[Federal Register Volume 87, Number 126 (Friday, July 1, 2022)]
[Rules and Regulations]
[Pages 39600-39677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-12376]



[[Page 39599]]

Vol. 87

Friday,

No. 126

July 1, 2022

Part II





Environmental Protection Agency





-----------------------------------------------------------------------





40 CFR Parts 80 and 1090





Renewable Fuel Standard (RFS) Program: RFS Annual Rules; Final Rule

Federal Register / Vol. 87 , No. 126 / Friday, July 1, 2022 / Rules 
and Regulations

[[Page 39600]]


-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 80 and 1090

[EPA-HQ-OAR-2021-0324; FRL-8521-01-OAR]
RIN 2060-AV11


Renewable Fuel Standard (RFS) Program: RFS Annual Rules

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: Under section 211 of the Clean Air Act (CAA), the 
Environmental Protection Agency (EPA) is required to set standards 
every year to implement nationally applicable renewable fuel volume 
targets. This action modifies the 2021 and 2022 statutory volume 
targets for cellulosic biofuel, advanced biofuel, and total renewable 
fuel, as well as establishes the 2022 volume target for biomass-based 
diesel. This action also modifies the previously established cellulosic 
biofuel, advanced biofuel, and total renewable fuel volume requirements 
for 2020. In addition, this action establishes the 2020, 2021, and 2022 
renewable fuel percentage standards for all four of the above biofuel 
categories. Finally, this action also addresses a judicial remand of 
the 2016 standard-setting rulemaking, as well as several regulatory 
changes to the Renewable Fuel Standard (RFS) program, including 
regulations for the use of biointermediates to produce qualifying 
renewable fuel, flexibilities for regulated parties, and clarifications 
of existing regulations.

DATES: This rule is effective on August 30, 2022. The incorporation by 
reference of certain publications listed in this regulation is approved 
by the Director of the Federal Register as of August 30, 2022. The 
incorporation by reference of ASTM E711-87 (R2004) was approved by the 
Director of the Federal Register as of July 1, 2010.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-HQ-OAR-2021-0324. All documents in the docket are listed on the 
https://www.regulations.gov website. Although listed in the index, some 
information is not publicly available, e.g., confidential business 
information (CBI) or other information whose disclosure is restricted 
by statute. Certain other material is not available on the internet and 
will be publicly available only in hard copy form. Publicly available 
docket materials are available electronically through https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Dallas Burkholder, Office of 
Transportation and Air Quality, Assessment and Standards Division, 
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 
48105; telephone number: 734-214-4766; email address: <a href="/cdn-cgi/l/email-protection#f0a2b6a3dda2859c959d919b999e9783b0958091de979f86"><span class="__cf_email__" data-cfemail="94c6d2c7b9c6e1f8f1f9f5fffdfaf3e7d4f1e4f5baf3fbe2">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: Entities potentially affected by this rule 
are those involved with the production, distribution, and sale of 
transportation fuels, including gasoline and diesel fuel, as well as 
renewable fuels such as ethanol, biodiesel, renewable diesel, and 
biogas. Potentially affected categories include:

------------------------------------------------------------------------
                                    NAICS \1\    Examples of potentially
            Category                  codes         affected entities
------------------------------------------------------------------------
Industry.......................          324110  Petroleum refineries.
Industry.......................          325193  Ethyl alcohol
                                                  manufacturing.
Industry.......................          325199  Other basic organic
                                                  chemical
                                                  manufacturing.
Industry.......................          424690  Chemical and allied
                                                  products merchant
                                                  wholesalers.
Industry.......................          424710  Petroleum bulk stations
                                                  and terminals.
Industry.......................          424720  Petroleum and petroleum
                                                  products merchant
                                                  wholesalers.
Industry.......................          221210  Manufactured gas
                                                  production and
                                                  distribution.
Industry.......................          454319  Other fuel dealers.
------------------------------------------------------------------------
\1\ North American Industry Classification System (NAICS).

    This table is not intended to be exhaustive, but rather lists the 
types of entities that EPA is now aware could potentially be affected 
by this action. Other types of entities not listed in the table could 
also be affected. To determine whether your entity would be affected by 
this action, you should carefully examine the applicability criteria in 
40 CFR parts 80 and 1090. If you have any questions regarding the 
applicability of this action to a particular entity, consult the person 
listed in the FOR FURTHER INFORMATION CONTACT section.

Table of Contents

I. Executive Summary
    A. Legal Authorities To Modify and Establish Renewable Fuel 
Volumes
    B. 2020 Volumes
    C. 2021 Volumes
    D. 2022 Volumes
    E. Response to the ACE Remand
    F. Annual Percentage Standards
    G. Administrative Actions
    H. Biointermediates
    I. Other Changes
    J. Environmental Justice
    K. Endangered Species Act
II. Legal Authorities To Reduce and Establish Volumes
    A. Authorities To Modify Statutory Volumes Targets
    B. Authority To Establish BBD Volumes
    C. Considerations for Retroactive and Late Rulemaking
    D. Considerations in Revisiting an Established RFS Standard
    E. Severability
III. Volume Requirements
    A. EPA's Assessment of the Statutory Factors for Each Component 
Category of Biofuel
    B. Interactions Between the RFS Annual Volumes
    C. Volume Requirements for 2020
    D. Volume Requirements for 2021
    E. Volume Requirements for 2022
    F. BBD Volume for 2022
    G. Summary of the RFS Volumes for 2020-2022
    H. Quantitative Impacts of the Volumes
IV. Response to ACE Remand
    A. Reevaluating the 2014-2016 Annual Rule
    B. Consideration of Approaches for Responding to the ACE Remand
    C. Demonstrating Compliance With the 2022 Supplemental Standard
    D. Authority and Consideration of the Benefits and Burdens
    E. Calculating a Supplemental Percentage Standard for 2022
V. Percentage Standards
    A. Calculation of Percentage Standards
    B. Small Refineries and Small Refiners
    C. Modification of the 2020 BBD Percentage Standard
    D. Percentage Standards for 2020-2022
VI. Administrative Actions
    A. Assessment of the Domestic Aggregate Compliance Approach
    B. Assessment of the Canadian Aggregate Compliance Approach
VII. Biointermediates
    A. Background
    B. Effect of This Action on Biointermediates Provisions Proposed 
in the REGS Rule
    C. Biointermediates Regulatory Provisions
    D. Other Considerations Related to Biointermediates
VIII. Amendments to Fuel Quality and RFS Regulations

[[Page 39601]]

    A. BBD Conversion Factor for Percentage Standard
    B. Changes to Registration for Baseline Volume
    C. Changes To Attest Engagements for Parties Owning RINs (``RIN 
Owner Only'')
    D. Public Access to Information
    E. Clarifying the Definition of ``Agricultural Digester''
    F. Definition of ``Produced From Renewable Biomass''
    G. Esterification Pathway
    H. Technical Amendments
IX. 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 (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    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 (NTTAA) and 
1 CFR Part 51
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act (CRA)
X. Statutory Authority

    A red-line version of the regulatory language that incorporates the 
changes in this action is available in the docket for this action.

I. Executive Summary

    The Renewable Fuel Standard (RFS) program began in 2006 pursuant to 
the requirements of the Energy Policy Act of 2005 (EPAct), which were 
codified in CAA section 211(o). The statutory requirements were 
subsequently amended by the Energy Independence and Security Act of 
2007 (EISA). The statute sets forth annual, nationally applicable 
volume targets for each of the four categories of renewable fuel. It 
also directs EPA to modify or establish volume targets in certain 
circumstances. EPA must then translate the volume targets into 
compliance obligations, expressed as annual percentage standards, that 
obligated parties must meet every year.
    In this action we are establishing the applicable volumes for 
cellulosic biofuel, advanced biofuel, and total renewable fuel for 2021 
and 2022, and the biomass-based diesel (BBD) applicable volume for 
2022,\1\ as well as modifying the applicable volumes that EPA 
previously established for cellulosic biofuel, advanced biofuel, and 
total renewable fuel for 2020.<SUP>2 3</SUP> We are also establishing 
the annual percentage standards (also known as ``percent standards'') 
for cellulosic biofuel, BBD, advanced biofuel, and total renewable fuel 
that apply to gasoline and diesel fuel produced or imported by 
obligated parties in 2020, 2021, and 2022. In addition, we are 
addressing the remand of the 2016 annual rule by the U.S. Court of 
Appeals for the D.C. Circuit, in Americans for Clean Energy v. EPA, 864 
F.3d 691 (2017) (hereafter ``ACE'') by establishing a supplemental 
volume of 250 million gallons for 2022. EPA intends to establish an 
additional supplemental volume of 250 million gallons for 2023 in a 
subsequent action.
---------------------------------------------------------------------------

    \1\ The 2021 BBD volume requirement was established in the 2020 
final rule. 85 FR 7016 (February 6, 2020).
    \2\ 85 FR 7016 (February 6, 2020).
    \3\ As explained in Section II, we did not trigger the reset 
authority for BBD. Thus, we are not resetting the previously 
finalized 2020 and 2021 BBD volumes. In addition, actual BBD use in 
both 2020 and 2021 is projected to exceed the previously finalized 
volumes. This is consistent with the findings in the 2019 and 2020 
final rules, which established the 2020 and 2021 BBD volumes 
respectively, anticipating that additional BBD would be used above 
the BBD volumes to satisfy the advanced biofuel standards. Thus, we 
see no need to retroactively reconsider the BBD volumes in any 
event. As discussed in Section III.F, we are setting the 2022 BBD 
volume pursuant to our ``set'' authority under CAA section 
211(o)(2)(B)(ii).

                                      Table I-1--Final Volume Requirements
                                               [Billion RINs] \a\
----------------------------------------------------------------------------------------------------------------
                            Category                                   2020            2021            2022
----------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel..............................................            0.51            0.56            0.63
Biomass-Based Diesel \b\........................................        \c\ 2.43        \d\ 2.43            2.76
Advanced Biofuel................................................            4.63            5.05            5.63
Total Renewable Fuel............................................           17.13           18.84           20.63
Supplemental Standard...........................................             n/a             n/a        \e\ 0.25
----------------------------------------------------------------------------------------------------------------
\a\ One Renewable Identification Number (RIN) is equivalent to one ethanol-equivalent gallon of renewable fuel.
  Throughout this preamble, RINs are generally used to describe total volumes in each of the four categories
  shown above, while gallons are generally used to describe volumes for individual types of biofuel such as
  ethanol, biodiesel, renewable diesel, etc. Exceptions include BBD, which is always given in physical volumes,
  and biogas and electricity, which are always given in RINs.
\b\ The BBD volumes are in physical gallons (rather than RINs).
\c\ Established in the 2019 RFS annual rule (83 FR 63704, December 11, 2018).
\d\ Established in the 2020 RFS annual rule (85 FR 7016, February 6, 2020).
\e\ The supplemental standard is an additional total renewable fuel obligation. Thus, the total renewable fuel
  obligation for 2022 is 20.87 billion RINs; 20.63 billion RINs for the 2022 total renewable fuel standard and
  0.25 billion RINs for the supplemental standard. The supplemental standard can be satisfied with any category
  (D3, D4, D5, D6, or D7) of RIN.

    Finally, we are finalizing several regulatory changes to the RFS 
program, including regulations for the use of biointermediates to 
produce qualifying renewable fuel, flexibilities for regulated parties, 
and clarifications of existing regulations.
    The RFS program is an important federal policy supporting the 
production of low-greenhouse gas (GHG) renewable fuels, which are an 
important element of addressing climate change through transportation 
policy. Expanding the production and use of renewable fuels also helps 
protect Americans from volatile crude oil prices by reducing our 
reliance on fossil fuels. As detailed in this rule's Regulatory Impact 
Analysis (RIA), EPA estimates that this rule will reduce the imports of 
crude oil and refined products by approximately 2.9 billion gallons. We 
have estimated that these reductions in imports will result in $227 
million of energy security benefits. The actual energy security 
benefits could be higher as this estimate does not consider military 
cost impacts of changes to U.S. imports of crude oil and refined 
products. Finally, increasing the domestic production and use of 
renewable fuels will also create good-paying American jobs; support our 
rural

[[Page 39602]]

economies, American agriculture, and manufacturing; and reduce the 
impacts of climate change.
    The final volume requirements in this action, combined with the 
changes EPA is separately taking with respect to the small refinery 
exemption (SRE) program, will provide much-needed stability to the RFS 
program. It will also strengthen the role of the program in advancing 
greater use of domestically produced low-carbon renewable fuels that 
are critical to building real energy independence in the long-term.
    Throughout this document, EPA discusses and addresses comments on 
the proposed rule that stakeholders submitted to EPA; more in-depth 
responses are located in a separate Response to Comments (RTC) 
document, available in the docket for this action. EPA also prepared an 
RIA to support this final rule, available in the docket for this 
action.

A. Legal Authorities To Modify and Establish Renewable Fuel Volumes

    For the 2020, 2021, and 2022 cellulosic biofuel, advanced biofuel, 
and total renewable fuel volumes, EPA is fulfilling our statutory 
obligation to ``reset'' the statutory volumes in accordance with CAA 
section 211(o)(7)(F). This provision, entitled ``Modification of 
Applicable Volumes,'' provides that, if a waiver of any statutory 
volume target exceeds specified thresholds, EPA shall modify the 
statutory volume targets for all years following the year that the 
threshold was exceeded. This obligation has been triggered by EPA 
actions waiving volumes in previous annual standard-setting 
rulemakings. Under this statutory provision, we are establishing new 
volume targets for cellulosic biofuel, advanced biofuel, and total 
renewable fuel for 2020, 2021, and 2022.\4\
---------------------------------------------------------------------------

    \4\ As we explain further in Section II, we are also 
independently justifying the 2020, 2021, and 2022 cellulosic biofuel 
volumes and the 2022 advanced biofuel and total renewable fuel 
volumes under the cellulosic waiver authority.
---------------------------------------------------------------------------

    When resetting the statutory targets, EPA must comply with the 
processes, criteria, and standards set forth in CAA section 
211(o)(2)(B)(ii). In addition to reviewing the implementation of the 
program during previous years and coordinating with the Secretary of 
Energy and the Secretary of Agriculture, EPA must also analyze several 
factors:
    <bullet> 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;
    <bullet> The impact of renewable fuels on the energy security of 
the U.S.;
    <bullet> The expected annual rate of future commercial production 
of renewable fuels, including advanced biofuels in each category 
(cellulosic biofuel and BBD);
    <bullet> The impact of renewable fuels on the infrastructure of the 
U.S., including deliverability of materials, goods, and products other 
than renewable fuel, and the sufficiency of infrastructure to deliver 
and use renewable fuel;
    <bullet> The impact of the use of renewable fuels on the cost to 
consumers of transportation fuel and on the cost to transport goods; 
and
    <bullet> 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.
    With respect to the 2022 BBD volume, we are setting this volume 
under CAA section 211(o)(2)(B)(ii). The requirement to reset the 
statutory volume targets does not apply to BBD. However, CAA section 
211(o)(2)(B)(ii) separately requires that EPA set the BBD volume for 
years including 2022 based on an analysis of the same statutory factors 
as the reset authority.
    In addition to these statutory provisions, the D.C. Circuit has 
also established principles that EPA must follow when promulgating RFS 
rulemakings that are retroactive (i.e., rules that apply to conduct 
prior to the rule becoming effective) and late (i.e., rules promulgated 
after the statutory deadline).\5\ Namely, EPA generally has authority 
to promulgate such RFS rules, but EPA must reasonably consider and 
mitigate the burdens on obligated parties caused by the issuance of 
these rules after the statutory deadline. Several aspects of this 
rulemaking are either retroactive or are being finalized after the 
statutory deadline, or both. Therefore, we consider this caselaw as 
required by the D.C. Circuit and consistent with our obligation to act 
reasonably. We further discuss all our legal authorities to modify or 
establish volumes in Section II.
---------------------------------------------------------------------------

    \5\ See, e.g., Americans for Clean Energy v. EPA, 864 F.3d 691 
(D.C. Cir. 2017); Monroe Energy, LLC v. EPA, 750 F.3d 909 (D.C. Cir. 
2014); Nat'l Petrochemical & Refiners Ass'n v. EPA, 630 F.3d 145, 
154-58 (D.C. Cir. 2010).
---------------------------------------------------------------------------

B. 2020 Volumes

    EPA established the applicable 2020 volume requirements and 
percentage standards in late 2019.\6\ Since we promulgated those 
standards, significant and unanticipated events occurred that affected 
the fuels markets in 2020. The two most prominent of these events were:
---------------------------------------------------------------------------

    \6\ 85 FR 7016 (February 6, 2020). EPA signed this rulemaking on 
December 19, 2019.
---------------------------------------------------------------------------

    <bullet> The COVID-19 pandemic, which caused a major drop in 
transportation fuel demand, a disproportionate fall in gasoline demand 
relative to diesel demand, and significantly reduced production and use 
of biofuels in 2020 below the volumes we anticipated could be achieved, 
and
    <bullet> The volume of gasoline and diesel fuel exempted from 2020 
RFS obligations through SREs is far lower than projected in the 2020 
final rule.
    These events adversely affected the ability of obligated parties to 
comply with the applicable standards and to achieve the intended 
volumes in the 2020 final rule.\7\ As a result, we proposed to 
retroactively adjust the 2020 volumes and standards to reflect the 
actual volumes of renewable fuels and transportation fuel consumed in 
the U.S. in 2020.\8\ In this final rule we are establishing revised 
volumes and standards for 2020 based on the actual volumes of renewable 
fuel and transportation fuel used in the U.S. in 2020, as we proposed. 
As we discuss further in Section III, the revised renewable fuel 
volumes are supported by our analysis of the statutory factors that we 
must consider when resetting RFS volumes. Our decision to use updated 
data on actual transportation fuel consumption is further explained in 
Section V.
---------------------------------------------------------------------------

    \7\ EPA extended the 2020 compliance deadline for obligated 
parties to January 31, 2022 (86 FR 17073, April 1, 2021). We 
subsequently further extended that deadline in a separate action (87 
FR 5696, February 2, 2022).
    \8\ We also call such volumes the volumes that are actually 
consumed, actually used, or actually supplied. In this context, we 
are using the term ``supply'' distinct from the statutory term 
``inadequate domestic supply'' in CAA section 211(o)(7)(A)(ii).
---------------------------------------------------------------------------

C. 2021 Volumes

    For 2021, we proposed establishing volumes that were equal to the 
volumes of cellulosic biofuel, advanced biofuel, and total renewable 
fuel that were projected to be used in the U.S. in 2021 based on data 
available at the time of the proposed rule. We also indicated our 
intent to update these projections in the final rule. As discussed in 
further detail in Section III, we believe this approach for 2021 is 
appropriate based on our analysis of the statutory factors EPA must 
analyze when resetting the RFS volumes, including our finding that this 
retroactive rulemaking has no ability to incentivize increased 
production and use of renewable fuel in 2021. Consistent with our 
proposed rule, we are finalizing volumes for 2021

[[Page 39603]]

that are equal to the actual volumes of cellulosic biofuel, advanced 
biofuel, and total renewable fuel that were used in the U.S. in 2021.

D. 2022 Volumes

    For 2022 we proposed a cellulosic biofuel volume that was equal to 
the volume of qualifying cellulosic biofuel projected to be used in the 
U.S. in 2022 and volumes of non-cellulosic advanced biofuel and 
conventional renewable fuel that were consistent with the implied 
statutory targets for these categories. These volumes were 
significantly higher than the proposed volumes for 2020 and 2021. In 
this final rule we are establishing volumes for 2022 that are 
consistent with the proposed volumes, after updating our projection of 
cellulosic biofuel use in 2022 using more recent data. As we discuss 
further in Section III, these volumes are based on our analysis of the 
statutory factors, including our assessment of the ability for the RFS 
program to incentivize increased production and use of renewable fuel 
in 2022 (particularly given the partially prospective nature of the 
2022 standards relative to the entirely retrospective 2020 and 2021 
standards), the statutory intent to support increasing production and 
use of renewable fuels, and the potential positive impacts of renewable 
fuels on several of the statutory factors such as climate change and 
energy security.\9\ The volumes for 2022 also reflect market 
constraints on the ability of RFS annual volume requirements to 
incentivize increased production and use of renewable fuel in the near 
term. These constraints include the commercial availability of 
cellulosic biofuel, the price and availability of feedstocks, and the 
availability of infrastructure to distribute higher-level blends of 
ethanol. Finally, the volumes for 2022 take into consideration the 
potential adverse impacts of the renewable fuel volumes on several 
statutory factors including wildlife habitat, water quality, and water 
supply.
---------------------------------------------------------------------------

    \9\ Throughout this document we often refer to the ``potential'' 
impacts (positive or negative) of increased biofuel production to 
highlight that there is uncertainty associated with these impacts. 
The lack of the qualifying word ``potential,'' however, does not 
mean that there is no uncertainty. For a fuller discussion of the 
uncertainty associated with these impacts see the RIA.
---------------------------------------------------------------------------

E. Response to the ACE Remand

    In 2015, EPA established the total renewable fuel standard for 
2016. As part of that rule, EPA relied upon the general waiver 
authority under a finding of inadequate domestic supply to reduce the 
total renewable fuel volume target by 500 million gallons.\10\ Several 
parties challenged that action, and in ACE the D.C. Circuit vacated 
EPA's use of the general waiver authority, finding that such use 
exceeded EPA's authority under the CAA. Specifically, EPA had 
impermissibly considered demand-side factors in its assessment of 
inadequate domestic supply, rather than limiting that assessment to 
supply-side factors. The court remanded the rule back to EPA for 
further consideration.
---------------------------------------------------------------------------

    \10\ See 80 FR 77420 (December 14, 2015); CAA section 
211(o)(7)(A)(ii).
---------------------------------------------------------------------------

    We now intend to restore the full 500 million gallons that we 
improperly waived in the 2016 rule but to do so over two years. 
Specifically, as we discuss further in Section IV, we are adding a 
supplemental volume obligation of 250 million gallons, which will be 
implemented as a supplemental 2022 standard as we proposed. We also 
intend to propose an additional supplemental volume of 250 million 
gallons for 2023 in a subsequent action.

F. Annual Percentage Standards

    The statute directs EPA to establish annual standards that 
translate the nationally applicable volume targets into compliance 
obligations on obligated parties. In this action, EPA is finalizing 
annual standards for 2020, 2021, and 2022 for all four categories of 
renewable fuel. We are also finalizing a supplemental standard to 
address the ACE remand, which will apply in the 2022 compliance year.
    The renewable fuel standards are expressed as a volume percentage 
and are used by each refiner and importer of petroleum-based gasoline 
or diesel fuel to determine their renewable fuel volume obligations. 
The specific formulas we use in calculating the renewable fuel 
percentage standards are found in 40 CFR 80.1405. In the 2020 final 
rule, we modified the formulas used to calculate the percentage 
standards to account for a projection of exempt gasoline and diesel 
fuel volumes produced by small refineries and small refiners.\11\ After 
seeking comment on this issue in the proposed rule, we are maintaining 
the modified formula. Additionally, we project that no exemptions will 
be granted for 2020-2022, and thus the exempt volume of gasoline and 
diesel fuel will be zero for all three years.
---------------------------------------------------------------------------

    \11\ 85 FR 7016 (February 6, 2020).
---------------------------------------------------------------------------

    Four separate percentage standards are required under the RFS 
program, corresponding to the four separate renewable fuel categories 
shown in Table I-1. The final standards are shown in Table I.F-1. 
Details, including the projected gasoline and diesel fuel volumes used, 
can be found in Section V. Further details regarding the supplemental 
standard can be found in Section IV.

                                        Table I.F-1--Percentage Standards
----------------------------------------------------------------------------------------------------------------
                            Category                                 2020 (%)        2021 (%)        2022 (%)
----------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel..............................................            0.32            0.33            0.35
Biomass-Based Diesel............................................            2.30            2.16            2.33
Advanced Biofuel................................................            2.93            3.00            3.16
Renewable Fuel..................................................           10.82           11.19           11.59
Supplemental Standard...........................................             n/a             n/a            0.14
----------------------------------------------------------------------------------------------------------------

G. Administrative Actions

    The regulations promulgated in 2010 require EPA to make an annual 
finding concerning whether the 2007 baseline amount of U.S. 
agricultural land has been exceeded in a given year. If the baseline is 
found to have been exceeded, then producers using U.S. planted crops 
and crop residue as feedstocks for renewable fuel production would be 
required to comply with individual recordkeeping and reporting 
requirements to verify that their feedstocks are renewable biomass. As 
discussed in Section VI, we have concluded that 2007 baseline acreage 
has not been exceeded.

H. Biointermediates

    Since the RFS2 program was finalized in 2010, we have become 
increasingly

[[Page 39604]]

aware that some renewable fuel producers would like to process fuel at 
more than one facility. Specifically, renewable fuel producers would 
like to first have a facility process renewable biomass into a proto-
renewable fuel (or ``biointermediate'') and then have a second, 
separate facility process that biointermediate into renewable fuel. In 
some cases, it may be preferable for economic or practical reasons for 
renewable biomass to be subjected to substantial pre-processing at one 
facility before being sent to a different facility where it is 
converted into renewable fuel. For example, renewable biomass, such as 
separated municipal solid waste (MSW), may be converted into biocrude--
a biointermediate--at one facility, after which the biointermediate 
producer would send the biocrude to a petroleum refinery that would 
further process the biocrude to produce a renewable gasoline or 
renewable diesel fuel. Such production methodologies have the potential 
to lower the cost of using cellulosic and other feedstocks for the 
production of renewable fuels by reducing capital costs for new 
facilities and/or the storage and transportation costs associated with 
feedstock handling--especially for cellulosic biomass. Thus, we believe 
that such technologies provide an opportunity for the future growth in 
production of the cellulosic biofuels required under the RFS program.
    In this action, we are finalizing provisions to allow for the use 
of certain biointermediates to produce qualifying renewable fuels. 
These provisions specify requirements that apply when renewable fuel is 
produced through sequential operations at more than one facility. These 
provisions center around the production, transfer, and use of 
biointermediates and the creation of new regulatory requirements 
related to registration, recordkeeping, and reporting for facilities 
producing or using a biointermediate for renewable fuel production. We 
further discuss the biointermediates provisions in Section VII.

I. Other Changes

    We are finalizing regulatory changes that will assist EPA in 
implementing our fuel quality and RFS programs. These regulatory 
changes include:

<bullet> Changes to registration requirements concerning baseline 
volumes
<bullet> Changes to attest engagements for parties owning Renewable 
Identification Numbers (RINs)
<bullet> Treatment of confidential business information
<bullet> Clarifying the definition of ``agricultural digesters''
<bullet> Adding pathways for stand-alone esterification
<bullet> Other technical amendments to the RFS regulations

    Each of these regulatory changes is discussed in greater detail in 
Section VIII.

J. Environmental Justice

    Executive Order 12898 (59 FR 7629, February 16, 1994) establishes 
Federal executive policy on environmental justice (``EJ''). It directs 
Federal agencies, to the greatest extent practicable and permitted by 
law, to make achieving EJ 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 people of color and low-income populations in the United 
States. EPA defines EJ as the fair treatment and meaningful involvement 
of all people regardless of race, color, national origin, or income 
with respect to the development, implementation, and enforcement of 
environmental laws, regulations, and policies.\12\ Executive Order 
14008 (86 FR 7619, February 1, 2021) also calls on Federal agencies to 
make achieving EJ part of their missions ``by developing programs, 
policies, and activities to address the disproportionately high and 
adverse human health, environmental, climate-related and other 
cumulative impacts on disadvantaged communities, as well as the 
accompanying economic challenges of such impacts.'' It also declares a 
policy ``to secure environmental justice and spur economic opportunity 
for disadvantaged communities that have been historically marginalized 
and overburdened by pollution and under-investment in housing, 
transportation, water and wastewater infrastructure and health care.'' 
EPA also released its ``Technical Guidance for Assessing Environmental 
Justice in Regulatory Analysis'' providing recommendations on 
conducting the highest quality analysis feasible, recognizing that data 
limitations, time and resource constraints, and analytic challenges 
will vary by media and regulatory context.\13\
---------------------------------------------------------------------------

    \12\ See, e.g., ``Environmental Justice.'' Epa.gov, 
Environmental Protection Agency, 4 Mar. 2021, https://www.epa.gov/environmentaljustice.
    \13\ The definitions and criteria for ``disproportionate 
impacts,'' ``difference,'' and ``differential'' are contained in 
EPA's June 2016 guidance document ``Technical Guidance for Assessing 
Environmental Justice in Regulatory Analysis.'' Epa.gov, 
Environmental Protection Agency, https://www.epa.gov/sites/default/files/2016-06/documents/ejtg_5_6_16_v5.1.pdf.
---------------------------------------------------------------------------

    When assessing the potential for disproportionately high and 
adverse health or environmental impacts of regulatory actions on people 
of color, low-income populations, tribes, and/or indigenous peoples, 
EPA strives to answer three broad questions: (1) Is there evidence of 
potential EJ concerns in the baseline (the state of the world absent 
the regulatory action)? Assessing the baseline will allow EPA to 
determine whether pre-existing disparities are associated with the 
pollutant(s) under consideration (e.g., if the effects of the 
pollutant(s) are more concentrated in some population groups). (2) Is 
there evidence of potential EJ concerns for the regulatory option(s) 
under consideration? Specifically, how are the pollutant(s) and their 
effects distributed for the regulatory options under consideration? 
And, (3) Do the regulatory option(s) under consideration exacerbate or 
mitigate EJ concerns relative to the baseline? It is not always 
possible to assess these questions in ways that produce quantitative 
results, though it may still be possible to describe them 
qualitatively.
    EPA's 2016 Technical Guidance does not prescribe or recommend a 
specific approach or methodology for conducting an EJ analysis, though 
a key consideration is consistency with the assumptions underlying 
other parts of the regulatory analysis when evaluating the baseline and 
regulatory options. Where applicable and practicable, the Agency 
endeavors to conduct such an analysis. Going forward, EPA is committed 
to conducting EJ analysis for rulemakings based on a framework similar 
to what is outlined in EPA's Technical Guidance, in addition to 
investigating ways to further weave EJ into the fabric of the 
rulemaking process.
    In 2009, under the Endangerment and Cause or Contribute Findings 
for Greenhouse Gases Under Section 202(a) of the Clean Air Act 
(``Endangerment Finding''), EPA considered how climate change threatens 
the health and welfare of the U.S. population. As part of that 
consideration, EPA also considered risks to people of color and low-
income individuals and communities, finding that certain parts of the 
U.S. population may be especially vulnerable based on their 
characteristics or circumstances. These groups include economically and 
socially disadvantaged communities; individuals at vulnerable 
lifestages, such as the elderly, the very young, and pregnant or 
nursing women; those already in poor health or with comorbidities; the 
disabled; those experiencing homelessness, mental illness, or substance 
abuse; and/or Indigenous or minority populations

[[Page 39605]]

dependent on one or limited resources for subsistence due to factors 
including but not limited to geography, access, and mobility.
    Scientific assessment reports produced over the past decade by the 
U.S. Global Change Research Program (USGCRP),<SUP>14 15</SUP> the 
Intergovernmental Panel on Climate Change (IPCC),<SUP>16 17 18 19</SUP> 
and the National Academies of Science, Engineering, and Medicine 
<SUP>20 21</SUP> add more evidence that the impacts of climate change 
raise potential EJ concerns. These reports conclude that poorer or 
predominantly non-White communities can be especially vulnerable to 
climate change impacts because they tend to have limited adaptive 
capacities and are more dependent on climate-sensitive resources such 
as local water and food supplies, or have less access to social and 
information resources. Some communities of color, specifically 
populations defined jointly by ethnic/racial characteristics and 
geographic location, may be uniquely vulnerable to climate change 
health impacts in the United States. In particular, the 2016 scientific 
assessment on the Impacts of Climate Change on Human Health found with 
high confidence that vulnerabilities are place- and time-specific, 
lifestages and ages are linked to immediate and future health impacts, 
and social determinants of health are linked to greater extent and 
severity of climate change-related health impacts.
---------------------------------------------------------------------------

    \14\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United 
States: Fourth National Climate Assessment, Volume II [Reidmiller, 
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. 
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research 
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
    \15\ USGCRP, 2016: The Impacts of Climate Change on Human Health 
in the United States: A Scientific Assessment. Crimmins, A., J. 
Balbus, J.L. Gamble, C.B. Beard, J.E. Bell, D. Dodgen, R.J. Eisen, 
N. Fann, M.D. Hawkins, S.C. Herring, L. Jantarasami, D.M. Mills, S. 
Saha, M.C. Sarofim, J. Trtanj, and L. Ziska, Eds. U.S. Global Change 
Research Program, Washington, DC, 312 pp. https://dx.doi.org/10.7930/J0R49NQX.
    \16\ Oppenheimer, M., M. Campos, R.Warren, J. Birkmann, G. 
Luber, B. O'Neill, and K. Takahashi, 2014: Emergent risks and key 
vulnerabilities. In: Climate Change 2014: Impacts, Adaptation, and 
Vulnerability. Part A: Global and Sectoral Aspects. Contribution of 
Working Group II to the Fifth Assessment Report of the 
Intergovernmental Panel on Climate Change [Field, C.B., V.R. Barros, 
D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee, 
K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. 
Levy, S. MacCracken, P.R. Mastrandrea, and L.L.White (eds.)]. 
Cambridge University Press, Cambridge, United Kingdom and New York, 
NY, USA, pp. 1039-1099.
    \17\ Porter, J.R., L. Xie, A.J. Challinor, K. Cochrane, S.M. 
Howden, M.M. Iqbal, D.B. Lobell, and M.I. Travasso, 2014: Food 
security and food production systems. In: Climate Change 2014: 
Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral 
Aspects. Contribution of Working Group II to the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change [Field, 
C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. 
Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, 
E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and 
L.L.White (eds.)]. Cambridge University Press, Cambridge, United 
Kingdom and New York, NY, USA, pp. 485-533.
    \18\ Smith, K.R., A.Woodward, D. Campbell-Lendrum, D.D. Chadee, 
Y. Honda, Q. Liu, J.M. Olwoch, B. Revich, and R. Sauerborn, 2014: 
Human health: impacts, adaptation, and co-benefits. In: Climate 
Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global 
and Sectoral Aspects. Contribution of Working Group II to the Fifth 
Assessment Report of the Intergovernmental Panel on Climate Change 
[Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, 
T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. 
Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and 
L.L. White (eds.)]. Cambridge University Press, Cambridge, United 
Kingdom and New York, NY, USA, pp. 709-754.
    \19\ IPCC, 2018: Global Warming of 1.5[deg] C. An IPCC Special 
Report on the impacts of global warming of 1.5[deg] C above pre-
industrial levels and related global greenhouse gas emission 
pathways, in the context of strengthening the global response to the 
threat of climate change, sustainable development, and efforts to 
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P[ouml]rtner, 
D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. 
P[eacute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. 
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. 
Waterfield (eds.)]. In Press.
    \20\ National Research Council. 2011. America's Climate Choices. 
Washington, DC: The National Academies Press. https://doi.org/10.17226/12781.
    \21\ National Academies of Sciences, Engineering, and Medicine. 
2017. Communities in Action: Pathways to Health Equity. Washington, 
DC: The National Academies Press. https://doi.org/10.17226/24624.
---------------------------------------------------------------------------

    This rule has the potential to reduce GHG emissions, which would 
benefit all populations including people of color, low-income 
populations, and indigenous populations. The manner in which the market 
responds to the provisions in this final rule could also have non-GHG 
impacts, including both positive and negative impacts. For instance, 
replacing petroleum fuels with renewable fuels could have impacts on 
water, air, and hazardous waste exposure for communities living near 
either existing or new facilities that produce these fuels. Replacing 
petroleum fuels with renewable fuels could also impact feedstock 
supplies and land use, which could impact a range of communities 
through their impacts on air, water, and soil quality, as well as water 
quantity. Impacts on water quality in particular could impact 
communities that rely on aquatic ecosystems for income or sustenance, 
including indigenous peoples. Replacing petroleum fuels with renewable 
fuels is also projected to cause increases in food and fuel prices, and 
these price impacts could also disproportionately affect low-income 
populations who spend a larger portion of their income on food and 
fuel.
    The overall EJ implications of these non-GHG impacts is uncertain. 
Specifically, it is uncertain whether these impacts are unevenly 
distributed spatially in ways that coincide with patterns of pre-
existing exposure and vulnerabilities for people of color, low income 
populations, and indigenous peoples. Accurately evaluating the EJ 
implications would entail predicting where changes in production of 
renewable fuels and land use occur at a fine spatial scale. That is 
beyond the scope of our analysis in this rule. A more detailed 
discussion of potential EJ concerns as a result of this action can be 
found in Chapter 8 of the RIA.

K. Endangered Species Act

    Section 7(a)(2) of the Endangered Species Act (ESA), 16 U.S.C. 
1536(a)(2), requires that Federal agencies such as EPA, along with the 
U.S. Fish and Wildlife Service (USFWS) and/or the National Marine 
Fisheries Service (NMFS) (collectively ``the Services''), ensure that 
any action authorized, funded, or carried out by the agency is not 
likely to jeopardize the continued existence of any endangered or 
threatened species or result in the destruction or adverse modification 
of designated critical habitat for such species. Under relevant 
implementing regulations, consultation is required only for actions 
that ``may affect'' listed species or designated critical habitat. 50 
CFR 402.14. Consultation is not required where the action has no effect 
on such species or habitat. For several prior RFS annual standard-
setting rules, EPA did not consult with the Services under section 
7(a)(2).
    On September 6, 2019, the D.C. Circuit decided American Fuel & 
Petrochemical Manufacturers v. EPA, 937 F.3d 559 (2019), finding that 
EPA had failed to make an effects determination for ESA purposes with 
regard to the 2018 RFS rule and remanding the rule without vacatur to 
EPA to make an appropriate effects determination. See id. at 598.
    On July 16, 2021, the D.C. Circuit decided Growth Energy v. EPA, 5 
F.4th 1 (2021), finding that EPA's determination that the 2019 RFS rule 
would have no effect on listed species or the designated critical 
habitat of such species was arbitrary and capricious and remanding the 
rule to EPA without vacatur to comply with the ruling. See id. at 32.
    In light of this case law pertaining to EPA's action in prior years 
and consistent with ESA section 7(a)(2) and relevant ESA implementing 
regulations at 50 CFR part 402, EPA has been engaged in informal 
consultation

[[Page 39606]]

including technical assistance discussions with the Services regarding 
this rule for over a year.\22\ EPA has prepared an ESA section 7(d) 
determination memorandum that discusses our decision to finalize this 
action before the consultation process is complete, which is also 
available in the docket for this action.<SUP>23 24</SUP>
---------------------------------------------------------------------------

    \22\ A chronology of these interactions between EPA and the 
Services is available in the docket for this action. ``Technical 
assistance'' and ``informal consultation'' are terms used to 
describe aspects of ESA consultation with the Services, as detailed 
in the ESA Section 7 Consultation Handbook, March 1998 (available at 
https://media.fisheries.noaa.gov/dam-migration/esa_section7_handbook_1998_opr5.pdf).
    \23\ Section 7(d) of the ESA prohibits a federal agency from 
making irreversible or irretrievable commitments of resources that 
have the effect of foreclosing the formulation or implementation of 
reasonable and prudent alternatives which would not violate ESA 
section 7(a)(2).
    \24\ EPA intends to respond to the D.C. Circuit's remands of the 
ESA determinations made in the 2018 and 2019 RFS rules in a separate 
proceeding.
---------------------------------------------------------------------------

II. Legal Authorities To Reduce and Establish Volumes

    The CAA provides EPA with several authorities to reduce or 
establish the nationally applicable renewable fuel volumes. In this 
action, as proposed, we are utilizing the cellulosic waiver authority 
along with the ``reset'' waiver authority to reduce the applicable 
volumes for 2020, 2021, and 2022 for total renewable fuel, advanced 
biofuel, and cellulosic biofuel. We are also utilizing our ``set'' 
authority to establish the 2022 applicable volume for BBD. We have also 
considered but declined to make reductions utilizing our ``general'' 
waiver authority.
    This section discusses the statutory authorities, additional 
factors we considered due to the retroactivity or lateness of this 
rulemaking, additional factors related to our reconsideration of the 
previously finalized standards for 2020, how we are applying our 
authorities to establish the volumes, as well as the severability of 
the various portions of this final rule. A detailed summary of the 
comments received on EPA's legal authorities to reduce and establish 
volumes and our responses to those comments can be found in the Section 
2 of the RTC document.

