## EPA Responses to Comments from Interagency Working Comments on Draft Language under EO 12866/13563 Interagency Review

1. Executive Summary, Section I.A.2, Pg. 10: we agree with and supports EPA’s assessment “that neither the required 2012 volumes for advanced biofuel nor total renewa ble fuel be lowered below the statutory volumes”. Ad equate volumes of alternative advanced biofuels and biomassbased diesel should be available in 2012 ba sed on existing domestic production capacity and import potential, such that there is no need to ad just the mandated levels of advanced biofuels

and total renewable fuels downward even thou gh the 2012 volume requirement for cellulosic biofuels is being revised downward.

Response:

No changes were made to the ru lemaking in response to this co mment. However, see response to

comment #8.

2. Executive Summary, Section I.D, Pg. 12: We ag ree with and supports EPA’s decision to deny the petition of API/NPRA to reconsider the revised RFS2 standards for 2011.

Response:

No changes were made to the rule making in response to this comment.

3. Section II.B.2, Pg. 20 – discussion of potentia l new facilities in 2012, a nd Section IV.B.1, Pg. 42 – discussion of potential sources of advanced biofuels: In both th ese sections, and potentially in other sections of the report that discuss advanc ed biofuels as well, EPA should take note of the progress of GEVO. GEVO purchased its first dry mill ethanol facility in 2010 and is actively converting the 22 mmgy plant in Luverne, MN to produce up to 18 mmgy of butanol. GEVO anticipates startup in Q2 2012, and could potentia lly produce as much as 10 mmgy of bio-based butanol by the end of 2012, and up to 18 mmgy in 2013. Since purchasing the plant in Luverne,

MN, GEVO has announced a letter of intent to purchase and retrofit a second, 50 mmgy dry mill, and has several other dry mills interested in conver ting to butanol production.

Similarly, Solazyme produced over 150,000 of al gae oil in 2010-11 that has been converted to renewable jet fuel by UOP; this volume is projected to increase in both 2012 and 2013.

Similarly, LS9 has purchased a state-of-the-art fermentation facility in Okeechobee, FL that will enable the production of 50,000 to 100,000 gallons per year of its “UltraClean Diesel”. The plant was originally scheduled for startup in 2010 and is now scheduled to begin shakedown runs in 2011, enabling the production of advanced biofuel in 2012.

Response:

A discussion of these three companies was added to the end of Sections II.D and IV.B.1.4. Section IV.B.1, Pg. 43 and Section IV.D, Pg. 63: EERE agrees with and supports EPA’s decision to establish 1.28 bgy as the volumetric requirement standard for biomass-based diesel in 2013.

Response:

No changes were made to the rule making in response to this comment.

5. Typo, page 51: “slash blending” is supposed to be “splash blending”. We noted other typos in the report, particularly missed “spaces” between words.

Response:

We searched through the document and corrected these and other typos.

6. Section IV.B.5, Pg. 52: In this section, EPA discusses the 75 mmgy Dynamic Fuels renewable diesel facility being cons tructed by Tyson/Syntroleum in Ge ismar, LA. EPA should take note of another similar project and poten tially add it to this discussion: the 137 mmgy Diamond Green renewable diesel facility being constructed by Valero/Darling International in Norco, LA. The Diamond Green project received a $241MM loan guar antee from the US Department of Energy in January, 2011, and will use an innovative hydr otreating/isomerization process from Desmet Ballestra Group and UOP, LLC known as Ecofin ingTM. Construction will commence in 2011 with production estimated to commence in Q1 2013.

Response:

A discussion was added to Section IV.B.5 to a cknowledge the existence of this Diamond Green

project.

7. One commenter recommend considering the follo wing language requesting public comment on alternative implementation options and welc ome discussion with EPA regarding possible refinements to this language:

EPA is also requesting comme nt on alternative options, in accordance with EISA 2007, that would reduce the 2012 statutory requirement for th e applicable volume of cellulosic biofuel by substantially less than the proposed range of values indicated above. To support the Administration’s aim in boosting the cellulosic bi ofuel sector, we are seeking comment on the degree to which a standard that reduces less of the statutory volume requirement may spur additional near- and longer-term cellulosic biofuel production capacit y. EPA recognizes that any method must take into account the uncertainty in estimating future production capacity, and that the intent of setting a mandate is to stimulate more rapid increases in the rate of production than the cellulosic biofuel industry is likely to experience in the absence of the program.

