical volume range of 1.28–1.6 bill gal. 

By aggregating these five categories, 

we can estimate the total volume of 

renewable fuel that represents both the 

volume of ethanol that could reasonably 

be consumed as E10 and higher ethanol 

blends, and the volume of all nonethanol renewable fuels that could 

reasonably be available to meet the four 

applicable standards. We note that in 

practice these five categories are not 

independent from one another, since 

different types of renewable fuel will 

differ in terms of their cost and higher 

volumes of one type of renewable fuel 

will reduce the need for volumes from 

another category in the context of 

meeting the applicable volume 

requirements. However, since the ranges 

shown above are intended to encompass 

reasonably achievable volumes for each 

type of renewable fuel, we believe that 

they can be treated as independent for 

the purposes of the aggregation 

described below. 

In order to aggregate the ranges in 

Table IV.B.4–1 into a single range for 

total renewable fuel, we used a Monte 

Carlo analysis to account for the need to 

aggregate multiple ranges, each having 

different likely distributions of 

likelihood across their range. As 

discussed in the preceding sections, the 

high and the low end of each range 

represents values such that it is possible 

but unlikely that volumes would be 

outside of those ranges. We have 

therefore treated these individual ranges 

as representing the 90% confidence 

interval of a distribution of possible 

volumes. In other words, the low end of 

the range would represent the 5th 

percentile and the high end of the range 

would represent the 95th percentile. 

This approach is consistent with our 

judgment that, while the ranges shown 

in Table IV.B.4–1 are intended to 

encompass the vast majority of possible 

volumes, there remains a small 

possibility that volumes outside of those 

ranges are possible. We believe it is 

reasonable to treat these ranges as 

representing 90% confidence intervals 

for purposes of the Monte Carlo 

analysis, though we request comment 

on treating them as a different 

confidence interval such as 80% or 

95%. 

As an alternative to a Monte Carlo 

process for aggregating the volumes in 

Table IV.B.4–1, we could use a simple 

summation of the ranges (i.e. basing the 

low end of the range of total renewable 

fuel on the sum of the low ends of the 

ranges for each of the five different 

categories, and likewise for the high end 


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of the range). However, we do not 

believe that such an approach would be 

appropriate. Doing so would tend to 

exaggerate the width of the range for the 

required volume of total renewable fuel 

as it is highly unlikely that 2014 

volumes for each of these categories will 

simultaneously be at the extreme low or 

high end of the proposed ranges, and 

would also mischaracterize biofuel 

categories wherein one end of the range 

is expected to be more likely than the 

other. Nevertheless, we request 

comment on this or alternative methods 

to the Monte Carlo approach for 

aggregating the volumes shown in Table 

IV.B.4–1. 

For the purposes of the Monte Carlo 

analysis, we are also proposing an 

appropriate shape to represent the 

applicable distribution of volumes 

within each range. The shape of the 

distribution of volumes is based on 

factors unique to each source of 

renewable fuel. We identified three 

standardized distributions that we can 

use to reasonably represent uncertainty 

in the distribution of volumes for each 

of the sources of renewable fuel under 

consideration. 

These three standardized 

distributions provide a mechanism for 

representing the regions within each 

projected volume range where the 

greatest likelihood of reasonably 

achievable volumes may lie, based on 

considerations of the various sources of 

uncertainty unique to each source of 

renewable fuel. We recognize that the 

half-normal distribution would by 

definition include a mode of zero, and 

that this would imply that the greatest 

likelihood of occurrence is at the low 

end of the range. For sources of 

renewable fuel wherein the low end of 

the range is estimated to be zero, for 

instance for some cellulosic biofuel 

facilities as discussed in Section II.C, 

the use of the half-normal would appear 

to suggest that zero is the most likely 

result. However, in the context of the 

Monte Carlo process for combining 

volume ranges from different sources, 

we are proposing to use the mean rather 

than the mode as described more fully 

below. Nevertheless, other distributions 

might be reasonable to address concerns 

about the mode in the half-normal 

distribution. For instance, a gamma 

distribution could be used, or a Weibull 

distribution with greater skewness than 

that shown in the figure above. We 

request comment on the use of these 

alternative distributions. 

In the case of biomass-based diesel, 

we are proposing that the applicable 

volume requirement for 2014 would be 

1.28 bill gal. Since this volume would 

be required, there is no realistic 

likelihood that the actual volume will 

be below 1.28 bill gal. While production 

volumes of biomass-based diesel in 

2013 are expected to substantially 

exceed the required volume of 1.28 bill 

gal, this is likely driven in large part by 

the tax credit for biodiesel, currently 

scheduled to expire at the end of the 

year, on the price of D6 RINs which 

have increased since the beginning of 

2013, and potentially other factors as 

well. Without the tax credit in place, 

demand for biodiesel substantially 

beyond the required volume is 

uncertain. Under the assumption that 

the biodiesel tax credit will not be 

extended beyond 2013, we believe that 

any additional incremental volumes 

above 1.28 bill gal would be 

progressively less likely than the 

required volume. This suggests that a 

half-normal distribution would be the 

most appropriate way to represent 

volumes of biomass-based diesel. With 

regard to non-ethanol cellulosic biofuel, 

we developed a distribution that was 

based on an aggregation of projected 

volume ranges for each cellulosic 

biofuel facility. See Section II.C for more 

discussion. For the total volume of 


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81 David Korotney, ‘‘Application of Monte Carlo 

process to the determination of proposed volume 

requirements for 2014 standards NPRM,’’ memorandum to EPA Air Docket EPA–HQ–OAR– 

2013–0479. 

ethanol that could reasonably be 

consumed, we chose a half-normal 

distribution representing ethanol in E10 

and E85 because there is little historical 

information on how market prices for 

E85 might respond to higher RIN prices, 

nor on how FFV owners might respond 

to changes in the relative price of E85 

and E10. In the future it may be more 

appropriate to use a skewed or normal 

distribution for the total volume of 

ethanol to reflect a growing 

understanding of the impact that RIN 

prices have on the retail price of E85 

and the impact that E85 prices have on 

consumer choice. For volumes of nonethanol advanced biofuel and nonethanol non-advanced renewable fuel, 

we chose normal distributions because 

we believe there is an equal likelihood 

that the volumes that could be made 

available would be on either the low 

end of the respective ranges or the high 

end of the respective ranges. We do not 

believe that actual historical volumes, 

which form the basis for the low end of 

the range in both cases, should also be 

used as justification for using skewed 

distributions. The distributions that we 

used for each of the five categories of 

renewable fuel are shown below. 

TABLE IV.B.4–2—STANDARD DISTRIBUTION ASSUMPTIONS USED IN ESTIMATING TOTAL RENEWABLE FUEL VOLUME FOR

2014 

Ethanol that could reasonably be consumed ................................................................................................................................. Half-normal. 

Available volumes of non-ethanol cellulosic biofuel ....................................................................................................................... Combined.a

Available volumes of biomass-based diesel ................................................................................................................................... Half-normal. 

Available volumes of non-ethanol advanced biofuel ...................................................................................................................... Normal. 

Available volumes of non-ethanol non-advanced renewable fuel .................................................................................................. Normal. 

aAs described in Section II.C, this distribution is a combination of the distributions for all facilities projected to produce non-ethanol cellulosic 

biofuel using the same Monte Carlo process. 

Based on the estimated ranges and 

distributions, we used a Monte Carlo 

process to aggregate the five 

distributions into a single distribution 

representing total renewable fuel. The 

Monte Carlo process randomly samples 

each of the five distributions in an 

iterative fashion. The results of all the 

iterations were then summed to produce 

a distribution for total renewable fuel. 

The figure below shows the resulting 

distribution after 3000 iterations. Details 

of the Monte Carlo process are provided 

in a memo to the docket.81

We recognize that the Monte Carlo 

process is an approximation to the 

mathematical formula that would result 

if the probability density functions for 

each of the distributions shown in 

Figure IV.B.4–1 were combined 

mathematically using convolution. 

However, we believe that the additional 

complexity of such a process is not 

warranted given the uncertainty 

inherent in the volumes ranges and the 

assigned distributions. The Monte Carlo 

process for combining distributions 

provides a reasonably accurate result 

with a considerably simpler process. 


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82The numbers are expressed as two significant 

digits to reflect that the applicable volumes in the 

statute are expressed this way. 

Based on this approach to aggregating 

the five ranges shown in Table IV.B.4– 

1, the volume of total renewable fuel 

that we are proposing for 2014 would 

fall within the range of 15.00–15.52 bill 

gal.82 Given that the applicable volume 

in the statute is 18.15 bill gal, this range 

represents a reduction of 2.63–3.15 bill 

gal. Within the uncertainties discussed 

above for each of the components, a 

range of 15.00–15.52 bill gal represents 

a volume of renewable fuel that 

reasonably accounts for both limitations 

in the volume of ethanol that can be 

supplied and consumed as well as 

limitations in the availability of nonethanol renewable fuels. 