A. Authorities To Modify Statutory Volumes Targets

    In CAA section 211(o)(2), Congress specified increasing annual 
volume targets for total renewable fuel, advanced biofuel, and 
cellulosic biofuel for each year through 2022. However, Congress also 
recognized that under certain circumstances it would be appropriate for 
EPA to set volume requirements different from the statutory volume 
targets and thus provided waiver provisions in CAA section 211(o)(7). 
In this action, we are utilizing the cellulosic waiver authority under 
CAA section 211(o)(7)(D) and the reset authority under CAA section 
211(o)(7)(F) to reduce volumes for 2020, 2021, and 2022. We are not 
using our general waiver authority. In addition, while in January 2021 
we sought comment on the use of general waiver authority to reduce 
volumes for 2020 in response to several petitions from states and 
obligated parties submitted during the 2020 compliance year,\25\ we 
have determined that reductions under the general waiver authority are 
not necessary or appropriate in light of our decision to waive the 
volumes using our other authorities.
---------------------------------------------------------------------------

    \25\ See 86 FR 5182 (January 19, 2021).
---------------------------------------------------------------------------

1. Cellulosic Waiver Authority
    Section 211(o)(7)(D)(i) of the CAA provides that if EPA determines 
that the projected volume of cellulosic biofuel production for a given 
year is less than the applicable volume established under CAA section 
211(o)(2)(B), then EPA must reduce the applicable volume of cellulosic 
biofuel to the projected volume available for that calendar year. In 
making this projection, EPA must take a ``neutral aim at accuracy.'' 
American Petroleum Institute (API) v. EPA, 706 F.3d 474, 479 (D.C. Cir. 
2013). Pursuant to this provision, EPA has set the cellulosic biofuel 
requirement lower than the statutory volume for each year since 2010. 
CAA section 211(o)(7)(D)(i) also provides EPA with the authority to 
reduce the applicable volume of total renewable fuel and advanced 
biofuel in years when EPA reduces the applicable volume of cellulosic 
biofuel under that provision. The reduction must be less than or equal 
to the reduction in cellulosic biofuel. EPA has used this aspect of the 
cellulosic waiver authority to lower the advanced biofuel and total 
renewable fuel volumes every year since 2014. Further discussion of the 
cellulosic waiver authority, and EPA's interpretation of it, can be 
found in the 2017 final rule.\26\
---------------------------------------------------------------------------

    \26\ See 81 FR 89752-89753 (December 12, 2016); see also API v. 
EPA, 706 F.3d 474 (D.C. Cir. 2013) (requiring that EPA's cellulosic 
biofuel projections reflect a neutral aim at accuracy); Monroe 
Energy v. EPA, 750 F.3d 909, 915-16 (D.C. Cir. 2014) (affirming 
EPA's broad discretion under the cellulosic waiver authority to 
reduce volumes of advanced biofuel and total renewable fuel); 
Americans for Clean Energy v. EPA (``ACE''), 864 F.3d 691, 730-735 
(D.C. Cir. 2017) (same); Alon Refining Krotz Spring, Inc. v. EPA, 
936 F.3d 628, 662-663 (D.C. Cir. 2019) (same); American Fuel & 
Petrochemical Manufacturers v. EPA, 937 F.3d 559, 577-78 (D.C. Cir. 
2019) (same).
---------------------------------------------------------------------------

    In this action, as proposed, we are utilizing the cellulosic waiver 
authority as required by the statute to reduce the applicable volume of 
cellulosic biofuel for 2020, 2021, and 2022. As described in Chapter 4 
of the RIA, the projected volumes of cellulosic biofuel production for 
2020, 2021, and 2022 are all significantly less than the volume targets 
in the statute. Therefore, the cellulosic waiver authority requires EPA 
to lower the cellulosic biofuel volume to the projected volume 
available in each year. Our interpretation of the ``projected volume 
available'' includes the volume of qualifying cellulosic biofuel 
projected to be produced or imported and available for use as 
transportation fuel in the U.S. in that year. Consistent with our past 
interpretation of the term as discussed further in Section III.B.2, it 
does not include cellulosic carryover RINs. We are also utilizing the 
cellulosic waiver authority as a basis for reductions in the total 
renewable fuel and advanced biofuel applicable volumes for 2022.
2. Reset Authority
    The CAA provides that EPA shall modify the statutorily prescribed 
RFS volumes once certain triggers are met. This section discusses the 
statutory requirements that trigger the use of this reset authority, 
describes the process and criteria for such use, and explains the 
impact of this modification on our other waiver authorities. In this 
action, as proposed, we are utilizing the reset authority to modify the 
volume requirements for 2020, 2021, and 2022 as required by the statute 
and after careful consideration of the many comments received.
a. Conditions for Resetting Volume Targets
    CAA section 211(o)(7)(F) sets forth EPA's authority to modify, or 
``reset'' the applicable volumes once certain triggers have been met. 
Specifically, EPA must reset the applicable volumes for a particular 
category of biofuel when, under CAA section 211(o)(7)(F)(i), we waive 
at least 20 percent of the applicable volume requirement for such 
category for two consecutive years, or, under CAA section 
211(o)(7)(F)(ii), we waive at least 50 percent of such applicable 
volume requirement for a single year. With the promulgation of the 2019 
standards, these conditions have been met for three categories of 
biofuel: cellulosic biofuel, advanced biofuel, and total renewable 
fuel.\27\ We describe below, for each

[[Page 39607]]

category of biofuel, how these conditions were satisfied.
---------------------------------------------------------------------------

    \27\ Because the statutory volumes for BBD lapsed after 2012, 
the reset provision, which only applies to 2016 and subsequent 
years, does not apply to BBD.
---------------------------------------------------------------------------

    The conditions for resetting cellulosic biofuel volumes were met by 
the 2010 annual standard, which reduced the applicable cellulosic 
biofuel volume by at least 50 percent. In that rule, we waived the 
cellulosic biofuel applicable volume for the first time using the 
cellulosic waiver authority.\28\ We set the cellulosic biofuel 
applicable volume at 6.5 million gallons for 2010.\29\ This waiver 
resulted in an applicable volume that was 93.5 percent lower than the 
applicable volume requirement provided in the statute (100 million 
gallons), thus triggering the reset requirement under CAA section 
211(o)(7)(F)(ii). However, the statute also provides that ``no such 
modification in applicable volumes shall be made for any year before 
2016.'' CAA section 211(o)(7)(F). Therefore, although the trigger to 
modify the cellulosic biofuel volume target under the reset provision 
was met in 2010, the statute did not require a change to the applicable 
volumes until 2016.\30\
---------------------------------------------------------------------------

    \28\ 75 FR 14670 (March 26, 2010).
    \29\ 75 FR 14675.
    \30\ We note that all subsequent annual rules have also waived 
the cellulosic biofuel volume by more than 50 percent.
---------------------------------------------------------------------------

    The conditions for resetting advanced biofuel volumes were met by 
the 2014 and 2015 annual standards, which reduced the advanced biofuel 
applicable volume by at least 20 percent for two consecutive years. For 
the 2014 annual standard, we waived the advanced biofuel volume for the 
first time.\31\ We set the advanced biofuel volume at 2.67 billion 
gallons.\32\ This represented a reduction of 28.8 percent from the 
applicable volume requirement provided in the statute (3.75 billion 
gallons). This reduction therefore triggered the first year of 
reductions of at least 20 percent under CAA section 211(o)(7)(F)(i). 
For the 2015 annual standard, we reduced the advanced biofuel 
applicable volume to 2.88 billion gallons.\33\ This represented a 
reduction of 47.6 percent from the applicable volume requirement 
provided in the statute (5.5 billion gallons). This represented the 
second consecutive year for which the Administrator waived volumes by 
at least 20 percent, thus triggering the modification of the advanced 
biofuel volume under CAA section 211(o)(7)(F)(i).
---------------------------------------------------------------------------

    \31\ 80 FR 77420 (December 14, 2015).
    \32\ Id.
    \33\ Id.
---------------------------------------------------------------------------

    The conditions for resetting total renewable fuel volumes were met 
by the 2018 and 2019 annual standards, which reduced the applicable 
total renewable fuel volume by at least 20 percent for two consecutive 
years. For the 2018 annual standard, we reduced the total renewable 
fuel volume to 19.29 billion gallons.\34\ This represented a reduction 
of 25.8 percent from the applicable volume requirement provided in the 
statute (26 billion gallons). This reduction therefore triggered the 
first year of reductions of at least 20 percent under CAA section 
211(o)(7)(F)(i). For the 2019 annual standard, we reduced the total 
renewable fuel volume to 19.92 billion gallons.\35\ This represented a 
reduction of 29 percent from the applicable volume requirement provided 
in the statute (28 billion gallons). This represented the second 
consecutive year for which the Administrator waived volumes by at least 
20 percent, thus triggering the modification of the total renewable 
fuel volume under CAA section 211(o)(7)(F)(i).
---------------------------------------------------------------------------

    \34\ 82 FR 58486 (December 12, 2017).
    \35\ 83 FR 63704 (December 11, 2018).
---------------------------------------------------------------------------

b. Factors That Must Be Analyzed
    In resetting the statutory volumes, EPA must comply with the 
processes, criteria, and standards set forth in CAA section 
211(o)(2)(B)(ii). That provision provides that the Administrator shall, 
in coordination with the Secretary of Energy and the Secretary of 
Agriculture, determine the applicable volumes of each biofuel category 
specified based on a review of implementation of the program during the 
calendar years specified in the table, and an analysis of the impact 
of:
    <bullet> 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;
    <bullet> the impact of renewable fuels on the energy security of 
the United States;
    <bullet> the expected annual rate of future commercial production 
of renewable fuels, including advanced biofuels in each category 
(cellulosic biofuel and BBD);
    <bullet> 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;
    <bullet> the impact of the use of renewable fuels on the cost to 
consumers of transportation fuel and on the cost to transport goods; 
and
    <bullet> 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.
    While the statute requires that EPA base its determination on an 
analysis of these factors, it does not establish any numeric criteria, 
require a specific type of analysis (such as quantitative analysis), or 
provide guidance on how EPA should weigh the various factors. 
Additionally, we are not aware of anything in the legislative history 
of EISA that provides authoritative guidance on these issues. Thus, as 
the Act ``does not state what weight should be accorded to the relevant 
factors,'' it ``give[s] EPA considerable discretion to weigh and 
balance the various factors required by statute.'' \36\ We received 
comments on this issue, with some commenters suggesting that we should 
give more weight to certain factors than others; our responses can be 
found in Section 2 of the RTC document.
---------------------------------------------------------------------------

    \36\ Nat'l Wildlife Fed'n v. EPA, 286 F.3d 554, 570 (D.C. Cir. 
2002); accord Riverkeeper, Inc. v. United States EPA, 358 F.3d 174, 
195 (2d Cir. 2004); BP Exploration & Oil, Inc. v. EPA, 66 F.3d 784, 
802 (6th Cir. 1995); see also Cal. by Brown v. Watt, 668 F.2d 1290, 
1317 (D.C. Cir. 1981) (``A balancing of factors is not the same as 
treating all factors equally. The obligation instead is to look at 
all factors and then balance the results. The Act does not mandate 
any particular balance, but vests the Secretary with discretion to 
weigh the elements. . . .'').
---------------------------------------------------------------------------

    Additionally, we also have authority to consider other factors, 
including implied authority to consider factors that inform our 
analysis of the statutory factors, as well as explicit authority to 
consider ``the impact of the use of renewable fuels on other factors. . 
. .'' \37\ Accordingly, we have considered several other factors, 
including the intertwined nature of compliance with the 2020-2022 
standards, the size of the carryover RIN bank,\38\ how the entirely 
retroactive nature of the 2020 and 2021 standards as compared to the 
partially prospective nature of the 2022 annual and supplemental 
standards affects the feasibility of compliance,\39\ the supply of 
qualifying renewable fuels to U.S.

[[Page 39608]]

consumers,\40\ soil quality,\41\ and environmental justice.\42\
---------------------------------------------------------------------------

    \37\ CAA section 211(o)(2)(B)(ii)(VI).
    \38\ The first two factors also inform our analysis of the 
statutory factor ``review of the implementation of the program.'' 
CAA section 211(o)(2)(B)(ii).
    \39\ The third factor (how the standards affect the feasibility 
of compliance) also informs our analysis of the statutory factor 
``the expected annual rate of future commercial production of 
renewable fuels.'' CAA section 211(o)(2)(B)(ii)(III).
    \40\ The fourth factor (supply of renewable fuels) is based on 
our analysis of this same statutory factor (the expected annual rate 
of future commercial production of renewable fuel), as well as of 
downstream constraints on biofuel use, including the statutory 
factors relating to infrastructure and costs. CAA section 
211(o)(2)(B)(ii)(III)-(V).
    \41\ Soil quality is closely tied to water quality and is also 
relevant to the impact of renewable fuels on the environment more 
generally. See CAA section 211(o)(2)(B)(ii)(I).
    \42\ Environmental justice involves consideration of the impact 
of renewable fuels on several factors, including environmental and 
cost factors. See CAA section 211(o)(2)(B)(ii)(I), (V). This and the 
other non-enumerated factors are also relevant under the statutory 
factor ``the impact of the use of renewable fuels on other factors. 
. . .'' CAA section 211(o)(2)(B)(ii)(VI).
---------------------------------------------------------------------------

c. Impact on Other Statutory Authorities To Waive Volumes
    Our use of the reset authority in this action does not preclude our 
legal authority to waive volumes under the other waiver authorities. 
Nothing in the CAA suggests that once the volumes are reset they cannot 
be modified further, or that the reset authority cannot be used in 
conjunction with other waiver authorities such as the cellulosic waiver 
authority.\43\
---------------------------------------------------------------------------

    \43\ See J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Intern., 
Inc., 534 U.S. 124, 143-44 (2001) (holding that when two statutes 
are capable of coexistence and there is not clearly expressed 
legislative intent to the contrary, each should be regarded as 
effective).
---------------------------------------------------------------------------

d. Use of the Reset Authority in This Action
    For cellulosic biofuel for 2020, 2021 and 2022, we believe that the 
appropriate volume after analyzing the various factors is the projected 
volume available in each of those years. For each year, this volume is 
equivalent to the resulting volume after exercise of the cellulosic 
waiver authority. Thus, these volumes are justified under both the 
cellulosic waiver authority and the reset authority.
    For advanced biofuel and total renewable fuel, we are establishing 
volumes equal to the actual volumes of such fuels available in 2020 and 
2021 under the reset authority alone. We recognize that the resulting 
volumes are lower than the minimum volumes that could result from 
exercising the cellulosic waiver authority; however, as we explain 
further in Section III, we do not believe that the lowest volumes 
permissible under the cellulosic waiver authority are appropriate based 
upon our consideration of the reset factors.\44\ In other words, larger 
reductions in advanced biofuel and total renewable fuel are warranted 
under the reset authority than could be provided utilizing the maximum 
reductions permissible under the cellulosic waiver authority alone. For 
2022, we are utilizing both the reset authority and the cellulosic 
waiver authority to reduce the advanced biofuel and total renewable 
fuel standards by the same amount as the reduction in cellulosic 
biofuel. This results in implied non-cellulosic advanced biofuel and 
conventional renewable fuel volumes equal to the implied statutory 
volumes. This also represents the maximum permitted reduction under the 
cellulosic waiver authority.\45\
---------------------------------------------------------------------------

    \44\ Under the cellulosic waiver authority, when EPA reduces the 
volume of cellulosic biofuel, EPA may reduce the advanced biofuel 
and total renewable fuel volumes by the same or a lesser amount.
    \45\ This is also consistent with our authority to apply equal 
reductions to the volumes of advanced biofuel and total renewable 
fuel under the cellulosic waiver. CAA(o)(7)(D)(i), see also 85 FR 
7016, 7047-7048 (February 6, 2020).
---------------------------------------------------------------------------

    In Section III and throughout the RIA, we set forth our policy and 
technical rationale for the 2020, 2021, and 2022 volumes for cellulosic 
biofuel, advanced biofuel, and total renewable fuel. Our analysis is 
framed in terms of the statutory factors that the reset authority 
requires us to consider, along with the considerations for retroactive 
and late rules identified by the D.C. Circuit. Since this analysis 
subsumes our policy and technical rationale for exercising the 
cellulosic waiver authority as well, we are not providing a separate 
analysis for the application of the cellulosic waiver authority.
3. General Waiver Authority
    Section 211(o)(7)(A) of the CAA provides that EPA, in consultation 
with the Secretary of Agriculture and the Secretary of Energy, may 
waive the applicable volumes specified in 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 by his own 
initiative. Such a waiver must be based on a determination by the 
Administrator, after public notice and opportunity for comment that (1) 
implementation of the requirement would severely harm the economy or 
the environment of a State, a region, or the United States; or (2) 
there is an inadequate domestic supply.
    EPA received several requests for use of the general waiver 
authority for the 2020 standards from stakeholders concerned about the 
impacts on the fuels markets resulting from the COVID-19 pandemic. 
These included requests from the governors of multiple states alleging 
that the criteria for the general waiver authority were satisfied and 
that lowering the required volumes for 2020 was appropriate. In January 
2021, we published a notice in the Federal Register seeking comment on 
these requests.\46\ We did not propose to and are not modifying the 
2020 volumes utilizing the general waiver authority in this action. In 
lieu of doing so, we are revising the 2020 volumes under both the 
cellulosic waiver authority and the reset authority to the volumes 
actually used in that year. This rule thus addresses many of the 
concerns raised in the general waiver petitions, including the 
shortfall in RIN generation in 2020, uncertainty regarding SREs 
following the Tenth Circuit's decision in Renewable Fuels Association 
(RFA) v. EPA, and the hurdles those may present to obligated parties' 
compliance.
---------------------------------------------------------------------------

    \46\ 86 FR 5182 (January 19, 2021). Comments on these requests 
are available in the docket for that notice, EPA-HQ-OAR-2020-0322, 
and the docket for this action.
---------------------------------------------------------------------------

    To the extent that EPA's independent action to reduce statutory 
volumes under both the cellulosic waiver authority and the reset 
authority satisfies the petition requests, those requests are now 
practically moot. To the extent any petition seeks differing reductions 
in applicable volumes than are set forth in this final rule, we believe 
the reductions we are finalizing are appropriate, and we are denying 
those requests. As discussed in Section III, the modified 2020 volumes 
reflect the volumes actually used in the U.S. in 2020. Thus, compliance 
with these modified volumes will not result in severe economic harm, 
and granting the general waiver petitions is not needed to avert such 
harm. As such, EPA is denying all pending requests to lower the 2020 
volumes based on severe economic harm. Specifically, we are denying the 
petitions to waive the 2020 standards on the basis of severe economic 
harm from the following states: Louisiana, Oklahoma, Texas, Utah, 
Wyoming, Pennsylvania, and Montana. We are also denying petitions 
received from small refineries suggesting EPA waive volumes for 2019 
and 2020 utilizing the general waiver authority under a finding of 
severe economic harm. These requests sought reductions in individual 
obligations utilizing the general waiver authority under a finding of 
severe economic harm. For the reasons further discussed in Section 13 
of the RTC document, we do not think that the statute should be read to 
allow for individual reductions in renewable volume obligations (RVOs) 
under the general waiver authority, nor do we believe that the 
petitioners have

[[Page 39609]]

demonstrated severe economic harm as required by the statute.

B. Authority To Establish BBD Volumes

    EPA has established the BBD requirement under CAA section 
211(o)(2)(B)(ii) since 2013 because the statute only provided BBD 
volumes through 2012. Thus, EPA is establishing an applicable volume 
for BBD for 2022 under this authority, which we term the ``set'' 
authority.\47\ As discussed in prior annual rulemakings, EPA is to 
determine the applicable volume of BBD, in coordination with the 
Secretary of Energy and the Secretary of Agriculture, based on an 
analysis of the same statutory factors enumerated above for 
``resetting'' volumes for the other fuel categories.\48\ The statute 
also requires that the BBD volume be set at or greater than the 1.0 
billion gallon volume requirement for 2012, but does not provide any 
other numerical criteria that EPA is to consider. We are establishing 
the BBD volume for 2022 at 2.76 billion gallons as proposed. Our policy 
and technical rationale for this volume is also set forth in Section 
III and Chapter 10 of the RIA.
---------------------------------------------------------------------------

    \47\ The applicable volume for BBD for 2021 was established in 
the 2020 annual rulemaking. 85 FR 7016 (February 6, 2020).
    \48\ 85 FR 7016, 7047-7048 (February 6, 2020).
---------------------------------------------------------------------------

C. Considerations for Retroactive and Late Rulemaking

    In this rulemaking, we proposed and are finalizing several late or 
retroactive standards. EPA has in the past also missed statutory 
deadlines for promulgating RFS standards. In those cases, the D.C. 
Circuit found that EPA retains authority to promulgate annual standards 
retroactively, so long as EPA exercises this authority reasonably.\49\ 
In doing so, EPA must balance the burden on obligated parties of a 
retroactive standard with the broader goal of the RFS program to 
increase renewable fuel use.\50\ Even if the rule does not operate 
retroactively, but is nonetheless promulgated after the statutory 
deadline, EPA must consider and mitigate the burdens on obligated 
parties associated with a delayed rulemaking.\51\ In upholding EPA's 
retroactive standards for 2014 and 2015 in ACE, for example, the court 
considered several specific factors, including the availability of RINs 
for compliance, the amount of lead time and adequate notice for 
obligated parties, and the availability of compliance flexibilities. 
Additionally, the court separately addressed rulemakings that were late 
(i.e., those issued after the statutory deadline) but were nonetheless 
not retroactive, emphasizing in that context the amount of lead time 
and adequate notice for obligated parties.\52\
---------------------------------------------------------------------------

    \49\ Americans for Clean Energy v. EPA, 864 F.3d 691, 720 (D.C. 
Cir. 2017) (ACE); Monroe Energy, LLC v. EPA, 750 F.3d 909 (D.C. Cir. 
2014); Nat'l Petrochemical & Refiners Ass'n v. EPA, 630 F.3d 145, 
154-58 (D.C. Cir. 2010) (NPRA).
    \50\ NPRA, at 154-58 (D.C. Cir. 2010).
    \51\ ACE, 864 F.3d 691, 718 (D.C. Cir. 2017).
    \52\ Id. at 721.
---------------------------------------------------------------------------

    In this rulemaking, we are exercising the reset authority after the 
statutory deadline of December 11, 2019 (i.e., one year after the 
promulgation of the 2019 final rule, which triggered the reset 
obligation for total renewable fuel).\53\ We are also exercising our 
set authority for the 2022 BBD volume after the statutory deadline of 
October 31, 2020. We are also promulgating the 2020, 2021, and 2022 
standards after their statutory deadlines of November 30, 2019, 2020, 
and 2021 respectively.\54\ The 2020 and 2021 standards are retroactive 
as they apply to gasoline and diesel fuel produced or imported in 2020 
and 2021. The 2022 standards, which apply to gasoline and diesel fuel 
produced or imported in 2022, are partially retroactive and partially 
prospective. We discuss in detail the considerations for late or 
retroactive rulemaking for each of these requirements further in 
Section III.
---------------------------------------------------------------------------

    \53\ This was the deadline for resetting total renewable fuel 
volumes. The deadlines for resetting advanced biofuel and cellulosic 
biofuel volumes passed earlier.
    \54\ These are also the deadlines for exercising the cellulosic 
waiver authority for those years, which we have also missed.
---------------------------------------------------------------------------

    In addition, in responding to the ACE remand of the 2016 annual 
rule, EPA is promulgating a supplemental standard for 2022.\55\ We are 
finalizing this supplemental standard after the statutory deadline for 
the 2016 standards (November 30, 2015). As with the other 2022 
standards, this standard will also be partially retroactive and 
partially prospective. We further discuss our response to the ACE 
remand in Section IV.
---------------------------------------------------------------------------

    \55\ We also intend to propose a supplemental standard for 2023 
in a subsequent action.
---------------------------------------------------------------------------

D. Considerations in Revisiting an Established RFS Standard

    We are revising the previously finalized 2020 standards in this 
rulemaking as proposed and after considering the many comments received 
both for and against doing so. We generally have authority to 
reconsider and revise our rulemakings, so long as we use the same 
procedures to amend a rule as we used to promulgate it in the first 
instance and set forth good reasons for the reconsideration.\56\ Our 
authority to revise RFS annual rules specifically is further buttressed 
by the statutory structure, under which Congress created a prospective 
regulatory scheme,\57\ but expressly contemplated the possibility for 
adjustments based on unanticipated circumstances through waiver 
authorities.\58\ This understanding of our authority is also long-
standing; we previously revised the 2011 and 2013 annual rules and have 
also adjudicated on the merits numerous petitions to revise other 
annual rules.\59\ We believe our power to reconsider, as with our power 
to promulgate a rule in the first instance, remains extant even where 
the rule operates retroactively or is promulgated after the statutory 
deadline, so long as we reasonably consider and mitigate the burdens 
associated with a retroactive or delayed rulemaking as described above.
---------------------------------------------------------------------------

    \56\ See Motor Vehicle Manufacturers Ass'n v. State Farm Mutual 
Automobile Insurance Co., 463 U.S. 29, 42, (1983) (``an agency must 
be given ample latitude to adapt their rules and policies to the 
demands of changing circumstances); Federal Communications 
Commission (FCC) v. Fox Television Stations, Inc., 556 U.S. 502, 515 
(2009) (recognizing that the Administrative Procedure Act ``makes no 
distinction . . . between initial agency action and subsequent 
agency action undoing or revising that action''); Perez v. Mortg. 
Bankers Ass'n, 575 U.S. 92, 101 (2015) (agencies may amend rules by 
using ``the same procedures when they amend . . . a rule as they 
used to issue the rule in the first instance''); 5 U.S.C. 553(e) 
(``Each agency shall give an interested person the right to petition 
for the issuance, amendment, or repeal of a rule.'').
    \57\ See, e.g., CAA section 211(o)(2)(B)(i) (statutory volume 
table prospectively determined by Congress), (o)(3)(B) (requirement 
for EPA to prospectively establish renewable fuel standards for the 
following year by Nov. 30 of the prior year).
    \58\ CAA section 211(o)(7).
    \59\ See 79 FR 25025 (May 2, 2014) (direct final rule adjusting 
the 2013 cellulosic biofuel applicable volume and percentage 
standard, after the compliance year was complete), 80 FR 77420 
(December 14, 2015) (rescinding the 2011 cellulosic biofuel standard 
for utilizing methodology invalidated by the court); Denial of AFPM 
Petition for Waiver of 2016 Cellulosic Biofuel Standard, available 
at: https://www.epa.gov/sites/default/files/2017-01/documents/afpm-rfs-petition-decision-ltr-2017-01-17.pdf; 77 FR 70752 (November 27, 
2012) (notice of denial of requests for a waiver of the renewable 
fuel standards for 2012-2013).
---------------------------------------------------------------------------

    Despite our legal authority to reconsider past RFS standards, we 
believe that we generally should not reconsider such standards. 
Reconsideration can impose costs on regulatory certainty and unduly 
disrupt market expectations created by previously promulgated 
standards. This may be particularly so where the effects of 
reconsideration are retroactive, and such retroactive rules must, as 
discussed above, consider and mitigate burdens on obligated parties. 
Moreover, in the 2020 final rule itself, we expressly stated that we 
did not intend,

[[Page 39610]]

at that time, to revisit that rulemaking and subsequently adjust the 
standards.\60\
---------------------------------------------------------------------------

    \60\ See Response to Comments at 173 (Docket Item No. EPA-HQ-
OAR-2019-0136-2157).
---------------------------------------------------------------------------

    At the same time, reconsideration can also address the impacts of 
unexpected actions and market disruptions that occur after the 
standards have been set and that lead to high costs and uncertainty 
over future standards. In this action we are reconsidering and revising 
the 2020 standards in response to several unanticipated and exceptional 
events that have occurred since the promulgation of the 2020 standards 
and that have had direct and significant impacts on the fuels market 
and the ability of obligated parties to comply. We believe these events 
have created the unusual situation where retroactive reconsideration 
and revision of the 2020 standards is warranted. We discuss these 
events and our rationale for revising the 2020 standards further in 
Section III.C.\61\
---------------------------------------------------------------------------

    \61\ EPA also received two petitions from the American Fuel & 
Petrochemical Manufacturers (AFPM) and API in early 2020 seeking 
reconsideration of the 2020 annual rule under CAA section 
307(d)(7)(B) in light of the RFA decision and its impact on EPA's 
projections of SREs in calculating the percentage standards. These 
petitions are available in the docket. See AFPM, Petition for 
Administrative Reconsideration of Renewable Fuel Standard Program: 
Standards for 2020 and Biomass-Based Diesel Volume for 2021 and 
Other Changes, 85 FR 7,016 (Feb. 6, 2020) (Mar. 24, 2020); API, 
Petition for Reconsideration of the RFS 2020 Rule, EPA-HQ-OAR-2019-
0136 (April 6, 2020). In the proposed rule, we did not determine 
whether these petitions met the standards for reconsideration under 
CAA section 307(d)(7)(B). Nonetheless, for the reasons described in 
this preamble, we believe it is appropriate to reconsider the 2020 
standards, and we have provided the procedural process (i.e., a CAA 
section 307(d) rulemaking to reconsider the 2020 standards) 
requested in the petitions.
---------------------------------------------------------------------------

E. Severability

    The following portions of this rulemaking are mutually severable 
from each other, as numbered: (1) the volumes and percentage standards 
for 2020, 2021, and 2022; (2) the reaffirmation of the modified 
definitions in the percentage standard formulas regarding the 
projection of exempt gasoline and diesel fuel volumes discussed in 
Section V.B; (3) the provisions for biointermediates discussed in 
Section VII; and (4) the regulatory amendments discussed in Section 
VIII. Each of the regulatory amendments in Section VIII is also 
severable from all the other regulatory amendments. If any of the above 
portions is set aside by a reviewing court, we intend the remainder of 
this action to remain effective. For instance, if a reviewing court 
sets aside the modified definitions in the percentage standard formula, 
we intend the remainder of the rule (including the 2020-2022 volumes 
and percentage standards, biointermediates provisions, and other 
regulatory amendments) to remain effective.\62\
---------------------------------------------------------------------------

    \62\ We recognize that we apply the modified definitions in 
calculating the percentage standards. However, as we explain further 
in Section V.B, even were we to use the prior definitions relating 
to SREs in the standard-setting formula, we would still project the 
same exempt volume of zero gallons. As a result, the application of 
the modified definitions does not affect and is severable from the 
percentage standards.
---------------------------------------------------------------------------

    We also intend for the volumes and percentage standards for 2020-
2022 to be severable from the 2022 supplemental volume and percentage 
standard such that if a court were to set aside the 2022 supplemental 
volume and percentage standard, the volumes and percentage standards 
for 2020-2022 would remain in place. Our authority and rationale for 
establishing the 2020-2022 volumes and standards is independent of 
those for establishing the supplemental volume and standard, and we do 
not believe that it would be appropriate to further delay 
implementation of the former if a court were to find defects in the 
latter. However, if the reverse were to occur, and a court were to set 
aside the 2020-2022 volumes and percentage standards, we would intend 
for the 2022 supplemental standard to be set aside along with the 2020, 
2021, and 2022 volumes and percentage standards. This is because we do 
not find it appropriate for the 2022 supplemental standard to exist 
without the standard to which it is supplemental, i.e., the 2022 total 
renewable fuel standard. As a practical matter, we also expect 
obligated parties to comply with the supplemental standard in the same 
compliance demonstration as the rest of the 2022 standards, as 
discussed further in Section IV.C.

III. Volume Requirements

    In this rule we are establishing 2020, 2021, and 2022 cellulosic 
biofuel, advanced biofuel, and total renewable fuel volumes under the 
reset authority.\63\ We are establishing the 2022 BBD volume under our 
set authority. The volumes we are establishing in this rule are 
generally consistent with the proposed volumes, with relatively minor 
adjustments to reflect updated data since the time of the proposed 
rule. As required by both the reset and set authorities, we have 
analyzed the statutory factors under CAA section 211(o)(2)(B)(ii). We 
have also coordinated with the Secretary of Energy and the Secretary of 
Agriculture, including through the interagency review process, and 
their input is reflected in this final rule.
---------------------------------------------------------------------------

    \63\ As we explained in Section II.D, some of the volumes we are 
establishing in this action are also independently justified under 
the cellulosic waiver authority, but the policy and technical 
analysis for our exercise of the cellulosic waiver is subsumed under 
our analysis of the reset factors.
---------------------------------------------------------------------------

    In Section III.A, we summarize our analyses as they apply to each 
of three component categories of biofuel: cellulosic biofuel, non-
cellulosic advanced biofuel, and conventional renewable fuel.\64\ In 
Section III.B we discuss the relationship between the volume 
requirements for all three years as part of our review of the 
implementation of the program. In Sections III.C through G, we describe 
the volumes for 2020, 2021, and 2022, along with our supporting 
assessment of the statutory factors. In Section III.H, we summarize the 
fuel costs and energy security benefits of the volumes. Our preamble 
discussion provides a high-level, narrative summary of the statutory 
factors, focusing on the factors that we deem most appropriate. A more 
detailed discussion of all the statutory factors is set forth in the 
RIA.
---------------------------------------------------------------------------

    \64\ Cellulosic biofuel corresponds directly to the statutory 
biofuel category. Cellulosic biofuel plus non-cellulosic advanced 
biofuel constitute the statutory advanced biofuel category. Finally, 
advanced biofuel plus conventional renewable fuel constitute the 
statutory total renewable fuel category. See CAA section 
211(o)(2)(B)(i)(I)-(IV).
---------------------------------------------------------------------------

A. EPA's Assessment of the Statutory Factors for Each Component 
Category of Biofuel

    The volumes for 2020, 2021, and 2022 we are finalizing in this rule 
are based on our analyses of the statutory factors listed in CAA 
section 211(o)(2)(B)(ii). This section summarizes the results of our 
analyses. We received numerous comments on the supporting analyses 
presented in the Draft RIA of the proposed rule. The summaries 
presented here reflect these comments, where appropriate, as well as 
updated data since the time of the proposed rule. Further detail on our 
analyses of the statutory factors for each of the biofuel types can be 
found in the RIA. Additionally, a summary of the comments received on 
the analyses presented in the proposed rule can be found in the RTC 
document.
1. Cellulosic Biofuel
    In EISA, Congress established escalating targets for cellulosic 
biofuel, reaching 16 billion gallons in 2022. After 2015, 84 percent of 
the growth in statutory volume of total renewable fuel was intended to 
come from cellulosic biofuel.\65\ This indicates that Congress

[[Page 39611]]

intended the RFS program to provide a significant incentive for 
cellulosic biofuels and that the focus for years after 2015 was to be 
on cellulosic. Consistent with this intent, our assessment of the 
statutory factors suggests that cellulosic biofuels have multiple 
benefits, including the potential for very low lifecycle GHG emissions 
that meet or exceed the 60 percent GHG reduction threshold. Further, 
none of the feedstocks expected to be used to produce cellulosic 
biofuels through 2022 are specifically produced to be used as 
feedstocks for cellulosic biofuel production.
---------------------------------------------------------------------------

    \65\ From 2015 through 2022 the statutory target for cellulosic 
biofuel increases by 13.0 billion gallons, from 3.0 billion gallons 
to 16.0 billion gallons. During this same time period the statutory 
target for total renewable fuel increases by 15.5 billion gallons, 
from 20.5 billion gallons to 36.0 billion gallons. Thus, cellulosic 
biofuel was expected to account for 84 percent (13.0 billion 
gallons/15.5 billion gallons) of the total renewable fuel increase.
---------------------------------------------------------------------------

    Compressed natural gas and liquid natural gas (CNG/LNG) derived 
from biogas represents the vast majority of the cellulosic biofuel 
volume projected through 2022. It is generally produced from waste 
materials or residues (e.g., through biogas collection from landfills, 
municipal wastewater treatment facility digesters, agricultural 
digesters, and separated MSW digesters) and thus is not expected to 
affect the conversion of wetlands, ecosystems, and wildlife habitat, 
soil and water quality, the price and supply of agricultural 
commodities, or food prices. In some situations, such as at larger 
landfills, CNG/LNG derived from biogas may also be able to be produced 
at a price comparable to fossil-based natural gas. Despite this 
relatively low cost of production, the combination of the high 
cellulosic RIN price and the significant volume potential for CNG/LNG 
derived from biogas is expected to increase the price of gasoline and 
diesel by about $0.01 per gallon.\66\
---------------------------------------------------------------------------

    \66\ See Chapters 5.1.2.2 and 9.4.3.2 of the RIA for a further 
discussion of the expected impact of RINs generated for CNG/LNG 
derived from biogas on the transportation fuel market.
---------------------------------------------------------------------------

    A small amount of liquid cellulosic biofuel was produced in 2020 
and 2021 and efforts continue to develop and commercialize various 
technologies. Many of their feedstocks (including agricultural residues 
and separated MSW) have limited uses in other markets.\67\ Because of 
this, using these feedstocks to produce liquid cellulosic biofuel is 
not expected to have significant adverse impacts related to several of 
the statutory factors, including the conversion of wetlands, ecosystems 
and wildlife habitat, soil and water quality, the price and supply of 
agricultural commodities, and food prices.
---------------------------------------------------------------------------

    \67\ One potential exception is corn kernel fiber. Corn kernel 
fiber is a component of distillers grains, which is currently sold 
as animal feed. Depending on the type of animal to which the 
distillers grain is fed, corn kernel fiber removed from the 
distillers grain through conversion to cellulosic biofuel may need 
to be replaced with additional feed.
---------------------------------------------------------------------------

    However, the cost of producing liquid cellulosic biofuel is high. 
These high costs are generally the result of low yields (e.g., gallons 
of fuel per ton of feedstocks) and the high capital costs of liquid 
cellulosic biofuel production facilities. In the near term (through 
2022), the production of these fuels is likely to be dependent on 
relatively high cellulosic RIN prices (in addition to incentives from 
state-level programs such as California's low carbon fuel standard 
(LCFS) program) to be economically competitive with petroleum-based 
fuels.
2. Non-Cellulosic Advanced Biofuel
    The volume targets established by Congress also anticipated 
significant growth in advanced biofuel beyond what is needed to satisfy 
the cellulosic biofuel standard. The statutory target for advanced 
biofuel in 2022 (21 billion gallons) allows for up to 5 billion gallons 
of non-cellulosic advanced biofuel to be used towards the advanced 
biofuel volume target. In practice, the vast majority of non-cellulosic 
advanced biofuel in the RFS program has been BBD, with relatively small 
volumes of sugarcane ethanol and other advanced biofuels. Some of the 
statutory factors assessed by EPA suggest that the targets for non-
cellulosic advanced biofuel established by Congress, or even higher 
volumes, are still appropriate. Notably, all advanced biofuels have the 
potential to provide significant GHG reductions as they are required to 
achieve at least 50 percent GHG reductions relative to the petroleum 
fuels they displace. Some types of advanced biofuels, such as biodiesel 
and renewable diesel produced from fats, oils, and greases, have been 
determined to provide even greater reductions than the 50 percent 
threshold.
    Because the vast majority of non-cellulosic advanced biofuels 
supplied to the U.S. historically have been advanced biodiesel and 
renewable diesel, this summary focuses on the impacts of these fuels. 
Advanced biodiesel and renewable diesel together comprise 95 percent or 
more of the total supply of non-cellulosic advanced biofuel over the 
last several years and are expected to supply all of the increase in 
advanced biofuel through 2022. High domestic production capacity and 
availability of imports indicate that volumes of non-cellulosic 
advanced biofuel in 2022 are likely to exceed the implied statutory 
targets. Similarly, the feedstocks used to make advanced biodiesel and 
renewable diesel (e.g., soy oil, canola oil, and corn oil, as well as 
waste oils such as white grease, yellow grease, trap grease, poultry 
fat, and tallow) currently exist in sufficient quantities globally to 
supply these increasing volumes. These feedstocks have many existing 
uses, such that significant increases in volumes used for biofuels may 
potentially require replacement in other markets with suitable 
substitute feedstocks such as imported vegetable oils (including palm 
oil). However, there is also potential for some ongoing growth in the 
production of these feedstocks. As such, higher volume requirements for 
non-cellulosic advanced biofuel may provide benefits to the rural 
economy, such as increased domestic employment in the biofuels industry 
and increased income for biofuel feedstock producers.
    However, some of the factors assessed would support lower volumes 
of advanced biofuel. For instance, as described in Chapter 9 of the 
RIA, the cost of biodiesel and renewable diesel is significantly higher 
than petroleum-based diesel fuel and is expected to remain so through 
2022. These high costs are expected to result in higher fuel prices, 
especially for consumers of finished fuels with relatively low 
renewable content (e.g., most diesel fuel). This in turn is expected to 
increase the cost to transport goods. Even if biodiesel and renewable 
diesel blends are priced similarly to petroleum diesel fuel at the pump 
after accounting for the relevant Federal and state incentives 
(including the RIN value), society as a whole nevertheless bears their 
full costs. Moreover, the fact that sufficient feedstocks exist to 
produce increasing quantities of advanced biodiesel and renewable 
diesel does not mean that those feedstocks are readily available or 
could be diverted to biofuel production without adverse consequences. 
As described in Chapter 5 of the RIA, we expect only limited quantities 
of fats, oils, and greases and distillers corn oil to be available for 
increased biodiesel and renewable diesel production in future years. We 
expect that the primary feedstock available to support significant 
increases in advanced biodiesel and renewable diesel through 2022 will 
be soybean oil and other vegetable oils whose primary markets are for 
food. Increased demand for soybean oil could potentially lead to 
diversion of feedstocks from food and other current uses in addition to 
further incentivizing

[[Page 39612]]

increased soybean crushing and soybean production and increased imports 
of soybean oil. It could also potentially lead to increased cultivation 
of other vegetable oils such as canola or palm oil as a substitute for 
diverted soybean oil. Increased vegetable oil production in the U.S. 
and abroad in turn could result in greater conversion of wetlands, 
adverse impacts on ecosystems and wildlife habitat, adverse impacts on 
water quality and supply, and increased prices for agricultural 
commodities and food prices.
3. Conventional Renewable Fuel
    Some of the statutory factors assessed for conventional renewable 
fuel favor the implied statutory volume (15 billion gallons) or higher 
volumes, while other factors favor lower volumes. While conventional 
renewable fuels are generally required by EISA to achieve 20 percent 
GHG reductions relative to the petroleum fuels they displace, some 
conventional renewable fuel facilities exceed this threshold. Notably, 
EPA has developed an expedited petition process for ethanol production 
facilities using more efficient process technologies.\68\ The statute, 
however, also contains grandfathering provisions exempting any facility 
that had begun construction on or before December 19, 2007, from this 
requirement, so not all producers of conventional renewable fuels meet 
or are required to meet the 20 percent GHG reduction threshold.\69\
---------------------------------------------------------------------------

    \68\ EPA has developed an ``Efficient Producer Petition 
Process,'' which encourages adoption of efficiency improvements in 
new ethanol facilities by expediting petition review and approval. 
Existing EPA estimates for corn starch ethanol produced in 2022 
using a dry mill process and natural gas fired process heat range 
from a 42 percent to a 17 percent reduction over baseline gasoline, 
depending on the technologies used at the production facility. See 
the RIA for the Renewable Fuel Standard Program (RFS2): Final Rule.
    \69\ See CAA section 211(o)(2)(A)(i). According to data from 
2021, approximately 80% of all corn ethanol generated RINs using a 
grandfathered pathway while approximately 20% of all corn ethanol 
generated RINs using a pathway required to meet or exceed the 20% 
GHG reduction threshold.
---------------------------------------------------------------------------

    The vast majority of conventional renewable fuel that has been 
supplied to the U.S. is corn ethanol. Domestic production capacity for 
corn ethanol exceeds 16 billion gallons. Production of corn ethanol in 
the U.S. reached its historical peak of 16.1 billion gallons in 
2018.\70\ Higher volumes of conventional renewable fuel production 
could result in more domestic jobs in the biofuels industry. At the 
same time, there are also significant volumes of palm biodiesel and 
renewable diesel that are produced internationally that could qualify 
as conventional renewable fuel under the grandfathering provisions of 
the RFS program. In the past, small volumes of grandfathered biodiesel 
and renewable diesel have been supplied to the U.S. and contributed to 
satisfying the RFS requirements.\71\
---------------------------------------------------------------------------

    \70\ Energy Information Administration (EIA) Monthly Energy 
Review.
    \71\ Use of grandfathered biodiesel and renewable diesel reached 
a maximum of 157 million gallons in 2016. Since 2018, use of 
grandfathered biodiesel and renewable diesel has been very small 
(less than 1 million gallons each year). See Chapter 1.6 of the RIA.
---------------------------------------------------------------------------

    Some of the analyses we conducted support lower volumes of 
conventional renewable fuel. As with soy biodiesel, increased corn 
production in the U.S. could result in greater conversion of wetlands, 
adverse impacts on ecosystems and wildlife habitat, adverse impacts on 
water quality and supply, and increased prices for agricultural 
commodities and food prices. Furthermore, there are constraints on 
ethanol use. The market has not achieved 15 billion gallons of actual 
use of conventional renewable fuel in any year, including those in 
which the RFS standards included an implied conventional renewable fuel 
volume of 15 billion gallons. This was due to various factors, 
including limitations on ethanol use above the E10 blendwall, strong 
export markets for domestically-produced ethanol, the effect of SREs in 
depressing the effective RFS standards, and use of advanced biodiesel 
and renewable diesel, buoyed by its tax subsidy and other incentive 
programs such as California's LCFS program to meet the implied 
conventional portion of the total renewable fuel requirement.
    While the use of ethanol as E10 has been, and continues to be, 
economical for refiners and blenders, the use of E10 alone has not been 
sufficient to achieve 15 billion gallons of ethanol use due to 
declining gasoline demand. The RFS program, along with the many other 
federal, state, local, and private incentive programs (e.g., the 
Department of Agriculture's (USDA's) Biofuels Infrastructure 
Partnership Program and Higher Blends Infrastructure Incentive 
Program), have had limited success in inducing the use of higher-level 
ethanol blends. As a result, growth in the nationwide average gasoline 
ethanol concentration has virtually stagnated as the market reached the 
E10 blendwall. While the use of higher-level ethanol blends has 
increased since 2011, that growth has been small compared to prior 
growth in the use of E10 and non-ethanol biofuels.\72\ We do not 
anticipate that use of higher-level ethanol blends through 2022 will 
increase rapidly enough to result in significantly greater volumes of 
ethanol consumption in the U.S., even with the incentives created by 
the RFS program and other incentive programs. Excess ethanol production 
has generally been directed to exports in recent years rather than 
selling greater volumes of E15 or E85 domestically. We expect these 
trends in exports to continue given international demand for ethanol.
---------------------------------------------------------------------------

    \72\ Since EPA granted E15 a CAA 211(f)(4) waiver in 2011 
allowing E15 sales, those sales have increased slowly but steadily, 
as described further in Chapters 1 and 5.5 of the RIA.
---------------------------------------------------------------------------

    Total demand for gasoline was lower in 2020 and 2021 and is 
expected to remain lower in 2022 relative to the volume of gasoline 
consumed in 2017-2019 according to data collected by EIA, which will 
limit the volume of ethanol used as E10.\73\ Most notably, the COVID-19 
pandemic caused a significant fall in gasoline demand and sales of E10 
starting in 2020. We expect, therefore, that maintaining the implied 15 
billion gallon statutory volume target for conventional renewable fuel 
going forward would require that volumes of biodiesel and renewable 
diesel (either conventional or advanced)--which are the least costly 
alternative biofuels to corn ethanol blended at concentrations greater 
than E10--increase to compensate for the limitations on corn ethanol 
use.\74\
---------------------------------------------------------------------------

    \73\ EIA's Monthly Energy Review (MER) for February 2022 
estimates gasoline consumption of 123.7 billion gallons in 2020 and 
135.0 billion gallons in 2021, while the January 2022 Short-Term 
Energy Outlook (STEO) projects 138.9 billion gallons in 2022. The 
MER reported gasoline consumption in 2017-2019 at 143.0-142.7 
billion gallons annually.
    \74\ See Chapter 2 of the RIA for our projections of biofuels 
that will be supplied to satisfy the volume requirements in each 
year.
---------------------------------------------------------------------------

    Such expected increases in biodiesel and/or renewable diesel are 
associated with potentially significant adverse impacts. For instance, 
we project that much of this biodiesel and renewable diesel would be 
imported, limiting the potential positive impacts on the domestic rural 
economy. Further, these fuels could be sourced from grandfathered 
facilities that are not required by EPA's regulations to achieve any 
GHG reductions relative to petroleum fuels. If imported biodiesel and 
renewable diesel were to increase, we would expect either an increase 
in the use of petroleum fuels from countries that previously used these 
fuels, or, alternatively, an expansion of palm oil production to 
produce biodiesel and renewable diesel, likely resulting in additional 
foreign land being converted to cropland for the production of palm 
oil. Were such international land-use change to occur, there would very 
likely be significant

[[Page 39613]]

adverse impacts on the environment, which may include impacts on air 
wetlands, ecosystems and wildlife habitats, air quality, water quality, 
water supply, and GHG emissions.