Response:We added a paragraph at the end of Section II.B to request comment on setting the 2012 cellulosic biofuel standard at a level above the 3.55 - 15.7 million gallons volume that we are

proposing.

8. In the context of EPA’s consideration of whethe r and to what degree to propose lowering the

advanced biofuel and total renewable fuel a pplicable volumes for 2012, there appears to be considerable uncertainty regarding the availability of sufficient volumes to meet an objective of 2.0 billion gallons. One commenter suggested that given this uncertainty and EPA’s discretion to set applicable volume requireme nts on an annual basis, that the agency consider proposing a lowering of the applicable requirements for adva nced biofuel and/or to tal renewable fuel and seek comment from the public regarding to what degree these requirements could be lowered.

Response:

We disagree that there is "considerable uncertainty" regarding the sufficiency of advanced biofuel volumes in 2012. We have modified the text in Section II.D in an attempt to make this clearer. However, we agree that there is some uncertainty as is inherent in any projection, and we added text to acknowledge this. Finally, we added text to request comment on whether the advanced and total renewable fuels standards should be lowered.

9. Comments provided with respect to the fo llowing text in Section II.E, page 29:

"According to the Energy Information Admin istration, biodiesel production in 2010 averaged about 28 mill gallons per month for the 10-month pe riod covered by the report, and information from the EPA-Moderated Transaction System (E MTS) indicates that this trend continued through the end of the year. Thus, total pr oduction volumes for 2010 are likely to be around 335 mill gallons."

Comments:

In April, EIA reported a tota l production of 311 million gallons, but a significant amount of that production was exported. Do biodiesel exports qua lify for the RFS2? Also, using census data, we estimate 296 Mgals in 2010 and after adjusting for trade, the actual use figure is 214 Mgals.

Response:

The data that EIA and the Census Bureau collect s is based on feedstock volumes and biodiesel only, which provides an incomplete picture of the total volumes available for compliance under RFS. In particular, tracking the volumes of waste greases, fats, and oils used in the production of biodiesel and renewabl e diesel carries significant uncertain ty. The RFS implementation team in the Compliance and Innovative Strategies Di vision of OTAQ have b een investigating these issues for some time. We believe that the most accurate measure of BBD volumes available for 2010 compliance are those reported to EPA under RFS. We will change the text in Section II.E to reflect this.

10. Comments provided with respect to the fo llowing text in Section II.E, page 30:"Projections of production for 2012 strongly sugge st that 1.0 bill gallons of biomass-based diesel is achievable. For instance, the U.S. Depa rtment of Agriculture projects that over 400 mill gallons of biodiesel will be produced from soyb ean oil in 2012, and adds that "Although some other first-use vegetable oils are also used to produce biodiesel, most of the remaining biodiesel production needed to reach the 1-billion-gallon ma ndate of the 2007 Energy Act uses animal fats or recycled vegetable oil as the feedstock." "

Comments:

Be sure to update this number for the final. As of now, USDA is reporting more like 500 million gallons for 2012.

Response:

No changes were made to the rulemaking in response to this comment, but we intend to update it for the final rule. However, if OMB can provid e a specific citation for the value of 500 mill gallons, we will update it for this proposal.

11. Comments on Section V.C.1, Defi nition of Annual Cover Crop:

The proposed changes in definitions for cover cr ops, as USDA interprets the clarification for cover crops, its aim is to restrict the types of cover crops that can qua lify as approved biofuel feedstocks rather than expand them. It should not it increase the use of cover crops over what would have occurred under the preexisting rule. Th at said nether, the clarification is not very helpful. In fact it may be too restrictive since it’s difficult to think of too many crops for which there isn’t a possible alternative use. It would help if EPA provided some examples of the kinds of cover crops they are talking about in each category.

The proposed canola/rapeseed clarification al so should have little effe ct on land management practices. There might be some reduction in cropland USDA agrees with EPA’s conclusion that any effect will be minor.

Response:

The clarification is intended to restrict use of the cover crop pathway to those cases where we anticipated no land use impact. This is consiste nt with how we assessed the cover crop pathway for the final rule, which was based on the exp ectation that cover crop use would have no land use impacts or impacts on markets that would lead to indirect impacts. However, this does not preclude such other crops from being added vi a the RFS2 petition process and in fact we are actively working on several petitions to add new feedstocks.