The distribution generated by the 

Monte Carlo process also provides a 

basis for determining a specific value 

within the range. We do not believe that 

using either the low end or high end of 

the proposed range would be 

appropriate as the basis for the 

applicable standard. While we believe 

that the upper end of the projected 

range is achievable, basing the total 

renewable fuel volume on this higher 

value could present an increased risk to 

obligated parties if, for example, 

uncertainties in projected gasoline and 

diesel consumption for 2014 lead to a 

requirement for more renewable fuel 

than is available or can be consumed. A 

value between the low and high ends, 

in contrast, would better account for 

cases in which the actual values for 

some of the input volumes fall at the 

high end of their respective ranges 

while the actual value of other input 

volumes fall at the low end of their 

ranges. Options for a value falling 

between the low and high ends of the 

range include the mean, the mode 

(highest frequency value) and the 

median (50th percentile). It may also be 

reasonable to use a value representing 

higher or lower values in the 

distribution, such as the 25th or 75th 

percentile. The table below shows the 

values for each of these approaches that 

correspond to the distribution in Figure 

IV.B.4–2. 

TABLE IV.B.4–3—POTENTIAL APPROACHES TO DETERMINING THE

TOTAL RENEWABLE FUEL VOLUME

REQUIREMENT

[Million ethanol-equivalent gallons] 

Mean ................................................. 15,207 

Mode ................................................. 15,059 

25th percentile .................................. 15,084 

50th percentile .................................. 15,183 

TABLE IV.B.4–3—POTENTIAL APPROACHES TO DETERMINING THE

TOTAL RENEWABLE FUEL VOLUME

REQUIREMENT—Continued 

[Million ethanol-equivalent gallons] 

75th percentile .................................. 15,297 

In today’s NPRM, we are proposing to 

use the mean value for the volume 

requirement for total renewable fuel, 

which represents our best estimate of 

the average amount of renewable fuel 

volumes that could reasonably be 

supplied. However, we request 

comment on whether it would be more 

appropriate to utilize either the mode or 

median (50th percentile), or some other 

value in the appropriate range shown in 

Table IV.B.4–3 that best reflects 

renewable fuel volumes that could 

reasonably be supplied under this 

program. 

As discussed throughout this section, 

there is considerable uncertainty in the 

estimates of some of the various 

components from which the required 

volume for total renewable fuel has been 

derived. There are many factors 

affecting supply, and they could lead to 

greater or lesser supply of renewable 

fuels than projected, such as higher or 

lower volumes of non-ethanol 

renewable fuel or advanced biofuels, 

higher or lower volumes of E85, the 

degree to which E0 is used, if any, and 

so on. Obligated parties also have 

significant flexibility to address 

compliance through a number of various 

approaches, such as the ability to use 

carryover RINs generated in 2013, or to 

carry a compliance deficit into 2015. 

Our proposed approach for dealing with 

this uncertainty has been to develop 

ranges for the various components and 

utilize the Monte Carlo process for 

aggregating the components into a single 

range and mean value. These estimates 

will be refined for the final rule based 

on more up-to-date information and any 

new information received through the 

public comment process. We have used 

this approach to develop the best 

available volume projections using 

current information. 

We understand that values lower or 

higher than the mean also could be 

used. For example, some parties may 

believe that a value lower than the mean 

should be used to provide greater 

confidence in the adequacy of supply, 

and avoid the risks associated with a 

volume reduction that is not sufficient 

to address the supply problems. From 

the perspective of production and use of 

renewable biofuels, in contrast, a higher 

value than the mean would avoid the 

risks associated with a volume 

reduction that is more than what is 

necessary to address the supply 

problems. As noted, our current view is 

that the best approach for resolving this 

uncertainty is to neither underestimate 

nor overestimate the market’s capacity 

to supply and consume renewable fuels. 

We request comment on our proposed 

approach and alternate approaches 

described here. 

C. Determination of Reductions in 

Advanced Biofuel 

The second step in our proposed 

framework for setting the applicable 

volume standards would be to 

determine an appropriate reduction in 

advanced biofuel that accounts for the 

availability of advanced biofuels in light 

of the significant shortfall in cellulosic 

biofuel compared to the statutory 

volume, as well as the contribution of 

ethanol in this category to the supply 

concerns related to total renewable fuel. 

The proposed volume of advanced 

biofuel should also support the goals of 

the RFS program for continued growth 

in the advanced biofuel category as 

reflected in the increasing gap between 

the cellulosic biofuel and advanced 

biofuel volumes set by EISA. 

1. Available Volumes of Advanced 

Biofuel in 2014 

Using a process similar to that for 

total renewable fuel in Section IV.B 

above, we determined the maximum 

volume of advanced biofuel that can 

reasonably be available in 2014. This 

volume defines the upper limit for any 

potential volume requirement we would 

set for advanced biofuels under the 

overall approach we are proposing. As 

described more fully in Section IV.A 

above, availability is one important 

factor to consider it determining the 

appropriate volume of advanced biofuel 

to require. However, as discussed in 

Section IV.C.2 below, for 2014 

additional considerations lead us to 

propose to set the advanced biofuel 

volume requirement at a level below the 

total available volume. 

In this section we describe the 

estimation of reasonable ranges for four 

separate categories of advanced biofuel, 

including: 

• Cellulosic biofuel. 

• Biomass-based diesel. 

• Domestic Production of Other 

Advanced Biofuel. 

• Imported Sugarcane Ethanol. 

a. Cellulosic Biofuel. 

As discussed in Section II above, the 

production of cellulosic biofuel in 2014 

is projected to be between 8 and 30 

million ethanol-equivalent gallons. This 

range can be separated into ethanol and 


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non-ethanol components as shown 

below. 

TABLE IV.C.1.a–1—PROJECTED VOLUMES OF CELLULOSIC BIOFUEL FOR

2014 

[Million ethanol-equivalent gallons] 

Ethanol .............................................. 5–25 

Non-ethanol ...................................... 0–9 

Total .............................................. 8–30 

The projected volume could be 

significantly greater if pathways for the 

generation of cellulosic biofuel RINs 

from landfill biogas and corn kernel 

fiber are approved and additional 

volumes of cellulosic heating oil are 

produced. For more details on the 

potential production of non-ethanol 

cellulosic biofuels in 2014, and the 

companies expected to produce these 

fuels, see Section II. 

b. Biomass-Based Diesel 

The range of biomass-based diesel 

that we used in estimating the 

availability of advanced biofuel is the 

same as the range that we used in 

determining the proposed volume of 

total renewable fuel. Table IV.B.2.b–1 

lists the sources that we used to 

conclude that there could be 1.28–1.6 

bill gal of biodiesel production in 2014. 

c. Domestic Production of Other 

Advanced Biofuel 

In Section IV.B.2.c above we used 

2012 production data and Production 

Outlook Reports to develop a range of 

24–132 mill gal representing nonethanol advanced biofuel with a D code 

of 5. These same sources were used to 

develop a range of ethanol advanced 

biofuel with a D code of 5. 

In 2012, 28 mill gal of ethanol 

advanced biofuel (other than cellulosic 

ethanol) was produced in the U.S. Based 

on Production Outlook Reports, we 

project that domestic production of such 

biofuel using some combination of 

sugarcane, grain sorghum, and separated 

food wastes could be as high as 142 mill 

gal. Based on these sources, for this 

NPRM we have used a range of 28–142 

mill gal to represent domestic 

production of ethanol advanced biofuel 

with a D code of 5. 

d. Imported Sugarcane Ethanol 

Sugarcane ethanol qualifies as 

advanced biofuel, and historically the 

U.S. has imported substantial volumes 

of it. Imports from the last ten years are 

shown below. While ethanol imported 

into the U.S. is not produced 

exclusively from sugarcane, it has 

historically been the primary feedstock 

for ethanol imported into the U.S. and 

is expected to continue to be the 

primary feedstock of ethanol imported 

into the U.S. in future years. While the 

generation of advanced biofuel RINs 

from sugarcane ethanol is not limited to 

ethanol imported from Brazil, 

historically Brazil has been the source of 

the majority of ethanol imported into 

the United States. As such, this section 

focuses on the availability of sugarcane 

ethanol imported from Brazil. 

As some stakeholders have noted 

before, imported volumes of ethanol 

have been highly variable. As a 

commodity traded on the world market, 

the market clearing price and quantity 

of Brazilian ethanol sold into the U.S. 

market fluctuates over time. Significant 

factors that can affect the price and 

quantity of ethanol imported into the 

U.S. include: 

• Sugarcane harvest (both acres 

planted and yield). 

• Worldwide market for sugar. 

• Worldwide demand for sugarcane 

ethanol. 

• Brazilian demand for ethanol, 

including the minimum ethanol content 

of gasoline as specified by the Brazilian 

government. 

• Potential for exporting corn-ethanol 

from the U.S. to Brazil. 

• Opportunities for sale of sugarcane 

ethanol in the U.S. which is a function 


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83 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. 

84The sugar marketing year in Brazil’s centersouth sugar-producing region, where the large 

majority of production occurs, runs from May 

through April. 

85On 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. 

86See http://www.platts.com/

RSSFeedDetailedNews/RSSFeed/Oil/8987702. 

87See http://www.bloomberg.com/news/2012-03- 

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

88Platts, ‘‘Brazil to raise ethanol mix in gasoline 

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

RSSFeedDetailedNews/RSSFeed/Oil/8194390. 