B. Interactions Between the RFS Annual Volumes

    In resetting the volumes, EPA must review the implementation of the 
program as required by CAA section 211(o)(2)(B)(ii). In conducting this 
review, we have completed a detailed assessment of the RFS program, as 
well as renewable fuel production and use more generally, since the 
beginning of the RFS program. This review is set forth at length in 
Chapter 1 of the RIA and in the RTC document. In this section and 
elsewhere in the preamble, we focus on specific aspects of our review 
as we deem appropriate.
    In our review, we have carefully considered the carryover RIN bank 
\75\ and carryforward deficits, which are two compliance mechanisms 
that have been historically important to the implementation of the RFS 
program and that we expect to continue to play a key role. 
Specifically, the RFS regulations contain provisions that allow an 
obligated party to satisfy their RFS obligations for a given year by 
using up to 20 percent of RINs generated in the previous year.\76\ 
Similarly, the RFS regulations also allow an obligated party to carry 
forward a compliance deficit from one year to the next, provided the 
party meets their full RFS obligations in the following year.\77\ These 
provisions operate such that any excess RINs generated in one year, or 
any RIN deficits, can impact the market for RINs and renewable fuels in 
the next year. As such, compliance with the RFS standards for one year 
is inherently intertwined with compliance for the prior year. Section 
III.B.1 below discusses the projected volume of carryover RINs (net of 
carryforward deficits) that will be available for use towards 
compliance with the 2020, 2021, and 2022 standards. We also evaluate 
whether we should set the 2020, 2021, and 2022 volumes at levels that 
would intentionally reduce the size of the carryover RIN bank, and we 
find that this would not be appropriate. Section III.B.2 then addresses 
some special considerations regarding cellulosic carryover RINs, and we 
also conclude that it would not be appropriate to intentionally draw 
down the bank of cellulosic carryover RINs by including them in the 
cellulosic biofuel volume requirement.
---------------------------------------------------------------------------

    \75\ CAA section 211(o)(5) requires that EPA establish a credit 
program as part of its RFS regulations, and that the credits be 
valid for obligated parties to show compliance for 12 months as of 
the date of generation. EPA implemented this requirement through the 
use of RINs, which are generated for the production of qualifying 
renewable fuels. Obligated parties can comply by blending renewable 
fuels themselves, or by purchasing the RINs that represent the 
renewable fuels from other parties that perform the blending. There 
are different ``D'' codes representing the different RFS standards 
that the various renewable fuels can be used to comply with. (e.g., 
D3 represents cellulosic biofuel that can be used to comply with the 
cellulosic biofuel standard.) RINs can be used to demonstrate 
compliance for the year in which they are generated or the 
subsequent compliance year. Obligated parties can obtain more RINs 
than they need in a given compliance year, allowing them to ``carry 
over'' these excess RINs for use in the subsequent compliance year, 
although our regulations limit the use of these carryover RINs to 20 
percent of the obligated party's RVO. For the bank of carryover RINs 
to be preserved from one year to the next, individual carryover RINs 
are used for compliance before they expire and are essentially 
replaced with newer vintage RINs that are then held for use in the 
next year. For example, vintage 2020 carryover RINs must be used for 
compliance in 2021, or they will expire. However, vintage 2021 RINs 
can then be ``banked'' for use in 2022.
    \76\ 40 CFR 80.1427(a)(5).
    \77\ 40 CFR 80.1427(b).
---------------------------------------------------------------------------

    In reviewing the implementation of the program, we also recognize 
the difference between the ability of retroactive versus prospective 
volume requirements to affect renewable fuel use. As we explained in 
Section II, the 2020 and 2021 standards will be entirely retrospective, 
while the 2022 standards will apply prospectively for the remainder of 
2022. In Section III.B.3 below, we explain that the retroactive 2020 
and 2021 standards will not affect renewable fuel use in 2020 and 2021, 
respectively, but we do expect the somewhat prospective 2022 standards 
to significantly affect renewable fuel use in 2022. Given this dynamic, 
we believe that higher, market-forcing renewable fuel volumes should 
occur in 2022 as opposed to 2020 or 2021.
1. Treatment of Carryover RINs
    Consistent with our approach in recent annual rules and the 
proposed rule, we have considered the availability and role of 
carryover RINs in setting the volume requirements for 2020, 2021, and 
2022. In general, we have authority to consider the size of the 
carryover RIN bank in deciding whether and to what extent to exercise 
any of our discretionary waiver authorities.\78\ EPA's approach to the 
consideration of carryover RINs in exercising our cellulosic waiver 
authority was affirmed in Monroe Energy and ACE.\79\
---------------------------------------------------------------------------

    \78\ These discretionary waiver authorities include the reset 
and set authorities, CAA section 211(o)(7)(F) and 211(o)(2)(B)(ii) 
(both of which direct EPA to establish RFS volumes based upon a 
``review of the implementation of the program''), discretionary 
portion of the cellulosic waiver authority, CAA section 
211(o)(7)(D)(i) (``the Administrator may also reduce the applicable 
volume of renewable fuel and advanced biofuels requirement''), the 
general waiver authority, CAA section 211(o)(7)(A) (``The 
Administrator . . . may waive the requirements''), and the BBD 
waiver authority with regard to the extent of the reduction in the 
BBD volume, CAA section 211(o)(7)(E)(ii) (``the Administrator . . . 
shall issue an order to reduce . . . the quantity of biomass-based 
diesel . . . by an appropriate quantity'').
    \79\ Monroe Energy, 750 F.3d 909; ACE, 864 F.3d at 713.
---------------------------------------------------------------------------

    As noted in past RFS annual rules, carryover RINs are a 
foundational element of the design and implementation of the RFS 
program.\80\ A bank of carryover RINs is extremely important in 
providing a liquid and well-functioning RIN market upon which success 
of the entire program depends, and in providing obligated parties 
compliance flexibility in the face of substantial uncertainties in the 
transportation fuel marketplace.\81\ Carryover RINs enable parties 
``long'' on RINs to trade them to those ``short'' on RINs instead of 
forcing all obligated parties to comply through physical blending. 
Carryover RINs also provide flexibility and reduce spikes in compliance 
costs in the face of a variety of unforeseeable circumstances--
including weather-related damage to renewable fuel feedstocks and other 
circumstances potentially affecting the production and distribution of 
renewable fuel--that could limit the availability of RINs.
---------------------------------------------------------------------------

    \80\ See, e.g., 72 FR 23904 (May 1, 2007).
    \81\ See 80 FR 77482-87 (December 14, 2015), 81 FR 89754-55 
(December 12, 2016), 82 FR 58493-95 (December 12, 2017), 83 FR 
63708-10 (December 11, 2018), 85 FR 7016 (February 6, 2020).
---------------------------------------------------------------------------

    Just as the economy as a whole is able to function efficiently when 
individuals and businesses prudently plan for unforeseen events by 
maintaining inventories and reserve money accounts, we believe that the 
RFS program is able to function when sufficient carryover RINs are held 
in reserve for potential use by the RIN holders themselves, or for 
possible sale to others that may not have established their own 
carryover RIN reserves. Were there to be too few RINs in reserve, then 
even minor disruptions causing shortfalls in renewable fuel production 
or distribution or higher than expected transportation fuel demand 
(requiring greater volumes of renewable fuel to comply with the 
percentage standards that apply to all volumes of transportation fuel, 
including the unexpected volumes) could result in deficits and/or 
noncompliance by parties without RIN reserves. Moreover, because 
carryover RINs are individually and unequally held by market 
participants, a small carryover RIN bank may negatively impact the RIN 
market,

[[Page 39614]]

even when the market overall could satisfy the standards. In such a 
case, market disruptions could force the need for a retroactive waiver 
of the standards, undermining the market certainty so critical to the 
RFS program. For all of these reasons, the collective carryover RIN 
bank provides a necessary programmatic buffer that helps facilitate 
compliance by individual obligated parties, provides for smooth overall 
functioning of the program to the benefit of all market participants, 
and is consistent with the statutory provision allowing for the 
generation and use of credits. We anticipate that the carryover RIN 
bank will serve this very purpose for the still upcoming compliance 
with the 2019 standards for small refineries, when actual biofuel use 
in that year is expected to have fallen considerably short of the RFS 
standards.\82\
---------------------------------------------------------------------------

    \82\ EPA extended the 2019 compliance deadline for small 
refineries to the first quarterly reporting deadline after the 
effective date of the 2021 standards (i.e., this action). See 87 FR 
5696 (February 2, 2022).
---------------------------------------------------------------------------

    EPA can also rely on the availability of carryover RINs to support 
market-forcing volumes that may not be able to be met with renewable 
fuel production and use in that year, and in the context of the 2013 
RFS rulemaking we noted that an abundance of carryover RINs available 
in that year, together with possible increases in renewable fuel 
production and import, justified maintaining the advanced and total 
renewable fuel volume requirements for that year at the levels 
specified in the statute.\83\
---------------------------------------------------------------------------

    \83\ 79 FR 49793-95 (August 15, 2013).
---------------------------------------------------------------------------

a. Carryover RIN Bank Size
    We project a significant drawdown in the number of carryover RINs 
as a result of compliance with the 2019 standards. After compliance 
with the 2019 standards, we project that there will be approximately 
1.83 billion total carryover RINs available, a decrease of 1.65 billion 
RINs from the previous estimate of 3.48 billion total carryover RINs in 
the 2020 final rule.\84\ Since we are setting both the 2020 and 2021 
volume requirements at the actual volume of renewable fuel consumed in 
those years, we project that 1.83 billion total carryover RINs will be 
available for compliance with the 2022 standards (including the 2022 
supplemental standard) as well.
---------------------------------------------------------------------------

    \84\ The calculations performed to estimate the size of the 
carryover RIN bank can be found in the memorandum, ``Carryover RIN 
Bank Calculations for 2020-2022 Final Rule,'' available in the 
docket for this action.
---------------------------------------------------------------------------

    However, there remains uncertainty surrounding the ultimate number 
of carryover RINs that will be available for compliance with the 2020, 
2021, and 2022 standards (including the 2022 supplemental standard) for 
several reasons, including the fact that compliance with the 2019 
standards has not yet occurred for all parties. Furthermore, we note 
that there have been enforcement actions in past years that have 
resulted in the retirement of carryover RINs to make up for the 
generation and use of invalid RINs and/or the failure to retire RINs 
for exported renewable fuel. To the extent that there are enforcement 
actions in the future, they could have similar results and require that 
obligated parties or renewable fuel exporters settle past enforcement-
related obligations in addition to complying with the annual standards. 
In light of these uncertainties, the net result could be a total 
carryover RIN bank larger or smaller than 1.83 billion RINs.
b. EPA's Decision Regarding the Treatment of Carryover RINs
    We evaluated the volume of carryover RINs projected to be available 
and considered whether we should intentionally draw down the carryover 
RIN bank in setting the 2020, 2021, and 2022 volume requirements 
(including the 2022 supplemental volume). In the proposed rule we 
stated that we did not believe that it would be appropriate to 
intentionally draw down the carryover RIN bank, and we received many 
comments on this proposed decision. Commenters supporting EPA's 
proposed approach--generally obligated parties--agreed with EPA's 
statements that maintaining the carryover RIN bank was important to 
provide liquidity and maintain a functioning RIN market. Many of these 
commenters noted that compliance with the 2019 standards had already 
resulted in the significant drawdown of the carryover RIN bank and 
fewer carryover RINs were available for use in 2020 than in previous 
years. Some of these commenters also stated that revising the 2020 
volumes to maintain the existing bank of carryover RINs was 
insufficient, and that EPA should lower volumes further to increase the 
number of available carryover RINs. Other commenters--generally 
renewable fuel producers--opposed EPA's proposal not to draw down the 
carryover RIN bank. These parties generally raised concerns that a 
large number of carryover RINs could reduce demand for renewable fuels. 
Some of these commenters similarly suggested that a large carryover RIN 
bank suppresses RIN prices, and that EPA had not demonstrated why a 
carryover RIN bank of 1.8 billion RINs (or even a lower volume) was 
insufficient to enable the RIN market to function. Our consideration of 
these comments is described briefly in this section, and in greater 
detail in Section 2 of the RTC document.
    In this final rule we are maintaining the proposed approach of not 
intentionally drawing down the carryover RIN bank. In reaching this 
determination, we considered the functions of the carryover RIN bank, 
its projected size, the uncertainties associated with its projection, 
its potential impact on the production and use of renewable fuel, the 
ability and need for obligated parties to draw on it to comply with 
their obligations (both on an individual basis and on a market-wide 
basis), and the impacts of drawing it down on obligated parties and the 
fuels market more broadly. As previously described, the bank of 
carryover RINs provides important and necessary programmatic 
functions--including acting as a cost spike buffer--that will both 
facilitate individual compliance and provide for smooth overall 
functioning of the program. We believe that a balanced consideration of 
the possible role of carryover RINs in achieving the statutory volumes, 
versus maintaining an adequate bank of carryover RINs for important 
programmatic functions, is appropriate when EPA exercises its 
discretion under its statutory authorities.
    Furthermore, as noted earlier, after compliance with the 2019 
standards, we project that there will be a significant drawdown in the 
number of carryover RINs from 3.48 down to 1.83 billion RINs. This 
drawdown is due to a combination of factors, including higher-than-
projected gasoline and diesel fuel use,\85\ a shortfall in renewable 
fuel production and use,\86\ and EPA denying all SRE petitions for 
2019.\87\ While there is some uncertainty as to the precise amount of 
the

[[Page 39615]]

drawdown for the reasons noted above, it is virtually certain that the 
draw down will be significant in magnitude.
---------------------------------------------------------------------------

    \85\ In establishing the 2019 standards, we projected that 180.4 
billion gallons of gasoline and diesel fuel would be used in 2019. 
However, based on 2019 RFS compliance data, 185.8 billion gallons 
was actually used. See Table 1 at https://www.epa.gov/fuels-registration-reporting-and-compliance-help/annual-compliance-data-obligated-parties-and. This resulted in an increase in the renewable 
fuel volumes required by the 2019 percentage standards compared to 
the volumes the standards were based on.
    \86\ While renewable fuel use in 2019 was higher than in 2018, 
it was only marginally so and failed to keep up with the increase in 
the renewable fuel standards and the larger-than-expected increase 
in gasoline and diesel fuel use.
    \87\ EPA issued a large number of SREs in recent years, leading 
to significant increase in the size of the carryover RIN bank. 
However, EPA recently denied all SRE petitions for 2019, resulting 
in these small refineries--most of which had been exempt in recent 
years--needing to acquire RINs to demonstrate compliance or 
carryforward a deficit.
---------------------------------------------------------------------------

    As we describe further in Section III.C, there was an unanticipated 
and significant shortfall in RIN generation in 2020 relative to the 
volumes that the 2020 final rule intended for the market to achieve. 
The shortfall is anticipated to be smaller than the 1.83 billion total 
carryover RINs that we project will be available in 2020. While the 
carryover RIN bank would likely be sufficient to cover the shortfall in 
renewable fuel production in 2020 on aggregate, this does not mean that 
all obligated parties would have access to these carryover RINs. RIN 
holding data indicates that just four obligated parties--which 
represented approximately 40 percent of the 2019 total RVO--currently 
hold over half of all available 2019 RINs, and nine obligated parties--
which represented approximately 55 percent of the 2019 total RVO--hold 
over three-quarters of all available 2019 RINs.\88\ Conversely, 
obligated parties that collectively represent approximately fifteen 
percent of the 2019 total RVO currently do not hold any 2019 RINs 
whatsoever; thus, these parties may not have access to 2019 carryover 
RINs to meet their 2020 obligations. Requiring compliance with the 
original 2020 standards could therefore cause significant disruptions 
in the RIN market, especially in light of the fact that at least 30 
obligated parties carried compliance deficits from 2019 into 2020.\89\ 
These parties must fully meet their 2020 obligations or they will be in 
non-compliance with their RFS obligations. That is, they do not have 
the option to carry forward a deficit for a second year in a row.\90\ 
It is possible that these parties could purchase additional RINs on the 
market. However, given the shrinking size of the carryover RIN bank, 
the current holders of additional RINs may choose to sell their RINs 
only at very high costs or in the alternative choose to not sell their 
RINs but retain them for their own compliance purposes. Thus, and as we 
explain further in Section III.C, there is a substantial probability 
that some parties would not be able to acquire sufficient RINs to 
comply with the original 2020 standards.
---------------------------------------------------------------------------

    \88\ See ``2019 RIN Holding Data as of March 1, 2022,'' 
available in the docket for this action. Carryover RIN holdings are 
presented in relation to the 2019 total RVO as this is the most 
recent year for which EPA has compliance data.
    \89\ This number is based on 2019 compliance reports submitted 
to EPA to date. There is still some uncertainty in the number of 
obligated parties that will carry a deficit into 2020 as EPA has 
extended the deadline for small refineries to submit their 2019 
compliance reports. See 87 FR 5969 (February 2, 2022).
    \90\ See 40 CFR 80.1427(b).
---------------------------------------------------------------------------

    However, by revising the 2020 standards to the actual volume of 
renewable fuel consumed, additional 2019 RINs will likely become 
available in the marketplace. Parties holding more 2019 RINs than are 
needed or able to be used (i.e., above the 20 percent carryover limit) 
after the revision of the 2020 standards are also more likely to trade 
those RINs, making them available to other obligated parties for 
compliance with the 2020 standards. These RINs can also be used by 
small refineries to demonstrate compliance with their 2019 obligations, 
potentially reducing the number of obligated parties that will need to 
carry forward a deficit.
    The advanced biofuel and total renewable fuel standards we are 
finalizing for 2022, moreover, are significantly higher than the volume 
of renewable fuel used in 2020 and 2021. As we explain further in 
Sections III.E and IV, while we believe that the market is capable of 
achieving the 2022 standards (including the 2022 supplemental 
standard), those standards are market-forcing and represent a 
significant increase in renewable fuel use from the levels used in 2020 
and 2021. The market may fall short of using such levels of biofuels, 
in which case obligated parties may rely on carryover RINs to achieve 
compliance. We believe that preserving the carryover RIN bank to 
provide this buffer in the event of a shortfall is important. Given 
these factors, as well as the uneven holding of carryover RINs among 
obligated parties noted above, we believe that further increasing the 
standards with the intent to draw down the carryover RIN bank could 
lead to significant deficit carryovers and non-compliance by some 
obligated parties that own relatively few or no carryover RINs. We do 
not believe this is an appropriate outcome. Therefore, consistent with 
the approach we have taken in recent annual rules, we are not setting 
the 2020, 2021, and 2022 volume requirements (including the 2022 
supplemental standard) at levels that would intentionally draw down the 
bank of carryover RINs.
    We are not determining that 1.83 billion RINs is a bright-line 
threshold for the number of carryover RINs that provides sufficient 
market liquidity and allows the carryover RIN bank to play its 
important programmatic functions. As in past years, we are instead 
evaluating, on a case-by-case basis, the size of the carryover RIN bank 
in the context of the RFS standards and the broader transportation fuel 
market at this time. Based upon this holistic, case-by-case evaluation, 
we are concluding that it would be inappropriate to intentionally 
reduce the number of carryover RINs by establishing higher volumes than 
what the market achieved in 2020 or 2021 or what we anticipate the 
market is capable of achieving in 2022. Conversely, while an even 
larger carryover RIN bank may provide greater assurance of market 
liquidity, we do not believe it would be appropriate to set the 
standards at levels specifically designed to increase the number of 
carryover RINs available to obligated parties. As we explain further in 
Sections III.D and E, for instance, given the market-forcing intent of 
the RFS program, it would be inappropriate to establish the 2020 and 
2021 volumes below the levels the market actually used simply to 
increase the carryover RIN bank.
2. Consideration of Cellulosic Carryover RINs
    Section 211(o)(7)(D)(i) of the CAA requires EPA to set the 
applicable volume of cellulosic biofuel at the ``projected volume 
available during [the] calendar year.'' EPA has consistently 
interpreted the statutory phrase ``projected volume available'' to 
refer to the volume of qualifying cellulosic biofuel projected to be 
produced or imported and available for use as transportation fuel in 
the U.S. in that year. This is equivalent to the projected number of 
cellulosic RINs generated in the year that are available for obligated 
parties to use for compliance. Since we first exercised the cellulosic 
waiver authority in the 2010 annual rule, we have never included 
cellulosic carryover RINs in this projection.
    In the proposed rule we requested comment on whether to include 
cellulosic carryover RINs as part of the ``projected volume 
available.'' Under this interpretation of the cellulosic waiver 
authority, the ``projected volume available'' would include the 
projected volume of cellulosic biofuel plus the volume of available 
cellulosic carryover RINs from the prior year. EPA received a number of 
comments on this issue, including those supporting EPA's interpretation 
of ``projected volume available'' in previous rules and those 
supporting an interpretation of this phrase that would include 
available carryover RINs. Both groups of commenters argued that their 
preferred interpretation was more consistent with the statutory 
language and the policy goals of the RFS program. Commenters opposed to 
including cellulosic carryover RINs in the projected volume available 
generally argued that cellulosic carryover RINs provided obligated 
parties important compliance

[[Page 39616]]

flexibility, just like other categories of carryover RINs. They further 
argued that cellulosic carryover RINs were especially important in 
light of the uncertainty associated with cellulosic biofuel production 
projections. Conversely, commenters that supported including cellulosic 
carryover RINs in the projected volume available generally argued that 
despite the continued rapid growth in cellulosic biofuel volumes, 
excess cellulosic carryover RINs could result in lower cellulosic RIN 
prices, as happened in 2019 and 2020. Lower cellulosic RIN prices in 
turn could negatively affect investment in cellulosic biofuel 
production. These commenters stated that adopting this new 
interpretation would ensure that there was a strong market for 
cellulosic biofuel and cellulosic RINs in the future and would result 
in increased investment in cellulosic biofuel production and ultimately 
increased cellulosic biofuel production. Finally, these commenters 
generally suggested that the existence of cellulosic waiver credits 
adequately addressed obligated parties' need for compliance 
flexibility.
    In this rule we are finalizing cellulosic biofuel volumes for 2020-
2022 that are based on the volume of qualifying cellulosic biofuel 
projected to be produced or imported and available for use as 
transportation fuel in the U.S. in that year. This is equivalent to the 
projected number of cellulosic RINs generated in the year that are 
available for obligated parties to use for compliance. Consistent with 
EPA's longstanding approach, we have not included available cellulosic 
carryover RINs in our projection of the projected volume available. The 
statutory term ``projected volume available'' does not directly address 
the topic of carryover RINs. Indeed, the cellulosic waiver provision 
(CAA section 211(o)(7)(D)(i)) does not mention carryover RINs at all, 
or otherwise refer to the statutory basis for such RINs (CAA section 
211(o)(5)). Thus, we believe there are multiple possible 
interpretations of this ambiguous statutory provision, including the 
interpretation adopted by EPA in previous years.
    We continue to believe that the interpretation EPA adopted in 
previous years strikes an appropriate balance between the interests of 
the cellulosic biofuel producers, those obligated to purchase and use 
cellulosic biofuels and cellulosic RINs, and consumers; and best 
ensures the ongoing smooth implementation of the RFS program.\91\ Below 
we summarize the considerations we balanced in deciding to retain our 
longstanding approach in this rulemaking; further discussion is 
contained in the RTC document.
---------------------------------------------------------------------------

    \91\ See Chevron USA, Inc. v. Natural Resources Defense Council, 
Inc., 467 U.S. 837 (1984).
---------------------------------------------------------------------------

    While we acknowledge that some aspects of the cellulosic biofuel 
category (such as the cellulosic waiver authority and the cellulosic 
waiver credits) \92\ are unique, we nevertheless believe the benefits 
of carryover RINs, discussed in Section III.B.1, generally apply to 
cellulosic carryover RINs. Cellulosic waiver credits can help obligated 
parties satisfy their cellulosic biofuel volume obligation, but they 
are not a full replacement for cellulosic RINs. Rather, to satisfy 
their cellulosic biofuel obligation, obligated parties must retire 
either a cellulosic RIN or a cellulosic waiver credit plus an advanced 
RIN.\93\ In other words, in the event of a shortfall in cellulosic RIN 
generation, absent cellulosic carryover RINs, the market must still 
rely on the advanced carryover RIN bank in addition to cellulosic 
waiver credits.
---------------------------------------------------------------------------

    \92\ Cellulosic waiver credits may be purchased from EPA by 
obligated parties in years when EPA uses the cellulosic waiver 
authority to reduce the statutory volumes of cellulosic biofuel. 
Regulations related to cellulosic waiver credits can be found in 40 
CFR 80.1456.
    \93\ See 40 CFR 80.1456(c)(4).
---------------------------------------------------------------------------

    Furthermore, because there are no statutory volume targets for 
cellulosic biofuel in 2023, and because we are required to establish 
the cellulosic biofuel volumes for 2023 and future years on the 
assumption that the Administrator will not need to issue a waiver for 
these years under CAA section 211(o)(2)(B)(iv), we do not anticipate 
using the cellulosic waiver authority for 2023. This means that it is 
unlikely that cellulosic waiver credits will be available in 2023.\94\ 
Including cellulosic carryover RINs in the projected volume available 
through 2022 would also likely result in few to no cellulosic carryover 
RINs available for use in 2023. Thus, changing our interpretation now 
to draw down the cellulosic carryover RIN bank in this rule would 
likely create a scenario where few or no cellulosic carryover RINs and 
no cellulosic waiver credits would be available in 2023. Obligated 
parties would thus effectively lose both important compliance 
flexibilities in that year. We do not believe this would be 
appropriate.
---------------------------------------------------------------------------

    \94\ Moreover, unlike with carryover RINs, obligated parties are 
not allowed to carry over cellulosic waiver credits for use in the 
following year or use them to meet deficits from the prior year. See 
40 CFR 80.1456(b)(1), (4). Thus, although cellulosic waiver credits 
are available for 2022, obligated parties will not be able to carry 
those over for use in 2023.
---------------------------------------------------------------------------

    We recognize that the potential for lower cellulosic RIN prices 
could have a directionally negative impact on cellulosic biofuel 
investment. The market circumstances that resulted in lower cellulosic 
RIN prices in 2019-2020, however, appears to be the result of more than 
just the availability of cellulosic carryover RINs. Similar volumes of 
cellulosic carryover RINs, and higher levels of available cellulosic 
carryover RINs as a percentage of the cellulosic biofuel requirement, 
were available in prior years when cellulosic RIN prices were also much 
higher relative to 2019-2020.\95\ EPA's assessment of the drop in 
cellulosic RIN prices in 2019-2020 suggests that there were multiple 
contributing factors, including a new projection methodology for 
cellulosic biofuel that under-projected cellulosic biofuel production 
in 2018 \96\ and the granting of a significant number of SREs for 2017 
and 2018.
---------------------------------------------------------------------------

    \95\ The number of cellulosic carryover RINs available for use 
in 2016 and 2017 were 39 million RINs (17 percent of the 2016 
cellulosic biofuel volume requirement) and 34 million RINs (11 
percent of the 2017 cellulosic biofuel volume requirement) 
respectively. These numbers are similar to the number of cellulosic 
carryover RINs available for use in 2019 and 2020 (49 million RINs 
or 12 percent of the 2018 cellulosic biofuel volume requirement and 
38 million RINs or 6 percent of the 2020 cellulosic biofuel volume 
requirement). In 2016 and 2017 cellulosic RIN prices averaged $1.89 
and $2.78 per RIN. In 2019 and 2020 cellulosic RIN prices averaged 
$1.15 and $1.49 per RIN.
    \96\ EPA has continued to apply this projection methodology in 
years following 2018, including in this rule. This same projection 
methodology resulted in an over-projection of cellulosic biofuel 
production in 2019 and 2020. As such, the methodology does not 
inherently result in under-projections (or over-projections) of 
cellulosic biofuel generally or CNG/LNG derived from biogas more 
specifically. Further discussion of EPA's cellulosic biofuel 
projection methodology can be found in Chapter 5.1 of the RIA.
---------------------------------------------------------------------------

    In projecting cellulosic biofuel production for 2022 using the most 
recent available data, and denying pending SRE petitions in a separate 
action, we are addressing several of the factors that we believe led to 
the drop in cellulosic RIN prices in 2019-2020. Most immediately, we 
expect the size of the cellulosic carryover RIN bank to drop from 49 
million to 38 million RINs following 2019 compliance. We are continuing 
to project significant increases in cellulosic biofuel availability 
through 2022, based upon a methodology that takes neutral aim at 
accuracy. We do not expect the standards we set, moreover, to be 
effectively reduced by future grants of SRE petitions as they have in 
some past years. As discussed in Section VII, we are also finalizing 
regulations to allow for the production of qualifying

[[Page 39617]]

renewable fuel, including cellulosic biofuel, from biointermediates. 
While we cannot predict future RIN prices, this combination of actions 
should provide a strong market signal of EPA's intention to support a 
robust cellulosic biofuel market.
    Further, despite the drop in the cellulosic RIN price in 2019-2020, 
cellulosic biofuel production has increased significantly each year 
since 2014, demonstrating that cellulosic biofuel production can and 
has continued to increase despite volatility in the cellulosic RIN 
price.\97\ We do not believe that changing our interpretation of the 
``projected volume available'' to include cellulosic carryover RINs is 
at this point necessary in order to ensure future growth in cellulosic 
biofuels. Instead, we believe that the existing policies described here 
are sufficient to provide the market with adequate certainty for 
investment and growth in cellulosic biofuels. EPA will continue to 
monitor the cellulosic biofuel market closely and assess the efficacy 
of the program in providing a sufficient investment environment for 
cellulosic biofuels.
---------------------------------------------------------------------------

    \97\ See Section 5.1 of the RIA for more detail on annual 
cellulosic biofuel production.
---------------------------------------------------------------------------

    Finally, we note that the legal arguments made by commenters 
supporting a change to include cellulosic carryover RINs in the 
cellulosic volume, while still relevant, are less so in the context of 
this rulemaking. Commenters' legal arguments generally focused on an 
interpretation of the cellulosic waiver authority. In this rulemaking, 
however, we are concurrently exercising both the cellulosic waiver 
authority and the reset authority. Under the reset authority, we have 
broad discretion to establish volumes, including cellulosic biofuel 
volumes lower than the volume required under the cellulosic waiver. 
Even were EPA's interpretation of ``projected volume available'' 
erroneous, we would nonetheless reduce the cellulosic biofuel volumes 
to the final volumes we are establishing in this document (not 
including carryover RINs) utilizing the reset authority. Thus, 
regardless of whether the commenters are correct about EPA's legal 
authority under the cellulosic waiver, we have legal authority under 
the reset authority to establish volumes at the projected volume 
available of cellulosic biofuel, excluding any cellulosic carryover 
RINs.
3. Ability for the RFS Volumes To Impact Renewable Fuel Supply
    In developing the volume requirements, we considered the timing of 
this action and its ability to impact renewable fuel production, 
imports, and use. Since only prospective requirements have a 
significant chance of affecting actual renewable fuel use, we proposed 
to establish higher volumes for 2022. By contrast, imposing higher 
volumes for 2020 or 2021 would have no effect on the production or use 
of renewable fuels in those years. The proposal noted that 
retroactively requiring volumes higher than what the market has 
actually supplied could create market disruption and thus interfere 
with program implementation without advancing program goals.
    Commenters generally acknowledged that higher volume requirements 
for 2020 and 2021 would not impact renewable fuel production and use in 
those years. However, some commenters stated that revising the 2020 
volumes after previously establishing them would reduce confidence in 
the market-forcing nature of the RFS program and could negatively 
impact renewable fuel production in future years. While we recognize 
these concerns, we believe that the unique circumstances in 2020 
(described throughout Section III and especially in Section III.C) 
justify revising the 2020 volumes.\98\
---------------------------------------------------------------------------

    \98\ Further discussion of this topic can be found in Section 6 
of the RTC document.
---------------------------------------------------------------------------

    In this rule we are finalizing volumes consistent with the proposed 
approach: establishing volumes for 2020 and 2021 at the level of 
renewable fuel used in these years and establishing higher renewable 
fuel volumes for 2022. With respect to 2020 and 2021, these years have 
already passed. Both common sense as well as our review of the 
implementation of the RFS program indicate that this final rule cannot 
retroactively affect the production or use of renewable fuels in 2020 
or 2021, or consequently affect the statutory reset factors in CAA 
section 211(o)(2)(B)(ii)(I)-(VI) insofar as they are based on renewable 
fuel production or use that occurred during those years (e.g., the 
impacts of the use of renewable fuels in 2020 and 2021 on cost, the 
environment, and so forth). It is possible that the proposed rule, 
which was signed on December 7, 2021, may have impacted renewable fuel 
production and use during 2021. Given that the proposal came out in 
December and was only a proposal and not a final rule, however, those 
impacts were likely to be quite limited. Any market effects of the 2020 
and 2021 volumes finalized in this rule will be felt after the rule is 
promulgated and mediated through the carryover RIN bank. As we explain 
below, these mediated market effects can be evaluated with regard to 
the statutory factors and favor establishing 2020 and 2021 volumes at 
those actually used.
    The situation for 2022, however, is different. We are issuing this 
final rule with a significant portion of the year remaining. Moreover, 
we are finalizing volumes using the same policy approach as in the 
proposal, which was issued in December 2021, albeit with some small 
changes due to updated data, allowing the proposal to have provided 
regulated entities with additional notice of the potential 
requirements. Thus, we believe that the RFS standards for 2022 will be 
able to significantly affect market decisions for renewable fuel 
production, import, and use in 2022, and consequently the related 
statutory factors. In turn, we believe it is appropriate to increase 
renewable fuel requirements in 2022, when this rule has a much greater 
chance of actually increasing renewable fuel use and production, as 
opposed to 2020 or 2021.
    Further, there are also disadvantages to requiring higher volumes 
for 2020 and 2021 retroactively, or similarly, to maintaining the 2020 
standards in the original final rule. Such higher volumes would cause 
some combination of a drawdown of the carryover RIN bank, carryforward 
deficits, or potentially even non-compliance by obligated parties. 
While we have previously found an intentional drawdown of the carryover 
RIN bank to be appropriate in one case, we do not think it is 
appropriate to do so in this rule for reasons we described above in 
Section III.B.1. We also do not think that intentionally relying on or 
effectively compelling carryforward deficits or intentionally causing 
non-compliance is generally appropriate.
    Renewable fuel production and use in 2020 was significantly lower 
than what we projected in the original 2020 final rule. As discussed in 
Section III.C, compliance with the original 2020 standards would likely 
result in a significant drawdown in the number of carryover RINs 
available for use in 2021 and 2022. As discussed in Section III.B.1, we 
currently project that as a result of compliance with the 2019 
standards, the number of carryover RINs available for compliance with 
the 2020 standards will be approximately 1.83 billion RINs, a 
considerable drop from the 3.48 billion total carryover RINs we 
projected in the 2020 final rule. We expect that as a result of 
revising the 2020 standards to equal the actual volume of renewable 
fuels consumed, the number of carryover RINs available for compliance 
with the 2021 and 2022

[[Page 39618]]

standards will remain at 1.83 billion RINs.
    Were we not to modify the 2020 standards, we anticipate that the 
total number of carryover RINs available for compliance with the 2021 
and 2022 standards would decrease substantially, to 680 million RINs, 
or less than 4 percent of the 2022 total renewable fuel standard.\99\ 
This would be the lowest quantity of carryover RINs available since EPA 
began projecting the size of the carryover RIN bank in 2013, far below 
the levels of carryover RINs available to obligated parties in recent 
years. A well-functioning RIN market is foundational for allowing 
obligated parties to comply with their RFS mandates, particularly for 
obligated parties that do not themselves produce or blend renewable 
fuels. Drawing down the carryover RIN bank to this level could 
significantly disrupt the functionality of the RIN market.
---------------------------------------------------------------------------

    \99\ The calculations performed to project the number of 
carryover RINs that would be available if we did not revise the 2020 
standards can be found in the memorandum, ``Carryover RIN Bank 
Calculations for 2020-2022 Final Rule,'' available in the docket for 
this action. Further discussion of the size of the advanced and 
cellulosic carryover RIN banks is contained in the above-cited memo, 
Section III.B.2, and Section 2.6 of the RTC document.
---------------------------------------------------------------------------

    This drawdown in the carryover RIN bank would be particularly 
concerning given the uneven nature of carryover RIN holdings and the 
number of obligated parties that carried deficits into 2020 discussed 
in the previous section. Taken together, these facts present a 
significant risk of market disruption were we to not revise the 2020 
standards. A number of obligated parties that have not already carried 
deficits into 2020 would likely have to carry deficits into 2021. Other 
parties may have to carry deficits into 2022. Some parties, especially 
those that have already carried a deficit into 2020, may not be able to 
acquire sufficient RINs for compliance in 2021 or 2022.\100\ If we were 
to leave the 2020 standards unchanged, we find that there would be a 
substantial probability that some obligated parties would not be able 
to comply with those standards or with the 2021 and 2022 standards we 
are finalizing in this action.
---------------------------------------------------------------------------

    \100\ The regulations at 40 CFR 80.1427(b) allows obligated 
parties to only carry forward a deficit if they did not carry 
forward a deficit from the previous calendar year; thus, an 
obligated party that carries forward a deficit from 2020 into 2021 
may not carry forward a deficit from 2021 into 2022.
---------------------------------------------------------------------------

    We emphasize that the above risks arise from the unanticipated 
shortfall in 2020 renewable fuel use and the inherent potential for 
future unexpected market events. In turn, noncompliance may lead to 
significant adverse business impacts on these parties as well as to 
civil penalties. Particularly given our legal duty to consider burdens 
on obligated parties when promulgating retroactive standards, we do not 
think this outcome would be fair or appropriate.
    If these compliance difficulties occur, moreover, we believe that 
the harms would not just be felt by directly affected obligated parties 
but also extend to the entire fuels market and the RFS program. If 
insufficient RINs are available to obligated parties to meet their 
compliance obligations, this could negatively impact the regulatory and 
market certainty critical to the investments needed to increase 
renewable fuel volumes in 2022 and into the future. Uncertainty in the 
RFS program specifically, and the broader fuels market more generally, 
could negatively impact investment in increasing renewable fuel 
production and accordingly the expected future rate of production of 
renewable fuels. It could also negatively affect investment in the 
infrastructure necessary to deliver and use of greater quantities of 
renewable fuel. As discussed in greater detail in the RIA, biofuel 
production and use generally have positive impacts on climate change, 
energy security, job creation, and rural economic benefits. Reduced 
production and use of renewable fuels would therefore be expected to 
negatively impact these statutory factors. In particular, reduced 
business certainty could also deter the commercialization of novel 
advanced biofuels, which have the potential for lower costs and 
superior environmental benefits.
    Retroactively reducing the 2020 volumes mitigates these concerns. 
Specifically, reducing the 2020 required volumes to the volumes of 
renewable fuel actually used in 2020 preserves an estimated carryover 
RIN bank of 1.83 billion RINs for use in 2021, and establishing the 
2021 volumes at the volumes of renewable fuel actually used in 2021 
preserves the same estimated carryover RIN bank for compliance with the 
market-forcing 2022 standards.
    We note lesser reductions to 2020 or 2021 would give rise to 
similar concerns. The magnitude of those concerns would depend on how 
high the 2020 and 2021 volume requirements are and the resulting impact 
on the carryover RIN bank. We think that some of these concerns, 
moreover, would remain even were we to make offsetting reductions to 
the 2022 volumes (e.g., were we to increase the 2021 volumes by 500 
million gallons and decrease the 2022 volumes by the same amount). In 
that case, even though the aggregate incentive for renewable fuels 
across all three years might remain the same, retroactively requiring 
compliance for past years would increase the risk of market disruption. 
This is because while we expect a significantly higher number of RINs 
to be generated in 2022 than in either 2020 or 2021, compliance is 
still conducted on a year-by-year basis. As noted above, there are 
limitations on the ability of obligated parties to carry forward 
deficits into 2022 and consequently to leverage 2022 RIN generation to 
meet higher 2020 or 2021 standards.