89Personal Communication with Dr. Bruce 

Babcock, Iowa State, June 27, 2013. 

90 ‘‘AEO2013—Addendum on Ethanol Trade 

Balance.pdf’’ document submitted to docket EPA– 

HQ–OAR–2013–0479. 

91Bruce A. Babcock et al, ‘‘Biofuel Taxes, 

Subsidies, and Mandates: Impacts on US and 

Brazilian Markets,’’ Staff Report 13–SR 108, May 

22, 2013. 

92FAPRI–ISU 2012 World Agricultural Outlook, 

‘‘Ethanol Trade’’. 

93FAPRI–MU Biofuel Baseline, March 2013. 

FAPRI–MU Report #02–13. Values for the 2013/

2014 agricultural year were averaged with those 

from the 2014/2015 agricultural year assuming that 

the year begins in September and ends in August. 

of the RIN price for advanced biofuel, 

legal and practical constraints on the 

volume of ethanol that can be 

consumed, state Low Carbon Fuel 

Standards (LCFS) program demand, and 

the availability and price of competing 

advanced biofuels such as biodiesel. 

• Import and export tariffs. 

Production of sugarcane in Brazil in 

recent years has been lower than 

normally expected due to two factors. 

First, adverse weather conditions 

reduced production.83 For example, 

adverse weather conditions are 

estimated to have reduced cane 

production by about 4% in the 2011/

2012 marketing year.84 Thus, a return to 

more typical weather conditions, such 

as occurred in the 2012/2013 

agricultural marketing year, in the 

timeframe that this rulemaking 

considers would by itself 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.85 It 

appears that credit conditions have 

eased and that more direct investment 

in sugar cane production and milling in 

Brazil is occurring. 

Some parties expected a more typical 

trend in sugarcane ethanol production 

for the 2012/2013 through the 2014/

2015 harvest years, with replanted fields 

boosting 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.86

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.87

Such information suggests that 

sugarcane and ethanol production in the 

2013/14 and 2014/15 harvest years 

could be higher than production in 2011 

and 2012. 

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, 

2013.88 The 25% concentration rate is 

the highest allowed by law in Brazil. 

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 

influenced by the price of ethanol (high 

prices leading to a reduction in the 

minimum). Indeed, as evidenced by the 

reduction to a 20% blending rate in 

2011, the Brazilian government 

considers the likely supply of sugarcane 

ethanol to support its domestic needs in 

setting the minimum ethanol content of 

its blended fuel. 

The Iowa State/CARD model projects 

that Brazil will produce roughly 8.7 bill 

gal of ethanol in 2014. Non-fuel use and 

Brazilian ethanol exports to countries 

other than the U.S. is estimated to be 

around 500 million gallons, which 

leaves roughly 8.2 bill gal for Brazilian 

consumption and for exports to the U.S. 

If the minimum blending rate for 

ethanol in motor vehicles in Brazil is set 

at 25% (the current rate), Iowa State 

estimates that Brazil will consume 

roughly 5.9 bill gal of ethanol. At a 20% 

minimum blend rate, ethanol demand in 

Brazil would be roughly 5.2 bill gal. 

Therefore, even with the 25% minimum 

blending requirement for ethanol in 

vehicles, Brazil should have up to 2.8 

bill gal available for a wide variety of 

domestic uses as well as the potential to 

export ethanol to the U.S.89 Thus, 

assuming that the 25% blending rate 

remains in effect through 2014 

(including both the 2013/14 sugarcane 

season which ends in May 2014 and the 

subsequent 2014/15 sugarcane season), 

the analyses referenced below suggest 

that more than enough ethanol should 

be available assuming normal weather 

patterns to support both the Brazilian 

domestic demand as well as export to 

the U.S. in 2014. 

The historical volumes of sugarcane 

ethanol imports into the U.S. from 

Brazil are indicative of Brazilian 

production and export capacity, and 

thus provide several benchmarks for the 

volume that could potentially be 

imported into the U.S. in 2014. For 

instance, the average import volume 

over the last ten years is 223 mill gal, 

while the maximum volume was 560 

mill gal in 2006. In 2010 Brazil had its 

largest ethanol production volume in 

recent history, and in that same year it 

exported 490 mill gal to the U.S. 

Finally, the largest total export volume 

from Brazil to all other countries was 

1.35 bill gal in 2008. 

There are several other sources 

providing estimates of what import 

volumes of Brazilian sugarcane ethanol 

may be possible in 2014. In an 

addendum to its Annual Energy Outlook 

2013, EIA included an estimate of 

sugarcane ethanol imports of 719 mill 

gal for 2014.90 In their comments on the 

2013 standards NPRM, the Brazilian 

Ministry of Mines and Energy indicated 

that Brazil could achieve exports of 800 

mill gal to the U.S. in 2014. A recent 

report from Iowa State University 

indicated that total ethanol imports 

could be 310–820 mill gal in 2014, 

depending on whether the biodiesel tax 

credit remains in effect.91

The Food and Agricultural Policy 

Research Institute (FAPRI) publishes 

several different documents that also 

provide some benchmarks. The 2012 

World Agricultural Outlook projected 

that total net exports of ethanol from 

Brazil could be 1,259 mill gal in 2014,92

while their Biofuel Baseline projects 

that total ethanol imports into the U.S. 

could reach 496 mill gal in 2014.93


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Based on the discussion above, we 

have compiled a list of benchmarks that 

we believe can be used to estimate a 

range of import volumes for Brazilian 

sugarcane ethanol. 

TABLE IV.C.1.d–1—PROJECTIONS OF 2014 IMPORTED SUGARCANE ETHANOL ORDERED FROM LOWEST TO HIGHEST

[Million gallons] 

Average import volumes from 2003–2012 .................................................................................................................................. 223 

ISU Staff Report—biodiesel tax credit in place ........................................................................................................................... 310 

Ethanol exported from Brazil to the U.S. when ethanol production was at its historical maximum (2010) ............................... 490 

FAPRI Biofuel Baseline ............................................................................................................................................................... 496 

Production Outlook Reports ........................................................................................................................................................ 510 

Historical maximum ethanol imported into the U.S. from Brazil (2006) ...................................................................................... 560 

AEO2013 ..................................................................................................................................................................................... 719 

Projection from Brazilian Ministry of Mines and Energy ............................................................................................................. 800 

ISU Staff Report—biodiesel tax credit not in place ..................................................................................................................... 820 

FAPRI 2012 World Agricultural Outlook—total Brazilian exports in 2014 .................................................................................. 1,259 

Historical maximum ethanol exported from Brazil (2008) ........................................................................................................... 1,350 

For the purposes of this NPRM, we 

estimate, based on a review of the 

benchmarks shown in the table above, 

that a range of 300–800 mill gal of 

Brazilian sugarcane ethanol could be 

available for import to the U.S. in 2014. 

We do not believe that it would be 

appropriate to use either the highest or 

lowest values in the table since they are 

unlikely to reasonably represent the 

market circumstances in 2014. 

While the volumes of sugarcane 

ethanol imported into the U.S. in 2012 

were about 500 mill gal, and in 2013 

could reach a similar level, we believe 

it is reasonable to use 300 mill gal as the 

low end of the range for 2014. There has 

been significant variability in sugarcane 

ethanol imports in the past, so volumes 

below 500 mill gal are possible 

depending on market factors and 

relevant public policies in both 

countries. While volumes above 800 

mill gal are possible, we believe that 

they are unlikely given that the 

Brazilian agency responsible for 

projections of exports indicated that 800 

mill gal would be achievable in 2014, 

and 800 mill gal would be a 

substantially higher import volume of 

Brazilian sugarcane ethanol than in any 

previous year. 

We have used a projected range of 

300–800 mill gal for imported sugarcane 

ethanol in our estimate of the total 

volume of advanced biofuel that could 

be available in 2014. However, as 

described in Section IV.C.2 below, we 

are not proposing to use only 

availability in the determination of the 

applicable volume requirement for 

advanced biofuel. Thus the proposed 

volume requirement for advanced 

biofuel would not require the use of 

300–800 mill gal of sugarcane ethanol, 

and the actual volume of sugarcane 

ethanol that is imported will be highly 

dependent upon competition in the U.S. 

market with other advanced biofuels 

that could be available. 

e. Summary 

As discussed in the preceding 

sections, we have estimated volume 

ranges for six different categories of 

advanced biofuel as a step towards 

estimating the availability of advanced 

biofuel for 2014. We also identified 

which of the three standardized curves 

shown in Figure IV.B.4–1 would be 

most appropriate for each category. A 

discussion of the standardized 

distributions for cellulosic biofuel, 

biomass-based diesel, and domestic 

non-ethanol advanced biofuel are 

provided in Section IV.B.4 above. For 

volumes of ethanol advanced biofuel, 

we chose a normal distribution because 

we believe there is an equal likelihood 

that the volumes that could be made 

available would be on either the low 

end of the range or the high end of the 

range. A normal distribution for ethanol 

advanced biofuel is also consistent with 

our approach to non-ethanol advanced 

biofuel, as both ranges were developed 

from the same sources. For volumes of 

imported sugarcane ethanol, the most 

recent historical data on actual imports 

suggests that the middle of the range 

300–800 mill gal is likely, and this 

suggests that a normal distribution is 

more reasonable than a skewed 

distribution. The advanced biofuel 

ranges and the assumed standardized 

distributions are summarized below. 