C. Volume Requirements for 2020

    We proposed to revise previously finalized 2020 total renewable 
fuel, advanced biofuel, and cellulosic biofuel volumes to equal the 
volume of such fuels actually consumed in the U.S. in 2020. We also 
proposed to make corresponding adjustments to the percentage standards 
applicable to obligated parties.\101\
---------------------------------------------------------------------------

    \101\ As discussed in Section V, the adjustments to the 
percentage standards would also include changes to the non-renewable 
gasoline and diesel volumes to reflect actual 2020 consumption.
---------------------------------------------------------------------------

    As discussed previously, commenters generally acknowledged that 
higher volume requirements for 2020 would not impact renewable fuel 
production and use in 2020, but expressed concerns that revising the 
2020 volumes after previously establishing them would reduce confidence 
in the market-forcing nature of the RFS program and could negatively 
impact renewable fuel production and use in future years. Many of these 
commenters stated that the structure of the RFS program automatically 
adjusted to the lower than expected demand for gasoline and diesel 
fuel, and that further modification of the 2020 percentage standards 
was thus unnecessary, especially in light of the availability of 
carryover RINs. Other commenters supported our proposed revisions to 
the previously established 2020 volume requirements, noting the impact 
of the COVID-19 pandemic and the shortfall in renewable fuel use 
relative to projections in the original 2020 final rule.
    In this rule we are finalizing revised 2020 volumes and percentage 
standards based on the actual volumes of renewable fuel, gasoline, and 
diesel fuel used in 2020, consistent with the proposed rule. While we 
recognize the concerns raised by commenters opposing these changes, we 
believe that the unique circumstances in 2020 justify revising the 2020 
volumes, and that we

[[Page 39619]]

have the authority to do so as discussed in Sections II.C and D.
    We acknowledge that we are reconsidering and revising the already 
finalized 2020 standards \102\ after the November 30, 2019, statutory 
deadline for the 2020 standards in CAA section 211(o)(3)(B)(i). The 
revised 2020 standards are also retroactive. Barring unusual 
circumstances, we generally do not believe it is appropriate to 
reconsider and revise previously finalized RFS standards, particularly 
where we are doing so retroactively.\103\ Nonetheless, we are doing so 
for 2020 because, in compliance with the statutory requirement that we 
review the implementation of the RFS program, we have determined that 
critical and unanticipated events have occurred which affected fuels 
markets in that year and consequently affect compliance with the RFS 
program. Specifically, there was a significant, unprecedented, and 
unforeseen shortfall in renewable fuel use in 2020 relative to the 
volumes that we required in the original 2020 final rule. Actual use of 
qualifying renewable fuel in 2020 (17.13 billion RINs) was nearly 3 
billion RINs lower than the 20.09 billion RINs that the 2020 final rule 
projected the market could achieve. That is, the actual shortfall is 
14.9 percent of the total renewable fuel volume in the original 2020 
rule. This is the largest shortfall on record, in both absolute and 
percentage terms, since Congress enacted the RFS program.\104\ This 
shortfall was largely due to two factors: (1) the COVID-19 pandemic, 
which caused an unforeseen and drastic fall in transportation fuel 
demand generally and in biofuel demand more specifically; and (2) EPA's 
projection in the 2020 rule that we would grant a large number of SREs 
for 2020 and our consequent decision to deny all pending 2020 SRE 
petitions.
---------------------------------------------------------------------------

    \102\ 85 FR 7016 (February 6, 2020).
    \103\ We have in the past modified previously finalized RFS 
standards, including in response to court decisions (see 80 FR 77420 
(December 14, 2015), modifying the cellulosic biofuel standards), 
and in response to new information and petitions for reconsideration 
(see 79 FR 25025 (May 2, 2014)), also modifying the cellulosic 
biofuel standard).
    \104\ See Figure 1.2-4 in the RIA.
---------------------------------------------------------------------------

    In general, under the RFS program, a shortfall in gasoline and 
diesel fuel consumption relative to the projected volumes results in a 
corresponding decrease in the volume of renewable fuel required. This 
self-adjusting nature of the program is a function of the fact that the 
RFS standards are applied as a percentage to an obligated party's 
gasoline and diesel fuel production; the obligation to acquire RINs for 
compliance rises and falls along with the sum of gasoline and diesel 
fuel production volume. Further, historical deviations before 2020 
between the volumes of gasoline and diesel fuel actually used relative 
to their projected volumes have been relatively small, on the order of 
a few percent.\105\ As a result, we have historically not adjusted the 
RFS standards after they have been established to account for updated 
gasoline and diesel fuel consumption levels. This is consistent with 
our general policy of not reconsidering and revising previously 
finalized RFS standards.
---------------------------------------------------------------------------

    \105\ See Figure 1.2-1 in the RIA.
---------------------------------------------------------------------------

    However, the situation in 2020 was different. As explained further 
in Section III.B, the shortfalls in 2020 were both significantly larger 
than in any previous year (about 12 percent) and disproportionately 
affected gasoline more than diesel fuel.\106\ This is important 
because, on average, finished gasoline contains more renewable content 
than finished diesel. The vast majority of gasoline contains at least 
10 percent ethanol, mostly in the form of E10, whereas the average 
concentration of renewables in diesel is considerably less than 10 
percent.\107\ Thus, while the decrease in transportation fuel demand in 
2020 proportionally decreased the required renewable fuel volume, the 
decrease in the demand for renewable fuel was greater given the larger 
drop in gasoline versus diesel fuel demand. In other words, despite the 
self-adjusting nature of the RFS standards in response to 
transportation fuel demand, the disproportionate fall in gasoline 
demand meant actual RIN generation still fell short of what was 
ultimately required for compliance.
---------------------------------------------------------------------------

    \106\ See Figure 1.2-1 in the RIA.
    \107\ According to EIA's January 2022 STEO diesel consumption in 
the U.S. in 2020 was 3.51 million barrels per day (54.0 billion 
gallons). Biodiesel and renewable diesel in 2020 totaled 2.50 
billion gallons, which generated 3.87 billion RINs. Thus, the 
average gallon of diesel in the U.S. was blended with renewable fuel 
that generated 0.07 RINs (3.87 billion RINs/54.0 billion gallons), 
while the average gallon of gasoline was blended with renewable fuel 
that generated 0.10 RINs.
---------------------------------------------------------------------------

    In addition, when we promulgated the 2020 volume requirements, we 
did so while projecting for the first time that we would be granting a 
large number of SREs for 2020. Specifically, the 2020 final rule 
projected that EPA would grant exemptions of 7.26 billion gallons of 
gasoline and diesel, equivalent to approximately 770 million RINs.\108\ 
We reallocated the projected exempted volumes onto the remaining 
obligated parties, thereby significantly increasing the obligations on 
those parties. However, EPA recently announced that we were denying 
pending SRE petitions before the agency, including all petitions for 
2020.\109\ In other words, the actual exempted volume of gasoline and 
diesel fuel in 2020 is zero. Were we to leave the 2020 standards 
unchanged, this discrepancy between projected and actual exemptions 
would significantly raise the effective volume obligations for all 
obligated parties. This effect is independent from the COVID-related 
transportation fuel demand effects described above.
---------------------------------------------------------------------------

    \108\ 85 FR 7053, February 6, 2020.
    \109\ See ``June 2022 Denial of Petitions for RFS Small Refinery 
Exemptions,'' EPA-420-R-22-011, June 2022.
---------------------------------------------------------------------------

    Accounting for these factors, actual renewable fuel use in 2020 
(17.13 billion RINs) was approximately 1.23 billion RINs lower than the 
estimated obligation for 2020 were we to leave the original 2020 
percentage standards unchanged, based on available data of obligated 
gasoline and diesel fuel production in 2020 (18.35 billion RINs). As 
such, compliance with the original 2020 standards would likely result 
in a significant drawdown of the number of carryover RINs available for 
use in 2021. As we discussed in Section III.B, this would present a 
substantial probability of market disruption, including of 
noncompliance by some obligated parties.
    While our analyses have focused on the availability of RINs for RFS 
compliance in 2020, the risks we describe must be considered in the 
broader context of the fuels market. As we explain in Chapter 1 of the 
RIA, in our review of the implementation of the RFS program, we find 
that the RFS program, the biofuels market, and the broader 
transportation fuels market are highly intertwined. This broader 
consideration of the larger fuels market further supports our concerns 
regarding maintaining the original 2020 standards. For one, 2020 
follows a year (2019) in which the market already relied heavily on 
carryover RINs to meet the RFS obligations. As noted above, we 
anticipate the market to draw down the carryover RIN bank from 3.48 
billion to 1.83 billion RINs to meet compliance obligations for 2019. 
While the 3.48 billion carryover RIN bank going into 2019 reflected a 
historical high, it was the result of roughly three years of 
accumulation.\110\ That accumulation occurred during a period when EPA 
had incrementally raised the total renewable fuel volume each year and 
maintained the conventional volume at the full implied statutory volume 
of 15 billion gallons. At the same time, EPA had

[[Page 39620]]

granted large numbers of SREs that were not accounted for in setting 
the standards and significantly reduced the effective RFS requirements 
below the volumes we established in our annual rules. More recently, we 
have denied pending SRE petitions, including all petitions for 2019 and 
2020, and we are not aware of any circumstances that would warrant EPA 
granting SREs in the future that would increase the size of the 
carryover RIN bank akin to what occurred leading up to 2019.\111\
---------------------------------------------------------------------------

    \110\ See ``Carryover RIN Bank Calculations for 2020-2022 Final 
Rule,'' available in the docket for this action.
    \111\ See ``June 2022 Denial of Petitions for RFS Small Refinery 
Exemptions,'' EPA-420-R-22-011, June 2022.
---------------------------------------------------------------------------

    Were we to leave the 2020 standards unchanged, as noted above, we 
would expect a further drawdown of the carryover RIN bank to the lowest 
historical levels since we began tracking the carryover RIN bank in 
2013. The associated shortfall in renewable fuel production and use in 
2020 comes on the heels of an already large shortfall in renewable fuel 
production and use in 2019. As noted above, the dramatic reduction in 
the carryover RIN bank in 2019 eliminated much of the flexibility the 
carryover RIN bank might have otherwise provided for 2020. Moreover, a 
significant reduction to the number of carryover RINs for two 
consecutive years would only increase the general concerns associated 
with relying on carryover RINs to meet the RFS obligations, especially 
for parties that generally do not own significant quantities of 
carryover RINs.
    Additional factors regarding the larger transportation fuels market 
also support our decision to revise the 2020 standards. The drop in 
demand for transportation fuel due to the COVID-19 pandemic had a 
significant impact on refiners. Refining margins (often referred to as 
the ``crack spread'') dropped sharply in 2020, resulting in broad 
losses across the refining industry in 2020.<SUP>112 113</SUP> In 
response to this economic environment many refiners sought to minimize 
expenses to preserve available capital, taking actions such as delaying 
or cancelling capital expenditures.\114\ At the same time, biofuel 
producers were also impacted by a dramatic reduction in transportation 
fuel demand and challenges across the supply chain for agricultural 
commodities, including biofuel feedstocks.\115\ This combination of 
factors made the acquisition of the renewable fuel volumes necessary to 
meet the RFS obligations in 2020 uniquely challenging, both 
economically and practically.
---------------------------------------------------------------------------

    \112\ Q4 2020: U.S. Refining Margins Remain Depressed; Refining 
Industry in Focus. Baker & O'Brien Inc.; March 12, 2021.
    \113\ Somasekhar, Arathy. ``U.S. oil refiners set for first 
profit since onset of pandemic.'' Reuters. July 28, 2021.
    \114\ Agarwal, Bharti. ``Effect of COVID-19 pandemic on refining 
and refiners.'' IHS Markit. August 2020.
    \115\ Aday, Serpil and Aday, Mehmet Seckin. ``Impact of COVID-19 
on the food supply chain.'' Food Quality and Safety. Volume 4, Issue 
4. December 2020.
---------------------------------------------------------------------------

    Given the above reasons, we have decided to reconsider and revise 
the 2020 volumes to those actually used. In doing so, we recognize that 
since 2020 has already passed, this rulemaking has no ability to affect 
actual production, imports, and use of renewable fuel in 2020. As such, 
the impact of the rule on those statutory factors related to renewable 
fuel production and use during 2020 is similarly limited. Rather, this 
final rule seeks to ensure sufficient RINs are available for 
compliance. It acts to relieve burdens on obligated parties, and in 
some cases the potentially onerous burden of non-compliance with the 
RFS program, the possibility of civil penalties, and associated market 
disruptions. This approach also seeks to mitigate related negative 
impacts on the regulatory and market certainty critical to the 
investments needed to increase renewable fuel volumes in 2022 and into 
the future. As discussed in Section III.B.3, this market certainty has 
an impact on many of the statutory factors, including the expected 
future rate of production of renewable fuels, the development of 
infrastructure to distribute and use increased volumes of such fuels, 
climate change, energy security, job creation, and rural economic 
benefits.
    As our reconsideration of the 2020 standards is retroactive, we 
have considered and mitigated burdens on obligated parties as required 
by the D.C. Circuit's caselaw on retroactive RFS standards. To begin 
with, as noted above, we have ensured sufficient RINs for compliance, 
and this factor has been key in our decision to reconsider and revise 
the standards to actual supply. We have also considered several other 
factors:
    <bullet> Adequate lead time for obligated parties to comply with 
the revised standards.
    <bullet> The availability of compliance flexibilities.
    <bullet> The impact of the revised standards on those parties that 
may have relied on the original standards in making business decisions.
    <bullet> Alternatives to revising the 2020 volume requirements to 
be equal to the volumes actually consumed.
    Each of these factors is discussed below.
    Regarding lead time for obligated parties, we note that relatively 
less lead time is needed given that we are reducing the stringency of 
their obligations, as opposed to increasing their stringency. 
Nonetheless, we are providing significant lead time. Earlier this year 
we extended the 2020 compliance deadline for obligated parties to the 
next quarterly reporting deadline after the 2019 compliance reporting 
deadline for small refineries, which in turn was extended in that same 
action to the next quarterly reporting deadline that is after the 
effective date of this rule.\116\ In other words, obligated parties 
will have no less than 5 months after the publication of this final 
rule in the Federal Register, and no less than 11 months after the 
publication of the 2020-2022 proposal,\117\ to comply with their 2020 
obligations. Had we not adjusted the 2020 compliance deadline, 
obligated parties would have needed to demonstrate compliance by March 
31, 2021.
---------------------------------------------------------------------------

    \116\ 87 FR 5696 (February 2, 2022).
    \117\ 86 FR 72436 (December 21, 2021).
---------------------------------------------------------------------------

    Regarding the availability of compliance flexibilities, obligated 
parties continue to have access to carryover RINs and carryforward 
deficits to facilitate compliance. As discussed above, the revision of 
the 2020 volumes to those actually supplied preserves the carryover RIN 
bank and the availability of this flexibility.
    Regarding potential reliance interests, we recognize that 
retroactively adjusting the 2020 standards may disrupt market 
expectations created by the prior final rule, for instance on the part 
of biofuel producers that made investments or other parties who 
transacted biofuels or RINs, based on the higher standards originally 
finalized. As a general matter, these expectations may not rise to the 
level of reliance interests recognized by the courts.\118\ As discussed 
in Section II, EPA generally has authority to reconsider and revise 
prior rulemakings. Congress also specifically granted EPA multiple 
waiver authorities. Moreover, as shown in Section 1.9 of the RIA, RIN 
prices have fluctuated significantly over time. Thus, market actors may 
not possess legally cognizable reliance interests in specific RFS 
volumes or

[[Page 39621]]

standards or specific RIN prices. Even hypothetically assuming that 
some market expectations amounting to legally cognizable reliance 
interests exist, those expectations and interests were already 
confounded by the significant and unanticipated events described above, 
including the COVID-19 pandemic's impact on the fuels markets.
---------------------------------------------------------------------------

    \118\ See Monroe Energy, LLC v. EPA, 750 F.3d 909, 919-20 (D.C. 
Cir. 2014) (holding that the litigant ``had no legally settled 
expectation'' regarding how EPA exercised its waiver authority to 
adjust the renewable volume obligations). See also AFPM, 937 F.3d 
577-78 (finding it far from obvious that biofuel producers had 
serious reliance interests in the annual volumes).
---------------------------------------------------------------------------

    Furthermore, obligated parties who obtained additional RINs in 
response to the original, higher 2020 standards are not penalized in 
any way. To the contrary, these parties will continue to have 
sufficient RINs to comply with the revised, lower standards and may 
sell excess RINs or carry them over for 2021 compliance consistent with 
EPA's regulations. Similarly, biofuel producers who made investments in 
response to the original 2020 standards and generated additional RINs 
are also able to sell these RINs in the market and may continue to 
obtain returns on their investments as the market demands additional 
RINs needed to meet the 2022 standards. Although this action may reduce 
the market value of 2020 RINs, maintaining the current 2020 standards 
would force other obligated parties into noncompliance. We do not 
believe any potential reliance interests of RIN-holders would justify 
imposing the burden of non-compliance on obligated parties who had no 
reason to anticipate the unprecedented events of 2020. Additionally, we 
have extended the 2020 compliance deadline so that all parties are 
still able to trade and acquire RINs for compliance with the 2020 
standards.\119\ In all cases, we believe that revising the standards is 
warranted based on the events and factors described above and that we 
have set forth a sufficiently detailed justification for doing so.
---------------------------------------------------------------------------

    \119\ 87 FR 5696 (February 2, 2022).
---------------------------------------------------------------------------

    Finally, we also considered alternatives to our final action, 
including revising the 2020 volumes to volumes lesser or greater than 
the volume of renewable fuel that was supplied, as well as leaving the 
original volumes from the 2020 final rule in place. We do not believe 
it is appropriate to retroactively modify the volumes to be lower than 
what the market actually used. We acknowledge that reducing the 2020 
volumes further would allow the market to build up the carryover RIN 
bank so as to provide even greater market liquidity. This would benefit 
obligated parties, particularly those that carried forward deficits 
into 2020 or have very few or no carryover RINs. However, we do not 
believe this would be appropriate since the general purpose of the RFS 
program is to incentivize increasing production and use of renewable 
fuels over time. Doing so, moreover, would be unprecedented. While EPA 
has previously set the RFS standards at what the market actually used 
(like for 2014 and 2015 in the 2014-2016 rule), we have never 
intentionally reduced the standards with the express intent to inflate 
the size of the carryover RIN bank. We further discuss this issue in 
the RTC document.
    At the same time, we do not believe that requiring higher volumes 
than what was actually used is appropriate. As explained above, doing 
so would result in some combination of potentially disruptive outcomes: 
(1) a reduction in the size of the carryover RIN bank; (2) obligated 
parties carrying deficits into 2021; and/or (3) obligated parties being 
out of compliance with their RFS obligations. Given the intertwined 
nature of compliance from year to year, we acknowledge that requiring 
higher volumes in 2020 may increase demand for renewable fuels in 2022. 
However, this rule achieves the same result simply by requiring higher 
volumes in 2022. Given that this rule cannot affect past years such as 
2020 but can affect the future, we believe it is more appropriate to 
drive increasing renewable fuel demand prospectively, in 2022. Doing so 
also mitigates the compliance concerns, including the potential for 
non-compliance, described above. We discussed this issue further in 
Section III.B.
    The above reasons also support our decision to act after the 
statutory deadlines for waiving the volumes and establishing the 2020 
standards. We have also further and specifically assessed whether it is 
appropriate to exercise the reset authority after the passage of the 
statutory deadline and have concluded that it is. We received comments 
from certain stakeholders suggesting either that EPA lacked the 
authority to utilize the reset authority after the deadline had passed, 
or that our discretion is limited when utilizing the reset authority 
after the deadline. Commenters suggested that the reset authority only 
provides for a prospective waiver and cannot be used to modify volumes 
that have already been established. As explained in Section II.A.2, the 
statutory deadline for resetting the total renewable fuel volume was in 
December 2019 (i.e., one year after the promulgation of the 2019 
standards final rule).\120\ The statutory deadlines for resetting the 
advanced biofuel and cellulosic biofuel volumes occurred even earlier. 
Despite being late to meet our statutory obligations, we are exercising 
the reset authority for several reasons.
---------------------------------------------------------------------------

    \120\ We received comments suggesting that the lead time 
requirement in CAA section 211(o)(2)(B) also applied, such that EPA 
was required to promulgate modified standards by October 31, 2019 
(i.e., 14 months prior to the year in which the standards would take 
effect). Since the reset provision in CAA section 211(o)(7) provides 
the timing requirement specific for the reset rule (one year after 
the last triggering action), we believe that specific provision 
controls over the more general 14-month provision in CAA section 
211(o)(2)(B), which applies to establishing standards under that 
provision more generally (including for BBD after 2012 and for all 
other fuel categories after 2022). In any event, whether we utilize 
the October 31, 2019 deadline, or the December 2019 deadline, our 
exercise of the reset authority is late.
---------------------------------------------------------------------------

    First, doing so satisfies our statutory obligation to reset the 
statutory volumes. Second, we have already notified the public that we 
intended to exercise the reset authority.\121\ This rule makes good on 
that intent and meets our statutory obligation. Third, the reset 
authority also provides EPA broad discretion to modify the renewable 
fuel volumes and to establish biofuel volume requirements at the 
volumes actually consumed in 2020. Such 2020 volumes for advanced 
biofuel and total renewable fuel could not be established under the 
cellulosic waiver authority, which was the legal basis for the original 
2020 final rule.\122\ Nonetheless, we believe that these are the 
appropriate volumes for the reasons explained above. Fourth, we 
acknowledge that the text of the statutory reset provision does 
contemplate a prospective waiver of the applicable volumes. This is 
not, however, different from other statutory authorities in the RFS 
program, which also contemplate prospective actions.\123\ This includes 
the authority to establish volumes for 2023 and beyond under CAA 
section 211(o)(2)(B)(ii), which requires EPA to establish volume 
requirements 14 months in advance of when they apply based on the same

[[Page 39622]]

statutory factors as the reset authority. The D.C. Circuit has reviewed 
EPA's belated exercise of authority under that and other RFS provisions 
and has held that EPA does not lose authority to act merely as a result 
of a missed deadline \124\ and upheld our prior rulemakings as 
reasonable. Finally, EPA generally has the authority to reconsider past 
actions establishing the RFS standards and in doing so can utilize 
explicit waiver authorities provided in the statute to modify volumes 
that we declined to use at the time of the initial promulgation of the 
rule to reduce volumes beyond initial reductions. Nothing in the 
statute indicates that the various waiver authorities (such as the 
reset and cellulosic waiver authorities) cannot be used together, nor 
does anything indicate that EPA's authorities are limited upon 
reconsideration of a rule. Further discussion of this topic is provided 
in Section 2 of the RTC document.
---------------------------------------------------------------------------

    \121\ See 84 FR 36766 (July 29, 2019), 86 FR 72436 (December 21, 
2021).
    \122\ The cellulosic waiver authority limits reductions in the 
statutory total renewable fuel and advanced biofuel volumes to no 
more than the reduction in the cellulosic biofuel volume. In the 
2020 final rule, we exercised the cellulosic waiver to the maximum 
extent, resulting in an implied conventional renewable fuel volume 
of 15 billion gallons and an implied non-cellulosic advanced biofuel 
volume of 4.5 billion gallons. However, the volumes of advanced 
biofuel and total renewable fuel actually supplied in 2020 fell 
short of these numbers.
    \123\ See, e.g., CAA section 211(o)(3)(B)(i) (requiring EPA to 
establish standards by November 30 of the preceding year), section 
(o)(7)(D)(i) (requiring EPA to determine whether or not to exercise 
the cellulosic waiver authority by November 30 of the preceding 
year), and section (o)(2)(B)(ii) (requiring EPA to establish volumes 
14 months before they apply).
    \124\ See ACE at 718-9, NPRA at 154-158, Monroe at 920.
---------------------------------------------------------------------------

    The revised 2020 volumes, along with the original volumes, are 
shown in Table III.C-1. The revised 2020 percentage standards are 
provided in Section V.D.

           Table III.C-1--Revised Volume Requirements for 2020
                             [Billion RINs]
------------------------------------------------------------------------
                                             Original
                Standard                      volume      Revised volume
------------------------------------------------------------------------
Cellulosic Biofuel......................            0.59            0.51
Biomas-Based Diesel.....................        \a\ 2.43        \a\ 2.43
Advanced Biofuel........................            5.09            4.63
Total Renewable Fuel....................           20.09           17.13
------------------------------------------------------------------------
Source: EMTS (EPA Moderated Transaction System). See ``RIN supply as of
  2-17-22''
\a\ The BBD volume for 2020 is in physical gallons (rather than RINs)
  and was established in the 2019 final rule (83 FR 63704, December 11,
  2018). We are not revising the 2020 BBD volume in this action.

D. Volume Requirements for 2021

    We proposed to establish the cellulosic biofuel, advanced biofuel, 
and total renewable fuel volumes for 2021 at the volumes of these fuels 
projected to be supplied to the U.S. in 2021. Commenters generally 
supported this proposed approach. Many commenters submitted updated 
data on renewable fuel use in 2021, or referenced publicly available 
data on renewable fuel use and asked that the 2021 volumes reflect this 
updated data. Some commenters suggested that the 2021 volumes should be 
set at the implied statutory levels despite the retroactive nature of 
the 2021 volumes and the anticipated shortfall in renewable fuel use 
relative to the implied statutory volumes. In this final rule we are 
establishing cellulosic biofuel, advanced biofuel, and total renewable 
fuel volumes for 2021 at the volumes of these fuels supplied to the 
U.S. in 2021, as proposed. However, instead of basing the 2021 volumes 
on a projection of the supply in 2021 as in the proposed rule, we now 
have and are updating the volumes based on data on the actual supply of 
these fuels in 2021. While this results in some changes relative to the 
proposed volumes for 2021, these changes are relatively small, and are 
consistent with our stated intent in the proposed rule to finalize 
volumes for 2021 consistent with the most current data available.
    Given that we are establishing 2021 volumes on the same basis as 
the 2020 volumes (i.e., at the volumes of biofuels actually used), the 
rationale for our 2021 volumes is similar to the rationale for our 2020 
volumes. Below we present some of the key similarities and also note 
differences where they exist. As with 2020, because this rule is being 
finalized after the end of 2021, there is no longer any ability for the 
rule to affect renewable fuel production, imports, and consumption in 
the U.S. in 2021. As such, the impact of the rule on each of the 
statutory factors with regard to renewable fuel use and production 
during 2021 is similarly limited. Also, as with 2020, we could have set 
volumes for 2021 that were greater or lesser than the volume of 
renewable fuel that was actually consumed in 2021, but we do not 
believe that doing so would be appropriate for similar reasons. We do, 
however, believe that the RFS program should drive increases in 
renewable fuel volumes over time. Given that we are setting volumes for 
2020-2022 in this rule and the fact that retrospective volumes have 
limited ability to affect biofuel use, we believe that increases in 
volume requirements are more appropriate in 2022. That is when this 
rule applies prospectively for part of the year and has the potential 
to affect actual biofuel consumption. We discuss this relationship 
between the three years further in Section III.B.3.
    As with 2020 standards, the 2021 standards are both late (relative 
to the statutory deadline of November 30, 2020) and retroactive. Unlike 
for 2020, however, we are not modifying previously finalized standards 
for 2021. The lateness and retroactivity of the 2021 standards are 
appropriate for similar reasons as for 2020. We believe that 
establishing the 2021 volumes at the volumes actually used properly 
balances the statutory goal of increasing renewable fuel use with 
mitigating burdens on obligated parties. It ensures that the obligated 
parties should have sufficient RINs to comply. In a separate action, we 
have extended the compliance reporting deadline for 2021, providing 
additional lead time. Obligated parties will have at least 9 months 
after the publication of this action in the Federal Register before 
having to demonstrate compliance with their 2021 obligations.\125\ We 
also maintain the existing compliance flexibilities for obligated 
parties including access to carryover RINs and carryforward deficits. 
As discussed above, the revision of the 2020 volumes to those actually 
supplied preserves the carryover RIN bank that helps facilitate 
compliance, including for 2021. In addition, we note that this 
approach, of setting volumes at those actually used, is consistent with 
our approach in the 2014 and 2015 standards rulemakings, which the D.C. 
Circuit upheld in ACE.
---------------------------------------------------------------------------

    \125\ See 40 CFR 80.1451(f)(1)(i)(B)(3); 87 FR 5696 (February 2, 
2022).
---------------------------------------------------------------------------

    As with the 2020 volumes, the 2021 volumes also depend upon an 
exercise of the reset authority. We believe using the reset authority 
is appropriate for similar reasons as for 2020, including that we are 
statutorily obligated to reset 2021 volumes, we have previously 
informed the public that we intended to reset the volumes, and the 
reset authority gives us discretion to reduce the total renewable fuel 
volume beyond what we could establish under the

[[Page 39623]]

cellulosic waiver. As with resetting the 2020 standards, we do not 
believe that the passage of time or the retroactive nature of this rule 
deprive us of our ability to exercise the reset authority. 
Additionally, the statute indicates that when we reset the volumes, we 
must do so for all remaining years in the statutory volume tables, 
which extend through 2022. Thus, in resetting the 2020 volumes, we are 
obligated to reset the 2021 and 2022 volumes.\126\
---------------------------------------------------------------------------

    \126\ See CAA section 211(o)(7)(F) (``the Administrator shall 
promulgate a rule . . . that modifies the applicable volumes set 
forth in the table concerned for all years following the final year 
to which the waiver applies'').
---------------------------------------------------------------------------

    The volumes of cellulosic biofuel, advanced biofuel, and total 
renewable fuel that we are establishing for 2021 are shown in Table 
III.D-1. The BBD volume for 2021 was previously established in the 2020 
final rule and is included in Table III.D-1 for context. These volumes 
are based on the actual consumption of renewable fuels in the U.S., as 
discussed in greater detail in Chapter 5 of the RIA.

                   Table III.D-1--RFS Volumes for 2021
                             [Billion RINs]
------------------------------------------------------------------------
                        Category                              Volume
------------------------------------------------------------------------
Cellulosic Biofuel......................................            0.56
Biomass-Based Diesel....................................        \a\ 2.43
Advanced Biofuel........................................            5.05
Total Renewable Fuel....................................           18.84
------------------------------------------------------------------------
\a\ The BBD volume for 2021 is in physical gallons (rather than RINs)
  and was established in the 2020 final rule (85 FR 7016, February 6,
  2020). We are not revising the 2021 BBD volume in this action.

E. Volume Requirements for 2022

    For 2022 we proposed a cellulosic biofuel volume that was equal to 
the volume of qualifying cellulosic biofuel projected to be used in the 
U.S. in 2022 and volumes of non-cellulosic advanced biofuel and 
conventional renewable fuel that were consistent with the implied 
statutory targets for these categories.\127\ The proposed volumes for 
2022 were significantly higher than the proposed volumes for 2020 and 
2021.
---------------------------------------------------------------------------

    \127\ The implied statutory volume for non-cellulosic advanced 
biofuel in 2022 (5 billion gallons) is the difference between the 
statutory volumes for advanced biofuel (21 billion gallons) and 
cellulosic biofuel (16 billion gallons) in 2022. Similarly, the 
implied statutory volume for conventional renewable fuel in 2022 (15 
billion gallons) is the difference between the statutory volumes for 
total renewable fuel (36 billion gallons) and advanced biofuel (21 
billion gallons) in 2022.
---------------------------------------------------------------------------

    We received numerous comments on the proposed volumes for 2022. 
Many commenters supported the proposed volumes and the incentives those 
volumes provide for increased renewable fuel production and use in the 
U.S. Some of these commenters suggested that even higher volumes may be 
appropriate, particularly higher volumes of advanced biofuel. We also 
received many comments arguing that the proposed volumes were too high. 
These comments generally raised concerns that the implied volume for 
conventional renewable fuel (15 billion gallons) was far above the E10 
blendwall. To address these concerns these parties requested that we 
reduce the total renewable fuel volume by 1.2-1.5 billion gallons so 
that the implied conventional volume reflected the estimates of the E10 
blendwall in the proposed rule. As an alternative means of reducing the 
implied volume of conventional renewable fuel below the blendwall, some 
commenters suggested that we retain the proposed volume for total 
renewable fuel, but increase the advanced biofuel volume requirement by 
1.2-1.5 billion gallons. Finally, some commenters requested that we 
reduce the advanced biofuel volume. These commenters generally raised 
concerns about the availability and/or cost of advanced biofuel 
feedstocks, and the environmental impacts associated with increased use 
of these feedstocks to produce higher volumes of advanced biofuels.
    After considering these comments and updated data on biofuel 
production and use, we are establishing 2022 total renewable fuel, 
advanced biofuel, and cellulosic biofuel volumes using the same general 
approach as in the proposed rule. We are establishing the cellulosic 
biofuel volume at the volume of qualifying cellulosic biofuel projected 
to be used in the U.S. in 2022. We are establishing the advanced 
biofuel and total renewable fuel volumes consistent with the cellulosic 
biofuel volume and the implied statutory targets for non-cellulosic 
advanced biofuel and conventional renewable fuel (5 billion gallons and 
15 billion gallons, respectively). These volumes represent significant 
growth compared to historical volumes and compared to the volumes of 
these fuels used in 2020 and 2021. The cellulosic biofuel volume we are 
finalizing for 2022 represents a 70 million gallon increase over the 
volume of cellulosic biofuel used in 2021. This increase is based on 
the expected continued growth in biogas use. We also anticipate 
significant growth in the use of non-cellulosic advanced biofuels, 
especially in advanced renewable diesel.\128\ While we expect that 
conventional ethanol use will fall short of the implied 15 billion 
gallon volume in 2022 by roughly 800 million gallons, we project that 
greater volumes of biodiesel and renewable diesel will be produced and 
imported to offset this shortfall. We discuss the 2022 BBD volume 
separately in Section III.F. The remainder of this section discusses 
our rationale for finalizing these volumes. Additional discussion, 
including more detailed responses to the comments mentioned above, can 
be found in the RIA and the RTC document.
---------------------------------------------------------------------------

    \128\ See Chapters 2 and 5 of the RIA.
---------------------------------------------------------------------------

    The cellulosic biofuel volume for 2022 is equal to the projected 
available volume of cellulosic biofuel.\129\ This volume represents the 
highest volume of cellulosic biofuel we can establish for 2022 given 
the cellulosic waiver provision, which requires EPA to reduce the 
statutory cellulosic biofuel volume to the projected volume 
available.\130\ While EPA does have the authority to establish a lower 
cellulosic biofuel volume under the reset authority, we do not believe 
this would be appropriate for 2022, as discussed below.
---------------------------------------------------------------------------

    \129\ See Chapter 5.1 of the RIA.
    \130\ The projected volume available must represent a ``neutral 
aim at accuracy'' API v. EPA, 706 F.3d 476 (D.C. Cir. 2013).
---------------------------------------------------------------------------

    EPA's approach to the cellulosic biofuel volume for 2022 seeks to 
realize the potential for GHG benefits associated with increased 
cellulosic biofuel production despite the relatively high costs of 
liquid cellulosic biofuels, and in the case of CNG/LNG derived from 
biogas, the impact on the price of transportation fuel. Because 
cellulosic biofuels through 2022 are projected to be produced from 
wastes or residues, their production is not expected to have 
significant adverse impacts on several of the statutory factors such as 
the price and supply of agricultural commodities, water quality and 
supply, and the conversion of wetlands, ecosystems, and wildlife 
habitat. Thus, while some of the statutory factors (such as the cost to 
consumers of transportation fuel and the cost to transport goods) may 
suggest that a volume of cellulosic biofuel lower than the volume 
projected to be produced in 2022 would be appropriate, we have 
determined that these factors are outweighed by other factors (such as 
climate change).
    The advanced biofuel and total renewable fuel volumes strike a 
balance between numerous competing statutory factors. They reflect the 
potential for growth in the volume of renewable fuel produced and 
consumed in the U.S., and the potential energy security and climate 
change benefits that producing and consuming increasing volumes of 
qualifying renewable fuels provide.

[[Page 39624]]

They also take into consideration the potential negative impacts of 
renewable fuels produced from crops such as corn or soybeans on 
environmental factors such as the conversion of wetlands, ecosystems, 
and wildlife habitat, water quality, and water supply.
    We acknowledge that the implied conventional renewable fuel volume 
is higher than the volume of these fuels projected to be consumed in 
the U.S. in 2022. This may help incentivize the continued expansion of 
the infrastructure necessary to expand the use higher-level blends of 
ethanol, which remains the dominant form of conventional renewable 
fuel. In recent years, ethanol consumption beyond the E10 blendwall in 
the U.S. has been limited by infrastructure constraints--as well as 
other factors--to a volume significantly lower than the volume of 
ethanol produced in the U.S. and the total production capacity of the 
U.S. ethanol industry. If these infrastructure constraints can be 
overcome, domestic ethanol consumption and ultimately domestic ethanol 
production could increase, and this could result in job creation, rural 
economic development, higher corn prices, and a greater supply of 
agricultural commodities. Despite the incentive for higher-level 
ethanol blends, it is our expectation that ethanol use will fall short 
of 15 billion gallons. We project that additional volumes of 
conventional biodiesel and renewable diesel could be supplied in 2022 
to fulfill a portion of that shortfall, including renewable fuels that 
are grandfathered under 40 CFR 80.1403 and are thus not required to 
meet the minimum 20 percent GHG reduction required for all qualifying 
renewable fuel. These fuels would most likely be produced in foreign 
facilities and from foreign grown feedstocks. This may cause additional 
adverse environmental impacts and would not provide the same benefits 
to domestic job creation and rural economic development but could still 
provide energy security benefits.
    In addition, based on past experience, the shortfall in 
conventional renewable fuel volumes needed to meet 15 billion gallons 
means that obligated parties will likely need to look to other sources 
of renewable fuel beyond conventional renewable fuels to meet their 
compliance obligations for 2022. While we are establishing the non-
cellulosic portion of the advanced biofuel standard at the full implied 
statutory volume of 5 billion gallons, our assessment of potential 
supply indicates that additional volume, particularly of advanced 
renewable diesel, will likely be used in 2022. This means that if, as 
expected, the market falls short of the implied volume of conventional 
renewable fuel in 2022, as has happened in several years in the past, 
excess volumes of advanced biofuel beyond what is needed to meet the 
advanced biofuel volume will likely be used to fulfill some portion of 
the shortfall.
    Finally, while we are projecting that sufficient biodiesel and 
renewable diesel, both advanced and conventional, will be available to 
help meet the 2022 volume requirements, the market may fall short. In 
that case, the carryover RIN bank can still enable compliance and help 
avoid or mitigate potential market disruptions. As noted above, our 
decisions to establish the 2020 and 2021 volumes at those actually 
supplied preserve the carryover RIN bank. Obligated parties may use 
these carryover RINs to help them comply with the 2022 standards. See 
Section III.B for a more detailed discussion of carryover RINs.
    We acknowledge that in lieu of relying on higher volumes of 
advanced biofuel to fulfill an expected shortfall in conventional 
biofuel, we could instead establish a higher advanced biofuel volume 
and corresponding lower conventional biofuel volume, while keeping the 
total renewable fuel volume the same. While this alternative would 
require larger volumes of potentially lower GHG fuels (i.e., advanced 
biofuels), we expect the actual impact on GHG emissions to be minimal 
given that much of the shortfall in conventional biofuel is expected to 
be made up with additional volumes of advanced biofuels regardless. 
Moreover, since the vast majority of ethanol is made from corn starch 
and therefore cannot qualify as advanced biofuel regardless of its GHG 
reductions,\131\ this alternative would reduce incentives for increased 
use of higher-level ethanol blends and may negatively affect investment 
in infrastructure for the distribution of such blends. By contrast, 
maintaining the statutory implied volume of conventional renewable fuel 
preserves greater incentives for investment in the infrastructure for 
higher-level ethanol blends and therefore has the potential to induce 
greater renewable fuel consumption in future years. Moreover, the 
advanced carryover RIN bank going into 2022 is expected to be very low, 
further favoring a lower advanced biofuel standard.\132\
---------------------------------------------------------------------------

    \131\ CAA section 211(o)(1)(B)(i).
    \132\ See ``Carryover RIN Bank Calculations for 2020-2022 Final 
Rule,'' available in the docket for this action.
---------------------------------------------------------------------------

    We note that this approach of maintaining the statutory implied 
conventional and non-cellulosic advanced biofuel volumes is inherently 
consistent with the volumes Congress itself established in EISA. It is 
also consistent with EPA's policy in prior years, during which we have 
never established prospective volume requirements lower than the 
implied statutory volume targets, with a single exception.\133\ While 
we have discretion to establish different volumes, we continue to 
believe that maintaining the implied statutory volumes strikes the 
proper balance based upon our consideration of the reset factors.
---------------------------------------------------------------------------

    \133\ We prospectively established a volume for conventional 
renewable fuel for 2016 (14.5 billion gallons) that was lower than 
the statutory implied volume (15 billion gallons). In doing so, we 
exercised our ``inadequate domestic supply'' waiver authority based 
largely on the limited demand for ethanol in the United States. That 
decision that was subsequently set aside by the D.C. Circuit in ACE, 
as exceeding our waiver authority. We further discuss the ACE 
decision and our response to the Court's remand in Section IV.
---------------------------------------------------------------------------

    As with 2020 and 2021, the 2022 standards are being promulgated 
late; that is, after the statutory deadline of November 30, 2021. Since 
this rule is being finalized during 2022, the 2022 standards will be 
partially retroactive and partially prospective. Despite the lateness 
and partial retroactivity of this rule, we nonetheless believe it is 
appropriate to establish increased volumes for 2022. First, the 2022 
volumes appropriately balance the statutory goal of increasing 
renewable fuel use with mitigating burdens on obligated parties. Since 
the 2022 standards are partially prospective, we expect it will induce 
the market to produce, import, and consume additional biofuels in 2022. 
This is in contrast to the 2020 and 2021 standards, which as noted 
above, are entirely retroactive. Moreover, we find that the market is 
capable of meeting the increased 2022 volumes through increased biofuel 
use, and any shortfall can be met by carryover RINs. Overall, we think 
the 2020-2022 volumes in the aggregate strike the proper policy balance 
overall between the statutory purpose of increasing biofuel use with 
mitigating burdens on obligated parties. We further discuss the 
intertwined nature of these standards in Section III.B.3.
    Second, we are providing significant lead time for 2022. Obligated 
parties will have at least 11 months after the publication of this 
action in the Federal Register before having to demonstrate compliance 
with their 2022 obligations.\134\ Moreover, the proposed rule provided 
parties with additional

[[Page 39625]]

advance notice. We proposed the 2022 volumes in late 2021 and are 
finalizing very similar volumes in this action. Specifically, we are 
finalizing the same implied conventional and non-cellulosic advanced 
biofuel volumes and a slightly lower cellulosic biofuel volume based on 
the same methodology with updated data.
---------------------------------------------------------------------------

    \134\ See 40 CFR 80.1451(f)(1)(i)(B)(4); 87 FR 5696 (February 2, 
2022).
---------------------------------------------------------------------------

    We also continue to provide compliance flexibilities such as access 
to carryover RINs and carryforward deficits. As discussed above, the 
revision of the 2020 volumes to those actually supplied preserves the 
carryover RIN bank and helps facilitate compliance, including for 2022.
    Finally, we have considered and rejected multiple alternatives to 
the 2022 volumes we are finalizing. As discussed above, these include 
requiring lower 2022 volumes while not revising the 2020 standards, 
requiring lower 2022 volumes but higher 2020 and 2021 volumes, and 
requiring higher 2022 advanced biofuel volumes but lower 2022 implied 
conventional volumes. We address additional alternatives raised by 
commenters for volumes for all three years in the RTC document.
    We also acknowledge that we are late in resetting the 2022 volumes. 
We nonetheless believe that this late exercise of the reset authority 
is appropriate for similar reasons as for 2020 and for 2021, including 
that we are obligated to reset the 2022 volumes, we have previously 
told the public that we intended to do so, and the statute requires us 
to reset 2022 if we reset 2020 and 2021. Moreover, all the 2022 volumes 
we are resetting are also independently justified under our cellulosic 
waiver authority. The exercise of that authority is also late, but it 
is justified for substantively the same reasons as the retroactive 
establishment of the 2022 standards described above.
    The volumes of cellulosic biofuel, BBD, advanced biofuel, and total 
renewable fuel we are finalizing for 2022 are shown in Table III.E-1. 
The BBD volume for 2022 is also included in Table III.E-1 for context, 
although we discuss it in Section III.F.

                   Table III.E-1--RFS Volumes for 2022
                             [Billion RINs]
------------------------------------------------------------------------
                        Category                              Volume
------------------------------------------------------------------------
Cellulosic Biofuel......................................            0.63
Biomass-Based Diesel....................................        \a\ 2.76
Advanced Biofuel........................................            5.63
Total Renewable Fuel....................................           20.63
------------------------------------------------------------------------
\a\ The BBD volume for 2022 is in physical gallons (rather than RINs).

F. BBD Volume for 2022

    As described above, we are finalizing an advanced biofuel volume 
consistent with the statutory implied non-cellulosic advanced biofuel 
volume of 5 billion gallons. This represents an increase of 500 million 
gallons from the statutory implied non-cellulosic advanced biofuel 
volume of 4.5 billion gallons in prior years. Consistent with this and 
with the proposed rule, we are also increasing the BBD volume 
requirement by the same energy-equivalent amount (330 million physical 
gallons) to 2.76 billion gallons.
    As in recent years, we believe that excess volumes of BBD (above 
2.76 billion gallons) will be used in 2022 to satisfy the advanced 
biofuel standard. Historically, the BBD standard has not independently 
driven the use of BBD in the market. This is due to the nested nature 
of the standards and the competitiveness of BBD relative to other 
advanced biofuels. Instead, the advanced biofuel standard, and 
occasionally the total renewable fuel standard, have driven the use of 
BBD in the market. We believe this trend will continue in 2022, and 
that the 2022 advanced biofuel and total renewable standards will drive 
the use of BBD in the market in 2022.
    At the same time, we think it is important to maintain space for 
other advanced biofuels to participate in the RFS program. Although the 
BBD industry has matured over the past decade, the production of other 
advanced biofuels continues to be relatively low and uncertain. 
Maintaining this space for other advanced biofuels can facilitate in 
the long-term increased commercialization and use of other advanced 
biofuels, which may have superior environmental benefits and lower 
costs relative to BBD. Conversely, we do not think that increasing the 
size of this space is necessary for 2022 given that only small 
quantities of these other advanced biofuels have been used in recent 
years relative to the space we have already provided.
    The BBD volume for 2022 is consistent with our policy in recent 
annual rules, where we set the BBD volume consistent with the change, 
if any, in the non-cellulosic advanced biofuel volume. In the 2019 
final rule, we set the 2020 BBD volume at 2.43 billion gallons. This 
was an increase from the prior year's BBD volume by the same energy-
equivalent amount (330 million physical gallons) as the increase in the 
2019 non-cellulosic advanced biofuel volume, which had increased by 500 
million ethanol-equivalent gallons from 4 to 4.5 billion gallons. By 
contrast, in the 2020 final rule, when the 2020 non-cellulosic advanced 
biofuel volume remained constant at 4.5 billion gallons, we also 
maintained the 2021 BBD volume at 2.43 billion gallons. In both rules, 
we preserved a significant space for other advanced biofuels to 
compete, approximately equal to 850 million RINs (approximately equal 
to 566 million physical gallons). In reality, only 334 million RINs of 
other advanced biofuel was available in 2020 and 227 million RINs in 
2021, suggesting that we do not need to further increase the space for 
other advanced biofuels. In this rule, we are continuing to maintain 
space for other advanced biofuels. Since the non-cellulosic advanced 
biofuel volume is increasing by 500 million gallons to 5 billion 
gallons in 2022, we are increasing the BBD volume by the same energy-
equivalent amount, or 330 million physical gallons.\135\
---------------------------------------------------------------------------

    \135\ We acknowledge that this increase in the 2022 BBD volume 
is slightly different than our actions in the 2019 and 2020 final 
rules. In those rules, we were setting the BBD volumes for the 
subsequent year. For instance, in the 2019 rule, we increased the 
2020 BBD volume based on increases in the 2019 non-cellulosic 
advanced volume. In this rule, we are setting the 2022 BBD and 
advanced volumes at the same time. In addition, because we 
established the 2021 cellulosic biofuel and advanced biofuel volumes 
retroactively at the levels actually consumed, the increase in non-
cellulosic advanced biofuel from 2021 to 2022 is actually about 490 
million gallons, or slightly less than the change in the implied 
statutory non-cellulosic advanced biofuel volume of 500 million 
gallons. Regardless of these differences, EPA's goal is to maintain 
approximately the same space for other advanced biofuels as in 
recent prospective annual rules. We accomplish this by raising the 
BBD volume by 330 million physical gallons (equivalent to 500 
million ethanol-equivalent gallons). We note that even were we to 
raise the BBD volume by only 490 million ethanol-equivalent gallons, 
we expect no impact on the market given that the advanced biofuel 
and total renewable fuel standards are driving BBD use in 2022.
---------------------------------------------------------------------------

    We acknowledge that in finalizing the 2022 BBD volume in this 
action, we are establishing a late BBD volume. CAA section 
211(o)(2)(B)(ii) provides that EPA shall determine the applicable 
volume 14 months prior to the year for which the standard will apply. 
That deadline (October 31, 2020) has already passed. The D.C. Circuit 
in ACE has affirmed EPA's ability to promulgate late BBD standards as 
long as those standards are reasonable.\136\ In evaluating the 
reasonableness of EPA's standards, the court stated that EPA must 
``consider[] various ways to minimize the hardship caused to obligated 
parties.'' \137\ As in this case of previous annual rules, we believe 
that

[[Page 39626]]

the advanced biofuel and total renewable fuel standards for 2022 will 
drive the use of BBD in the market, and thus, the BBD standard we 
establish is unlikely to result in additional burdens on obligated 
parties. Moreover, as with the other 2022 standards, we have provided 
parties with significant lead time. Additionally, the volume 
requirement we are finalizing is consistent with our treatment of the 
BBD volume requirement in the past (i.e., increasing the BBD volume 
requirement in accordance with increases in the implied statutory non-
cellulosic advanced volume so as to preserve space for other advanced 
biofuels). Further, the same compliance flexibilities available for the 
other standards also apply to BBD. We further discuss the BBD standard 
in Chapter 10 of the RIA and in the RTC document.
---------------------------------------------------------------------------

    \136\ ACE at 721.
    \137\ Id. (quoting Monroe Energy, LLC v. EPA, 750 F.3d 909, 920 
(D.C. Cir. 2014)).
---------------------------------------------------------------------------

G. Summary of the RFS Volumes for 2020-2022

    The volumes for 2020, 2021, and 2022 are summarized in Table III.G-
1.

                               Table III.G-1--RFS Volumes for 2020, 2021, and 2022
                                                 [Billion RINs]
----------------------------------------------------------------------------------------------------------------
                            Category                                   2020            2021            2022
----------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel..............................................            0.51            0.56            0.63
Biomass-Based Diesel \a\........................................        \b\ 2.43        \c\ 2.43            2.76
Advanced Biofuel................................................            4.63            5.05            5.63
Total Renewable Fuel............................................           17.13           18.84           20.63
----------------------------------------------------------------------------------------------------------------
\a\ The BBD volumes are in physical gallons (rather than RINs).
\b\ The BBD volume for 2020 was established in the 2019 final rule (83 FR 63704, December 11, 2018).
\c\ The BBD volume for 2021 was established in the 2020 final rule (85 FR 7016, February 6, 2020).

H. Quantitative Impacts of the Volumes

    As one aspect of our analysis, we estimated certain quantitative 
impacts of the volumes. As explained in Chapter 2.2 of the RIA, we have 
used a baseline of the volumes actually supplied in 2020 to 
quantitatively assess the impacts of this rule, and thus the 2020 
volumes have no costs or benefits. We therefore focus on the 
quantitative impacts of the 2021 and 2022 volumes.\138\ We recognize 
that there are other possible baselines that could be used as a point 
of comparison, and that the choice of baseline significantly influences 
our impact analyses. A potential alternative baseline is the volumes of 
renewable fuels that would be used each year from 2020-2022 in the 
absence of RFS obligations (a ``No RFS baseline''). While we have 
generally not used this alternative baseline in this rule for purposes 
of our quantitative analysis, Chapter 2.2 of the RIA contains a brief 
description of what such a baseline might look like, and how using such 
a baseline might affect our analysis of the impacts of this rule. 
Moreover, many of the qualitative analyses do consider a No RFS 
baseline.
---------------------------------------------------------------------------

    \138\ The below costs and benefits for both 2021 and 2022 are 
calculated relative to the actual volumes of renewable fuel used in 
2020. The 2022 values therefore reflect the incremental volumes for 
both 2021 and 2022.
---------------------------------------------------------------------------

    For some of the statutory factors (fuel costs, cost to transport 
goods, and energy security benefits), we were able to quantify the 
expected impacts and also monetize the associated societal 
impacts.\139\ Information and specifics on how fuel costs and the cost 
to transport goods are calculated are presented in Chapter 9 of the 
RIA, while energy security benefits are discussed in Chapter 4 of the 
RIA. A summary of the fuel costs to society and energy security 
benefits are shown in Tables III.H-1 and 2. As noted above, these 
numbers estimate the impacts of the 2021 and 2022 volumes relative to a 
2020 volumes baseline; that is, the impacts of the use of renewable 
fuel in 2021 and 2022 relative to the use of renewable fuel in 2020. 
This is not the same as estimating the causal impacts of this rule. As 
described earlier in this section, because this rule is retroactive, it 
is not expected to affect renewable fuel use or production in 2020 or 
2021 or to affect the statutory factors (including costs and energy 
security) insofar as they are based on renewable fuel use or production 
in those years. While this rule is expected to cause changes in 
renewable fuel use and production in 2022, the renewable fuel volumes 
analyzed for 2022 are also impacted by other factors. These include, 
for instance, the increased use of ethanol as E10 given the projected 
increase in gasoline consumption in 2022. We further discuss these 
issues in Chapter 2 of the RIA.
---------------------------------------------------------------------------

    \139\ Due to the uncertainty related to the GHG emission impacts 
of this rule (discussed in further detail in Chapter 3.2 of the RIA) 
we have not included a quantified projection of the GHG emission 
impacts of the rule. However, to provide perspective regarding the 
scope of the potential benefits, Chapter 3.2.2 of the RIA 
illustrates potential GHG benefits associated with the volumes in 
this rule using the lifecycle GHG values calculated in the 2010 RFS 
final rule and other prior actions.
    \140\ Office of Management and Budget (OMB). Circular A-4. 
September 17, 2003.

             Table III.H-1--Fuel Costs of the Final Volumes
                      [2021 dollars, millions] \a\
------------------------------------------------------------------------
                          Year                               Costs \b\
------------------------------------------------------------------------
2021....................................................           1,257
2022:
    Excluding Supplemental Volumes......................           5,260
    Including Supplemental Volumes......................           5,720
------------------------------------------------------------------------
\a\ These costs represent the costs of producing and using biofuels
  relative to the petroleum fuels they displace. They do not include
  other factors, such as the potential impacts on soil and water
  quality.
\b\ In the proposal, costs for 2022 were also presented using 3 percent
  and 7 percent discount rates, following guidance to federal agencies
  on development of regulatory analyses.\140\ Since 2022 is now the
  current year, no discounting of future benefits is necessary for this
  final rule.


      Table III.H-2--Energy Security Benefits of the Final Volumes
                        [2021 dollars, millions]
------------------------------------------------------------------------
                          Year                             Benefits \a\
------------------------------------------------------------------------
2021....................................................              67
2022:
    Excluding Supplemental Volumes......................             217
    Including Supplemental Volumes......................             227
------------------------------------------------------------------------
\a\ In the proposal, energy security benefits for 2022 were also
  presented using 3 percent and 7 percent discount rates, following
  guidance to federal agencies on development of regulatory
  analyses.\141\ Since 2022 is now the current year, no discounting of
  future benefits is necessary for this final rule.


[[Page 39627]]

    Other factors, such as job creation, the price and supply of 
agricultural commodities, and the impact on food prices are quantified 
but the societal impacts have not been monetized. We also provided a 
quantitative estimate of the expected annual rate of future commercial 
production of renewable fuels. Further information can be found in the 
RIA. We were not able to quantify many of the impacts of this 
rulemaking, including those of statutory factors such as environmental 
impacts and rural economic development. Regardless of whether or not we 
were able to quantify or monetize a particular impact, we considered 
each of the statutory factors. As we explained in Section II, the 
statute does not require quantification. We also did not rely solely on 
the quantitative impacts to determine the policy in this rulemaking. 
Rather, we find that the volumes established in this rulemaking are 
appropriate under the reset authority when we balance all of the 
relevant factors, which are described throughout this preamble and the 
RIA.
---------------------------------------------------------------------------

    \141\ Office of Management and Budget (OMB). Circular A-4. 
September 17, 2003.
---------------------------------------------------------------------------

IV. Response to ACE Remand

    In addition to finalizing the applicable volume requirements and 
percentage standards for 2020, 2021, and 2022, in this rulemaking we 
are also addressing the remand of the 2014-2016 annual rule \142\ by 
the D.C. Circuit in ACE.\143\ Previously, in the 2020 proposal, we 
proposed to address the D.C. Circuit's remand by retaining the original 
2016 total renewable fuel standard.\144\ We received many comments both 
in support of and against this approach.\145\ In the 2020 final rule, 
we deferred taking action in response to the remand.\146\ We are now 
addressing the remand through supplemental total renewable fuel volume 
requirements totaling 500 million gallons spread over two years.\147\ 
We are finalizing a 250-million-gallon supplemental standard to be 
applied in 2022 coupled with the intention of proposing an additional 
250-million-gallon supplemental standard in a subsequent action for 
2023. We are establishing the supplemental total renewable fuel volume 
requirement and the corresponding percentage standard for 2022 in this 
rulemaking. This section describes the relevant aspects of the 2014-
2016 annual rule, the court's decision, EPA's responsibilities 
following the court's remand, and our approach.
---------------------------------------------------------------------------

    \142\ 80 FR 77420 (December 14, 2015).
    \143\ 864 F.3d 691 (2017).
    \144\ 84 FR 36762 (July 29, 2019).
    \145\ See Docket No. EPA-HQ-OAR-2019-0136.
    \146\ 85 FR 7016 (February 6, 2020).
    \147\ We also refer to the supplemental total renewable fuel 
volume requirement as a ``supplemental standard'' throughout this 
preamble.
---------------------------------------------------------------------------

A. Reevaluating the 2014-2016 Annual Rule

1. The 2016 Renewable Fuel Standard
    On December 14, 2015, EPA promulgated a rulemaking establishing the 
volume requirements and percentage standards for 2014, 2015, and 
2016.\148\ In establishing those standards for 2016, we utilized the 
cellulosic waiver authority under CAA section 211(o)(7)(D) to lower the 
cellulosic biofuel, advanced biofuel, and total renewable fuel volume 
requirements, and the general waiver authority under CAA section 
211(o)(7)(A) to lower total renewable fuel by an additional 
increment.\149\
---------------------------------------------------------------------------

    \148\ 80 FR 77420 (December 14, 2015). The rule also established 
BBD volume for 2017.
    \149\ 80 FR 77439 (December 14, 2015).
---------------------------------------------------------------------------

    As an initial step, under CAA section 211(o)(7)(D), we lowered the 
cellulosic biofuel volume requirement by 4.02 billion gallons, to the 
projected production of cellulosic biofuel for 2016, as required by the 
statute.\150\ Using that same authority, we then elected to reduce the 
advanced biofuel and total renewable fuel volumes. We did not reduce 
the advanced biofuel volume requirement by the full 4.02 billion 
gallons that was permitted under this authority, but rather by a lesser 
3.64 billion gallons that resulted in an advanced biofuel volume 
requirement that was ``reasonably attainable.'' \151\ This allowed some 
advanced biofuel to ``backfill'' for the shortfall in cellulosic 
biofuel. We then reduced the total renewable fuel volume by an amount 
equivalent to the reduction in advanced biofuel in accordance with our 
longstanding interpretation that when making reductions to advanced 
biofuel and total renewable fuel under CAA section 211(o)(7)(D), the 
best reading of the statute is to reduce them both by the same 
amount.\152\
---------------------------------------------------------------------------

    \150\ 80 FR 77499 (December 14, 2015).
    \151\ 80 FR 77427.
    \152\ Id.
---------------------------------------------------------------------------

    As a second step, under CAA section 211(o)(7)(A), under a finding 
of inadequate domestic supply, we further lowered the total renewable 
fuel standard by 500 million gallons for 2016.\153\ In assessing 
``inadequate domestic supply,'' we considered the availability of 
renewable fuel to consumers. Based on such demand-side considerations, 
we made the additional 500 million gallon reduction in the total 
renewable fuel requirement.
---------------------------------------------------------------------------

    \153\ 80 FR 77444.
---------------------------------------------------------------------------

    The 2016 total renewable fuel standard was challenged in court. In 
an opinion issued on July 28, 2017, the D.C. Circuit vacated EPA's use 
of the general waiver authority under a finding of inadequate domestic 
supply to reduce the 2016 total renewable fuel standard, the second 
step of setting the 2016 total renewable fuel standard.\154\ The court 
in ACE held that EPA had improperly focused on the availability of 
renewable fuel to consumers for use in their vehicles, and that the 
statute instead requires a ``supply-side'' assessment of the volumes of 
renewable fuel that can be supplied to refiners, blenders, and 
importers.\155\ Other components of EPA's interpretation of 
``inadequate domestic supply'' were either upheld by the court in ACE 
(e.g., EPA need not consider carryover RINs as a ``supply source of 
renewable fuel for purposes of determining the supply of renewable fuel 
in a given year'') or were not challenged (e.g., EPA's consideration of 
biofuel imports as part of the domestic supply). EPA's use of the 
cellulosic waiver authority to provide the initial reduction in total 
renewable fuel was also upheld by the court. In establishing volume 
requirements for subsequent years, EPA has applied the court's holding 
and not reduced volumes under a finding of inadequate domestic 
supply.\156\
---------------------------------------------------------------------------

    \154\ ACE, 864 F.3d 691.
    \155\ Id. at 696, 707.
    \156\ We note that the precedential effect of the ACE decision 
has governed subsequent RFS annual rules. Compare, e.g., 82 FR 34229 
& n.82 (July 21, 2017) (2018 annual rule proposal, issued prior to 
ACE) (soliciting comment on whether it would be appropriate to 
exercise the inadequate domestic supply waiver authority based on 
the maximum reasonably achievable volume'' of renewable fuel, which 
incorporates demand-side considerations), with 82 FR 46177 (Oct. 4, 
2017) (2018 annual rule availability of supplemental information and 
request for comment, issued after ACE) (recognizing, under ACE, that 
EPA may not consider demand-side constraints in determining 
inadequate domestic supply).
---------------------------------------------------------------------------

2. Agency Responsibility
    The court in ACE upheld EPA's volume requirements for advanced 
biofuel, BBD, and cellulosic biofuel; there is, therefore, no need for 
EPA to adjust those 2016 final volume requirements, or to take further 
action with regard to these standards in light of the court's decision. 
The court also upheld EPA's use of the cellulosic waiver authority to 
reduce the 2016 total renewable fuel volume requirement. The court only 
vacated EPA's decision to further reduce that requirement under the 
``inadequate domestic supply'' waiver authority,

[[Page 39628]]

remanding this issue to EPA for further consideration consistent with 
the court's opinion.\157\ EPA's obligation is thus to reevaluate the 
2016 total renewable fuel volume requirement in accordance with the 
court's decision.
---------------------------------------------------------------------------

    \157\ Id. at 703.
---------------------------------------------------------------------------

B. Consideration of Approaches for Responding to the ACE Remand

    As discussed in the previous section, EPA waived 500 million 
gallons of total renewable fuel volume associated with the 2016 volume 
requirements. In 2017, after the compliance year had passed, and after 
obligated parties had demonstrated compliance with those requirements, 
we received the ACE court's decision rejecting EPA's use of the general 
waiver authority under a finding of inadequate domestic supply to 
reduce volumes as being beyond our statutory authority and remanding 
the rulemaking action back to EPA. Given that compliance demonstrations 
had already occurred, and we had proposed volume requirements for 2017 
factoring in the 2016 standards as originally promulgated,\158\ we were 
faced with the question of whether we should reopen 2016 compliance, or 
factor the waived volume into a future standard, as discussed further 
in this section. In this action, we are taking an initial step to 
address the court's remand through a supplemental standard of 250 
million gallons of total renewable fuel in 2022, with the intent of 
proposing an additional supplemental standard of 250 million gallons of 
total renewable fuel to be required in 2023 in a subsequent action. As 
the court invalidated only the 500 million gallon total renewable fuel 
reduction, we are therefore limiting our response to the remand to only 
the 2016 total renewable fuel standard and the corresponding 500 
million gallon reduction stemming from our use of the general waiver 
authority. Since total renewable fuel is not a subcategory nested 
within any other volume category, this approach will not affect the 
other standards.
---------------------------------------------------------------------------

    \158\ 81 FR 34778 (May 31, 2016).
---------------------------------------------------------------------------

1. Response to the ACE Remand
    We proposed to address the ACE decision by applying a 250-million-
gallon supplemental standard in 2022 with the intention of proposing an 
additional 250-million-gallon supplemental standard for 2023 in a 
subsequent rulemaking action. We received comments both in support of 
such an approach, and against such an action. Despite comments 
suggesting we should not impose a supplemental standard, or that we 
should impose a lesser supplemental standard, we are finalizing the 
supplemental standard as proposed.
    Under this approach, the original 2016 standard for total renewable 
fuel will remain unchanged and the compliance demonstrations that 
obligated parties made for it will likewise remain in place. A 
supplemental standard for 2022 will thus avoid the difficulties 
associated with reopening 2016 compliance, as discussed below. This 
supplemental standard will have the same practical effect as increasing 
the 2022 total renewable fuel volume requirement by 250 million 
gallons, as compliance will be demonstrated using the same RINs as used 
for the 2022 standard. The percentage standard for the supplemental 
standard is calculated the same way as the 2022 percentage standards 
(i.e., using the same gasoline and diesel fuel projections), such that 
the supplemental standard is additive to the 2022 total renewable fuel 
percentage standard. This approach will provide a meaningful remedy in 
response to the court's vacatur and remand in ACE and will effectuate 
the Congressionally determined renewable fuel volume for 2016, modified 
only by the proper exercise of EPA's waiver authorities, as upheld by 
the court in ACE and in a manner that can be implemented in the near 
term. It is with emphasis on these considerations that we are taking a 
different approach from the one proposed in the 2020 proposal.\159\
---------------------------------------------------------------------------

    \159\ See FCC v. Fox, 556 U.S. 502 (2009), acknowledging an 
agency's ability to change policy direction.
---------------------------------------------------------------------------

    We are treating such a supplemental standard as a supplement to the 
2022 standards, rather than as a supplement to standards for 2016, 
which has passed. In order to comply with any supplemental standard, 
obligated parties will need to retire available RINs; it is thus 
logical to require the retirement of available RINs in the marketplace 
at the time of compliance with this supplemental standard. As discussed 
below, it is no longer possible for obligated parties to comply with a 
500-million-gallon 2016 obligation using 2015 and 2016 RINs as required 
by our regulations. Thus, compliance with a supplemental standard 
applied to 2016 would be impossible barring EPA reopening compliance 
for all years from 2016 onward. By applying the supplemental standard 
to 2022 instead of 2016, RINs generated in 2021 and 2022 will be used 
to comply with the 2022 supplemental standard. Additionally, as 
provided by our regulations, RINs generated in 2015 and 2016 could only 
be used for 2015 and 2016 compliance demonstrations,\160\ and obligated 
parties had an opportunity at that time to utilize those RINs for 
compliance or sell them to other parties, while ``banking'' RINs that 
could be utilized for future compliance years.
---------------------------------------------------------------------------

    \160\ 2016 RINs could also be used for up to 20 percent of an 
obligated party's 2017 compliance demonstrations.
---------------------------------------------------------------------------

    In applying the supplemental standard to 2022, we are treating the 
supplemental standard like a 2022 standard in all respects. That is, 
producers and importers of gasoline and diesel fuel that are subject to 
the 2022 standards are also subject to the supplemental standard. The 
applicable deadlines for attest engagements and compliance 
demonstrations that apply to the 2022 standards also apply to the 
supplemental standard. Due to the 2022 supplemental standard being 
administratively included in the 2022 standard, the gasoline and diesel 
fuel volumes used by obligated parties to calculate their obligations 
to satisfy the 2022 supplemental standard will be their 2022 gasoline 
and diesel production and importation. Additionally, obligated parties 
may effectively use 2021 RINs for up to 20 percent of their 2022 
supplemental standard as allowed under the RFS regulations.\161\ We 
intend to provide more guidance for obligated parties regarding 
submitting annual compliance reports for the 2022 compliance year on 
our website closer to the 2022 annual compliance reporting 
deadline.\162\
---------------------------------------------------------------------------

    \161\ See 40 CFR 80.1427(a)(5).
    \162\ Information and guidance related to annual compliance 
reporting instructions for obligated parties will be available at: 
https://www.epa.gov/fuels-registration-reporting-and-compliance-help/how-report-quarterly-and-annually-renewable-fuel.
---------------------------------------------------------------------------

    As described more fully in Section III, the volume requirements for 
2022 are market-forcing, requiring a growth in renewable fuel volumes 
that we believe is achievable. We nevertheless believe that compliance 
with the 2022 supplemental standard in addition to the 2022 annual 
standards is feasible and can be achieved through the actual use of 
renewable fuels, including imports, in 2022 as opposed to carryover 
RINs. However, if the 2022 supplemental standard cannot be fully met 
through the supply of additional renewable fuel volumes in 2022, it 
could be met through a drawdown of the carryover RIN bank.\163\ After 
compliance with the 2019-2021 standards, the carryover RIN bank is 
expected to consist of approximately

[[Page 39629]]

1.83 billion total carryover RINs for compliance in 2022.\164\ We 
acknowledge that the size of the carryover RIN bank may change somewhat 
by the 2022 compliance deadline. However, given the projected size of 
the carryover RIN bank in light of the revised 2020 standards, we think 
it is virtually certain that more than 250 million total carryover RINs 
will be available in 2022.
---------------------------------------------------------------------------

    \163\ See Section III.B for a discussion of carryover RINs.
    \164\ As noted in Section III.B, we project that there will be 
1.83 billion total carryover RINs after compliance with the 2019 
standards. Since we are setting both the 2020 and 2021 volume 
requirements at the actual volume of renewable fuel consumed in 
those years, 1.83 billion total carryover RINs will be available for 
compliance with the 2022 standards as well. The calculations 
performed to estimate the number of carryover RINs currently 
available can be found in the memorandum, ``Carryover RIN Bank 
Calculations for 2020-2022 Final Rule,'' available in the docket for 
this action.
---------------------------------------------------------------------------

    We recognize that in the 2020 proposal, we indicated that a 
supplemental standard would result in a drawdown of the carryover RIN 
bank. We do not believe that is the case today, with a 250-million-
gallon supplemental standard as opposed to the full 500 million 
gallons, and supported by our analysis in Chapter 5 of the RIA, 
demonstrating that the market is capable of achieving the supplemental 
volumes with increased biofuel use. Nonetheless, we acknowledge that 
the market has the option of using carryover RINs to meet the 
supplemental standard. Such use would be consistent with a purpose of 
the carryover RIN bank. As we stated in the 2020 final rule, ``[t]he 
current bank of carryover RINs provides an important and necessary 
programmatic and cost spike buffer that will both facilitate individual 
compliance and provide for smooth overall functioning of the program.'' 
\165\ As discussed in Section III.B, we continue to believe that a 
significant carryover RIN bank is fundamental to the functionality and 
success of the RFS program.
---------------------------------------------------------------------------

    \165\ 85 FR 7020-22 (February 6, 2020).
---------------------------------------------------------------------------

    Attempting to restore waived volumes many years after the close of 
the compliance period brings with it significant challenges, 
particularly in the context of this final action where we are already 
setting market-forcing standards for 2022. By phasing in the 500 
million gallons of total renewable fuel associated with the ACE remand 
through the implementation of two supplemental standards over two 
compliance years, we believe that we can lessen both the disruption to 
the market and the burden on obligated parties and maintain the 
functionality of the carryover RIN bank. Imposing two 250-million-
gallon supplemental standards in two compliance years, as opposed to 
one 500-million-gallon supplemental standard in a single compliance 
year, provides additional notice for both obligated parties and the 
renewable fuel industry about the additional volume requirements and 
lessens the additional requirements for each compliance year. This 
should increase the likelihood that the volumes are met with additional 
renewable fuel use and, in turn, lessen the likelihood that the 
carryover RIN bank is drawn down.
    In summary, we are implementing a 250-million-gallon supplemental 
standard in 2022 and intend to propose an additional 250-million-gallon 
supplemental standard in 2023, totaling 500 million gallons, which 
represent the reduction in the 2016 total renewable fuel volume 
improperly waived under the general waiver authority. This approach 
addresses our obligation to respond to the ACE remand while accounting 
for the unique timing of imposing a 2016 requirement in 2022. This 
approach allows obligated parties to comply with the 2022 supplemental 
standard using 2021 and 2022 RINs.
2. Consideration of Alternatives
    In the proposed rule, we laid out our thinking regarding an 
alternative approach of reopening 2016 compliance. We also considered 
maintaining the 2016 standards, as finalized in 2016, and as proposed 
in the 2020 proposal. Finally, we considered additional reductions in 
2016 volumes utilizing our cellulosic or general waiver authority as 
suggested by several commenters. These alternatives are further 
discussed, and rejected, in Section 8 of the RTC document.

C. Demonstrating Compliance With the 2022 Supplemental Standard

    We will prescribe formats and procedures as specified in 40 CFR 
80.1451(j) for how obligated parties will demonstrate compliance with 
the 2022 supplemental standard that simplifies the process in this 
unique circumstance.\166\ Although the 2022 supplemental standard is a 
regulatory requirement separate from and in addition to the 2022 total 
renewable fuel standard, obligated parties will submit a single annual 
compliance report for both the 2022 annual standards and the 
supplemental standard. Obligated parties will only report a single 
number for their total renewable fuel obligation in the 2022 annual 
compliance report.\167\ Obligated parties only need to submit a single 
annual attest engagement report for the 2022 compliance period that 
covers both the 2022 annual standards and the 2022 supplemental 
standard.\168\ If we set a 2023 supplemental standard as intended, we 
intend to use the same approach for the annual compliance demonstration 
for the 2023 compliance period as well.
---------------------------------------------------------------------------

    \166\ We note that we are not changing the reporting regulations 
at 40 CFR 80.1451(a), as we do not believe that regulatory changes 
are needed to accommodate annual compliance demonstration for the 
2022 supplemental standard.
    \167\ Obligated parties demonstrate annual compliance by 
following the reporting instructions entitled, ``Instructions for 
RFS0304: RFS Annual Compliance Report'' (RFS0304 report). A copy of 
these reporting instructions is available in the docket of this 
action. Obligated parties will combine the 2022 total renewable fuel 
standard with the 2022 supplemental standard in ``Field 18'' of the 
RFS0304 report. This combined value is then multiplied by the 
obligated gasoline and diesel fuel volume reported as specified in 
reporting instructions for ``Field 20'' of the RFS0304 report.
    \168\ We are not modifying the deadline for the attest 
engagement reports for the 2022 compliance period in this action.
---------------------------------------------------------------------------

    To assist obligated parties with this unique compliance situation, 
we intend to issue guidance with instructions on how to calculate and 
report the values to be submitted in the 2022 compliance reports.\169\
---------------------------------------------------------------------------

    \169\ A link to this guidance will be available at: https://www.epa.gov/fuels-registration-reporting-and-compliance-help/how-report-quarterly-and-annually-renewable-fuel.
---------------------------------------------------------------------------

D. Authority and Consideration of the Benefits and Burdens

    In establishing the 2016 total renewable fuel standard, EPA waived 
the required volume of total renewable fuel by 500 million gallons 
using the inadequate domestic supply general waiver authority. The use 
of that waiver authority was vacated by the court in ACE and the rule 
was remanded to the EPA. In order to remedy our improper use of the 
inadequate domestic supply general waiver authority, we find that it is 
appropriate to treat our authority to establish a supplemental standard 
at this time as the same authority used to establish the 2016 total 
renewable fuel volume requirement--CAA section 211(o)(3)(B)(i)--which 
requires EPA to establish percentage standard requirements by November 
30 of the year prior to which the standards will apply and to 
``ensure'' that the volume requirements ``are met.'' EPA exercised this 
authority for the 2016 standards once already. However, the effect of 
the ACE vacatur is that there remain 500 million gallons of total 
renewable fuel from the 2016 statutory volumes that were not included 
under the original exercise of EPA's authority under CAA section 
211(o)(3)(B)(i). We are now utilizing the same authority to correct our 
prior action, and ``ensure'' that the

[[Page 39630]]

volume requirements ``are met,'' and we are doing so significantly 
after November 30, 2015. Therefore, we have considered how to balance 
benefits and burdens and mitigate hardship by our late issuance of this 
standard. Additionally, as we have in the past, we rely on our 
authority in CAA section 211(o)(2)(A)(i) to promulgate late 
standards.\170\ CAA section 211(o)(2)(A)(i) requires that EPA 
``ensure'' that ``at least'' the applicable volumes ``are met.'' \171\ 
Because the D.C. Circuit vacated our waiver of 500 million gallons of 
total renewable fuel from the original 2016 standards, we are now 
taking action to ensure that at least the applicable volumes from 2016 
are ultimately met. We have determined that the appropriate means to do 
so is through the use of two 250 million gallon supplemental standards, 
one in 2022, as finalized in this action, and in 2023, as we intend to 
propose in a subsequent action.
---------------------------------------------------------------------------

    \170\ In promulgating the 2009 and 2010 combined BBD standard, 
upheld by the D.C. Circuit in NPRA v. EPA, 630 F.3d 145 (2010), we 
utilized express authority under section 7545(o)(2). 75 FR 14670, 
14718.
    \171\ See also CAA section 211(o)(2)(A)(iii)(I), requiring that 
``regardless of the date of promulgation,'' EPA shall promulgate 
``compliance provisions applicable to refineries, blenders, 
distributors, and importers, as appropriate, to ensure that the 
requirements of this paragraph are met.''
---------------------------------------------------------------------------

    We have sought to mitigate the burdens of a late and partially 
retroactive standard by implementing a supplemental standard that 
applies for the 2022 compliance year. Although we established a total 
renewable fuel standard in 2016, we did so while erroneously waiving 
500 million gallons of total renewable fuel through the use of our 
general waiver authority. In this action, we are beginning to remedy 
that error by requiring an additional 250 million gallon total 
renewable fuel volume requirement in the 2022 compliance year.\172\
---------------------------------------------------------------------------

    \172\ As noted earlier, we intend to propose an additional 250-
million-gallon supplemental standard for 2023 in a subsequent 
action.
---------------------------------------------------------------------------

    As noted in Section II.C, in ACE and two prior cases, the court 
upheld EPA's authority to issue late renewable fuel standards, even 
those applied retroactively, so long as EPA's approach is 
reasonable.\173\ EPA must consider and mitigate the burdens on 
obligated parties associated with a delayed rulemaking.\174\ When 
imposing a late or retroactive standard, we must balance the burden on 
obligated parties of a retroactive standard with the broader goal of 
the RFS program to increase renewable fuel use.\175\ The approach we 
are taking in this action would implement a late standard, with 
partially retroactive effects, as described in these cases. Obligated 
parties made their RIN acquisition decisions in 2016 based on the 
standards as established in 2016 and they may have made different 
decisions had we not reduced the 2016 total renewable fuel standard by 
500 million gallons using the general waiver authority. Were EPA to 
create a supplemental standard for 2016 designed to address the use of 
the general waiver authority in 2016, we would be imposing a wholly 
retroactive standard on obligated parties, but because the supplemental 
standard will be complied with in the 2022 compliance year, it will 
instead be a late standard with partially retroactive effects. Pursuant 
to the court's direction, we have carefully considered the benefits and 
burdens of our approach and considered and mitigated the burdens to 
obligated parties caused by the lateness.
---------------------------------------------------------------------------

    \173\ See ACE, 864 F.3d at 718; Monroe Energy, LLC v. EPA, 750 
F.3d at 920; NPRA, 630 F.3d at 154-58.
    \174\ ACE, 864 F.3d at 718.
    \175\ NPRA, 630 F.3d at 154-58.
---------------------------------------------------------------------------

    We acknowledge that in the 2020 proposal, we stated that a 
supplemental standard would ``impose a significant burden on obligated 
parties'' that would ``be unduly burdensome and inappropriate'' and 
lack ``any corresponding benefit as any additional standard cannot 
result in additional renewable fuel use in 2016.'' \176\ Our approach 
mitigates the associated burdens or even entirely avoids most of the 
burdens we described in the 2020 proposal. As an initial matter, we 
believe that the combined 2022 total renewable fuel obligation and the 
supplemental standard can be met with actual use of renewable fuel in 
2022. Additionally, the current size of the carryover RIN bank is 
sufficient to mitigate the burden on obligated parties from a 
supplemental standard and spreading the 500 million gallon volume over 
two compliance years also mitigates the burdens on the carryover RIN 
bank, should parties choose to comply utilizing carryover RINs.
---------------------------------------------------------------------------

    \176\ 84 FR 36788 (July 29, 2019).
---------------------------------------------------------------------------

    We believe that the approach described in this action provides 
benefits that outweigh potential burdens. Consistent with the 2016 
renewable fuel volume established by Congress, our supplemental 
standard for 2022 and intended supplemental standard for 2023 are in 
total equivalent to the volume of total renewable fuel that we 
inappropriately waived for the 2016 total renewable fuel standard. The 
use of these supplemental standards phased across two compliance years 
provides a meaningful remedy to the D.C. Circuit's vacatur of EPA's use 
of the general waiver authority and remand of the 2016 rule in ACE. 
While this action cannot result in additional renewable fuel used in 
2016, it can result in additional fuel use in 2022. We believe that 
that while the additional volume in 2022 will put increased pressure on 
the market, it is nevertheless feasible and achievable.
    We have carefully considered and designed this approach to mitigate 
any burdens on obligated parties. We have considered the availability 
of RINs to satisfy this additional requirement. We are imposing a 
supplemental standard to the 2022 standards that will apply in the 2022 
compliance year. Doing so allows 2021 and 2022 RINs to be used for 
compliance with the 2022 supplemental standard, in keeping with 
existing RFS regulations. We believe there will be a sufficient number 
of 2021 and 2022 RINs to satisfy the 2022 supplemental standard.
    Second, we provide significant lead-time for obligated parties by 
imposing this standard as supplemental to the 2022 standard. Obligated 
parties will have the same amount of additional time to comply with 
this standard as the 2022 standard, as discussed in Section III.E.
    Third, we are providing multiple mechanisms to mitigate the 
compliance burden. One step is to designate that the response to the 
ACE remand will be a supplement to the 2022 standards. This approach 
not only allows the use of 2021 and 2022 RINs for compliance with the 
2022 supplemental standard, as described earlier, but it also avoids 
the need for obligated parties to revise their 2016 (and potentially 
2017, 2018, 2019, etc.) compliance demonstrations, which would be a 
burdensome and time-consuming process. In addition, our approach allows 
obligated parties to satisfy both the 2022 annual standards and the 
supplemental standard in a single set of compliance and attest 
engagement demonstrations. We are also extending the same compliance 
flexibility options already available for the 2022 annual standards to 
the 2022 supplemental standard, including allowing the use of carryover 
RINs and deficit carryforward subject to the conditions of 40 CFR 
80.1427(b)(1). We are also applying a supplemental standard for 2022 
that partially addresses the remand, and intend to address the 
remainder of the remanded volumes in a future year. This will allow 
obligated parties and renewable fuel producers additional lead time to 
meet the standard.

[[Page 39631]]

    Lastly, we have carefully considered alternatives, including 
retaining the 2016 total renewable fuel volume as described in the 2020 
proposal, and additional waivers.
    On balance, we find that requiring an additional 250 million 
gallons of total renewable fuel to be complied with through a 
supplemental standard for 2022 (with our intention to do so again in 
2023) to be an appropriate response to the court's vacatur and remand 
of our use of the general waiver authority to waive the 2016 total 
renewable fuel standard by 500 million gallons.

E. Calculating a Supplemental Percentage Standard for 2022

    The formulas in 40 CFR 80.1405(c) for calculating the applicable 
percentage standards were designed explicitly to associate a percentage 
standard for a particular year with the volume requirement for that 
same year. The formulas are not designed to address the approach that 
we are establishing in this action, namely the use of a 2016 volume 
requirement to calculate a 2022 percentage standard. Nonetheless, we 
can apply the same general approach to calculating a supplemental 
percentage standard for 2022.
    The numerator in the formula in 40 CFR 80.1405(c) is the 
supplemental volume of 250 million gallons of total renewable fuel. The 
values in the denominator remain the same as those used to calculate 
the 2022 percentage standards in Section V.D, which can be found in 
Table V.D-1. As described in Section V.D, the resulting supplemental 
total renewable fuel standard percentage standard for a 250-million-
gallon volume requirement in 2022 is 0.14 percent.
    The supplemental standard for 2022 is a requirement for obligated 
parties separate from and in addition to the 2022 total renewable fuel 
standard. The two percentage standards are listed separately in the 
regulations at 40 CFR 80.1405(a), but in practice obligated parties 
will need to demonstrate compliance with both at the same time. Thus, 
the two percentage standards in Section V.D are effectively additive 
(i.e., 11.59% + 0.14% = 11.73%).