TABLE IV.C.1.e–1—VOLUME RANGES FOR ESTIMATING ADVANCED BIOFUEL AVAILABILITY FOR 2014 

[Million ethanol-equivalent gallons] 

Available volumes of non-ethanol cellulosic biofuel ................................................................................... 0–9 Skewed. 

Available volumes of ethanol cellulosic biofuel .......................................................................................... 5–25 Combination.a

Available volumes of biomass-based diesel ............................................................................................... b 1,920–2,400 Half-normal. 

Available volumes of domestic non-ethanol advanced biofuel .................................................................. 24–132 Normal. 

Available volumes of domestic ethanol advanced biofuel .......................................................................... 28–142 Normal. 

Available volumes of imported sugarcane ethanol ..................................................................................... 300–800 Normal. 

aAs described in Section II.C, this distribution is a combination of the distributions for all facilities projected to produce non-ethanol cellulosic 

biofuel. b Represents a physical volume range of 1.28–1.6 bill gal. 

As for the total renewable fuel 

volume, the high and the low end of 

each range represents values such that 

it is possible but unlikely that volumes 

would be higher or lower than this 

range. EPA therefore treated each 

individual range in Table IV.C.1.e–1 as 

representing the 90% confidence 

interval of the applicable standardized 

distribution. We then used a Monte 

Carlo process in which each of the six 

distributions were randomly sampled in 

an iterative fashion. The results of all 

the iterations were then summed to 

produce a distribution for advanced. 

The figure below shows the resulting 

distribution after 3000 iterations. 


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94Renewable fuels grandfathered under the 

provisions of § 80.1403 are not required to meet any 

GHG threshold. 

95While production volumes of ethanol that can 

qualify as an advanced biofuel, both domestically 

and internationally are significant, consumption of 

this fuel will be constrained 

Based on this approach to aggregating 

the six ranges shown in Table IV.C.1.e– 

1, we believe that available volumes of 

advanced biofuel are likely to fall 

within the range of 2.49–3.23 bill gal. 

Given that the volume requirement in 

the statute is 3.75 bill gal, this range of 

availability represents a reduction of 

0.52–1.26 bill gal. 

2. Options for Determining Appropriate 

Reductions in Advanced Biofuel 

While projected availability defines 

the upper limit of the volume 

requirement we would set for advanced 

biofuel, we have also considered two 

other factors: the contribution of ethanol 

in the advanced category to the supply 

concerns discussed above with respect 

to total renewable fuel, and the RFS 

program’s goal of growth in the 

advanced biofuel category. Below we 

discuss three approaches that could be 

taken to determine an appropriate 

volume of advanced biofuel for 2014. 

We believe that Option 3 best addresses 

the dual concerns of constraints on 

ethanol supply and consumption and 

limited availability of advanced biofuels 

while also effectuating Congress’s 

intention that the volume requirement 

for advanced biofuel continues to grow. 

a. Option 1: Advanced Biofuel 

Availability 

The RFS volume requirements that 

Congress established in CAA 

211(o)(2)(B) increase steadily between 

2009 and 2022. Over this period, the 

amount of total renewable fuel which is 

not advanced biofuel (largely corn 

starch based ethanol) was intended by 

Congress to grow slowly up to 15.0 bill 

gal in 2015, and then stay at that level 

for subsequent years. Cellulosic biofuel 

was intended to grow very dramatically, 

from 0.5 bill gal in 2012 to 16.0 bill gal 

in 2022. Non-cellulosic advanced 

biofuel was expected to grow steadily 

every year, increasing from 1.5 bill gal 

in 2012 to 5.0 bill gal in 2022. This 

anticipated growth of the advanced 

biofuel category is also evident from its 

increasing role as a component of the 

applicable volume of total renewable 

fuel, growing from 5.4% in 2009, to 

20.7% in 2014, and 61.1% in 2022. 

Advanced biofuel must meet a GHG 

reduction threshold of 50%, compared 

to a 20% threshold for non-advanced 

renewable fuel.94 Thus, increased 

substitution of advanced biofuels for 

fossil fuels would result in lower 

lifecycle GHG emissions from 

transportation fuels. 

In previous rulemakings where we 

considered reductions in the applicable 

annual volume of advanced biofuel 

following a reduction in the statutory 

volume for cellulosic biofuel, we 

focused on the availability of advanced 

biofuel (and in some cases available 

carryover RINs) when making 

determinations as to whether a 

reduction in advanced biofuel volumes 

was warranted. Using availability to set 

the applicable volume of advanced 

biofuel for 2014 and beyond would be 

consistent with past practice, and would 

reflect placing sole emphasis on its 

availability and the growth in advanced 

biofuels that results. However, the 

approach we used in previous annual 

rulemakings was based on the 

circumstances in previous years. In 

particular, supply concerns related to 

the legal constraints on the amount of 

ethanol that can be blended into 

gasoline and practical constraints on the 

volume of ethanol that can be consumed 

were not a limiting factor in previous 

years and so were not discussed as a 

potential basis for determining volumes. 

As discussed in Section IV.B.1 above, 

constraints on ethanol consumption are 

a limiting factor in 2014. 

Moreover, using availability as the 

sole basis for determining advanced 

biofuel volumes would ignore the 

impact that ethanol within the advanced 

biofuel category have on the supply 

concerns related to constraints on 

ethanol consumption in blends higher 

than E10. While the available volume of 

advanced biofuel would be 

predominantly non-ethanol, a 

substantial volume would be ethanol.95

For an advanced biofuel availability of 

2.49–3.23 bill gal (see Figure IV.C.1.e– 


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96The 2.0 bill gal is composed of the proposed 

volume of biomass-based diesel, 1.92 bill gallons 

ethanol equivalent, and the remaining volume of 

non-cellulosic advanced biofuel, 0.08 bill gallons. 

1), the fraction that is ethanol ranges 

from an average of about 18% at the low 

end of the range to an average of about 

25% at the high end of the range. Since 

any advanced biofuel that is ethanol 

contributes to the concerns related to 

total ethanol consumption, it is 

appropriate to consider reductions in 

the required volume of advanced biofuel 

beyond the 0.52–1.26 bill gal reduction 

needed to ensure that the volume 

required is available. 

For these reasons, we invite comment 

on the Option 1 approach but are not 

proposing it. 

b. Option 2: Full Reduction in 

Cellulosic Biofuel 

Under the cellulosic waiver authority 

we have the discretion to reduce 

advanced biofuel by up to the same 

amount that we reduce cellulosic 

biofuel. Thus, a second option would be 

to reduce the advanced biofuel volume 

by the same amount that we reduce the 

cellulosic biofuel volume. Our proposed 

cellulosic biofuel volume requirement 

of 8–30 mill gal for 2014 corresponds to 

a reduction of 1,720–1,742 mill gal in 

comparison to the statutory volume of 

1,750 mill gal. This is approximately 

twice the size of the reduction in 

advanced biofuel that would result from 

accounting for availability alone, as in 

Option 1, and would result in an 

advanced biofuel volume requirement of 

2,008–2,030 mill gal. 

A reduction of 1,720–1,742 mill gal in 

the advanced biofuel requirement 

would allow for overall growth in noncellulosic advanced biofuel, consistent 

with overall levels of non-cellulosic 

advanced biofuels that Congress 

specified for 2014 in 211(o)(2)(B). The 

table below shows that this approach 

would ensure that the required volume 

of non-cellulosic advanced biofuel— 

comprised of biomass-based diesel and 

other advanced biofuel—that would be 

needed to meet the requirements would 

remain at 2.0 bill gal, the same volume 

that would have been needed to meet 

the statutory level of 3.75 bill gal of 

advanced biofuel if 1.75 bill gal of 

cellulosic biofuel were available.96

TABLE IV.C.2.b—IMPACT ON OTHER ADVANCED BIOFUEL OF REDUCING THE ADVANCED BIOFUEL REQUIREMENT BY AN

AMOUNT EQUAL TO THE REDUCTION IN CELLULOSIC BIOFUEL

[Million ethanol-equivalent gallons] 

Required volumes 

without a reduction 

in cellulosic biofuel 

or advanced biofuel 

Required volumes 

with a reduction in 

advanced biofuel 

equal to reduction 

in cellulosic 

Cellulosic biofuel ...................................................................................................................................... 1,750 17 

Biomass-based diesel a ........................................................................................................................... 1,920 1,920 

Other advanced biofuel b ......................................................................................................................... 80 80 

Total advanced biofuel ............................................................................................................................ 3,750 2,017 

a Represents a physical volume of 1.28 bill gal biodiesel. b Can include biomass-based diesel with a D code of 4 that is in excess of that required to meet the biomass-based diesel requirement of 1.28 

bill gal, as well as any other forms of advanced biofuel with a D code of 5 such as renewable diesel, heating oil, biogas, and imported sugarcane 

ethanol. 

This approach to setting the advanced 

biofuel volume requirement would 

minimize the impact of the advanced 

biofuel category on the supply problems 

associated with constraints on ethanol 

consumption. However this approach 

would ignore the availability of noncellulosic advanced biofuel to fill the 

shortfall in cellulosic biofuel. It would 

reduce the market opportunities for 

other advanced biofuels (as compared to 

the other options), and thereby hinder 

the development of advanced biofuels 

that might otherwise help to meet the 

broader energy security and GHG 

reduction goals of Congress for the RFS 

program. Finally, as discussed below, 

this approach would result in greater 

reductions in advanced biofuel than are 

needed to account for the contribution 

of ethanol advanced biofuels to the 

blendwall. For these reasons, we invite 

comment on this approach but are not 

proposing it. 

c. Option 3: Availability, Growth, and 

Limits on Ethanol Consumption 

Neither Option 1 nor Option 2 

address all the factors we believe are 

important in the determination of the 

applicable advanced biofuel volume 

requirement. For instance, under Option 

1 (using just availability to determine 

the appropriate volume of advanced 

biofuel), the significant impacts of 

constraints on ethanol consumption and 

the factors leading to a reduction in the 

total volume of renewable fuel would 

not be reflected at all in our 

determination of the advanced biofuel 

requirement. On the other hand, under 

Option 2 (reducing the advanced biofuel 

requirement by the same amount that 

we reduce cellulosic biofuel), would 

impose unnecessary constraints on nonethanol advanced biofuels even though 

they do not contribute to the constraints 

on the volume of ethanol that can 

reasonably be consumed. 

For these reasons we are proposing a 

third option that would address these 

issues by first summing the applicable 

volume requirements for cellulosic 

biofuel and biomass-based diesel, and 

then adding available volumes of nonethanol advanced biofuel, including any 

biodiesel in excess of the 1.28 bill gal 

requirement as well as other available 

non-ethanol advanced biofuels such as 

renewable diesel, heating oil, and 

biogas. Under this approach, we 

consider only non-ethanol sources of 

advanced biofuel as these fuels are not 

limited by their ability to be consumed 

as are ethanol blends. This approach 

would help to ensure that the advanced 

biofuel requirement would include all 

available volumes of advanced biofuel 

which do not contribute to the supply 

concerns related to constraints on 

ethanol consumption. It would also 

provide for additional growth in 

volumes of advanced biofuel that would 

otherwise be lost due to the shortfall in 

cellulosic biofuel. Once the advanced 

biofuel volume requirement was set, the 

market would determine which 


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advanced biofuels would be produced 

and sold to meet the advanced biofuel 

requirement, including whether they 

would be ethanol or non-ethanol. Thus 

under this approach we would not be 

mandating or determining what 

renewable fuels would in fact be 

produced and sold. 

We once again used a Monte Carlo 

approach to aggregate the ranges for 

cellulosic biofuel, biomass-based diesel, 

and non-ethanol advanced biofuel. The 

ranges and standardized distributions 

we used in this process are shown in 

Table IV.C.2.c–1, and the resulting 

distribution for advanced biofuel is 

shown in Figure IV.C.2.c–1. 

TABLE IV.C.2.c–1—PROPOSED VOLUME RANGES FOR ESTIMATING ADVANCED BIOFUEL REQUIREMENT FOR 2014 

[Million ethanol-equivalent gallons] 

Proposed requirement for cellulosic biofuel ............................................................................................... 8–30 Combined.a

Proposed requirement for biomass-based diesel ....................................................................................... b 1,920 n/a. 

Available volumes of excess biomass-based diesel .................................................................................. c 0–480 Half-normal. 

Available volumes of domestic non-ethanol advanced biofuel .................................................................. 24–132 Normal. 

a As described in Section II.C, this distribution is a combination of the distributions for all facilities projected to produce cellulosic biofuel. b Represents a physical volume of 1.28 bill gal. c Represents a physical volume range of 0–320 mill gal. 

For the reasons discussed above, we 

propose that the advanced biofuel 

volume requirement would be set based 

on the Option 3 approach, within the 

range of 2.00–2.51 bill gal. Given that 

the volume requirement in the statute is 

3.75 bill gal, this proposed range of 

advanced biofuel would represent a 

reduction of 1.24–1.75 bill gal. In 

comparison, the reduction in cellulosic 

biofuel that we are proposing in today’s 

NPRM is 1.72–1.74 bill gal, and the 

reduction in total renewable fuel that 

we are proposing is 2.63–3.15 bill gal. 

The Option 3 approach to setting the 

advanced biofuel volume requirement 

would generate a volume that falls 

approximately midway between 

Options 1 and 2 for 2014. 

The approach we are proposing in 

today’s NPRM is based upon and fully 

consistent with the authorities provided 

in the statute for waiving volumes. The 

proposed reductions in the volumes of 

advanced biofuel and total renewable 

fuel derive from our determination that 

the industry and market will be unable 

to supply sufficient volumes in 2014 to 

meet the statutory mandates, either 

because of projected limitations in 

production and importation of 

qualifying renewable fuels, or projected 

limitations in the available 

infrastructure to ensure that those fuels 

are supplied to and consumed in the 

transportation sector. All of these 

limitations represent forms of 

inadequate supply and are permissible 

bases for exercising both the general 

waiver authority and the cellulosic 

waiver authority. 

As for the required volume of total 

renewable fuel, there are a variety of 

ways in which a specific value within 

the proposed range can be chosen for 

the volume of advanced biofuel that we 

require in the final rule. The table below 

shows the values that correspond to the 

distribution in Figure IV.C.2.c–1 using 

several possible approaches. 

TABLE IV.C.2.C–2—POTENTIAL APPROACHES TO DETERMINING THE

FINAL ADVANCED BIOFUEL VOLUME

REQUIREMENT

[Million ethanol-equivalent gallons] 

Mean ................................................. 2,202 

Mode ................................................. 2,099 

25th percentile .................................. 2,086 

50th percentile .................................. 2,178 

75th percentile .................................. 2,289 


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In today’s NPRM we are proposing to 

use the mean value of 2,202 mill gal for 

the volume requirement for advanced 

biofuel because we believe it best 

represents a neutral aim at advanced 

biofuel volumes that could reasonably 

be supplied. However, we request 

comment on whether one of the 

alternative values shown in Table 

IV.C.2.c–2, or some other approach, 

would be more appropriate as the basis 

for the required volume of advanced 

biofuel in the final rule. 

D. Summary of Proposed Volume 

Requirements for 2014 

For the reasons discussed above, we 

are proposing the volumes of total 

renewable fuel and advanced biofuel as 

shown below. 

TABLE IV.D–1—PROPOSED VOLUMES FOR 2014 

[Billion gallons] 

Statutory 

volume 

Proposed volume 

Range Mean 

Advanced biofuel ......................................................................................................................... 3.75 2.00–2.51 2.20 

Total renewable fuel .................................................................................................................... 18.15 15.00–15.52 15.21 

For the final rule, we may revise the 

ranges based on additional information 

that becomes available after publication 

of this NPRM. This information could 

include more recent Production Outlook 

Report required under § 80.1449, 

production and consumption data for 

2013, and information from 

stakeholders. 

With regard to the mean, we request 

comment on whether it is the most 

appropriate way to determine the 

volume within each of the ranges that 

we would require in the final rule, or 

whether instead one of the alternatives 

shown in Tables IV.B.4–3 or IV.C.2.c–2, 

or some other approach, would be more 

appropriate. Nevertheless, as described 

above, we do not believe that using 

either the low end or high end of the 

proposed ranges would be appropriate 

as the basis for the applicable standards. 

A value between the low and high ends 

would better account for cases in which 

the actual values for some of the input 

volumes fall at the high end of their 

respective ranges while the actual value 

of other input volumes fall at the low 

end of their ranges. 

We note that the two ranges shown in 

Table IV.D–1 were not independently 

derived and thus cannot be treated 

independently from one another in the 

determination of the appropriate 

volumes to finalize. Many of the same 

ranges of biofuel availability that were 

used in estimating the range of total 

renewable fuel were also used in 

estimating the range of advanced 

biofuel. This fact can be seen in the 

distribution of results from the Monte 

Carlo process, which shows a distinct 

correlation between total renewable fuel 

and advanced biofuel. 


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97EIA Monthly Energy Review for June 2013, 

Table 10.3. Corn-ethanol exports were about 740 

mill gal in 2012 based on EIA Exports By 

Destination. 

98EIA AEO2013, Table17. Assumes corn-ethanol 

exports of 885 mill gal per EIA. 

99For more information on these programs visit 

their Web sites at: http://arpa-e.energy.gov/ and 

http://www1.eere.energy.gov/bioenergy/integrated_

biorefineries.html. 

100On October 21st USDA announced that an 

additional $181 million would be available through 

the Biorefinery Assistance Program. For more 

information visit the program’s Web site at: and 

http://www.rurdev.usda.gov/BCP_Biorefinery.html. 

Because of this correlation, decisions 

for both total renewable fuel and 

advanced biofuel need to take this 

relationship into account. For example, 

it would not be appropriate to finalize 

a volume for total renewable fuel that is 

at the high end of its proposed range, 

while also finalizing a volume for 

advanced biofuel that is at the low end 

of its proposed range. Doing so would 

result in a demand for renewable fuels 

that either could not be filled with 

available volumes or could not 

reasonably be consumed. 