V. Percentage Standards

    EPA implements the nationally applicable volume requirements by 
establishing percentage standards that apply to obligated parties.\177\ 
The obligated parties are producers and importers of gasoline and 
diesel fuel, as defined by 40 CFR 80.1406(a). The standards are 
expressed as volume percentages. Each obligated party multiplies the 
percentage standards by the total volume of all non-renewable gasoline 
and diesel fuel they produce or import to determine their RVOs.\178\ 
The RVOs are the number of RINs that the obligated party is responsible 
for procuring to demonstrate compliance with the RFS rule for that 
year. Since there are four separate standards under the RFS program, 
there are likewise four separate RVOs applicable to each obligated 
party for each year.
---------------------------------------------------------------------------

    \177\ See CAA section 211(o)(3)(B).
    \178\ 40 CFR 80.1407.
---------------------------------------------------------------------------

    The volumes used to determine the 2020, 2021, and 2022 percentage 
standards (including the 2022 supplemental standard) are described in 
Sections III and IV and are shown in Table V-1.

                  Table V-1--Volumes for Use in Determining the Applicable Percentage Standards
                                                 [Billion RINs]
----------------------------------------------------------------------------------------------------------------
                            Standard                                   2020            2021            2022
----------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel..............................................            0.51            0.56            0.63
Biomass-Based Diesel \a\........................................        \b\ 2.43        \c\ 2.43            2.76
Advanced Biofuel................................................            4.63            5.05            5.63
Total Renewable Fuel............................................           17.13           18.84           20.63
Supplemental Standard...........................................             n/a             n/a            0.25
----------------------------------------------------------------------------------------------------------------
\a\ The BBD volumes are in physical gallons (rather than RINs).
\b\ The BBD volume requirement for 2020 was established in the 2019 standards rulemaking (83 FR 63704, December
  11, 2018).
\c\ The BBD volume requirement for 2021 was established in the 2020 standards rulemaking (85 FR 7016, February
  6, 2020).

    In this section, we also reaffirm the regulatory change to the 
percentage standard formulas from the 2020 final rule, which account 
for a projection of the aggregate volume for SREs that we expect to 
grant for each compliance year. This section also provides our 
rationale for that projection of exempt gasoline and diesel volume. 
Additionally, we also describe our intended approach for evaluating 
SREs going forward.

A. Calculation of Percentage Standards

    The formulas used to calculate the percentage standards applicable 
to obligated parties are provided in 40 CFR 80.1405(c). The formulas 
apply to the estimates of the volumes of non-renewable 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. EIA provides 
projected gasoline and diesel fuel volumes, but these include 
projections of ethanol and BBD used in transportation fuel. Since the 
percentage standards apply only to the non-renewable portions of 
gasoline and diesel fuel, the volumes of renewable fuel are subtracted 
out of the EIA projections of gasoline and diesel fuel. In addition, 
transportation fuels other than gasoline or diesel fuel (e.g., natural 
gas, propane, and electricity from fossil fuels) are not currently 
subject to the RFS standards, and volumes of such fuels are not used in 
calculating the annual percentage standards or obligated parties' RVOs.
    As specified in the 2010 RFS2 final rule,\179\ the percentage 
standards are based on energy-equivalent gallons of renewable fuel, 
with the cellulosic biofuel, advanced biofuel, and total renewable fuel 
standards based on ethanol equivalence and the BBD standard based on 
biodiesel equivalence. However, all RIN generation is based on ethanol-
equivalence. To effectuate this difference between BBD and the other 
three standards, the formula used to calculate the percentage standard 
for BBD in 40 CFR 80.1405 includes a factor of 1.5 to convert physical 
volumes of BBD into ethanol-equivalent volumes. We are applying the 1.5 
conversion factor for the calculations of the 2020-2022 BBD percentage 
standards.
---------------------------------------------------------------------------

    \179\ See 75 FR 14670 (March 26, 2010).
---------------------------------------------------------------------------

B. Small Refineries and Small Refiners

    In CAA section 211(o)(9), Congress exempted small refineries from 
RFS compliance temporarily through December 31, 2010. Congress also

[[Page 39632]]

provided that small refineries could receive an extension of the 
exemption beyond 2010 based either on the results of a required 
Department of Energy (DOE) study or in response to individual SRE 
petitions demonstrating ``disproportionate economic hardship.'' CAA 
section 211(o)(9)(B)(i).
    In the 2020 final rule, EPA revised certain definitions in the 
percentage standards formulas at 40 CFR 80.1405(c) to account for a 
projection of the total exempted volume of gasoline and diesel produced 
at small refineries, including for those exemptions granted after the 
final rule. We sought comment on this approach in the proposed rule 
associated with this action. We are reaffirming our modified 
definitions in this action and utilizing those definitions to calculate 
the projected exemptions for 2020, 2021, and 2022.
1. Reaffirmation of the Modified Definitions From the 2020 Final Rule
    In the 2020 final rule, we finalized changes to the definitions of 
two relevant terms in the percentage standard formulas at 40 CFR 
80.1405(c), GE<INF>i</INF> and DE<INF>i</INF>.\180\ We stated that 
these terms represent a projection of the exempted volume of gasoline 
and diesel fuel, regardless of whether we had adjudicated exemptions 
for that year by the time of the final rule establishing the percentage 
standards. The term ``GE<INF>i</INF>'', representing the volume of 
exempt gasoline, was defined as ``the total amount of gasoline 
projected to be exempt in year i, in gallons, per Sec. Sec.  80.1441 
and 80.1442.'' Similarly, the term ``DE<INF>i</INF>'', representing the 
volume of exempt diesel, was defined as ``the total amount of diesel 
projected to be exempt in year i, in gallons, per Sec. Sec.  80.1441 
and 80.1442.''
---------------------------------------------------------------------------

    \180\ 85 FR 7016 (February 6, 2020).
---------------------------------------------------------------------------

    At the time of the 2020 final rule, this approach entailed a change 
in policy.\181\ We acknowledged that we previously did not account for 
SREs granted after an annual rule, and at times we even suggested that 
doing so was improper.\182\ We set forth several rationales for our 
change in policy. As we explain below, our rationale for maintaining 
the 2020 final rule's approach largely overlaps with the rationales we 
previously presented, but also differs in some respects.
---------------------------------------------------------------------------

    \181\ See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 
515 (2009).
    \182\ See 78 FR 49825-49826; 77 FR 1340; EPA's Br., Doc No. 
1757157, D.C. Cir. No. 17-1258, AFPM v. EPA (Oct. 25, 2018) (``EPA 
Br. in AFPM'').
---------------------------------------------------------------------------

    First, the basic legal rationale for the modified definitions 
remains the same. Namely, while the statute does not specifically 
require EPA to redistribute exempted volumes in this manner, this is a 
reasonable interpretation of our authority under Chevron v. Natural 
Resources Defense Council (NRDC).\183\ Indeed, making this projection 
harmonizes various statutory provisions. The statute authorizes small 
refineries to petition for and EPA to grant an exemption based on 
disproportionate economic hardship ``at any time,'' \184\ while also 
directing EPA to promulgate standards by November 30 of the prior year 
to ``ensure[ ]'' that the renewable fuel volumes are met.\185\ In other 
words, small refineries may seek and EPA may grant hardship exemptions 
at any time, including after the percentage standards are established. 
Meanwhile, EPA has authority to account for a projection of these 
exemptions in the annual rule to ``ensure'' the renewable fuel 
volumes.\186\ In more concrete terms, accounting for a projection of 
subsequently granted SREs in establishing the standards better ensures 
the volumes are met by increasing the standards on the non-exempt 
obligated parties.
---------------------------------------------------------------------------

    \183\ Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 
U.S. 837, 842-44 (1984).
    \184\ CAA section 211(o)(9)(B)(i).
    \185\ CAA section 211(o)(3)(B)(i); see also CAA section 
211(o)(2)(A)(i), (2)(A)(iii)(I), CAA section 301(a). This 
projection, moreover, is hardly unique in the RFS program as 
Congress required numerous projections in the implementation of the 
program. See, e.g., CAA section 211(o)(7)(D) (projection of the 
volume of cellulosic biofuel production); (o)(3)(A) (projection of 
the volumes of transportation fuel, biomass-based diesel, and 
cellulosic biofuel).
    \186\ See CAA section 211(o)(2)(A)(i), (2)(A)(iii)(I), 
(3)(B)(i); see also CAA section 301(a).
---------------------------------------------------------------------------

    Second, it remains true that this approach is consistent with our 
previous statements that ``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.'' \187\ By projecting exempted volumes in advance of issuing 
annual standards, we can issue a single set of standards for each year 
without the need for subsequent revisions and the associated 
uncertainty for obligated parties.
---------------------------------------------------------------------------

    \187\ 77 FR 1340 (January 9, 2012).
---------------------------------------------------------------------------

    We acknowledge that in this action we are revising the 2020 
standards based in part on changes to our SRE policies that rendered 
the projection in the 2020 final rule inaccurate. However, as we 
explain in Section III.C, the reconsideration of the 2020 standards is 
based on unique circumstances, including the significant SRE policy 
changes and effects of the COVID-19 pandemic on transportation fuel 
use. This is not a scenario that we expect to recur on a regular or 
periodic basis.
    Third, we believe that we can project the exempt small refinery 
volume with reasonable accuracy despite the uncertainties associated 
with this projection. In prior annual rulemakings, we had noted that 
``Congress allowed for some imprecision to exist in the actual volumes 
of renewable fuel that are consumed as a result of the percentage 
standards that we set each November. . .'' \188\ as well as the 
inherent difficulties of projecting exempted small refinery 
volumes.\189\ However, we are projecting only the aggregate exempted 
volume in a given compliance year. We thus need not wrestle with the 
difficulties of predicting precisely which refineries will apply or the 
economic circumstances of specific refineries in a given compliance 
year. We only need to estimate the total exempted volume.
---------------------------------------------------------------------------

    \188\ 77 FR 1340 (January 9, 2012).
    \189\ EPA Br. in AFPM 72-77.
---------------------------------------------------------------------------

    Moreover, prior to the 2020 final rule, EPA had not articulated its 
prospective policy to adjudicating SRE petitions for those compliance 
years. For instance, in the 2018 final rule, we did not state our 
policy to adjudicating 2018 SRE petitions. Instead, we articulated that 
policy in a separate memorandum issued after the annual rule.\190\ 
Since EPA's policy to adjudicating SRE petitions affects the exempted 
volume, not having established this policy at the time of the annual 
rule made it very challenging to project the exempted volume. By 
contrast, in this action, we have the benefit of a stated policy for 
adjudicating SRE petitions. As we explain below, we have also actually 
adjudicated numerous SRE petitions for 2020 and 2021 based on this 
policy. These facts strongly augment our ability to reasonably project 
the exempted volume for 2020-2022.
---------------------------------------------------------------------------

    \190\ ``Decision on 2018 Small Refinery Exemption Petitions,'' 
Memorandum from Anne Idsal, Acting Assistant Administrator, Office 
of Air and Radiation to Sarah Dunham, Director, Office of 
Transportation and Air Quality. August 9, 2019. We note that this 
decision was subsequently remanded to EPA, and EPA issued a new 
decision on April 7, 2022. ``Denial of Petitions for RFS Small 
Refinery Exemptions,'' EPA-420-R-22-005, April 2022.
---------------------------------------------------------------------------

    Fourth, in the 2020 final rule, we indicated that the revised 
definitions resulted in reallocating a projection of significant 
exempted volumes for the purpose of better ensuring that the renewable 
fuel volumes were met. We

[[Page 39633]]

noted that the projection of significant exempt volumes was consistent 
not only with our prospective SRE policy at the time but also with our 
then-recent experience administering the RFS program and the relatively 
high levels of volumes exempted after the promulgation of the relevant 
annual rules. These facts have since changed. As we explain below, we 
are projecting an exempt volume of zero gallons based on our new SRE 
policy. Thus, the projection has no impact on the calculation of the 
2020-2022 percent standards. Stated differently, even were we to apply 
the prior formula definitions used in the 2019 and earlier final rules, 
we would establish the same percent standards.
    Nonetheless, we are choosing to maintain the modified definitions 
for several reasons. First, as we explained above, we think the 
modified definitions properly harmonize the statutory directives to 
``ensure'' that the volumes are met with the statutory authority to 
grant SREs ``at any time,'' including after the promulgation of the 
annual standards. Second, while we are not aware of any circumstances 
that would warrant EPA granting SREs given the technical findings in 
the recent SRE denials as explained further below, the statute 
nonetheless continues to provide authority to grant SREs. In the event 
EPA does grant SREs for some future compliance year, accounting for a 
projection of SREs would in fact better ``ensure'' that the volumes are 
met. Third, as we noted in the 2020 final rule, we received numerous 
comments on this issue as well as a petition for reconsideration. Based 
on this significant stakeholder input, we conducted a comprehensive 
legal, policy, and technical analysis of this issue and decided to 
modify the definitions in that final rule. While we chose to reexamine 
this issue and retain the authority to further revise the definitions, 
we are mindful of the importance of maintaining regulatory repose and 
certainty where appropriate. Finally, in this action, we also received 
many supportive comments on our approach. While we also received some 
adverse comments, those commenters largely rehashed arguments that we 
considered and rejected at the time of the 2020 final rule. In any 
event, no commenter presented us with a sufficient rationale for 
changing course once again. We further address these comments in 
Section 7 of the RTC document.
2. Projection of Exempt Volumes
    We are finalizing a projected exempted volume of zero gallons for 
all years. This was the low end of the range that we proposed, 
consistent with the Tenth Circuit's decision in RFA v. EPA.\191\ We are 
finalizing this projection based on our recent actions denying pending 
SRE petitions for 2016-2021, including all petitions for 2020 and 
2021.\192\ In these actions, we stated, consistent with RFA, that SREs 
should only be granted based on hardship due to RFS compliance, not 
other factors. We further found, consistent with our prior actions, 
that that no small refinery suffers hardship due to the RFS program 
because all small refineries are able to pass through the RIN costs of 
RFS compliance onto their customers in the form of higher sales prices 
on gasoline and diesel fuel. Accordingly, we denied the SRE petitions. 
This was also the primary rationale for the low end of the projection 
we set forth in the proposed rule. We intend to apply this same 
reasoning to future SRE petitions, and we are not aware of any 
circumstances at the current time that would warrant EPA granting SREs 
for the 2020, 2021, or 2022 compliance years. Therefore, we project 
that there will be no exempt volume from SREs under 40 CFR 80.1405(c) 
for 2020, 2021, and 2022.
---------------------------------------------------------------------------

    \191\ We also proposed a high end of the range, consistent with 
the SRE policy set forth in the 2020 final rule. However, that 
policy is no longer EPA's policy. Nor did we apply that policy in 
actually adjudicating any SREs for 2020, 2021, or 2022. Thus, it 
cannot the basis for the projection.
    \192\ See ``April 2022 Denial of Petitions for RFS Small 
Refinery Exemptions,'' EPA-420-R-22-005, April 2022; ``June 2022 
Denial of Petitions for RFS Small Refinery Exemptions,'' EPA-420-R-
22-011, June 2022.
---------------------------------------------------------------------------

    The decision denying all existing 2020 and 2021 SRE petitions forms 
the primary basis for our 2020 and 2021 projections. While the 
regulatory language refers to the amount of gasoline and diesel fuel 
projected to be exempt (i.e., the volume of exempt gasoline and diesel 
fuel as a result of SREs), in this action we are in the unique position 
of having adjudicated all 2020 SRE petitions and can use the actual 
exempt volume of gasoline and diesel fuel. As there has been no volume 
exempt thus far, and we do not anticipate granting any further 
exemptions, the best projection for use in the 2020 percentage standard 
formula is zero gallons of exempt gasoline and diesel fuel. For 2021, 
although we have only adjudicated five petitions, we intend to apply 
the same reasoning to any future petitions we received for 2021. Thus, 
we are also projecting zero gallons of exempt gasoline and diesel fuel 
for 2021. Finally, for 2022, although we have not adjudicated any SRE 
petitions for this year, nor do we have any petitions pending before 
us, we intend to apply the same reasoning to future petitions for 2022. 
Thus, we are also projecting zero gallons of exempt gasoline and diesel 
fuel for 2022. This approach was supported by many commenters.
    EPA's projection of zero exempt volume is the Agency's best 
estimate based on the information available to us at this time. 
However, actual decisions on future petitions must await EPA's receipt 
and adjudication of those petitions. We are not in this action 
resolving any SRE petitions or prejudging the outcome of future 
petitions.

C. Modification of the 2020 BBD Percentage Standard

    As noted above, the percentage standards implement the nationally 
applicable volume requirements. Since EPA is modifying 2020-2022 
cellulosic biofuel, advanced biofuel, and total renewable fuel volumes 
in this action, we are also establishing percentage standards 
corresponding to those volumes. Further, we are establishing the 2022 
BBD volume and associated percentage standard using our set authority 
as described in Section III.F. With regard to the 2020 and 2021 BBD 
volumes, EPA is not revising such volumes, which were established in 
the 2019 and 2020 final rules, respectively.\193\ Nonetheless, for the 
2021 BBD standard, EPA did not previously promulgate percentage 
standards, and thus we do so now for the first time.\194\
---------------------------------------------------------------------------

    \193\ 83 FR 63704 (December 11, 2018); 85 FR 7016 (February 6, 
2020). In this action, we are not reopening nor did we seek comment 
on the 2020 or 2021 BBD volume requirements.
    \194\ This action is consistent with past annual rules, which 
have generally promulgated the BBD percentage standard for the BBD 
volume set in the prior year's annual rule. This is due to the 
unique statutory timing applicable to BBD, where EPA must set the 
volume 14 months in advance but promulgate percentage standards by 
November 30 of the immediately preceding year. See CAA section 
211(o)(2)(B)(ii), (o)(3)(B)(i).
---------------------------------------------------------------------------

    We are also revising the BBD percentage standard for the 2020 
volume. EPA previously promulgated the 2020 BBD volume in the 2019 
final rule and the associated percentage standards in the 2020 final 
rule.\195\ In this action, EPA is modifying only the 2020 BBD 
percentage standard, not the 2020 BBD volume. Specifically, we are 
using the same volume requirement previously promulgated (2.43 billion 
gallons) but updating the other inputs for calculating the standard 
(such as the projections of gasoline and diesel fuel consumption and 
exempted gasoline and diesel fuel volumes in 2020), which

[[Page 39634]]

we term ``inputs'' in the remainder of this section. The full list of 
inputs is set forth in Section V.D below.
---------------------------------------------------------------------------

    \195\ 85 FR 7049 (February 6, 2020).
---------------------------------------------------------------------------

    We are updating the inputs because it is logical for all of the 
2020 percentage standards to be calculated using the same inputs. This 
is consistent with EPA's policy since the beginning of the RFS program, 
where we have generally calculated all the percentage standards for a 
given year based on the same inputs. Here, because we are updating the 
inputs for the other 2020 percentage standards, we also are modifying 
the inputs for the 2020 BBD percentage standard. This approach is 
supported by the nested nature of the standards, where BBD is a subset 
of the advanced biofuel and total renewable fuel standards, and 
compliance with all three standards is accomplished in part by using 
the same RINs. We believe it would not be appropriate to use updated 
inputs for the other standards, while simultaneously using what is now 
outdated data for the BBD standard alone.
    Additionally, the inputs we are using in this action are quite 
different from the inputs used in the 2020 final rule. As discussed in 
Sections II.D. and III.C., the projections for gasoline and diesel fuel 
consumption in 2020 final rule, which were used to establish the BBD 
standard, are significantly different than the actual gasoline and 
diesel fuel consumed in 2020. Relative to the 2020 final rule, we are 
also using different projections of exempted gasoline and diesel fuel, 
as discussed in the prior section.
    Finally, we note that our modification of the 2020 BBD percentage 
standard is not anticipated to have any significant real-world impacts. 
The modification results in an increase in the BBD percentage standard, 
which will increase the number of RINs required for compliance with 
this standard. However, even were we to retain the original, lower 
standard, we would nonetheless expect the same number of BBD RINs to be 
used for 2020 compliance given that BBD is nested within the advanced 
biofuel category and additional BBD RINs will be used to comply with 
that standard.

D. Percentage Standards for 2020-2022

    The formulas in 40 CFR 80.1405 for the calculation of the 
percentage standards require the specification of a total of 14 
variables comprising the renewable fuel volume requirements, projected 
gasoline and diesel demand for all states and territories where the RFS 
program applies, renewable fuels projected by EIA to be included in the 
gasoline and diesel demand, and projected exempt volumes of gasoline 
and diesel fuel. The values of all the variables used for this rule are 
shown in Table V.D-1 for the applicable 2020, 2021, and 2022 standards 
(including the 2022 supplemental standard).\196\
---------------------------------------------------------------------------

    \196\ See the technical memoranda, ``Calculation of % standards 
for 2020,'' ``Calculation of % standards for 2021,'' and 
``Calculation of % standards for 2022,'' available in the docket for 
this action.

                  Table V.D-1--Volumes for Terms in Calculation of the Percentage Standards \a\
----------------------------------------------------------------------------------------------------------------
                                                                                                       2022
             Term                  Description         2020            2021            2022        Supplemental
----------------------------------------------------------------------------------------------------------------
RFVCB.........................  Required volume             0.51            0.56            0.63               0
                                 of cellulosic
                                 biofuel.
RFVBBD........................  Required volume             2.43            2.43            2.76               0
                                 of biomass-
                                 based diesel
                                 \b\.
RFVAB.........................  Required volume             4.63            5.05            5.63               0
                                 of advanced
                                 biofuel.
RFVRF.........................  Required volume            17.13           18.84           20.63            0.25
                                 of renewable
                                 fuel.
G.............................  Projected volume          123.11          134.50          138.61          138.61
                                 of gasoline.
D.............................  Projected volume           49.96           49.92           56.15           56.15
                                 of diesel.
RG............................  Projected volume           12.64           13.96           14.31           14.31
                                 of renewables
                                 in gasoline.
RD............................  Projected volume            2.16            2.08            2.45            2.45
                                 of renewables
                                 in diesel.
GS............................  Projected volume               0               0               0               0
                                 of gasoline for
                                 opt-in areas.
RGS...........................  Projected volume               0               0               0               0
                                 of renewables
                                 in gasoline for
                                 opt-in areas.
DS............................  Projected volume               0               0               0               0
                                 of diesel for
                                 opt-in areas.
RDS...........................  Projected volume               0               0               0               0
                                 of renewables
                                 in diesel for
                                 opt-in areas.
GE............................  Projected volume            0.00            0.00            0.00            0.00
                                 of gasoline for
                                 exempt small
                                 refineries.
DE............................  Projected volume            0.00            0.00            0.00            0.00
                                 of diesel for
                                 exempt small
                                 refineries.
----------------------------------------------------------------------------------------------------------------
\a\ Except where otherwise noted, the required volumes (i.e., the first four rows of the table) are in billion
  RINs. All other volumes are in billion gallons (not billion RINs).
\b\ The BBD volume used in the formula represents physical gallons. The formula contains a 1.5 multiplier to
  convert this physical volume to ethanol-equivalent volume.

    Projected volumes of gasoline and diesel, and the renewable fuels 
contained within them, were derived from EIA's January 2022 STEO. While 
we received 2022 transportation fuel demand projections from a letter 
sent by EIA on October 29, 2021, which included gasoline and diesel 
fuel demand projections from the October 2021 STEO, we believe it is 
more appropriate to use demand projections from the more recent January 
2022 STEO. Using more up-to-date EIA data on projected gasoline and 
diesel fuel demand allows our assessment of 2022 supply--and 
calculation of percentage standards--to be as accurate as possible. For 
the same reason, we have used updated, actual gasoline and diesel fuel 
consumption estimates for 2020 and 2021 from EIA's Monthly Energy 
Review (MER).\197\
---------------------------------------------------------------------------

    \197\ To determine the 49-state values for gasoline and diesel, 
the amount of these fuels used in Alaska is subtracted from the 
totals provided by EIA because petroleum-based fuels used in Alaska 
do not incur RFS obligations. The Alaska fractions are determined 
from the June 25, 2021 EIA State Energy Data System (SEDS), Energy 
Consumption Estimates. In addition, fuel used in ocean-going vessels 
is also subtracted from the total because it is excluded from the 
definition of transportation fuel by the statute. This volume is 
provided directly by EIA.
---------------------------------------------------------------------------

    Using the volumes shown in Table V.D-1, we have calculated the 
percentage standards for 2020, 2021, and 2022 as shown in Table V.D-2.

[[Page 39635]]



                    Table V.D-2--Percentage Standards
------------------------------------------------------------------------
                                       2020         2021         2022
             Category               (percent)    (percent)    (percent)
------------------------------------------------------------------------
Cellulosic Biofuel...............         0.32         0.33         0.35
Biomass-Based Diesel.............         2.30         2.16         2.33
Advanced Biofuel.................         2.93         3.00         3.16
Renewable Fuel...................        10.82        11.19        11.59
Supplemental Standard............          n/a          n/a         0.14
------------------------------------------------------------------------

VI. Administrative Actions

A. Assessment of the Domestic Aggregate Compliance Approach

    The RFS regulations specify an ``aggregate compliance'' approach 
for demonstrating that planted crops and crop residue from the U.S. 
comply with the ``renewable biomass'' requirements that address lands 
from which qualifying feedstocks may be harvested.\198\ In the 2010 
RFS2 rulemaking, EPA established a baseline number of acres for U.S. 
agricultural land in 2007 (the year of EISA enactment) and determined 
that as long as this baseline number of acres is not exceeded, it is 
unlikely, based on our assessment of historical trends and economic 
considerations, that new land outside of the 2007 baseline is being 
devoted to crop production. The regulations specify, therefore, that 
renewable fuel producers using planted crops or crop residue from the 
U.S. as feedstock in renewable fuel production need not undertake 
individual recordkeeping and reporting related to documenting that 
their feedstocks come from qualifying lands, unless EPA determines 
through one of its annual evaluations that the 2007 baseline acreage of 
402 million acres agricultural land has been exceeded.
---------------------------------------------------------------------------

    \198\ 40 CFR 80.1454(g). EPA established the ``aggregate 
compliance'' approach in the 2010 RFS2 rule and has applied it for 
the U.S. in annual RFS rulemakings since then. See 75 FR 14701-04. 
In this final rule, we have not reexamined or reopened this policy, 
including the regulations at 40 CFR 80.1454(g) and 80.1457. 
Similarly, as further explained below, we have applied this approach 
for Canada since our approval of Canada's petition to use aggregate 
compliance in 2011. In this final rule, we have also not reexamined 
or reopened our decision on that petition. Any comments we received 
on these issues are beyond the scope of this rulemaking.
---------------------------------------------------------------------------

    The regulations promulgated in 2010 require EPA to make an annual 
finding concerning whether the 2007 baseline amount of U.S. 
agricultural land has been exceeded in a given year. If the baseline is 
found to have been exceeded, then producers using U.S. planted crops 
and crop residue as feedstocks for renewable fuel production would be 
required to comply with individual recordkeeping and reporting 
requirements to verify that their feedstocks are renewable biomass.
    Based on data provided by the USDA Farm Service Agency (FSA) and 
Natural Resources Conservation Service (NRCS), we have estimated that 
U.S. agricultural land reached approximately 382.6 million acres in 
2021 and thus did not exceed the 2007 baseline acreage of 402 million 
acres.<SUP>199 200</SUP>
---------------------------------------------------------------------------

    \199\ For additional analysis and the underlying USDA data, see 
``Assessment of Domestic Aggregate Compliance Approach 2021,'' 
available in the docket for this action.
    \200\ USDA also provided EPA with 2021 data from the 
discontinued Grassland Reserve Program (GRP) and Wetlands Reserve 
Program (WRP). Given this data, EPA estimated the total U.S. 
agricultural land both including and omitting the GRP and WRP 
acreage. In 2021, combined land under GRP and WRP totaled 2,993,177 
acres. Subtracting the GRP and WRP acreage in addition to the 
Agriculture Conservation Easement Program acreage yields an estimate 
of 379.6 million total acres of U.S. agricultural land in 2021. Just 
subtracting the Agriculture Conservation Easement Program leads to 
an estimate of 382.6 million total acres of U.S. agricultural land 
in 2021.
---------------------------------------------------------------------------

B. Assessment of the Canadian Aggregate Compliance Approach

    The RFS regulations specify a petition process through which EPA 
may approve the use of an aggregate compliance approach for planted 
crops and crop residue from foreign countries.\201\ On September 29, 
2011, EPA approved such a petition from the Government of Canada.\202\
---------------------------------------------------------------------------

    \201\ 40 CFR 80.1457.
    \202\ See ``EPA Decision on Canadian Aggregate Compliance 
Approach Petition'' (Docket Item No. EPA-HQ-OAR-2011-0199-0015).
---------------------------------------------------------------------------

    The total agricultural land in Canada in 2021 is estimated at 115.8 
million acres. This total agricultural land area includes 94.4 million 
acres of cropland and summer fallow, 11.6 million acres of pastureland 
and 9.8 million acres of agricultural land under conservation 
practices. This acreage estimate is based on the same methodology used 
to set the 2007 baseline acreage for Canadian agricultural land in 
EPA's response to Canada's petition. This acreage does not exceed the 
2007 baseline acreage of 122.1 million acres.\203\
---------------------------------------------------------------------------

    \203\ The data used to make this calculation can be found in 
``Assessment of Canadian Aggregate Compliance Approach 2021'' 
located in the docket to this rule.
---------------------------------------------------------------------------

VII. Biointermediates

A. Background

    In order for a fuel to be a renewable fuel under the RFS program, 
it must be produced from renewable biomass as defined in the statute 
(as well as be used to displace petroleum-based transportation fuel, 
heating oil, or jet fuel). The RFS regulations were designed with the 
assumption that renewable biomass would be converted into renewable 
fuel at a single facility where the connection between renewable 
biomass and renewable fuel would be obvious and easy to verify (e.g., a 
renewable fuel producer purchases corn directly from several farmers in 
a region, crushes the corn in a mill, and then ferments the corn into 
ethanol, all at the same facility). The regulations therefore impose 
requirements on renewable fuel producers to provide EPA with 
information necessary to verify that their fuel was made with 
qualifying renewable biomass, through production processes 
corresponding with approved pathways, and in volumes corresponding to 
feedstocks used. Such information is necessary for oversight and 
enforcement, providing integrity and confidence in the program.
    Since the RFS2 regulatory program was promulgated in 2010, however, 
EPA has received a number of inquiries from companies regarding the 
possible use of renewable biomass that has been substantially pre-
processed at one facility to produce a proto-renewable fuel (referred 
to as a biointermediate), which would then subsequently be used at a 
different facility to produce renewable fuel for which RINs would be 
generated. For example, a number of companies have approached us with 
the proposed use of woody biomass or separated MSW to produce a 
biocrude, a pre-processed feedstock that could then be processed into 
renewable fuel at a crude oil refinery. In response to these requests, 
EPA has stated that the RFS regulations promulgated in 2010 are 
insufficient to generally allow RINs to

[[Page 39636]]

be generated in situations where multiple facilities are involved in 
the conversion of renewable biomass feedstocks into renewable fuel. The 
existing registration, engineering review, recordkeeping, reporting, 
and attest audit provisions extend only to the renewable fuel 
production facility under the assumption that the renewable biomass was 
a direct input to the facility. In the case of biointermediates, 
however, some steps of the fuel production process are not taking place 
at the renewable fuel production facility, rendering ineffective the 
existing oversight provisions to ensure production from renewable 
biomass under an EPA-approved pathway. The introduction of a 
biointermediate production facility without commensurate oversight 
provisions introduces the possibility of the same renewable biomass 
being claimed by multiple renewable fuel facilities, multiple RINs 
being generated on the same product, or RINs being generated 
inconsistent with an EPA-approved pathway. Additionally, without 
adequate oversight of the biointermediate production facility, it may 
be impossible to tell whether a so-called ``renewable fuel'' is in fact 
from renewable biomass as opposed to petroleum sources, as it is not 
always possible to detect a biointermediate in a finished fuel. Thus, 
in order to ensure that fuels produced using biointermediates comport 
with CAA requirements for renewable fuels, EPA is must extend its 
regulatory structure, including requirements for registration, 
engineering review recordkeeping, reporting, and attest audits, to 
biointermediate production, transfer, and use.
    On November 16, 2016, EPA issued the proposed Renewables 
Enhancement and Growth Support (REGS) rule that, among other things, 
outlined proposed provisions to allow the use of biointermediates to 
produce qualifying renewable fuels under the RFS program.\204\ The REGS 
proposal outlined a comprehensive set of compliance provisions, 
enforcement provisions, and oversight mechanisms for biointermediates 
that would have allowed biointermediates into the RFS program while 
maintaining oversight of the production, transfer, and use of 
biointermediates to make renewable fuels. A public hearing was held in 
Chicago, IL, on December 16, 2016, and the public comment period ended 
on January 17, 2017. However, EPA did not finalize the biointermediates 
provisions in the REGS proposal.
---------------------------------------------------------------------------

    \204\ See 81 FR 80828 (November 16, 2016).
---------------------------------------------------------------------------

    Since 2017, we have carefully considered public comments received 
in response to the proposed biointermediates provisions in the REGS 
proposal, as well as new information relevant to biointermediates that 
has become available as the industry continues to evolve. Based on 
those comments and our updated understanding of the renewable fuels 
landscape, we thought further on how best to design and implement a 
potential biointermediates program and decided to propose the 
biointermediates provisions anew.\205\ While the December 2021 
biointermediates proposal re-proposed many provisions of the REGS 
proposal, it also updated several key aspects of that proposal 
reflecting what we have learned since that time.
---------------------------------------------------------------------------

    \205\ See 86 FR 72465-72474 (December 21, 2021).
---------------------------------------------------------------------------

    We re-proposed (i.e., proposed anew) the biointermediates 
provisions for two main reasons. First, since the publication of the 
REGS proposal, we identified several areas that we wanted to modify or 
enhance based on new information and our updated understanding of how 
biointermediates may be used in the industry (based on, e.g., the many 
new and different players as the market has continued to evolve). 
Second, we believed it would be useful to provide an additional 
opportunity for stakeholders interested in biointermediates to comment 
on the proposed program as a whole given the significant changes in the 
new proposal and to the amount of time that has passed since the REGS 
proposal.
    In this action, we are finalizing provisions to allow for the use 
of biointermediates to produce qualifying renewable fuels. These 
provisions specify requirements that apply when renewable fuel is 
produced through sequential operations at more than one facility. These 
provisions center around the production, transfer, and use of 
biointermediates and the creation of new regulatory requirements 
related to registration, recordkeeping, and reporting for facilities 
producing or using a biointermediate for renewable fuel production.

B. Effect of This Action on Biointermediates Provisions Proposed in the 
REGS Rule

    The December 2021 re-proposal of the biointermediates program 
superseded the previously proposed biointermediates provisions in the 
REGS proposal. In the December 2021 notice, we explained that we were 
re-proposing (i.e., proposing anew) some aspects of the 
biointermediates provisions from the REGS proposal without changes and 
updating other aspects.\206\ The biointermediates provisions in the 
December 2021 proposal thus replaced the proposed biointermediate 
provisions in the REGS proposal and had the effect of withdrawing that 
previous proposal. That is, we are now clarifying that we consider the 
biointermediates provisions in the 2016 REGS proposal formally 
withdrawn. We are not withdrawing any other portion of the REGS 
proposal. As we noted in the December 2021 proposal, we are not 
responding to any comments on the biointermediates provisions in the 
REGS proposal that were not resubmitted as comments on the December 
2021 proposal; comments on the REGS proposal that were not resubmitted 
are outside the scope of this action.\207\
---------------------------------------------------------------------------

    \206\ See 86 FR 72465 (December 21, 2021).
    \207\ See 86 FR 74266 (December 21, 2021).
---------------------------------------------------------------------------

C. Biointermediates Regulatory Provisions

    We are finalizing provisions allowing the use of biointermediates 
because we believe that the use of biointermediates to produce 
renewable fuels will be a reasonable and positive development for 
future growth in production, particularly of cellulosic and advanced 
biofuels. At the same time, a robust set of regulatory provisions for 
the use of biointermediates is needed in order to ensure that renewable 
fuels produced from biointermediates meet the statutory requirements to 
be produced from renewable biomass and via processes that meet the 
necessary greenhouse gas reduction thresholds.\208\ Additionally, we 
need to be able to oversee the validity of RINs generated in situations 
where feedstocks are allowed to be processed at multiple facilities, 
and where partially processed feedstocks, which may appear very similar 
to or have the potential to actually qualify as renewable fuels 
themselves, are transferred between parties. In many cases, 
biointermediates are processed to a point where they can be used 
directly as fuel or as a feedstock to produce a different renewable 
fuel with further processing. The fact that a biointermediate can be 
both a potential renewable fuel and a feedstock creates opportunities 
for the multiple-generation of RINs for the same volume. The 
biointermediates program imposes regulatory requirements designed to 
prevent such multiple counting. Similarly, we need to ensure that non-
qualifying feedstocks are not added to

[[Page 39637]]

biointermediates during transit and counted as qualifying for 
subsequent RIN generation. Finally, we must also ensure that renewable 
fuels produced from biointermediates are produced under EPA-approved 
pathways to ensure that applicable GHG threshold reductions are met. As 
the history of the RFS program has demonstrated, the value of RINs 
provides considerable incentive for fraudulent activity, and therefore 
it is important for the integrity of the program that mechanisms be in 
place to verify their validity.\209\
---------------------------------------------------------------------------

    \208\ See CAA Section 211(o)(1).
    \209\ We note that there has been a long history of RIN fraud in 
the RFS program. We detail several of the major RIN fraud civil 
enforcement cases on our website, available at https://www.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program.
---------------------------------------------------------------------------

    The finalized biointermediate provisions are designed to ensure 
that biointermediates are produced, transferred, and used in a manner 
consistent with Clean Air Act and EPA regulatory requirements. The 
registration, reporting, and recordkeeping requirements for 
biointermediate producers discussed in Section VII.C.7 will demonstrate 
that a biointermediate producer can make qualifying biointermediate 
under an approved pathway, and the biointermediate-related 
modifications to the renewable fuel producer's registration, reporting, 
and recordkeeping requirements will help ensure that biointermediates 
are used consistent with approved pathways to make qualifying renewable 
fuel. The transfer limits discussed in Section VII.C.4 coupled with the 
product transfer document requirements discussed in Section VII.C.6 
will allow the effective tracking of biointermediates from the point 
the biointermediate is produced to the point the biointermediate is 
used to help ensure that biointermediates are not contaminated or 
multiple-counted for RIN generation during transport.
    We are also finalizing independent third-party oversight measures 
to allow verification that biointermediates are produced, transferred, 
and used appropriately. As discussed in Section VII.C.5, 
biointermediate producers and renewable fuels must participate in the 
RFS Quality Assurance Program (QAP), which will verify production of 
both the biointermediate and resultant renewable fuels. As discussed in 
Section VII.C.8, biointermediate producers and renewable fuel producers 
will also have to undergo an annual attest engagement audit, which 
verifies that registration, reporting, and recordkeeping information is 
consistent with EPA's regulatory requirements for biointermediate 
production, transfer, and use.
    As discussed in Section VII.C.9, we are also finalizing provisions 
that address situations where a biointermediate is improperly produced. 
These provisions establish which parties are liable when an improperly 
produced biointermediate is identified and how any RINs generated from 
fuel produced from the improperly produced biointermediate will be 
treated. We believe these provisions will provide strong incentives for 
biointermediate producers and renewable fuel producers to produce, 
transfer, and use biointermediates in a manner consistent with Clean 
Air Act and EPA regulatory requirements.
1. General Biointermediates Program Structure
    We are finalizing the general program structure as proposed with 
modifications based on comments. Under today's biointermediates 
program, approved pathways in Table 1 to 40 CFR 80.1426 (hereafter 
``Table 1'') will continue to identify the renewable biomass feedstocks 
and processes that are acceptable to make renewable fuel for the 
respective pathways; however, with the finalization of the 
biointermediates program, the processes specified can now be conducted 
across two different facilities.\210\ Since biointermediates are 
altered from the feedstocks listed in Table 1, the regulations require 
renewable fuel producers to have sufficient information from the 
biointermediate producer to verify that the biointermediate is made 
from the renewable biomass feedstock listed in the approved pathway 
being used by the renewable fuel producer.\211\ Similarly, the 
biointermediate producer must have sufficient documentation from the 
feedstock supplier(s) to demonstrate that the feedstock used to produce 
the biointermediate was renewable biomass. The regulations further 
require the renewable fuel producer to keep records and report to EPA 
information sufficient to verify that the biointermediate used to 
produce the renewable fuel is produced from renewable biomass 
consistent with the EPA-approved pathway. The biointermediate producer 
must also independently keep records and report to EPA information to 
demonstrate that biointermediates were produced from qualifying 
renewable biomass feedstocks under EPA-approved pathways.\212\
---------------------------------------------------------------------------

    \210\ We discuss lifecycle and pathway considerations for the 
use of biointermediates in Section VII.D.2. This section also 
addresses the interplay between the biointermediates program and 
facility-specific pathways under 40 CFR 80.1416.
    \211\ We discuss the product transfer document requirements for 
biointermediates in Section VII.C.6.
    \212\ We discuss the registration, reporting, and recordkeeping 
requirements for biointermediate producers and renewable fuel 
producers in Section VII.C.7.
---------------------------------------------------------------------------

    We are not changing the current system in which, with very few 
exceptions (i.e., RINs generated for biogas to renewable CNG, renewable 
LNG, or renewable electricity), only the renewable fuel producer is 
permitted to generate RINs. This means that the party that produces 
renewable fuel from a biointermediate generates RINs, rather than the 
producer of the biointermediate. This approach is the easiest to both 
implement and enforce, and will involve no disruption from current 
practices. If we were to allow for different points of RIN generation, 
it would add unnecessary complexity and difficulty into the program, 
and introduce an opportunity for fraudulent multiple-generation of RINs 
for the same volume of fuel. While renewable fuel producers are not 
precluded from entering into contracts with biointermediate producers 
that could provide for transfer of some or all of the RIN value to the 
biointermediate producer, under the biointermediates provisions only 
the renewable fuel producer will be able to generate and assign the RIN 
within the EPA Moderated Transaction System (EMTS).
    We discuss specific provisions related to the biointermediate 
provisions being finalized in this document below. In general, we 
received many public comments that were supportive of our general 
approach to allow to produce renewable fuels using biointermediates. We 
summarize and respond to all comments received relating to 
biointermediates in Section 10 of the RTC document.
2. Implementation Dates
    We are finalizing our proposal that the biointermediates provisions 
will be implemented starting 60 days after the publication of the final 
rule in the Federal Register. Recognizing the amount of time that has 
passed since EPA first identified the need to revise the regulations in 
order to allow the use of biointermediates and stakeholders' continued 
interest in such use, we are beginning program implementation as soon 
as possible. As explained at proposal, the start date of the program is 
necessarily linked to the scope and complexity of the biointermediates