The ranges that we are proposing for 

advanced biofuel and total renewable 

fuel determine the range of nonadvanced renewable fuel that would be 

needed. The majority of non-advanced 

renewable fuel is ethanol made from 

corn starch, though as discussed in 

Section IV.B.2.d we would also expect 

some non-ethanol renewable fuel as 

well, in the range of 1–25 mill gal. 

Taking this non-ethanol renewable fuel 

into account, we used the results of the 

Monte Carlo process that generated the 

ranges shown in Table IV.D–1 to 

determine that the volume of cornethanol that would be needed would be 

12.94–13.07 bill gal. This range 

represents an increase in comparison to 

2012 corn-ethanol consumption, which 

was about 12.5 bill gal.97 While this 

range represents a reduction in 

comparison to the statutory volumes for 

2014, it nonetheless represents an 

increase relative to projected 2013 cornethanol consumption of about 12.3 bill 

gal.98 For comparison, this reduction in 

corn-ethanol volume for 2014 is about 

90% of the size of the proposed 

reduction in advanced biofuel. Thus 

under our proposed approach, both nonadvanced renewable fuels and advanced 

biofuels are contributing to the 

necessary reductions needed to attain 

renewable fuel volumes that can 

reasonably be supplied and consumed. 

We request comment on our proposed 

approach and on alternative approaches 

that may be applied to determine how 

best to allocate adjustments needed to 

address the constraints of both the 

ethanol blendwall and limitations in the 

availability of non-ethanol biofuels. 

E. Volume Requirements for 2015 and 

Beyond 

In enacting the RFS program, 

Congress anticipated and intended to 

promote substantial, sustained growth 

in biofuel production and 

consumption—beyond the levels that 

have been achieved to date—though it 

did so in the context of forecasts of 

continually growing transportation fuel 

consumption. As explained in Section 

IV.B, gasoline demand has declined in 

the years since EISA was enacted in 

2007 and is projected to continue to do 

so. As a result, the gasoline pool will be 

able to absorb about 2.3 bill gal less 

ethanol as E10 in 2014 than it would 

have been possible to absorb if the 

gasoline use projection in AEO2007 had 

been realized. While we recognize this 

change in circumstances, we continue to 

support the objective of continued 

growth in renewable fuel production 

and consumption, as well as the central 

policy goals underlying the RFS 

program: reductions in greenhouse gas 

emissions, enhanced energy security, 

economic development, and 

technological innovation. We recognize 

that the issues concerning availability of 

qualifying renewable fuels and the 

consumption of ethanol that are 

discussed above with respect to the 

2014 RFS standards will continue to be 

relevant in 2015 and beyond. Our 

objective in this rulemaking is to 

develop a general approach for 

determining appropriate volume 

requirements that can be applied not 

only to 2014, but also for 2015 and 

beyond. Any such approach would, of 

course, fully consider comments 

received in response to this NPRM and 

would account for new and improved 

data and changes in relevant 

circumstances over time. As we have 

underscored throughout this proposal, 

we look forward to engagement with 

stakeholders on all relevant aspects of 

the proposed approach. 

We believe that the general approach 

reflected in today’s proposal is 

consistent with the goals of the 

underlying statute and will put the RFS 

program on a manageable trajectory 

while supporting continued growth in 

renewable fuels over time. In future 

years, we would expect to use the most 

recently available information to update 

the analyses used to project volumes in 

each of these areas: 

• Volume of ethanol that could be 

consumed, including reasonably 

achievable growth in capacity to 

consume higher ethanol blends such as 

E15 and E85. 

• Available volumes of cellulosic 

biofuel. 

• Available volumes of biomass-based 

diesel. 

• Available volumes of advanced 

biofuel. 

• Available volumes of non-advanced 

renewable fuel. 

• Amount of carryover RINs. 

In addition to these factors, the 

approach we are proposing today would 

also account for changes in 

circumstances over time, including the 

substantial efforts underway to increase 

the volume of biofuel produced and 

consumed in the United States. Many 

companies are continuing to invest in 

efforts ranging from research and 

development to the construction of 

commercial scale facilities to increase 

the production potential of next 

generation biofuels. Many of these 

projects have received financial support 

from government agencies: 

• DOE’s ARPA–E program, which 

aims to advance high-potential, highimpact energy technologies that are too 

early for private sector investment, and 

DOE’s Integrated Biorefinery Program, 

which provides grants and works in 

partnership with industry to develop, 

build, operate, and validate integrated 

biorefineries at various scales at 

locations across the country.99 DOE 

invests more than $200 million annually 

on technology development aimed at 

enabling cost-competitive advanced 

biofuels, including cellulosic ethanol, 

renewable gasoline, diesel, and aviation 

fuel. DOE has also awarded over $1 

billion since 2007 for 27 integrated 

biorefinery projects intended to de-risk 

first-of-a-kind technologies at pilot, 

demonstration, and commercial scale. 

• USDA’s Biorefinery Assistance 

Program, which provides loan 

guarantees for the development and 

construction of commercial scale 

biorefineries, is another example.100

Many of these new projects are focused 

on producing non-ethanol fuels, 

including bio-based hydrocarbons 

(gasoline, diesel, and jet fuel), gaseous 

fuels (CNG and LNG), or more energydense alcohols such as butanol. 

• President Obama’s directive to 

USDA, DOE, and the Navy to 

collaborate with the private sector to 

spur a ‘‘drop-in’’ biofuels industry to 

meet the transportation needs of the 

Department of Defense (DOD) and the 

private sector. This multi-agency effort 

potentially establishes the federal 

government as an early market adopter 

of these biofuels, demonstrating their 

potential bankability for commercial 

markets. DOD made four $5M, 18-month 

phase 1 awards in June 2013. Successful 

projects will be selected to go on to 


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101EIA Annual Energy Outlook 2013, Table 40. 

Sum of Ethanol-Flex Fuel ICE Cars and Light 

Trucks. 

102Memorandum from David Korotney to EPA 

docket EPA–HQ–OAR–2013–0479. 

103 2013 NACS Retail Fuels Report. 

104 ‘‘E85 motor fuel is increasingly pricecompetitive with gasoline in parts of the Midwest.’’ 

Today in Energy. EIA, 19 September 2013. <http:// 

www.eia.gov/todayinenergy/detail.cfm?id=13031>. 

Study compared daily average observed E85 and 

regular gasoline prices at the same stations in the 

states of Iowa, Illinois, Indiana, Kentucky, 

Michigan, Minnesota, and Ohio. 

105See Table IV.B.1–2 

106Memorandum from David Korotney to EPA 

docket EPA–HQ–OAR–2013–0479. 

107http://www.usda.gov/wps/portal/usda/

usdamediafb?contentid=2012/05/0141.xml. 

108EIA Alternative Fuel Vehicle Data Report. 

Released May 4, 2012. 

109EIA Annual Energy Outlook 2013, Table 40. 

Increase in Ethanol-Flex Fuel Cars and Light Trucks 

from 2013 to 2014. 

110 Draft Guidance Letter, CD–13–XX (LD), ‘‘E85 

Flexible Fuel Vehicle Weighting Factor for Model 

Year 2016–2019 Vehicles,’’ http://epa.gov/otaq/

regs/ld-hwy/greenhouse/ld-ghg.htm#action. 

Phase II construction to be jointly 

supported by the three agencies in the 

beginning of fiscal year 2015. 

In addition to these efforts at other 

agencies, EPA is currently evaluating a 

number of new pathways to allow these 

fuels to generate RINs under the RFS 

program if the applicable feedstock, fuel 

type, and greenhouse gas reduction 

requirements are met. As these new 

fuels and fuel volumes come online, the 

proposed methodology will 

automatically incorporate them into the 

development of the standards for the 

following year. 

Simultaneously, efforts are underway 

to increase the availability, awareness, 

and acceptance of gasoline fuel blends 

containing greater than 10 percent 

ethanol as expanded consumption of 

this fuel could play a role in the future. 

For instance, EPA has taken a series of 

regulatory steps to enable E15 to be sold 

in the U.S. In 2010 and 2011, EPA 

issued partial waivers to enable use of 

E15 in model year 2001 and newer 

vehicles, and in June of 2011, EPA 

finalized regulations to prevent 

misfueling of vehicles, engines, and 

equipment not covered by the partial 

waiver decisions. Other federal and 

state agencies have also taken steps to 

help foster the inclusion of E15 in the 

marketplace. We recognize that there 

remain a number of obstacles to 

increased E15 consumption. We request 

comment on what actions, on the part 

of government as well as industry and 

other stakeholders, could be taken to 

overcome these obstacles and to enable 

E15 consumption to increase. 

With regard to E85, the portion of the 

estimated 11.5 million FFV fleet (in 

2013) 101 having reasonable access to the 

existing E85 retail infrastructure 

(approximately 3,000 stations 

nationwide) represents a potential 

market of over 1 bill gal of E85 

consumption.102 While there are many 

factors that may contribute to a 

customer’s choice of which fuel to 

purchase, a recent study by the National 

Association of Convenience Stores 

found that for 71% of customers, price 

was the most important factor in their 

decision on where to purchase their 

fuel.103 Historically, E85 has been more 

expensive than E10 on an energycontent adjusted basis which has likely 

been a key factor in the low sales 

volumes. Recent data collected by EIA 

suggests that at least in some parts of the 

country the price relationship between 

E10 and E85 may be changing. In a 

Today in Energy article published on 

September 19, 2013, EIA presented data 

showing that in a collection of 

Midwestern states E85 retail prices were 

less than E10 retail prices on an energycontent adjusted basis in July 2013, the 

most recent month for which 

information was available.104 This 

change in price relationship between 

E10 and E85 coincides with reported 

increases in sales volumes of E85 in 

Iowa and Minnesota, two states in 

which E85 sales volumes are publically 

available.105 If the conditions that have 

led to this price relationship continue in 

the future, E85 sales volumes are likely 

to continue to increase. 

In addition to the potential for 

increased consumption of E85 when 

considering the existing infrastructure 

and vehicle fleet, there is also 

substantial opportunity to increase 

ethanol consumption in higher level 

ethanol blends through growth in the 

FFV fleet and E85 infrastructure. The 

number of stations offering E85 is 

currently increasing at a rate of 

approximately 300 new stations per 

year.106 In 2012 USDA announced a 

goal to help retail station owners install 

as many as 10,000 ethanol blender 

pumps by 2017.107 Growth Energy has 

a ‘‘Blend Your Own Ethanol’’ program 

to encourage the installation of ethanol 

blender pumps. These efforts, combined 

with the potential for these higher level 

ethanol blends to decrease consumer 

fuel costs in the future under 

appropriate market circumstances, 

could lead to a significant increase in 

the amount of ethanol than can be 

consumed as a transportation fuel in the 

United States in future years. As a 

benchmark, if every FFV currently in 

the fleet had access to E85 and chose to 

use it exclusively, the total consumption 

of these vehicles would be 

approximately 8 bill gal per year. The 

size of the FFV vehicle fleet also 

continues to increase, and is expected to 

grow by approximately 1 million 

vehicles from 2013 to 2014, with sales 

recently in excess of 2 million vehicles 

per year.108 109 EPA’s recently proposed 

credit for vehicle manufacturers under 

the light-duty greenhouse gas standards 

could help encourage the continuation 

such sales into the future.110 Ongoing 

growth in the size of the FFV fleet and 

the number of E85 pumps could be 

accelerated by increases in demand 

from customers for E85 fuel, which has 

the potential to support a rapid growth 

in E85 infrastructure. Under the 

proposed framework for the 2014 

standards, any such growth in capacity 

for ethanol consumption would 

continuously be reflected in the 

standards set for the following year. 

At the same time, we recognize that 

a number of challenges must be 

overcome in order to fully realize the 

potential for higher levels of production 

and consumption of higher-level 

ethanol blends and of renewable fuels 

generally in the United States. We also 

recognize that, while the RFS program 

is a central element of our domestic 

biofuels policy, a range of other tools, 

programs, and actions have the potential 

to play an important complementary 

role. We request comment on what 

actions could be taken by various 

industry and other private stakeholders, 

as well by the government, to help 

overcome these challenges and to 

minimize the need for adjustments in 

the statutory renewable fuel volume 

requirements in the future. 

V. Proposed Percentage Standards for 

2014 

A. Background 

The renewable fuel standards are 

expressed as volume percentages and 

are used by each refiner or importer to 

determine their RVO. Since there are 

four separate standards under the RFS2 

program, there are likewise four 

separate RVOs applicable to each 

obligated party. Each standard applies 

to the sum of all gasoline and diesel 

produced or imported. The applicable 

percentage standards are set so that if 

every obligated party meets the 

percentages, then the amount of 

renewable fuel, cellulosic biofuel, 

biomass-based diesel, and advanced 

biofuel used will meet the volumes 

required on a nationwide basis. 

As discussed in Section II.C, we are 

proposing a required volume of 

cellulosic biofuel for 2014 of 17 million 


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ethanol-equivalent gallons. The volume 

we select for the final rule will be used 

as the basis for setting the percentage 

standard for cellulosic biofuel for 2014. 

We are also proposing to reduce the 

advanced biofuel and total renewable 

fuel volumes. The biomass-based diesel 

volume for 2014 has been proposed to 

be maintained at 1.28 billion gallons. 

The volumes to be used to determine 

the four proposed percentage standards 

are shown in Table V.A–1. 

TABLE V.A–1—PROPOSED VOLUMES

FOR USE IN SETTING THE APPLICABLE PERCENTAGE STANDARDS FOR

2014 a

Cellulosic biofuel ................ 17 mill gal. 

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

TABLE V.A–1—PROPOSED VOLUMES

FOR USE IN SETTING THE APPLICABLE PERCENTAGE STANDARDS FOR

2014 a—Continued 

Advanced biofuel ............... 2.20 bill gal. 

Renewable fuel .................. 15.21 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 determination, 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. 

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 2014, this 

value is zero. See further discussion in 

Section V.B.2 below. 

DEi = Amount of diesel projected to be 

produced by exempt small refineries and 


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111Energy Information Administration/ShortTerm Energy Outlook—September 2013, Table 4a, 

‘‘U.S. Crude Oil and Liquid Fuels Supply, 

Consumption, and Inventories.’’ 

112Energy Information Administration/Annual 

Energy Outlook 2013, April 2013, ‘‘Energy 

Consumption by Sector and Source, United States, 

Reference case; Transportation Distillate Fuel Oil.’’ 

113Energy Information Administration/ShortTerm Energy Outlook—September 2013, Table 8, 

‘‘U.S. Renewable Energy Consumption (Quadrillion 

Btu).’’ 

114 72 FR 23900, May 1, 2007. 

115 40 CFR §§ 80.1141, 80.1142. 

116See 40 CFR §§ 80.1441, 80.1442. 

117 ‘‘Small Refinery Exemption Study: An 

Investigation into Disproportionate Economic 

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

118 40 CFR §§ 80.1441(e)(2), 80.1442(h). 

119 75 FR 14716, March 26, 2010. 

120To 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 EIA State Energy Data System (SEDS), 

Energy Consumption Estimates. 

small refiners in year i, in gallons, in any 

year they are exempt per §§ 80.1441 and 

80.1442, respectively. For 2014, this 

value is zero. See further discussion in 

Section V.B.2 below. 

The four separate renewable fuel 

standards for 2014 are based on the 

gasoline and diesel consumption 

volumes projected by EIA. 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 projected volumes of gasoline and 

diesel that will be used to calculate the 

final 2014 percentage standards will be 

provided to EPA by EIA. To estimate the 

gasoline and diesel projected volumes 

for the purposes of this proposal, we 

have used EIA’s Short-Term Energy 

Outlook (STEO) 111 for the gasoline 

projection and EIA’s Annual Energy 

Outlook 2013 Early Release 112 for the 

diesel projection. Gasoline and diesel 

volumes are adjusted to account for 

renewable fuel contained in the EIA 

projections. The projected volumes of 

ethanol and biodiesel used to calculate 

the final percentage standards will be 

provided to EPA by EIA. To estimate the 

ethanol and biodiesel projected volumes 

for the purposes of this proposal, we 

have used the values 113 for ethanol and 

biodiesel provided in the STEO. Using 

the most recent available EIA data for 

purposes of this proposal allows us to 

provide the affected industries with a 

reasonable estimate of the standards for 

planning purposes. 

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,114 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.115 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).116

Congress provided two ways that 

small refineries could receive a 

temporary extension of the exemption 

beyond 2010. One was 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. In 

March of 2011, DOE evaluated the 

impacts of the RFS program on small 

entities and concluded that some small 

refineries would suffer a 

disproportionate hardship.117 The other 

way that small refineries could receive 

a temporary extension is based on EPA 

determination of disproportionate 

economic hardship on a case-by-case 

basis in response to refiner petitions.118

EPA has granted some exemptions 

pursuant to this process, as recently as 

2013. However, at this time, no 

exemptions have been approved for 

2014. Therefore, for this proposal we 

have calculated the 2014 standards 

without a small refinery/small refiner 

adjustment. 

However, if an individual small 

refinery or small refiner requests an 

exemption and is approved prior to 

issuance of the final rule, the final 

standards will be adjusted to account for 

the exempted volumes of gasoline and 

diesel. Any requests for exemptions that 

are approved after the release of the 

final 2014 RFS standards will not affect 

the 2014 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, after the 2014 

standards are finalized, any additional 

exemptions for small refineries or small 

refiners that are issued will not affect 

those 2014 standards. 

3. Proposed Standards 

As specified in the March 26, 2010 

RFS2 final rule,119 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. For example, 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 2014, 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 V.B.3–1.120

Terms not included in this table have a 

value of zero. 