[[Page 39638]]

provisions being finalized.\213\ In general, public comments supported 
our proposal to begin implementing the biointermediate provisions as 
soon as possible. We also received a number of public comments 
suggesting a multitude of changes, many of which would have 
significantly increased the scope and/or complexity of the 
biointermediates program and thus the amount of time EPA would need to 
begin implementing it. While we address these suggestions individually 
in this preamble or the RTC document, we note that we have finalized a 
program that we can implement quickly and effectively so that parties 
can begin producing biointermediates as soon as practical.
---------------------------------------------------------------------------

    \213\ See 86 FR 72466 (December 21, 2021).
---------------------------------------------------------------------------

3. Definition of Biointermediate
a. General Approach to Defining Biointermediates
    We are finalizing as proposed our general approach to defining 
biointermediates that are allowed in the program.\214\ We explained in 
the December 2021 proposal that the broad definition of biointermediate 
in the REGS proposal would have allowed any product that met that 
definition to be used as a biointermediate. We also noted that, based 
on comments received on the REGS proposal and subsequent information 
and experience, the one-size-fits-all regulatory framework in the REGS 
proposal would not actually work in all of the potential 
biointermediates situations anticipated. Therefore, in December 2021 we 
instead proposed to specifically identify permissible biointermediates 
by adding individual types to the definition of biointermediates. By 
allowing only those particular types of biointermediates for which we 
have adequate information and confidence in our ability to effectively 
oversee their production, distribution, and use, we can ensure that 
RINs are generated only for fuels produced from biointermediates that 
in turn are produced from renewable biomass under EPA-approved 
pathways. We also noted at proposal that, under this approach, in order 
for us to allow a new biointermediate into the program we would need to 
modify the regulatory definition of biointermediates via rulemaking. 
Recognizing that undergoing a rulemaking to add new biointermediates 
into the program could take time, we sought comment on whether we 
should allow for an administrative process to approve biointermediates 
outside of a rulemaking.
---------------------------------------------------------------------------

    \214\ We are finalizing the definition of biointermediate in 40 
CFR 80.1401.
---------------------------------------------------------------------------

    Several commenters suggested that we either revert to the proposed 
biointermediates definition in the REGS proposal or allow for an 
administrative process akin to the pathway petition process for the 
approval of new biointermediates.\215\ These commenters suggested that 
a rulemaking process would take too long to allow for EPA to approve 
new biointermediates. They also noted that they believed that the 
proposed regulatory provisions provided sufficient safeguards to allow 
a broader range of biointermediates than the proposed definition would 
allow. Other commenters supported our general approach to defining 
biointermediates. These commenters noted that the approach balanced the 
allowing of needed flexibility in the RFS program to allow for 
renewable fuels to be produced at multiple facilities with ensuring 
proper oversight of a more complex production and distribution chain.
---------------------------------------------------------------------------

    \215\ The pathway petition process is described in 40 CFR 
80.1416.
---------------------------------------------------------------------------

    While we appreciate the desire of the commenters for greater 
flexibility and responsiveness, their comments did not assuage our 
implementation and oversight concerns. Each biointermediate has 
particular compliance and enforcement considerations, including how to 
track the biointermediate back to renewable biomass, how a 
biointermediate may be processed with other feedstocks to produce 
renewable fuel, and how a biointermediate fits within existing 
pathways. Furthermore, commenters failed to specify how the proposed 
biointermediate provisions could address our implementation and 
oversight concerns for any and all future potential biointermediates. 
While we have sufficient information on and understanding of the 
specific biointermediates that we proposed for inclusion in the 
December 2021 proposal and those additional biointermediates that we 
are finalizing as discussed in Section VII.C.3.c, it is difficult to 
anticipate whether the biointermediates program will be effective for 
biointermediates with as-yet unknown production, distribution, and use 
considerations. As such, we continue to believe that the most 
reasonable approach is a biointermediates program that allows us to 
consider and, if necessary, address these challenges on a 
biointermediate-by-biointermediate basis. We are thus finalizing as 
proposed our proposal to define the scope of the program by specifying 
the particular biointermediates that will be eligible to produce 
qualifying renewable fuels. In other words, under this approach, we are 
defining the specific situations in which it would be permitted to 
process feedstocks into renewable fuels at multiple facilities. Also 
under this approach, if we do not list a ``biointermediate'' explicitly 
in the definition of biointermediate, that purported 
``biointermediate'' is not lawful for use in making renewable fuels 
under the RFS program. In order for a new biointermediate to be brought 
into the program under this approach, we will amend the regulations via 
notice-and-comment rulemaking to add the new biointermediate to the 
list, at which time we will also make any other necessary regulatory 
changes needed to provide proper oversight for its potentially unique 
circumstances.
    We appreciate commenters concerned that adding new biointermediates 
via notice-and-comment rulemaking will take time; however, we note that 
we will likely continue to periodically issue rulemakings related to 
the RFS program to set volume requirements, promulgate new pathways, 
and technically amend the RFS regulatory provisions. These ongoing 
regulatory activities will provide ample opportunities to add new 
biointermediates to the program with any other necessary regulatory 
changes on a regular basis.
    As explained at proposal, our approach to defining biointermediates 
is not intended to affect pre-processing steps for feedstocks in Table 
1 that are limited to form changes. We recognize that it has been 
common practice for some feedstocks listed in Table 1 to 40 CFR 80.1426 
to be pre-processed at separate facilities before they are delivered to 
a renewable fuel production facility and used to produce renewable 
fuel. We do not intend to disrupt this practice. However, in order to 
assure that we can verify that renewable fuel was made with qualifying 
renewable biomass, through production processes corresponding with 
approved pathways, we need to impose limits on the type of pre-
processing of qualifying feedstocks that will be allowed without 
becoming subject to the biointermediate requirements. We believe we 
have appropriately balanced these interests by allowing the pre-
processing of feedstocks listed in approved pathways at facilities 
other than the renewable fuel production facility, but only if the pre-
processing results only in a form change such as chopping, crushing, 
grinding, pelletizing, filtering, compacting/compression, centrifuging,

[[Page 39639]]

degumming, dewatering/drying, melting, or the addition of water to 
produce a slurry. Unlike other processes that would lead to a 
biointermediate, even though these form-change processes are conducted 
at an upstream location, the feedstock can reasonably be expected to 
continue to be derived from renewable biomass, be used to produce 
renewable fuel under an EPA-approved pathway, and EPA can be reasonably 
expected to be able to verify it.
    In the NPRM, we sought comment on whether we should expand or 
narrow the types of pre-processing that should be allowed for 
feedstocks at facilities other than the renewable fuel production 
facilities that will not result in a biointermediate. Several 
commenters noted that we should allow for additional types of pre-
processing steps. Based on these comments, we are adding the bleaching 
and degumming of vegetable oils as non-prohibited pre-processing steps. 
These pre-processing steps are consistent with our stated intent in the 
proposal to avoid disrupting existing renewable fuel production 
processes where renewable biomass is not substantially altered in a 
manner that would make us question our ability to oversee the program. 
We have not included pre-processing steps that raise concerns over our 
ability to ensure that a biointermediate was produced from renewable 
biomass. Allowing such processes would require additional regulatory 
oversight, such as the biointermediate provisions being finalized in 
this document.
    To implement this approach, we are finalizing a prohibition on the 
production of a renewable fuel at more than one facility unless the 
renewable fuel production facility is using a biointermediate as 
defined in 40 CFR 80.1401 or is using feedstocks identified in Table 1 
to 40 CFR 80.1426 that were pre-processed at a different facility and 
the pre-processing was limited to chopping, crushing, grinding, 
pelletizing, filtering, compacting, compression, centrifuging, 
degumming, dewatering/drying, melting, or the addition of water to 
produce a slurry. Our intent with this prohibition is to make clear the 
specific situations where feedstocks will be allowed to be processed at 
multiple facilities without being subject to the biointermediates 
provisions.
b. Biocrude, Free Fatty Acid (FFA) Feedstock, and Undenatured Ethanol
    In the NPRM, we proposed an initial list of biointermediates that 
included biocrude, FFA feedstock, and undenatured ethanol. We proposed 
these three biointermediates because we believed they could effectively 
be accommodated by the proposed biointermediates provisions. We noted 
that these biointermediates are likely to be available in measurable 
quantities in the near future and that our proposed biointermediate 
regulations could ensure proper compliance oversight and 
enforcement.\216\ We also noted that since parties exist that are 
relatively close to or already capable of producing renewable fuels 
from biocrude, FFA feedstock, and undenatured ethanol, it is relatively 
clear to us how they will do so and what the compliance oversight 
issues might be with these biointermediates. Because we had sufficient 
knowledge and understanding to be confident that our biointermediates 
regulations can ensure proper compliance and oversight, proposed that 
it would be appropriate to allow the use of these biointermediates to 
produce renewable fuel under a biointermediates program.
---------------------------------------------------------------------------

    \216\ See 86 FR 72466-72469 (December 21, 2021).
---------------------------------------------------------------------------

    All commenters that spoke to the issue of inclusion of biocrude, 
FFA feedstock, and undenatured ethanol supported the inclusion of these 
biointermediates into the program. As supported by commenters, we are 
finalizing the inclusion of biocrude, FFA feedstock, and undenatured 
ethanol.\217\
---------------------------------------------------------------------------

    \217\ The definitions of each of specific biointermediate 
allowed under the program are being promulgated at 40 CFR 80.1401.
---------------------------------------------------------------------------

    To effectuate the inclusion of these biointermediates in the 
definition of the program, we proposed specific definitions of 
biocrude, FFA feedstock, and undenatured ethanol. We developed these 
proposed definitions based on discussions we had with parties that were 
interested in producing these biointermediates prior to the December 
2021 proposal. We received several comments suggesting clarifications 
for each proposed definition.
    Regarding biocrude, in the NPRM we proposed to define biocrude as 
``a liquid biointermediate produced from renewable biomass through 
gasification or pyrolysis at a biointermediate production facility to 
be used to produce renewable fuel at a refinery as defined in 40 CFR 
1090.80.'' \218\ We proposed to limit biocrude to these two production 
processes because we believed that gasification or pyrolysis of 
qualifying renewable biomass to make biocrude was consistent with the 
existing EPA-approved pathways, specifically Row M of Table 1 to 40 CFR 
80.1426. We received a number of comments suggesting that we allow for 
additional processes for the production of biocrude. Some commenters 
noted that additional processes are already covered by current pathways 
listed in Table 1 of 80.1426 (e.g., thermo-catalytic hydrodeoxygenation 
listed in Row M). Others asked whether certain types of pyrolysis 
(e.g., hydrothermal liquefaction) would be covered under the proposed 
definition. Finally, some commenters noted that there are a number of 
potential processing technologies to produce biocrude that EPA should 
consider adding to the proposed biocrude definition. We appreciate 
commenters highlighting that biointermediate producers could use other 
processes to make biointermediates consistent with our proposed 
approach. Therefore, we have modified the definition of biocrude to 
clarify that it must be produced from a process already covered under 
pathway M under Table 1 of 80.1426 (e.g., pyrolysis or gasification), 
or a process identified in an approved pathway under 40 CFR 80.1416 for 
the production of renewable fuel produced from biocrude.
---------------------------------------------------------------------------

    \218\ See 86 FR 72475 (December 21, 2021).
---------------------------------------------------------------------------

    Due to the significant amount of energy needed to process renewable 
biomass, it is important that only processes we have determined are 
consistent with meeting the applicable GHG reduction thresholds are 
used to produce biocrude. We are therefore structuring the biocrude 
definition to clearly limit biocrude production to processes covered by 
an EPA-approved pathway that can account for the GHG reduction, while 
reducing barriers for processes that can demonstrate they meet the GHG 
reduction.
    We also received several comments on the proposed FFA feedstock 
definition, and we are finalizing some suggested changes to that 
definition based on comments. In the NPRM, we proposed to define FFA 
feedstock as ``a biointermediate that is composed of at least 80 
percent free fatty acids that are separated from renewable biomass.'' 
\219\ We also proposed to include a provision that FFA feedstock must 
not include any free fatty acids from the refining of crude palm oil. 
We explained that this proposed definition is consistent with the 
lifecycle analysis that supported the proposed stand-alone 
esterification pathway in the 2020 RVO rule,\220\ and that it would 
ensure that only those FFA

[[Page 39640]]

feedstocks that would fall under currently approved pathways would be 
used to produce renewable fuels.
---------------------------------------------------------------------------

    \219\ See 86 FR 72485 (December 21, 2021).
    \220\ See 84 FR 36801 (July 29, 2019) for the proposed 
esterification pathway and 86 FR 72473-72474 (December 21, 2021) for 
a discussion of FFA feedstocks and the proposed esterification 
pathway.
---------------------------------------------------------------------------

    We are finalizing changes to the FFA feedstock definition in two 
areas based on suggestions from public commenters. First, several 
commenters suggested that the 80 percent requirement was too 
restrictive and may limit the use of many FFA feedstocks that could 
currently be produced and used in the market. These commenters 
suggested that we reduce the limit to 50 or 60 percent. As explained in 
the RTC document, we believe these comments have merit and are 
therefore finalizing that FFA feedstock must contain at least 50 
percent free fatty acids.
    Second, one commenter suggested that we specify a test method to 
measure FFA concentration in FFA feedstock as part of the definition. 
While we generally agree with the idea of a biointermediate producer 
specifying how they intend to measure FFA concentration, we want to 
ensure that we are accommodating the number of test methods that could 
be used to measure FFA concentration. Therefore, in response to this 
suggestion, we are finalizing a requirement for biointermediate 
producers that make FFA feedstock to submit as part of registration a 
description of the method they will use to determine FFA concentration 
in FFA feedstock. In acting on registrations, EPA will either approve 
use of the proposed measurement method or require an alternate method.
    Regarding undenatured ethanol, we proposed to define the specific 
biointermediate as ``ethanol that has not been denatured as required in 
27 CFR parts 19 through 21.'' We received a comment suggesting that we 
expand the definition of undenatured ethanol to include specially 
denatured alcohols under the Department of Treasury's Alcohol and 
Tobacco Tax and Trade Bureau (TTB) requirements at 27 CFR parts 20 and 
21. Specially denatured alcohols (SDAs) are alcohols that are denatured 
to make them unfit for human consumption, but not in a manner that 
qualifies them as denatured fuel ethanol under EPA's fuel quality 
regulations at 40 CFR part 1090 or industry specifications at ASTM 
International (ASTM) D4806. The commenter suggested that these alcohols 
could be used to make renewable fuel and that TTB requires specific 
tracking of SDAs to ensure that they are not used for human 
consumption. We believe, as commenters suggest, that SDAs should 
qualify as a biointermediate. We recognize that parties that may wish 
to produce ethanol for use as a biointermediate must comport with TTB 
requirements for the distribution of the ethanol to renewable fuel 
production facilities, and those parties may wish to utilize the 
provisions of 27 CFR parts 20 and 21 to create SDAs instead of either 
obtaining waivers to TTB requirements to distribute undenatured ethanol 
or denaturing the ethanol to create denatured fuel ethanol (which can 
render the ethanol no longer suitable for use to produce a renewable 
fuel). We did not intend to exclude SDAs from the program and have 
expanded the definition of undenatured ethanol to include SDAs as 
suggested. However, as we discuss in more detail in the RTC document, 
TTB requirements are not a substitute for the biointermediates 
provisions as TTB's provisions are not intended to demonstrate that 
renewable fuels were produced consistent with CAA and EPA regulatory 
requirements.
    We also note that we received a number of comments asking to 
clarify the treatment of foreign produced undenatured ethanol. We 
discuss this issue in Section VII.C.9.
c. Additional Allowed Biointermediates
    Recognizing that there may be additional potential biointermediates 
that are consistent with our criteria for inclusion in the program at 
this time (i.e., in this rulemaking), we sought comment on other 
potential biointermediates for inclusion in the final rule. In the 
NPRM, we noted that we would consider adding a potential 
biointermediate in the final rulemaking if its production, transfer, 
and use to produce renewable fuel would be sufficiently and 
appropriately covered by the regulatory framework we were proposing. 
Specifically, we noted our intention to base our consideration of 
potential additional biointermediates on whether the proposed 
biointermediates provisions would adequately limit opportunities to 
generate fraudulent RINs through multiple-counting, whether we could 
ascertain that feedstocks used to produce the potential biointermediate 
qualify as renewable biomass using an EPA-approved pathway, and whether 
there are any unique considerations for the potential biointermediate 
that would require further regulatory requirements to ensure that 
generated RINs are valid. We asked that commenters suggesting a 
potential additional biointermediate specifically address these 
criteria in their comments. We also asked commenters to provide 
information describing the type of potential biointermediate, the 
potential volume of renewable fuel(s) that could be produced from it, 
and the timeline for its development and ultimate production. Finally, 
we noted that we intended to finalize only those potential 
biointermediates that meet the criteria described above: would be 
effectively overseen under the proposed compliance and oversight 
provisions, have a low likelihood of being susceptible to generation of 
fraudulent RINs, can be verified as being produced from renewable 
biomass, and would not require further regulatory provisions.
    We received comments suggesting several additional biointermediates 
for inclusion in the final rule. We note that many commenters did not 
supply adequate information for us to determine whether it would be 
appropriate, based on our criteria, to include a potential 
biointermediate in the program. In such cases, given our uncertainty 
regarding whether the regulatory provisions would be sufficient to 
oversee production and use of the biointermediate, we have not added 
the potential biointermediate to the list at this time. We discuss each 
of these potential biointermediates specifically in the RTC document.
    However, some commenters did provide enough information for us to 
determine that we can appropriately include the potential 
biointermediate under the biointermediates provisions. In these cases, 
commenters adequately described the potential biointermediate and 
described how the proposed biointermediate provisions would be 
sufficient to mitigate the generation of fraudulent RINs. Based on the 
suggestions and descriptions from comments, we are finalizing the 
addition of five additional biointermediates in the final rulemaking. 
Specifically, we are adding the following to the biointermediates 
definition in this action: biomass-based sugars, digestate, glycerin, 
biodiesel distillate bottoms, and soapstock. We are also promulgating 
definitions, largely based commenters suggestions, for each of these 
specific biointermediates.\221\ We note that EPA identified all of 
these biointermediates in the proposal as potentials for 
inclusion,\222\ and we discuss these biointermediates and associated 
comments in the RTC document.
---------------------------------------------------------------------------

    \221\ The definitions for biomass-based sugars, digestate, 
glycerin, biodiesel distillate bottoms, and soapstock will be 
included with other definitions specified in 40 CFR 80.1401.
    \222\ See ``Potential Biointermediates Memo'' located in the 
docket for this action, docket ID EPA-HQ-OAR-2021-0324-0271.
---------------------------------------------------------------------------

    We received many comments on one particular potential 
biointermediate: biogas. Commenters suggested that we

[[Page 39641]]

should allow biogas transported via commercial pipeline, sometimes 
called renewable natural gas or RNG, to be used as a biointermediate in 
the production of renewable hydrogen, renewable methanol, and a variety 
of other renewable fuels. Commenters also noted that many of the 
proposed biointermediate provisions would likely need to be revised in 
order for biogas to be used as a biointermediate. We are not adding 
biogas to the definition of biointermediate in this action. While we 
acknowledge the opportunities for additional advanced and cellulosic 
biofuels that allowing the use of biogas or RNG as a biointermediate 
would provide, we also note, as some commenters highlighted, that the 
biointermediate provisions currently being finalized are not 
appropriate for biogas used as a biointermediate, especially when that 
biogas or RNG is distributed via commercial pipeline. We neither 
developed nor proposed provisions that would be necessary to address 
the unique circumstances associated with biogas as a biointermediate. 
We intend to address the use of biogas as a biointermediate when we 
address issues related to the use of biogas to make renewable 
electricity (so-called ``eRINs'') in a future action.
4. Limits on Biointermediate Transfers
    We are finalizing as proposed the requirement that the processing 
of a biointermediate must only occur at a single facility before the 
biointermediate is transported to a renewable fuel production 
facility.\223\ Under this approach, only two parties would be involved 
in the transformation of a renewable biomass feedstock under an 
approved pathway into renewable fuel. While it is possible that in the 
future the production of certain biointermediates may require 
processing at multiple facilities, most if not all of the inquiries 
regarding biointermediates that we have received thus far have only 
involved two facilities: one to produce the biointermediate and another 
to turn it into renewable fuel. Additionally, while it is relatively 
straightforward for EPA to track biointermediates and enforce the 
applicable requirements when there is one biointermediate producer, 
significant implementation and enforcement concerns arise when more 
than one facility is involved in the production of a given 
biointermediate, as each extra production step adds another layer of 
complexity and potential for fraud to occur. Thus, the final 
regulations do not allow the production of biointermediates to occur at 
multiple facilities.
---------------------------------------------------------------------------

    \223\ The regulatory requirements pertaining to limits on 
biointermediate transfers are being promulgated at 40 CFR 
80.1476(g).
---------------------------------------------------------------------------

    We are also finalizing as proposed the limit restricting the 
transfer of biointermediates from a biointermediate production facility 
to a single renewable fuel production facility, while renewable fuel 
production facilities may receive biointermediates from multiple 
biointermediate production facilities.\224\ This limitation will 
significantly simplify tracking of biointermediates and therefore 
enable EPA to oversee RIN generation for renewable fuels produced from 
biointermediates. While many commenters asserted that the proposed 
limit would make biointermediate transfer and use more difficult, 
without this restriction on biointermediates transfers the use of non-
qualifying feedstocks would be difficult to detect and therefore likely 
to occur. Additionally, we do not believe this limitation will 
unreasonably limit the production and use of biointermediates. In order 
for EPA and independent third parties to effectively audit whether 
qualifying biointermediates (i.e., biointermediates produced from 
qualifying renewable biomass under an EPA-approved pathway) in the 
exact amounts (i.e., the biointermediate did not have a RIN generated 
for it as a renewable fuel or have non-qualifying feedstocks added to 
the biointermediate during transport) were used in producing renewable 
fuel, all facilities that produced and used biointermediates as well as 
all the locations where biointermediates were distributed and stored 
need to be systematically audited. If there were no limits on 
biointermediates transfers, this could be potentially hundreds of 
facilities and locations located throughout the world. Such oversight 
would be unrealistic for EPA or independent third parties to 
accomplish, which would leave open opportunities for the generation of 
invalid or fraudulent RINs and undermine the use of real renewable 
fuels. If we were to allow biointermediate production facilities to 
transfer product to multiple renewable fuel production facilities and 
renewable fuel production facilities to also receive product from 
multiple biointermediate producers, some parties could take advantage 
of the increased complexity in tracking relationships and batches to 
use non-qualifying feedstocks to make renewable fuel or generate 
fraudulent RINs through multiple layers of multiple-counting.
---------------------------------------------------------------------------

    \224\ Informally, this type of relationship is called a ``many-
to-one'' relationship. Under this approach, many biointermediate 
production facilities can only transfer biointermediates to a single 
renewable fuel production facility. In contrast, under a ``many-to-
many'' relationship biointermediate production facilities could 
transfer biointermediates to many renewable fuel production 
facilities, and renewable fuel production facilities could receive 
biointermediates from many biointermediate production facilities.
---------------------------------------------------------------------------

    We also note that allowing a many-to-many relationship would 
require both a significant investment in EPA tracking capability and a 
significant overhaul of the RFS quality assurance program (QAP). Both 
of these efforts would significantly delay the implementation of a 
biointermediates program. As such, we have finalized the 
biointermediates transfer limits as a means of quickly implementing the 
program while balancing our ability to ensure proper oversight. We may 
reconsider the limits on biointermediate transfers in the future as we 
gain more experience with biointermediates.
    Relatedly, we are also finalizing as proposed registration 
provisions that require the biointermediate producer to designate as 
part of their registration information submitted to EPA the receiving 
renewable fuel production facility to which biointermediate will be 
transferred. Recognizing that biointermediate producers may need to 
periodically change the receiving renewable fuel production facility, 
we are allowing biointermediate producers to change their designated 
renewable fuel production facility no more than one time per calendar 
year unless, in its sole discretion, EPA determines it is appropriate 
to allow the biointermediate producer to change its designated 
renewable fuel production facility more than once in a year. An example 
of a situation where EPA would consider it appropriate is the closure 
of the receiving renewable fuel production facility. This once-a-year 
limitation is necessary to implement the many-to-one transfer 
limitation. Without such a limitation, biointermediate producers could 
redesignate their associated renewable fuel production facility an 
unlimited number of times which would undermine the purpose of the 
many-to-one limit (i.e., establishing a set of provisions that allows 
us to maintain oversight).
    We do not believe this registration requirement imposes an undue 
practical burden on transfers of biointermediates. We note that under 
the biointermediates program being finalized in this action, the newly 
designated receiving renewable fuel production facility must be 
registered to use the biointermediate, which in turn requires an 
engineering review by a professional engineer (PE) to determine that 
the renewable fuel

[[Page 39642]]

production facility can use the biointermediate under an approved 
pathway. This process can take several months to arrange for a PE to 
conduct the engineering review, submit the registration update to EPA, 
and have it ultimately accepted by EPA. Also, as discussed in Section 
VII.C.5, both the biointermediate and renewable fuel producers must 
have their respective facilities audited under the QAP program, which 
also contributes to the amount of time needed to change the designated 
receiving renewable fuel production facility. Consequently, because of 
the time to conduct new engineering reviews and have new QAPs approved 
by EPA, limiting biointermediate producers to changing the designated 
receiving renewable fuel producer once per calendar year does not in 
fact impose any additional restriction.
    These biointermediate transfer provisions will both enable the 
production and use of biointermediates and enhance our ability to 
provide compliance and enforcement oversight. Based on our discussions 
with parties interested in the production and use of biointermediates, 
we believe that in most cases parties intend for a single renewable 
fuel production facility to receive all biointermediate produced from a 
biointermediate production facility. The biointermediates transfer 
provisions are also designed to be consistent with our understanding of 
how biointermediate transfers would be contracted by biointermediate 
and renewable fuel productions and how renewable fuel production 
facilities would be designed to accommodate the use of 
biointermediates. We intend to review the limits on biointermediate 
transfers in the future as we gain more experience with the 
biointermediates program.
5. RFS Quality Assurance Program (QAP) and Biointermediates
    We are finalizing revisions to the RFS QAP to expand coverage to 
biointermediate production and use as proposed.\225\ The existing RFS 
QAP provides for auditing of renewable fuel production facilities by 
independent third-party auditors who review feedstock elements, process 
elements, and RIN generation elements to determine if renewable fuel 
production is consistent with EPA requirements. These independent 
third-party auditors verify the RINs generated from renewable fuel 
production facilities that participate in QAP. Under this action, we 
are finalizing our proposed requirement for both biointermediate 
producers and renewable fuel producers that use biointermediates to 
participate in the RFS QAP program. Independent third-party auditors 
will review feedstock and process elements for biointermediate 
production facilities to verify, among other things, that 
biointermediates are produced using renewable biomass and via processes 
consistent with the applicable renewable fuel pathway(s). Mandatory 
participation of both the biointermediate and renewable fuel producers 
will help ensure that RINs generated from biointermediates are valid, 
which in turn will allow EPA to balance the competing priorities of 
allowing the timely use of biointermediates for the production of 
renewable fuel in the near term and establishing a program that we can 
effectively oversee for the long term.
---------------------------------------------------------------------------

    \225\ The RFS QAP provisions are located throughout 40 CFR part 
80, subpart M. In this action, we are modifying the regulatory RFS 
QAP regulatory provisions at 40 CFR 80.1469, 80.1471, and 80.1471 as 
well as creating a new section at 40 CFR 80.1477 that describes the 
verification of biointermediates specifically.
---------------------------------------------------------------------------

    Additionally, in order for a renewable fuel producer to generate a 
Q-RIN, we are finalizing a requirement that both the biointermediate 
producer and the renewable fuel producer must have in place an EPA-
approved pathway-specific QAP. This is necessary to provide the level 
of assurance that is expected from the RFS QAP. If we allowed the 
renewable fuel producer to generate Q-RINs without the biointermediate 
producer's information being verified, it could undermine the level of 
compliance assurance provided by Q-RINs. Furthermore, allowing the 
production and use of biointermediates to go unverified would provide 
increased opportunity for the use of unapproved feedstocks and the 
generation of fraudulent RINs through multiple-counting. Having an 
independent third-party auditor verify the production of both the 
biointermediate and the renewable fuel is necessary to help oversee the 
added complexity that results from having renewable fuel processing 
occur at two different facilities. Finally, since the focus of the QAP 
system is the validity of RINs and both the biointermediate producer 
and the renewable fuel producer must follow approved pathway processes 
for RINs to be valid, it would not be appropriate to allow the 
generation of Q-RINs without a QAP for the biointermediate producer.
    Further, we are finalizing a requirement that the biointermediate 
producer and renewable fuel producer must use the same QAP vendor to 
ensure consistent oversight of the two facilities. We believe that the 
same auditor should verify both the biointermediate and renewable fuel 
production facility to ensure that the corresponding records, product 
transfer documents, and reported information agree between the two 
facilities. If we allowed separate auditors to verify the 
biointermediate and renewable fuel production facilities, the auditors 
may not be able to effectively implement their QAP and track 
biointermediate production, distribution, and use. We note that we are 
finalizing regulatory text that makes it clear our intent to require 
that the same independent auditor verify both the biointermediate 
producer and renewable fuel producer which was missing from the 
proposed regulations in the NPRM.\226\
---------------------------------------------------------------------------

    \226\ See 86 FR 72470 (December 21, 2021) (``Further, we are 
proposing that the biointermediate producer and renewable fuel 
producer must use the same QAP vendor to ensure consistent oversight 
of the two facilities.'').
---------------------------------------------------------------------------

6. Product Transfer Documents (PTDs)
    We are finalizing, with modifications relative to proposal, PTD 
requirements for the transfer of custody and title of biointermediates 
from the biointermediate production facility to the renewable fuel 
production facility.<SUP>227 228</SUP> PTD requirements are needed to 
provide renewable fuel producers using biointermediates the information 
they need to ensure the validity of RINs they generate. Under the 
biointermediates requirements being finalized in this action, the 
biointermediate producer must transfer to the renewable fuel producer 
PTDs for each batch of biointermediate. Since renewable fuel producers 
must have information about the feedstocks and processes used to 
produce biointermediates in order to ensure that they are generating 
valid RINs, the biointermediate PTD regulations require parties to 
transfer more information than is included in typical PTD requirements 
in the fuels regulations. The PTD must contain information

[[Page 39643]]

related to the feedstock, volume, and processes used in the production 
of the biointermediate. Additionally, to the extent that any portion of 
the biointermediate is not derived from renewable biomass, 
biointermediate producers are required to identify the renewable 
content (expressed by weight or volume percent as appropriate) of the 
biointermediate that can be used to make renewable fuel for which RINs 
could be generated. If applicable, biointermediate producers must also 
convey information regarding the cellulosic content (by weight or 
volume percent as appropriate) of the biointermediate. Information on 
these breakdowns, if applicable, must be transferred via the PTD to the 
renewable fuel producer so it can properly generate RINs for renewable 
fuel produced from the biointermediate. In all situations where a 
renewable fuel producer is required to utilize information related to 
the production of a biointermediate under 40 CFR 80.1426(f) to generate 
RINs, the biointermediate producer must transfer with PTDs records 
describing applicable calculations to the renewable fuel producer. For 
example, a biointermediate producer must transfer records that include 
all of the inputs and assumptions required to calculate the feedstock 
energy according to equations in 40 CFR 80.1426(f)(3)-(4), including 
the mass of the feedstock or biointermediate (M), average moisture 
content of the feedstock or biointermediate (m), converted fraction 
(CF), and the energy content of the feedstock or biointermediate 
components converted into renewable fuel (E). Copies of these records 
must be transferred on each occasion when any party transfers title of 
a biointermediate.
---------------------------------------------------------------------------

    \227\ PTD requirements for biointermediates, renewable fuels, 
and RINs under the RFS program are described at 40 CFR 80.1453.
    \228\ A transfer of title for a biointermediate is when one 
party (the transferer) transfers ownership of a batch or a portion 
of a batch of biointermediate to another party (the transferee). A 
transfer of custody for a biointermediate is when the transferer 
transfers physical custody of the batch or portion of a batch to the 
transferee without transferring ownership of the biointermediate. 
Such transfers of custody are common in the distribution of 
feedstocks, blendstocks, and fuels whereby those products are 
distributed via pipelines, railcars, and trucks operated by parties 
that never take title to the product being transferred. We 
anticipate that the distribution of biointermediates will be the 
same as other products covered by EPA's fuel quality and RFS 
programs.
---------------------------------------------------------------------------

    Several commenters noted that including PTD requirements for 
transfers of custody and title for biointermediate transfers would be a 
departure from similar PTD requirements for renewable fuels, which only 
require PTDs to accompany transfers of title. Other commenters 
contended that it is unnecessary to include information and copies of 
records related to the production of the biointermediate for each party 
that takes custody of the biointermediates, as it is only the renewable 
fuel producer that ultimately needs the records demonstrating that the 
biointermediate was produced from renewable biomass under an EPA-
approved pathway. Other commenters argued even further that no PTD 
requirements were necessary at all for transfers of biointermediates as 
such information would be documented using customary business practices 
that include necessary information on bills of lading.
    While we acknowledge commenters' concerns about the potential 
burdens of requiring PTD for biointermediates transfers of custody as 
well as title, PTDs for custodial transfers of biointermediates are 
necessary to address our concerns over potential multiple-counting of 
biointermediates for RIN generation and contamination of 
biointermediates with non-qualifying feedstocks during distribution. 
PTDs accompanying transfers of custody of products establish a paper 
trail that can be verified by third-party auditors and EPA. This is 
particularly important in the case of biointermediates because, unlike 
most other feedstocks covered under the RFS program (e.g., corn 
starch), biointermediates can often be used as both a renewable fuel 
and a feedstock. This potential dual use significantly increases the 
opportunities for multiple-counting of a single volume as both a 
biointermediate and a renewable fuel, and for associated RIN fraud.
    However, we recognize that much of the information that we proposed 
to require be transferred along with each custody transfer of a batch 
of biointermediate is only necessary for the renewable fuel producer. 
Therefore, we are requiring that only the basic identifying information 
for the batch of biointermediate be included on PTDs for transfers of 
custody.\229\ We note that this approach is consistent with how we 
handle transfers of custody for gasoline and diesel fuel under 40 CFR 
part 1090, which also applies to the transfer of most renewable fuels, 
such as denatured ethanol and biodiesel, under the RFS program.\230\ We 
believe, as some commenters suggested, that basic identifying 
information for batches of biointermediates is likely already included 
on bills of lading \231\ for the distribution of biointermediates and 
similar products; as such, requiring this information be provided via a 
PTD for custody transfers will not be unnecessarily burdensome. 
However, it is important to also require this information via PTDs for 
custody transfers so that parties will keep such information in a 
standardized format for third-party and EPA auditing. We also note, 
that without regulatory PTD requirements, parties would likely not 
maintain PTDs for periods of time consistent with the record retention 
periods under the RFS program.\232\
---------------------------------------------------------------------------

    \229\ For reference, these elements include the name and address 
of the transferor and transferee, the transferor's and transferee's 
EPA-issued registration numbers, the volume of biointermediate being 
transferred, the date of the transfer, and the location of the 
biointermediate at the time of the transfer.
    \230\ See 40 CFR part 1090, subpart L.
    \231\ A bill of lading is a document issued by a carrier to a 
shipper that details the type, quantity, and destination of the 
goods being carried. Under EPA's fuels programs, parties have 
typically included PTD language requirements on bills of lading for 
the product being transferred; however, EPA does not specify which 
specific document that EPA's PTD language requirements is included 
on as long as a document containing the applicable, required PTD 
language accompanies the transfer.
    \232\ The record retention requirements for RFS are located at 
40 CFR 80.1454(n).
---------------------------------------------------------------------------

    We also received comments on our proposed PTD requirements that the 
information we proposed to require for transfers of title \233\ of 
biointermediates is unnecessary to track their distribution. However, 
as discussed more thoroughly in Section VII.C.1, because the renewable 
fuel producer is ultimately responsible for the validity of any RINs 
generated from the biointermediate, it is necessary that the renewable 
fuel producer receive sufficient information from the biointermediate 
producer to demonstrate that the biointermediate, and therefore the 
renewable fuel, was produced from renewable biomass under an approved 
pathway. It would therefore be inappropriate not to require the 
transfer of any of this information between the biointermediate and 
renewable fuel producers. We also point out that even if some of the 
information specified in the PTD requirements for biointermediates is 
covered as part of customary business practice, not all of it is, and 
parties may not keep the PTDs as records in a way that is conducive to 
third-party and EPA oversight. We are therefore finalizing PTD 
provisions requiring that the information necessary to demonstrate that 
the biointermediate was produced from renewable biomass and via a 
process included under an EPA-approved pathway be included for 
transfers of title for the biointermediate.
---------------------------------------------------------------------------

    \233\ In general, we expect titles of transfer to occur 
primarily between biointermediate and renewable fuel producers.
---------------------------------------------------------------------------

    We are not finalizing proposed changes to PTD requirements for RINs 
generated from renewable fuel produced from biointermediates. In the 
NPRM, we proposed that RIN PTDs would need to identify that the RINs 
were generated for renewable fuels produced from biointermediates as 
well as the EPA-issued company and facility numbers of the 
biointermediate producer. We explained that by requiring such 
information on the RIN PTDs, parties that transfer or use such RINs 
would better understand whether they were transferring and using RINs 
generated from renewable fuels produced from

[[Page 39644]]

biointermediates. All commenters, including those that we believed 
would appreciate such information, opposed the additional requirement 
for RIN PTDs. These commenters noted that they could already obtain 
such information and that inclusion of such information on PTDs may 
cause RINs from biointermediates to not be traded and would be 
unnecessarily disruptive to existing RIN transactions. We appreciate 
the commenters' concerns and are, therefore, not finalizing the 
proposed RIN PTD language. Although we are not finalizing the proposed 
RIN PTD language, we stress here again that it is a violation of the 
RFS regulations to transfer or use an invalid RIN and it is incumbent 
upon all parties to undertake due diligence to ascertain the validity 
of RINs that they transfer or use to meet an RVO.
7. Registration, Reporting, and Recordkeeping Requirements
    We are finalizing registration, reporting, and recordkeeping 
requirements related to the production, distribution, and use of 
biointermediates for both biointermediate producers and renewable fuel 
producers largely as proposed. Under the RFS program, the renewable 
fuel producer is always responsible for verifying and demonstrating 
that the renewable fuel it produces is derived from renewable biomass 
and was produced in accordance with an approved renewable fuel 
production pathway.\234\ If the renewable fuel producer is using a 
biointermediate, however, the direct link between the renewable fuel 
producer and the renewable biomass supplier is lost. In such cases, the 
biointermediate producer is required to verify and provide records (in 
the form of PTDs) to the renewable fuel producer that demonstrate the 
feedstock used to make the biointermediate meets the definition of 
renewable biomass and is part of the approved renewable fuel production 
pathway that the renewable fuel producer intends to use to generate 
RINs. Therefore, additional registration, recordkeeping, and reporting 
requirements associated with biointermediates are needed to provide the 
renewable fuel producer with the information necessary to verify that 
the fuel they produce qualifies as renewable fuel for which RINs may be 
generated.
---------------------------------------------------------------------------

    \234\ See 40 CFR 80.1473(a).
---------------------------------------------------------------------------

    We discuss each of these requirements separately in Sections 
VII.C.7.a through c below.
a. Registration
    We are finalizing as proposed registration requirements for 
biointermediates producers and corresponding changes to renewable fuel 
producers' registration requirements to allow for the production, 
distribution, and use of biointermediates.\235\ Under the 
biointermediates program, biointermediate producers must register with 
EPA by facility in a manner similar to renewable fuel producers. The 
registration information submitted by the biointermediate producer must 
include the basic company information (e.g., company name, address of 
production facility, etc.) required for all EPA fuels program 
registrants. In addition, biointermediate producers must provide basic 
operational information, such as the capacity of their production 
facility, the processes utilized to produce the biointermediate, the 
feedstocks they will use, a description of their biointermediate 
product, and the pathway(s) they believe the biointermediate product 
could be used in.
---------------------------------------------------------------------------

    \235\ The registration requirements for biointermediate 
producers and the modifications to the registration requirements for 
renewable fuel producers are both located at 40 CFR 80.1450.
---------------------------------------------------------------------------

    Similar to renewable fuel producers, biointermediate producers must 
arrange for an independent third-party engineer to conduct a review for 
each facility. This independent third-party engineering review must 
include a site visit and review of the registration submission to 
independently evaluate the facility's ability to produce the 
biointermediate under an EPA-approved pathway. To implement the 
facility transfer limits discussed in Section VII.C.4, a 
biointermediate producer must identify the single renewable fuel 
production facility that will use its biointermediate product as part 
of the registration information reviewed by the third-party engineer 
and submitted to EPA.
    In order to use a biointermediate, existing renewable fuel 
producers must also update their registration information to 
demonstrate that the renewable fuel production facility can produce 
qualifying renewable fuel from the biointermediate. A renewable fuel 
producer cannot use a biointermediate until EPA has accepted both the 
biointermediate producer's and the renewable fuel producer's 
registration materials reflecting the production and use of the 
biointermediate.
    Similar to renewable fuel producers' registrations, biointermediate 
producers must submit updated registration information every three 
years, including a new independent third-party engineering review. In 
addition, biointermediate producers must update their registration 
materials between three-year updates if specified changes in their 
operations occur.\236\ A biointermediate producer must also comply with 
any other applicable registration requirements related to the 
particular renewable biomass feedstock(s) that would otherwise apply to 
a renewable fuel producer (e.g., submitting separated food waste plans 
and requirements related to the use of crop residue as a feedstock).
---------------------------------------------------------------------------

    \236\ See 40 CFR 80.1450(d) for changes where a biointermediate 
producer must update their registration information.
---------------------------------------------------------------------------

    We note that acceptance by EPA of a registration submission does 
not represent a determination by EPA of substantive compliance with 
applicable regulatory requirements. Biointermediate producers, as has 
been the case for all renewable fuel producers since the start of the 
RFS program, are responsible for ensuring on a continual basis that all 
applicable regulatory requirements are satisfied. For biointermediate 
producers, this includes, but is not limited to, the requirement to 
produce biointermediates from renewable biomass and in compliance with 
EPA-approved pathways.
b. Reporting and EMTS
    We are finalizing, with minor revisions based on comments received, 
reporting requirements for biointermediates producers that will help 
EPA oversee the program and that will serve as the basis for third-
party verification of the production, distribution, and use of 
biointermediates.\237\ Under the biointermediates program, 
biointermediate producers must submit quarterly reports to EPA that 
include feedstock and process information by batch, volume of the 
batch, renewable content of the batch, and cellulosic content of the 
batch (if applicable), as well as the specific renewable fuel facility 
where the batch of biointermediate was sent to be used for the 
production of renewable fuel. The biointermediate producer must also 
designate each batch that is intended to be used as a renewable fuel 
feedstock, so that the biointermediate batches are directly linked to 
the renewable fuel