TABLE V.B.3–1—VALUES FOR TERMS

IN CALCULATION OF THE STANDARDS 121

[bill gal] 

Term Value 

RFVCB,2014 ......................................... 0.017 

RFVBBD,2014 ...................................... 1.28 

RFVAB,2014 ........................................ 2.20 


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121U.S. Gasoline (October 2013 STEO) = 8.67 

MMbbl/day; U.S. Ethanol (October 2013 STEO) = 

0.858 MMBD calculated as 1.115 QBtu; U.S. 

Transportation Distillate (AEO2013) = 6.55 QBtu; 

U.S. Biodiesel (October 2013 STEO) = 0.09 MMBD 

calculated as 0.176 QBtu; U.S. Diesel Ocean-going 

vessels (AEO2013) = 52.429 TBtu; Alaska (SEDS 

2011): AK Gasoline = 6.321 MMbbl, AK Ethanol = 

0.733 MMbbl; AK Diesel = 7.621 MMbbl, AK 

Biodiesel = 0, AK Ocean-going vessels estimated at 

4.5% of U.S. vessel bunkering and applied to the 

U.S. ocean-going vessel volume. 

TABLE V.B.3–1—VALUES FOR TERMS

IN CALCULATION OF THE STANDARDS 121—Continued 

[bill gal] 

Term Value 

RFVRF,2014 ......................................... 15.21 

G2014 ................................................. 132.65 

D2014 .................................................. 47.12 

RG2014 ............................................... 13.12 

RD2014 ............................................... 1.38 

Using the volumes shown in Table 

V.B.3–1, we have calculated the 

proposed percentage standards for 2014 

as shown in Table V.B.3–2. 

TABLE V.B.3–2—PROPOSED

PERCENTAGE STANDARDS FOR 2014 

Cellulosic biofuel ............................. 0.010% 

Biomass-based diesel .................... 1.16% 

Advanced biofuel ............................ 1.33% 

Renewable fuel ............................... 9.20% 

VI. Public Participation 

We request comment on all aspects of 

this proposal. This section describes 

how you can participate in this process. 

A. How do I submit comments? 

We are opening a formal comment 

period by publishing this document. We 

will accept comments during the period 

indicated under the DATES section 

above. If you have an interest in the 

proposed standards, we encourage you 

to comment on any aspect of this 

rulemaking. We also request comment 

on specific topics identified throughout 

this proposal. 

Your comments will be most useful if 

you include appropriate and detailed 

supporting rationale, data, and analysis. 

Commenters are especially encouraged 

to provide specific suggestions for any 

changes that they believe need to be 

made. You should send all comments, 

except those containing proprietary 

information, to our Air Docket (see 

ADDRESSES section above) by the end of 

the comment period. 

You may submit comments 

electronically, by mail, or through hand 

delivery/courier. To ensure proper 

receipt by EPA, identify the appropriate 

docket identification number in the 

subject line on the first page of your 

comment. Please ensure that your 

comments are submitted within the 

specified comment period. Comments 

received after the close of the comment 

period will be marked ‘‘late.’’ EPA is not 

required to consider these late 

comments. If you wish to submit 

Confidential Business Information (CBI) 

or information that is otherwise 

protected by statute, please follow the 

instructions in Section VI.B below. 

B. How should I submit CBI to the 

Agency? 

Do not submit information that you 

consider to be CBI electronically 

through the electronic public docket, 

www.regulations.gov, or by email. Send 

or deliver information identified as CBI 

only to the following address: U.S. 

Environmental Protection Agency, 

Assessment and Standards Division, 

2000 Traverwood Drive, Ann Arbor, MI 

48105, Attention Docket ID EPA–HQ– 

OAR–2013–0479. You may claim 

information that you submit to EPA as 

CBI by marking any part or all of that 

information as CBI (if you submit CBI 

on disk or CD ROM, mark the outside 

of the disk or CD ROM as CBI and then 

identify electronically within the disk or 

CD ROM the specific information that is 

CBI). Information so marked will not be 

disclosed except in accordance with 

procedures set forth in 40 CFR part 2. 

In addition to one complete version of 

the comments that include any 

information claimed as CBI, a copy of 

the comments that does not contain the 

information claimed as CBI must be 

submitted for inclusion in the public 

docket. If you submit the copy that does 

not contain CBI on disk or CD ROM, 

mark the outside of the disk or CD ROM 

clearly that it does not contain CBI. 

Information not marked as CBI will be 

included in the public docket without 

prior notice. If you have any questions 

about CBI or the procedures for claiming 

CBI, please consult the person identified 

in the FOR FURTHER INFORMATION

CONTACT section. 

VII. Statutory and Executive Order 

Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

This action is a ‘‘significant regulatory 

action’’ as set forth under Executive 

Order 12866 (58 FR 51735, October 4, 

1993). 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. A determination has not been 

reached, however, with regard to 

whether this action is ‘‘economically 

significant’’ under Executive Order 

12866. Such a determination will be 

made for the final rule. 

The economic impacts of the RFS2 

program on regulated parties, including 

the impacts of the volumes of renewable 

fuel specified in the statute, were 

analyzed in the RFS2 final rule 

promulgated on March 26, 2010 (75 FR 

14670). With the exception of biomassbased diesel, this action proposes 

standards applicable in 2013 that would 

be reduced from those analyzed in the 

RFS2 final rule. The impacts of the 

proposed 2014 and 2015 volumes of 

biomass-based diesel were addressed in 

the final rule establishing the 2013 

volume requirement of 1.28 bill gal (77 

FR 59458). 

B. Paperwork Reduction Act 

There are no new information 

collection requirements associated with 

the standards in this notice of proposed 

rulemaking. The standards being 

proposed today would not impose new 

or different reporting requirements on 

regulated parties. The existing 

information collection requests (ICR) 

that apply to the RFS program are 

sufficient to address the reporting 

requirements in the regulations. 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid OMB 

control number. The OMB control 

numbers for EPA’s regulations in 40 

CFR are listed in 40 CFR part 9. 

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 Procedures Act or any 

other statute unless the agency certifies 

that the rulemaking 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 proposed 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 


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population of less than 50,000; and (3) 

a small organization that is any not-forprofit enterprise which is independently 

owned and operated and is not 

dominant in its field. 

After considering the economic 

impacts of today’s proposed rule on 

small entities, we certify that this 

proposed action will not have a 

significant economic impact on a 

substantial number of small entities. 

This rulemaking proposes that the 

annual volume requirement for 

cellulosic biofuel for 2014 would be 

reduced from the statutory volume of 

1.75 bill gal. We are also proposing to 

reduce the annual volume requirements 

for advanced biofuel and total 

renewable fuel. 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 proposed rule will not 

impose any additional requirements on 

small entities beyond those already 

analyzed. However, we continue to be 

interested in the potential impacts of the 

proposed rule on small entities and 

welcome comments on issues related to 

such impacts. 

D. Unfunded Mandates Reform Act 

This proposed 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 

proposed rule only applies to gasoline, 

diesel, and renewable fuel producers, 

importers, distributors and marketers 

and merely proposes the 2014 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 

proposes the 2014 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 rulemaking. 

In the spirit of Executive Order 13132, 

and consistent with EPA policy to 

promote communications between EPA 

and State and local governments, EPA 

specifically solicits comment on this 

proposed rule from State and local 

officials. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

This proposed action does not have 

tribal implications, as specified in 

Executive Order 13175 (65 FR 67249, 

November 9, 2000). This proposed 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. 

EPA specifically solicits additional 

comment on this proposed action from 

tribal officials. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

EPA interprets EO 13045 (62 FR 

19885, April 23, 1997) as applying only 

to those regulatory actions that concern 

health or safety risks, such that the 

analysis required under section 5–501 of 

the EO has the potential to influence the 

regulation. This proposed 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 proposes 

the annual standards for renewable fuel 

under the RFS program for 2014. 

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 proposed 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 

proposed rule will not have 

disproportionately high and adverse 

human health or environmental effects 

on minority or low-income populations 

because it does not affect the level of 

protection provided to human health or 

the environment. This action does not 

relax the control measures on sources 

regulated by the RFS regulations and 

therefore will not cause emissions 

increases from these sources. 

VIII. 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 proposal, 

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

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

7414, 7542, and 7601(a). 


sroberts on DSK5SPTVN1PROD with PROPOSALS
71784 Federal Register / Vol. 78, No. 230 / Friday, November 29, 2013 / Proposed Rules 

List of Subjects in 40 CFR Part 80 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Diesel fuel, Fuel 

additives, Gasoline, Imports, Oil 

imports, Petroleum, Renewable Fuel. 

Dated: November 18, 2013. 

Gina McCarthy, 

Administrator. 

For the reasons set forth in the 

preamble, 40 CFR part 80 is proposed to 

be 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 

adding paragraph (a)(5) to read as 

follows: 

§ 80.1405 What are the Renewable Fuel 

Standards? 

(a) * * * 

(5) Renewable Fuel Standards for 

2014. 

(i) The value of the cellulosic biofuel 

standard for 2014 shall be 0.010 percent. 

(ii) The value of the biomass-based 

diesel standard for 2014 shall be 1.16 

percent. 

(iii) The value of the advanced biofuel 

standard for 2014 shall be 1.33 percent. 

(iv) The value of the renewable fuel 

standard for 2014 shall be 9.20 percent. 

[FR Doc. 2013–28155 Filed 11–27–13; 8:45 am] 

BILLING CODE 6560–50–P 


sroberts on DSK5SPTVN1PROD with PROPOSALS