[[Page 39645]]

batches produced from that biointermediate. Like renewable fuel 
producers, biointermediate producers may also have to submit periodic 
reports based on their use of specific feedstocks or processes.
---------------------------------------------------------------------------

    \237\ The reporting requirements for biointermediate producers 
as well as the modified reporting requirements for renewable fuel 
producers are located at 40 CFR 80.1451. The modifications to the 
EMTS reporting requirements for RIN generation are located at 40 CFR 
80.1452.
---------------------------------------------------------------------------

    We are also finalizing as proposed changes to the periodic 
reporting requirements for renewable fuel producers that use a 
biointermediate to help EPA ensure that biointermediates are being used 
appropriately. These changes include the reporting of the types and 
quantities of biointermediates used to produce batches of renewable 
fuel and the processes used and proportion of renewable volume 
attributable to each biointermediate.\238\ These revised reporting 
requirements will help EPA monitor compliance concerning the production 
and use of biointermediates by linking the volume of biointermediate 
produced by a biointermediate producer with the volume of renewable 
fuel produced by a renewable fuel producer.
---------------------------------------------------------------------------

    \238\ The related forms for RFS producers are available at: 
https://www.epa.gov/fuels-registration-reporting-and-compliance-help/how-report-quarterly-and-annually-renewable-fuel.
---------------------------------------------------------------------------

    We are finalizing as proposed provisions requiring that renewable 
fuel producers report additional information in EMTS related to the 
generation of RINs from renewable fuels produced from biointermediates. 
For EMTS, the renewable fuel producer utilizing biointermediates in the 
production of renewable fuel must report the type and quantity of 
biointermediates used for the batch and the EPA company and facility 
registration number for each biointermediate production facility. 
Renewable fuel producers utilizing biointermediates must report in EMTS 
the total co-products and the process(es), feedstock(s), and 
biointermediate(s) used and proportion of renewable volume attributable 
to each process and feedstock.
    By the effective date of this action, we intend to complete 
modifications to EMTS to accommodate these updated reporting 
requirements for producers of renewable fuel to help track and ensure 
that biointermediates are used appropriately. Due to the similarity 
between the ways that biointermediates will be used and existing 
feedstocks are already being used, biointermediates use will be tracked 
through EMTS. In addition, aligning batches of RINs generated for 
renewable fuel with the biointermediate batches used to produce the 
fuel will help EPA ensure that volumes of biointermediates are 
appropriately used to generate valid RINs.
    These reporting requirements and tracking in EMTS will help EPA 
monitor the generation of RINs for renewable fuel produced from 
biointermediates, thereby reducing the potential for fraud and 
enhancing the integrity of the program.
    In the proposed rule, we sought comment on whether any additional 
functionality in EMTS would be helpful to implement the biointermediate 
program. Specifically, we sought comment on whether we should implement 
functionality that would allow transactors of RINs to see whether a RIN 
was generated from a biointermediate. We received several comments with 
suggestions on potential functional improvements to EMTS. We will 
consider such feedback as we prioritize future EMTS development.
c. Recordkeeping
    We are finalizing recordkeeping requirements for biointermediate 
producers as proposed.\239\ Under these recordkeeping requirements, 
biointermediate producers must comply with essentially the same 
feedstock and process-related recordkeeping requirements as those in 
place for renewable fuel producers. Since the biointermediate producer 
is a party between suppliers of feedstocks listed in Table 1 and the 
renewable fuel producer, the biointermediate producer must maintain 
records related to the purchase of feedstocks used to produce the 
biointermediate. Biointermediate producers must also maintain 
appropriate records that demonstrate that feedstocks meet the 
definition of renewable biomass. Finally, biointermediate producers 
must keep records of any calculations the biointermediate producer used 
to determine the renewable content and cellulosic content of the 
biointermediate, as applicable. This information must be conveyed to 
any renewable fuel producer that uses the biointermediate as part of 
the required PTDs as discussed in Section VII.C.6. Renewable fuel 
producers must maintain these PTDs in addition to complying with their 
current recordkeeping requirements.
---------------------------------------------------------------------------

    \239\ The recordkeeping requirements for biointermediate 
producers are located at 40 CFR 80.1454.
---------------------------------------------------------------------------

8. Attest Engagements
    We are finalizing attest engagement requirements for 
biointermediate producers as proposed.\240\ Under the biointermediates 
program, biointermediate producers must undergo annual attest 
engagements similar to annual attest engagement requirements for 
renewable fuel producers. The attest engagements for biointermediate 
producers will help ensure that information contained in records is 
consistent with reported information to EPA as part of registration and 
periodic reporting. The attest engagement for biointermediate producers 
must be conducted by an outside certified public accountant or 
certified independent auditor following procedures specified in the 
regulations to determine whether the underlying records for the 
biointermediate, the reported information to EPA, and copies of PTDs 
provided to the renewable fuel producer agree. The attest auditor must 
also validate the list of renewable fuel producers receiving any 
transfer of biointermediate batches to assure that the transfer limits 
discussion in Section VII.C.4 are met. The attest auditor must issue a 
report to EPA detailing the audit, their procedures, and any findings. 
We are also finalizing corresponding changes to the attest engagements 
for renewable fuel producers to ensure that attest auditors verify 
records, reports, and PTDs related to the use of a biointermediate by 
the renewable fuel producer.
---------------------------------------------------------------------------

    \240\ The requirements for annual attest engagements for 
biointermediate producers and the modification for annual attest 
engagements for renewable fuel producers are located at 40 CFR 
80.1464.
---------------------------------------------------------------------------

9. Liability, Prohibited Activities, and Invalid RINs Related to 
Biointermediates
    We are finalizing with modifications provisions that establish 
prohibited activities related to biointermediates, how biointermediate 
producers and renewable fuel producers will be held liable, when 
biointermediates will be determined to be invalid, and provisions 
related to the treatment of invalid RINs related to biointermediates.
a. Liability in Cases Where a Biointermediate is Noncompliant
    We are finalizing as proposed provisions that specify that both the 
biointermediate producer and renewable fuel producer are liable for 
cases where a biointermediate is determined not to comport with 
applicable regulatory requirements.\241\ Renewable fuel producers are 
ultimately responsible for ensuring that any biointermediate used to 
produce renewable fuel complies with the applicable statutory and 
regulatory requirements, consistent with the

[[Page 39646]]

requirement that they use qualifying feedstocks and processes to 
produce renewable fuels and generate RINs. Submission and EPA 
acceptance of feedstock and process descriptions in registration 
materials does not represent a determination by EPA that the actual 
feedstocks and processes used by a facility are in fact compliant with 
the RFS regulations; the responsibility of ensuring that they comply 
with applicable requirements on a continuing basis rests with both the 
renewable fuel producer and the biointermediate producer.
---------------------------------------------------------------------------

    \241\ The liability provisions for biointermediate producers and 
renewable fuel producers that use biointermediates is located at 40 
CFR 80.1461.
---------------------------------------------------------------------------

    In order to fulfill the statutory mandate that renewable fuel is 
produced from renewable biomass, the renewable fuel producer must be 
able to demonstrate that the feedstocks they are using are, or are 
derived from, renewable biomass and are consistent with the feedstocks 
permitted under the renewable fuel production pathway utilized. When a 
biointermediate is being used to produce renewable fuel, the renewable 
fuel producer may not have direct access to the information needed to 
make these demonstrations. Therefore, the biointermediate producer must 
demonstrate both to EPA and to the renewable fuel producer that the 
biointermediate is produced from renewable biomass and via processes 
consistent with the applicable pathway. To ensure appropriate levels of 
oversight by renewable fuel producers, we do not believe that the 
renewable fuel producer should be held harmless in the event that the 
biointermediate is determined to not be derived from renewable biomass 
or is determined to be unauthorized under the pathway utilized by the 
renewable fuel producer. Therefore, either or both the biointermediate 
producer and the renewable fuel producer are potentially liable for 
violations involving the improper production or characterization of a 
biointermediate used to produce renewable fuel for which RINs were 
generated. This is true both where any errors could be characterized as 
having been made in good faith, and in situations involving deliberate 
fraud.
    This approach has been used extensively in other EPA fuels programs 
(e.g., gasoline and diesel programs) where it is presumed that 
violations that occur at downstream locations (e.g., a retail station 
selling gasoline) were caused by all parties that produced, 
distributed, or carried the fuel. If, for example, a biointermediate 
producer were to use feedstocks that do not meet the definition of a 
renewable biomass, then both the biointermediate producer and the 
renewable fuel producer could be liable for the violation. Another 
example is if a party generated a RIN for a product as a renewable fuel 
and then sold that product as a biointermediate to a renewable fuel 
producer who also generated a RIN for the product. In such a case, both 
the original producer of the biointermediate and the renewable fuel 
producer will be liable under this approach.
b. Prohibited Activities
    We are finalizing as proposed several amendments and additions to 
the prohibited activities related to the production, distribution, and 
use of biointermediates.\242\ Specifically, we are finalizing the 
following prohibited activities:
---------------------------------------------------------------------------

    \242\ The prohibited activities related to the production, 
distribution, and use of biointermediates, as well as other 
prohibited activities under the RFS, are located at 40 CFR 80.1460.
---------------------------------------------------------------------------

    <bullet> No person may introduce into commerce for use in the 
production of a renewable fuel any biointermediate produced from a 
feedstock or through a process that is not described in the person's 
EPA-accepted registration information;
    <bullet> No person may produce a renewable fuel at more than one 
facility unless the person uses a biointermediate as defined under 
Sec.  80.1401 or the renewable biomass is not substantially altered; 
\243\
---------------------------------------------------------------------------

    \243\ The allowable form changes, i.e., form changes that do not 
result in substantial alteration of the renewable biomass feedstock, 
are described in the regulations at 40 CFR 80.1460(k)(2).
---------------------------------------------------------------------------

    <bullet> No person may transfer a biointermediate from a 
biointermediate production facility to a facility other than the 
renewable fuel production facility specified in the biointermediate 
producer's EPA-accepted registration information;
    <bullet> No person may isolate or concentrate non-characteristic 
components of the feedstock to yield a biointermediate not identified 
in a registration accepted by EPA; and
    <bullet> No person may generate a RIN for fuel that was produced 
from a biointermediate for which the fuel and biointermediate were not 
audited under an EPA-approved quality assurance plan.
    <bullet> No person may transfer a biointermediate without complying 
with the PTD requirements in 40 CFR 80.1453(f).
    We are modifying from our proposal the prohibited act that ``no 
person may isolate or concentrate non-characteristic components of the 
feedstock to yield an intermediate product not contemplated by EPA in 
establishing an approved pathway that the biointermediate producer and 
the renewable fuel producer are using to convert renewable biomass to 
renewable fuel.'' \244\ The purpose of this proposed prohibited act was 
to ensure that a biointermediate producer will not isolate or 
concentrate certain components of feedstocks to produce a 
biointermediate that will no longer comport with the EPA-approved 
pathway identified in the biointermediate producer's accepted 
registration submission. For example, if a party is registered to 
produce a biointermediate for the production of cellulosic biofuel, the 
party would be prohibited from removing all cellulosic material from a 
cellulosic feedstock and still representing the biointermediate as 
being cellulosic. However, we recognize that the proposed language did 
not clearly communicate our intent or the prohibited act. We are 
therefore rewording the prohibited act to say that no person may 
isolate or concentrate non-characteristic components of the feedstock 
to yield a biointermediate not identified in a registration accepted by 
EPA. The purpose of this clarification is to state that biointermediate 
producers may not deviate from the processes and feedstocks for the 
production of biointermediates that EPA has accepted and registered 
them to use. We note that using a biointermediate or other feedstock 
that is inconsistent with a facility's registration information is 
prohibited regardless of this specifically enumerated prohibited act as 
it is a violation of the RFS regulations for a party to fail to meet 
any requirement of 40 CFR part 80, subpart M.\245\ The inclusion of 
this prohibited act is for emphasis and clarity.
---------------------------------------------------------------------------

    \244\ 86 FR 72495.
    \245\ See 40 CFR 80.1460(f).
---------------------------------------------------------------------------

    We are also adding a prohibited activity that states that no person 
may transfer a biointermediate without complying with the PTD 
requirements at 40 CFR 80.1453(f). As described in Section VII.C.6, the 
PTD requirements for biointermediates are an integral aspect of 
ensuring that renewable fuel producers have the necessary information 
to generate valid RINs. PTDs are also a fundamental component of our 
oversight and verification provisions for biointermediates and 
renewable fuels produced from biointermediates. We also received a 
comment that asked EPA to clarify the treatment of RINs for renewable 
fuels produced from biointermediates that were not accompanied by PTDs 
or were accompanied by incomplete or non-compliant PTDs. The commenter 
noted that because PTD review would be part of the QAP process for 
biointermediates

[[Page 39647]]

and renewable fuels produced from biointermediates, they believed it 
likely that the issue of RINs being generated from biointermediates 
without compliant PTDs would occur and that EPA should identify how 
those RINs would be treated. Under the scenario outlined by the 
commenter, the RINs would be invalid under 40 CFR 80.1431 because the 
regulations at 40 CFR 80.1426(a)(1)(iii) require that the renewable 
fuel producer meet the applicable recordkeeping requirements, which 
include maintaining copies of all applicable PTDs. Again, we note that 
regardless of the inclusion in the regulations of this specifically 
enumerated prohibited act, it is a violation of the RFS regulations for 
a party to fail to meet any requirement of 40 CFR part 80, subpart M, 
including the requirements to transfer and maintain compliance 
PTDs.\246\
---------------------------------------------------------------------------

    \246\ See 40 CFR 80.1460(f).
---------------------------------------------------------------------------

    We believe that these prohibited activities will provide certainty 
to regulated parties with regard to the production, distribution and 
use of biointermediates and renewable fuels made from biointermediates. 
These provisions will help to provide strong incentives on the part of 
renewable fuel producers to diligently be involved in overseeing the 
production, transfer, and use of biointermediates. Finally, these 
provisions are necessary to address the increased complexity of 
allowing renewable fuels to be processed at more than one production 
facility.
c. Invalid RINs From Biointermediates
    We are finalizing as proposed provisions that address the treatment 
of invalid RINs generated on renewable fuels produced from 
biointermediates. Due to the potential complexity involved in 
determining the validity of RINs generated for renewable fuel produced 
from a biointermediate, we are requiring that if any of the RINs in any 
batch of renewable fuel produced from a biointermediate are deemed 
invalid, then all RINs generated for that batch of renewable fuel will 
be considered invalid except to the extent that EPA, in its sole 
discretion, determines that some of these RINs would be valid. 
Circumstances in which invalid RINs generated on renewable fuels 
produced from biointermediates could arise include: where multiple 
biointermediates and/or non-biointermediate feedstocks are 
simultaneously processed to make renewable fuel with the same D-code; 
where biointermediates and/or non-biointermediate feedstocks are 
simultaneously processed that result in multiple D-codes; and where 
biointermediates are co-processed with non-renewable biomass (e.g., 
crude oil). Given the range of scenarios utilizing biointermediates to 
produce renewable fuels that would be permitted under this action and 
based on discussions with parties that have expressed interest in using 
various types of biointermediates in the future, we believe it is 
important to address such circumstances clearly in the regulations as 
apportioning which RINs were tied to which gallons of renewable fuel 
made in these situations is complicated.
    In all cases where a RIN is generated for a batch of renewable fuel 
produced using a biointermediate is invalid, we are requiring that all 
RINs generated from the renewable fuel be presumed invalid unless EPA, 
in its sole discretion, determines that a portion of the RINs should 
remain valid. This means that even if multiple, different RIN batches 
would be generated in EMTS for apportioned volumes of the batch of 
renewable fuel, all RIN batches in their entirety would be invalid if 
any amount of non-qualifying biointermediate was used to generate any 
RIN on any volume of the renewable fuel. This will also include 
situations where the multiple RIN batches were for different D-codes or 
where multiple types of biointermediates were used. We believe this 
provision is appropriate to avoid having to determine specifically 
which RINs are invalid in situations where biointermediates are 
processed simultaneously with other feedstocks, as apportioning RINs 
based on the constituent components of a renewable fuel is highly 
complex when multiple biointermediates and other feedstocks, all with 
differing feedstock energies and volumes, are used. This provision will 
provide a strong incentive for renewable fuel producers to conduct due 
diligence oversight procedures on the biointermediate producer to avoid 
the invalidation of an entire batch of RINs.
    We are also finalizing that, where the renewable fuel is a 
renewable diesel, renewable gasoline, renewable diesel blendstock, or 
renewable gasoline blendstock, if a RIN is invalid under 40 CFR 
80.1431(a)(1), the gallon of gasoline or diesel fuel for which the RIN 
was generated would incur an RVO. The regulations for calculating RVOs 
at 40 CFR 80.1407(f)(1) already exclude ``[a]ny renewable fuel as 
defined in Sec.  80.1401'' from the volume of gasoline or diesel fuel 
produced or imported used to calculate an obligated party's annual RVO. 
In many cases, RINs are determined to be invalid because the renewable 
fuel was not made from renewable biomass, the RINs were multiple-
counted, or were otherwise invalidly generated. In such cases, any 
volume of renewable gasoline or renewable diesel fuel will no longer be 
considered renewable fuel and therefore cannot be excluded from an 
obligated party's RVO.
10. Foreign Biointermediate Producers
    We are finalizing provisions for the use of biointermediates 
produced by foreign biointermediate producers. In general, foreign 
biointermediate producers are subject to the same regulatory 
requirements (e.g., recordkeeping, reporting, registration, and PTD 
requirements) as domestic biointermediate producers. However, we are 
finalizing requirements for additional requirements for foreign 
biointermediates in two main areas.
    For the first requirement, under the biointermediates program, 
foreign biointermediate producers must comply with requirements similar 
to those for foreign renewable fuel producers as described in 40 CFR 
80.1466 related to inspection and audit, agent appointment for service 
of process, and the application of U.S. substantive and procedural laws 
to any civil or criminal enforcement action.\247\ These requirements 
for foreign biointermediate producers will allow EPA to monitor the 
producers and carry out enforcement actions should a violation occur 
outside the U.S.
---------------------------------------------------------------------------

    \247\ The primary difference between the foreign renewable fuel 
producer requirements under 40 CFR 80.1466 and the foreign 
biointermediate producer requirements under 40 CFR 80.1478 is that 
foreign biointermediate producers do not have to post a bond. Bonds 
are required in cases where a foreign party generates or owns RINs 
(i.e., foreign RIN-generating foreign producers and foreign RIN 
owners). Since foreign biointermediate producers are not generating 
RINs, we are not requiring them to post a bond. However, if a 
foreign biointermediate producer would otherwise be required to post 
as bond by either generating or owning RINs, the bonding provisions 
under 40 CFR 80.1466 would apply.
---------------------------------------------------------------------------

    For the second requirement, we are finalizing a requirement that 
foreign biointermediate producers may only transfer their 
biointermediates to domestic and foreign RIN-generating renewable fuel 
producers. This means that foreign biointermediate producers will not 
be allowed to transfer their biointermediate to non-RIN-generating 
foreign producers. This limitation serves three purposes. One, non-RIN 
generating renewable fuel producers are not subject to certain 
requirements for registration that we believe are necessary to 
effectively oversee the production of biointermediates. RIN-generating 
renewable fuel producers are required to provide in EMTS the type

[[Page 39648]]

and volume of the biointermediate used and the registration number of 
the biointermediate production facility as well as obtain a bond based 
on the number of RINs they produce. The existence of foreign 
biointermediate producer's information in EMTS allows EPA to oversee 
all parties in the chain of RIN generation. This information is not 
available if foreign biointermediates are transferred to foreign non-
RIN generation renewable fuel producers. The bond provides financial 
assets for EPA to leverage should an issue with the validity of the 
RINs come into question. Without these controls, we cannot effectively 
oversee and enforce potential issues with foreign produced renewable 
fuels made from biointermediates.
    Two, it is unreasonable for the importer of a renewable fuel 
produced from a biointermediate to maintain formal contractual 
relationships with the biointermediate producer,\248\ each party 
outside of the United States that distributed the biointermediate 
outside of the United States, and the foreign renewable fuel producer. 
Importers of renewable fuel are typically domestic companies that 
specialize in the importation and distribution of products into the 
U.S. and often lack the foreign presence to effectively and 
independently oversee biointermediate production, transfer, and use by 
foreign parties. We have structured the biointermediates program to 
provide incentives (e.g., through the treatment of invalid RINs 
discussed in Section VII.C.9) for renewable fuel producers to ensure 
that biointermediate producer complies with applicable EPA regulatory 
requirements. We believe the chain of parties involved in the 
production of renewable fuel from a biointermediate outside the U.S. is 
too attenuated for the importer of the renewable fuel to reasonably 
conduct due diligence without the safeguards imposed by EPA for RIN-
generating foreign producers discussed previously.
---------------------------------------------------------------------------

    \248\ The requirements regarding the distribution of foreign 
renewable fuels are described at Sec.  80.1466 and for foreign 
biointermediates at Sec.  80.1478.
---------------------------------------------------------------------------

    Three, similar to the concerns highlighted for importers, we do not 
believe that the RFS QAP provisions would effectively cover a situation 
with three parties--a foreign biointermediate producer, non-RIN-
generating foreign producer, and renewable fuel importer--in the chain. 
As discussed in Section VII.C.5, RIN-generating renewable fuel 
producers that use biointermediates must participate in the RFS QAP and 
that the same QAP auditor must verify both the foreign biointermediate 
producer and RIN-generating foreign producer. Adding a third-party in 
this chain would significantly increase the complexity of the QAP 
verification process and would necessitate further amendments to the 
RFS QAP program and associated implementation measures to verify RINs 
generated from such a production chain. To accommodate these three-
party verification schemes (i.e., verification of the biointermediate 
producer, the foreign renewable fuel producer, and the renewable fuel 
importer), we would require consider time to develop our systems and 
review quality assurance plans, which could significantly delay 
implementation of the program and acceptance of foreign 
biointermediates into the program.
    We received comments suggesting that we exempt foreign ethanol 
producers that produce undenatured ethanol used as a biointermediate 
from the transfer limits discussed in Section VII.C.4. Specifically, 
commenters suggested that we exempt foreign ethanol producers that 
designate their undenatured ethanol as a biointermediate from the batch 
segregation requirement and the limit on biointermediate producers 
supplying only a single renewable fuel production facility.\249\ As 
explained above, these requirements are in place to ensure that 
biointermediates are produced using qualifying renewable biomass under 
an EPA-approved pathway and are not multiple-counted for RIN 
generation. Commenters said that they believed that existing provisions 
for foreign ethanol producers under the RFS coupled with TTB 
requirements for the control and tracking of undenatured ethanol in the 
U.S. rendered the biointermediate provisions unnecessary. They noted 
that the proposed biointermediate provisions would likely make the 
transfer of foreign undenatured ethanol for use as a biointermediate 
infeasible. Finally, some commenters noted that foreign ethanol 
producers cannot meet the proposed foreign biointermediate provisions 
under their current production and distribution practices.
---------------------------------------------------------------------------

    \249\ Under the biointermediates program, foreign undenatured 
ethanol is not presumed to be a biointermediate. Under the 
provisions for foreign undenatured ethanol, the importer of the 
undenatured ethanol must denature the ethanol and generate RINs for 
the denatured fuel ethanol as a renewable fuel. However, under the 
biointermediates program, for any undenatured ethanol (foreign or 
domestic) to be used as a biointermediate, the producer of the 
undenatured ethanol must designate the undenatured ethanol as a 
biointermediate and comply with the applicable provisions for the 
production, transfer, and use of the undenatured ethanol as a 
biointermediate.
---------------------------------------------------------------------------

    We are not finalizing any changes to the requirements for foreign 
biointermediate producers as they apply to foreign undenatured ethanol 
producers at this time. While we appreciate commenters' concerns 
regarding how the foreign ethanol producer provisions intersect with 
the biointermediates provisions, we believe that the tracking afforded 
by the biointermediate provisions is necessary to ensure that 
undenatured ethanol, including foreign undenatured ethanol, is properly 
produced (i.e., produced from qualifying renewable biomass under an 
EPA-approved pathway), distributed (i.e. not commingled with non-
qualifying undenatured ethanol), and used (i.e., only used as a 
biointermediate and not double-counted as renewable fuel and a 
biointermediate). We do not believe it is appropriate at this time to 
create disparate regulatory regimes for different biointermediates. One 
of the primary goals of establishing a common regulatory framework that 
applies to all biointermediates is to help ensure consistency and 
fairness in the treatment of renewable fuels produced at multiple 
locations while at the same time ensuring the valid generation of RINs. 
Creating a separate regulatory regime for foreign undenatured ethanol 
is not consistent with our intent to create a common regulatory 
framework that could address the use of many different types of 
biointermediate.
    Commenters failed to explain how TTB requirements, which are 
largely designed to ensure that undenatured ethanol is appropriately 
taxed, would effectively ensure that undenatured ethanol used as a 
biointermediate to produce renewable fuel was produced from qualifying 
renewable biomass and used under an EPA-approved pathway consistent 
with the RFS program requirements. We also note that TTB requirements 
only apply to domestic undenatured ethanol and do nothing to 
effectively track and oversee undenatured ethanol produced and 
distributed outside of the U.S. While we appreciate that TTB 
requirements for undenatured ethanol could help ensure the tracking of 
undenatured ethanol in the U.S., we do not believe those requirements 
are substitutes for the biointermediate provisions, especially as they 
apply to foreign biointermediate producers.
    Furthermore, as mentioned above, the foreign biointermediate 
producer provisions largely mirror the requirements that already apply 
to foreign renewable fuel producers, including foreign ethanol 
producers. Therefore, we believe that foreign

[[Page 39649]]

ethanol producers should already be meeting the requirements as 
specified in 40 CFR 80.1466, and the foreign biointermediate producer 
provisions should not impose any additional burden on parties that are 
already complying with the regulations.

D. Other Considerations Related to Biointermediates

1. C-14 Testing and Mass Balance for RIN Generation
    We are finalizing provisions that ensure for the accurate 
measurement of renewable content in cases where biointermediates are 
co-processed with petroleum feedstocks at a renewable fuel production 
facility. Specifically, we are finalizing three options: (1) C-14 
measurement using Method B of ASTM D6866, (2) C-14 measurement using 
Method C of ASTM D6866 (with some restrictions as explained below), and 
(3) facility-specific, alternative methods for measuring renewable 
content as approved by EPA. Under this approach, we would not allow the 
use of mass balance as specifically described in the regulations at 40 
CFR 80.1426(f)(4)(i)(A) (i.e., ``Method A''); however, we may consider 
other mass balance approaches when considering facility-specific, 
alternative methods.
    We proposed that only C-14 testing, specifically Method B 
(accelerator mass spectrometry) of ASTM D6866, be used in cases where 
biointermediates are co-processed with petroleum feedstocks at a 
renewable fuel production facility. We explained that we were proposing 
to require C-14 testing because we believed that the volume of 
biointermediate co-processed with petroleum at a crude refinery would 
likely be a small fraction of the refinery's throughput, which would 
make it difficult to rely on a mass balance approach for RIN 
generation.\250\ Our primary concern was, and still is, that the co-
processed fuel would contain little or no renewable content from the 
biointermediate and that using the mass balance approach, which 
determines renewable content based on assumptions rather than direct 
measurement, could overestimate renewable content and therefore result 
in the generation of RINs for the nonrenewable portion of the co-
processed fuel. Thus, in order to determine if and how much renewable 
content is actually present, we believed C-14 testing of the finished 
fuel would be necessary. We also sought comment on potential 
alternatives to direct C-14 measurement of renewable content of co-
processed fuels.
---------------------------------------------------------------------------

    \250\ See Martin R. Haverly et al., Biobased Carbon Content 
Quantification through AMS Radiocarbon Analysis of Liquid Fuels, 237 
Fuel, 1108, (2019).
---------------------------------------------------------------------------

    We received a range of comments on our proposal. Some commenters 
recognized that Method B of ASTM D6866 is the most accurate way to 
measure renewable content in processed fuels, and with the support of 
these comments and for the reasons set out in the proposed rule, we are 
finalizing the use of Method B of ASTM D6866 as one option for the 
measurement of renewable content of co-processed renewable fuels from 
biointermediates.
    Other commenters mentioned that mass balance could be more accurate 
than direct C-14 measurement in some circumstances, especially at lower 
concentrations of renewable content or when samples are contaminated 
with artificial C14 (the latter of which would make the test not 
compliant with ASTM D6866-22). However, commenters did not provide any 
new data or information suggesting how mass balance could more 
accurately measure low concentrations of renewable content. 
Specifically, commenters did not address how ``Method A'' as specified 
in the regulations at 40 CFR 80.1426(f)(4)(i)(A) could produce accurate 
results at low renewable fuel concentrations. As explained above, we 
are concerned that a mass-balance approach may not accurately estimate 
renewable content in a finished fuel when very small amounts of 
biointermediates are co-processed with petroleum fuels and are 
therefore finalizing our proposal that ``Method A'' cannot be used to 
determine renewable content for co-processed renewable fuels produced 
from biointermediates.
    In the NPRM, we also sought comment on the potential use of Method 
C of ASTM D6866. We received comments asserting that this method is 
more cost-effective than method B. While some comments expressed 
concern that Method C is less accurate, especially at lower 
concentrations of biogenic content, other commenters stated that it 
should be allowed for use as it has a similar absolute uncertainty as 
Method B of ASTM D6866. While we appreciate that Method C is cheaper 
and more widely available, we still have concerns about its efficacy at 
lower concentrations of renewable content in co-processed fuels. Based 
on commenters' suggestions, we are finalizing provisions that allow for 
the use of Method C of ASTM D6866 when the renewable content of the co-
processed fuel is at or above 10 percent. ASTM D6866-10 discusses how 
the increased accuracy of Method B, relative to Method C, is 
recommended when measuring below 10 percent renewable content, so 
limiting Method C to circumstances in which the renewable content at or 
above 10 percent balances the concern for accuracy with the cost of 
analysis.\251\
---------------------------------------------------------------------------

    \251\ See ASTM D6866-10, ``Standard Test Methods for Determining 
the Biobased Content of Solid, Liquid, and Gaseous Samples Using 
Radiocarbon Analysis,'' available in the docket for this action.
---------------------------------------------------------------------------

    We received several suggestions in response to our request for 
other potential alternatives. Commenters suggested that statistical 
models could be developed based on initial C-14 validation testing 
which could be approved as facility-specific approaches. Other 
commenters requested that we allow the use of a performance-based 
approach to approving new methods for renewable content measurements 
similar to what we allow under our performance-based measurement system 
(PBMS) under the 40 CFR part 1090 fuel quality regulations.
    While we continue to believe that direct C-14 measurement, 
specifically Method B of ASTM D6866, is the most accurate and precise 
way to determine the renewable content of co-processed fuels, we 
recognize that other methods, especially when tailored to a specific 
facility, could provide an accurate assessment of renewable content in 
co-processed fuels made from biointermediates. Based on commenters' 
suggestions that we provide a mechanism to approve facility-specific 
measurement procedures, we are finalizing an approach under which EPA 
can approve facility-specific alternatives to testing using Method B or 
Method C of ASTM D6866. This is consistent to what we currently allow 
for co-processed renewable fuels (see 40 CFR 80.1426(f)(9)(ii)), and we 
believe that such a facility-specific approach can potentially 
accommodate a wide range of alternatives. However, we note that while 
we may approve mass balance approaches tailored to specific facilities 
under this option, we would only intend to approve such an approach if 
the renewable fuel producer provides sufficient information about all 
inputs and outputs for the facility that is co-processing the 
biointermediate and validates assumptions used in any mass balance 
approach with data and testing that demonstrate that renewable biomass 
actually results in the production of renewable fuel.
2. Implications of Using Biointermediates for Lifecycle GHG Assessments
    We are not making any changes to Table 1 to 40 CFR 80.1426 as a 
result

[[Page 39650]]

of allowing biointermediates to be used under the RFS program. Each 
renewable fuel pathway consists of a fuel type, feedstock, and 
production process. Under the RFS program, we must assess lifecycle GHG 
emissions for each potential pathway to determine whether it meets the 
GHG reduction threshold, as compared to the 2005 statutory petroleum 
baseline, for one or more of the four renewable fuel categories. Table 
1 contains the many generally applicable pathways for which we have we 
assessed the lifecycle GHG emissions and assigned D codes. We are 
finalizing our proposed approach to creating and implementing a 
biointermediates program that maintains the framework of the existing 
pathways in Table 1 and provides that those pathways can now be 
followed through the production and use of a biointermediate. That is, 
the Table 1 pathways can now be implemented at more than one facility--
a biointermediate production facility and the renewable fuel production 
facility.
    Before this action, each pathway involved the conversion of a type 
of renewable biomass feedstock to a renewable fuel at one facility. The 
allowance of biointermediates in this action means that, under certain 
circumstances, a feedstock can now be processed at more than one 
facility. This additional flexibility does not change the requirement 
that to be eligible to generate RINs, fuels must be produced through an 
approved pathway. Although Table 1 does not explicitly list 
biointermediates or biointermediate processing requirements, fuels 
produced from biointermediates can qualify for existing Table 1 
pathways. For example, row M in Table 1 includes a pathway for 
renewable gasoline produced from crop residue through a process of 
``catalytic pyrolysis and upgrading process . . . utilizing natural 
gas, biogas, and/or biomass as the only process energy sources.'' Crop 
residue converted to biocrude via catalytic pyrolysis at one facility 
and then upgraded to renewable gasoline at another facility that uses 
only natural gas for process energy would be eligible for cellulosic 
biofuel (D-code 3) RINs through the row M pathway provided that all 
other applicable regulatory requirements are satisfied. As this example 
illustrates, the addition of a biointermediate does not change the 
pathway other than conducting the same processing steps at two 
facilities instead of one.
    We do not believe that the additional flexibility for 
biointermediates provided in this action necessitates changes to Table 
1 on the basis of lifecycle GHG emissions. EPA evaluated the lifecycle 
GHG emissions associated with each pathway before it was added to Table 
1 and determined that each pathway met the applicable GHG reduction 
requirement corresponding to the RFS fuel category. In general, these 
evaluations assumed that the bulk renewable biomass would be converted 
to renewable fuel at one facility. Compared to these prior evaluations, 
allowing the processing of renewable biomass to renewable fuel to occur 
at more than one facility may affect the emissions associated with 
transporting the bulk biomass, biointermediates and renewable fuels 
through the supply chain. However, we expect that in most cases the 
overall transportation emissions would decrease or be minimally 
affected. We anticipate that a supply chain that includes 
biointermediates would likely involve a ``hub and spoke'' arrangement 
with multiple biointermediate production facilities, located close to 
biomass collection points, that supply biointermediates to a single 
renewable fuel production facility. Relative to a supply chain that 
involves conversion at one facility, the hub and spoke model would 
reduce transport distances of bulk biomass and add transport of 
biointermediates. Renewable biomass is typically less energy dense 
(i.e., less calorific energy per ton) than the resulting 
biointermediate. Renewable biomass is also typically more challenging 
logistically to transport than biointermediates because it is often 
more difficult to store (i.e., more likely to degrade) and less uniform 
in shape and consistency relative to the biointermediate. For these 
reasons, bulk biomass typically requires more energy and associated GHG 
emissions to transport relative to the resulting biointermediate. In 
some cases, the biointermediate supply-chain may add to the overall 
transport distance of materials relative to a supply chain with only 
one facility, but in these cases, we expect the lower GHG emissions per 
ton-mile of material transport to offset the longer overall distance. 
Thus, by replacing transport of renewable biomass with transport of 
biointermediates we expect the biointermediate supply chains to either 
reduce or not significantly affect supply chain transportation and 
distribution related GHG emissions. For these reasons, and given that 
transportation and distribution GHG emissions are often small relative 
to other lifecycle stages, we do not expect the allowance of 
biointermediates to significantly increase the lifecycle GHG emissions 
associated with these fuel pathways relative to our existing estimates.
    Under the biointermediates provisions, all of the pathways 
currently applicable to renewable fuel under Table 1 would allow for 
the use of biointermediates provided implementation of the pathway 
using a biointermediate: (1) starts with the renewable biomass 
feedstock specified in the Table 1 pathway; (2) produces the fuel 
specified in the Table 1 pathway; (3) converts the renewable biomass 
feedstock to a biointermediate and the biointermediate to the renewable 
fuel using processes that are consistent with the production process 
requirements specified in the Table 1 pathway; and, (4) satisfies all 
of the other applicable regulatory requirements. Of course, qualifying 
renewable fuel cannot be made from a biointermediate if the fuel 
production pathway is not listed in Table 1 or otherwise approved by 
EPA.
    In addition to the generally applicable pathways in Table 1, EPA 
has also approved many facility-specific pathways in response to 
petitions submitted pursuant to the process at 40 CFR 80.1416. These 
approvals are based on our evaluations of the GHG emissions associated 
with the particular processes, materials used, fuels produced, and 
process energy types and amounts outlined and described in each of the 
facility-specific petition requests. Because our lifecycle GHG analyses 
and pathway approvals are specific to the precise processes, materials, 
etc. described in petitions, we are not allowing existing facility-
specific pathways to introduce the use of a biointermediate under their 
existing approvals. To the extent that the facility-specific 
determinations are already tailored to the particular circumstances of 
each pathway, we do not anticipate this restriction will directly 
affect implementation of the previously approved facility-specific 
pathways. In a limited number of cases, EPA previously approved 
facility-specific pathways that include use of a biointermediate. 
Existing pathway approvals that expressly allow for the use of a 
particular biointermediate are not affected by this action. However, if 
a facility producing fuel through a facility-specific pathway makes any 
changes in its feedstocks, processes or fuels produced that are outside 
the scope of its existing facility-specific pathway, including by 
introducing the use of a biointermediate, it would need to petition EPA 
for a new pathway evaluation pursuant to 40 CFR 80.1416.
    As a general matter, renewable fuel produced through facility-
specific pathways must be produced in

[[Page 39651]]

accordance with the RFS regulations at 40 CFR part 80, subpart M, 
including the requirements for producing renewable fuel from 
biointermediates that are being finalized in this action. Facility-
specific petitions may also include specific conditions, as determined 
through the informal adjudication and pursuant to 40 CFR 
80.1426(a)(1)(iii), 40 CFR 80.1416(b)(1)(vii), 80.1450(i), and 
80.1451(b)(1)(ii)(W), that apply to fuel production and RIN generation. 
Moving forward, we intend that future facility-specific pathway 
approvals will allow for the use of particular biointermediates that 
are regulatorily defined at 40 CFR 80.1401, and that such pathways will 
be governed by the applicable requirements for producing renewable fuel 
from biointermediates, as well as any facility-specific conditions and 
requirements.

VIII. Amendments to Fuel Quality and RFS Regulations

    This section describes the regulatory changes we are finalizing for 
the fuel quality and RFS programs. We address comments related to these 
regulatory changes in Section 11 of the RTC document.

A. BBD Conversion Factor for Percentage Standard

    In the proposed rule we noted our observation that the average 
Equivalence Value of BBD appears to have grown over time without 
stabilizing, and that the average future Equivalence Value for BBD was 
likely to be at least 1.55. We therefore proposed replacing the factor 
of 1.5 in the percentage standard formula for BBD with a factor of at 
least 1.55. We did not propose changing any other aspect of the 
percentage standard formula for BBD. We received several adverse 
comments on this proposed definition. In light of these comments, we 
are not finalizing this proposed change in this rule. We will continue 
to monitor the average number of RINs generated per gallon of BBD, and 
may consider this change in a future rule.

B. Changes to Registration for Baseline Volume

    We are finalizing as proposed revised registration requirements at 
40 CFR 80.1450(b)(1)(v) as well as revisions to the definition of 
``baseline volume'' at 40 CFR 80.1401 to allow a non-exempt (i.e., non-
grandfathered) renewable fuel producer to use either nameplate capacity 
or actual peak capacity for their facility's baseline volume if 
permitted capacity cannot be determined. We are not changing the 
requirements for establishing the baseline volume of grandfathered 
facilities.\252 253\ All non-grandfathered facilities with an 
applicable permitted capacity will continue to be required to register 
using that permitted capacity pursuant to 40 CFR 80.1450(b)(1)(v)(A).
---------------------------------------------------------------------------

    \252\ For purposes of this section, a ``grandfathered facility'' 
is a renewable fuel production facility that has volumes that are 
exempt from the renewable fuel lifecycle GHG reduction threshold 
under 40 CFR 80.1403(c). This provision exempts (i.e., 
``grandfathers'') facilities that commenced construction on or 
before December 19, 2007, did not discontinue construction for a 
period of 18 months after commencement of construction, and 
completed construction by December 19, 2010.
    \253\ For grandfathered facilities, baseline volume is the 
maximum volume of grandfathered fuel for which the facility is 
allowed to generate RINs. For non-grandfathered facilities, baseline 
volume is intended to indicate the maximum amount of renewable fuel 
that the facility is capable of producing. Actual peak capacity, 
however, may not be a good indicator of maximum capacity.
---------------------------------------------------------------------------

    We are finalizing this revision in order to allow for more up-to-
date information to be used in establishing the baseline volumes of 
non-grandfathered facilities. The existing provision at 40 CFR 
80.1450(b)(1)(v)(C) requires facilities to use actual peak capacity if 
the applicable air permit does not include a permitted maximum rate 
annual volume output. However, actual peak capacity is based on actual 
production tied to when EISA was enacted (i.e., December 2007), which 
is now well more than a decade in the past. This historical peak 
capacity is not necessarily an accurate reflection of the facility's 
current production capacity. Since the passage of EISA, facilities may 
have improved efficiency, expanded the facility, or experienced an 
increase in production due to increased demand, resulting in larger 
production than the year used to calculate actual peak capacity. Having 
accurate capacity information for registered renewable fuel facilities 
is important for EPA in helping to identify whether facilities are 
generating an appropriate number of RINs.\254\ This change will allow a 
non-exempt facility to choose whether to use actual peak capacity or 
nameplate capacity if permitted capacity cannot be determined. Non-
exempt facilities already registered using actual peak capacity will 
have the option to switch to nameplate capacity at any time.\255\ This 
change will have no impact on facilities who choose not to use this 
option.
---------------------------------------------------------------------------

    \254\ Because the baseline volume of an exempt (i.e., 
grandfathered) facility is by definition tied to either December 19, 
2007, or December 31, 2009 (see 40 CFR 80.1403(c) and (d) and 
80.1450(b)(1)(v)(B)), current production capacity is not relevant 
for such a facility.
    \255\ Facilities can also choose to keep their baseline volume 
as actual peak capacity.
---------------------------------------------------------------------------

C. Changes to Attest Engagements for Parties Owning RINs (``RIN Owner 
Only'')

    We are exempting parties that transact a relatively small number of 
RINs from the annual attest engagement requirements. In order to 
qualify for this exemption, parties must be registered solely as a 
``RIN Owner''. They may not be registered or engaged in any other role 
under the RFS program (e.g., obligated party, exporter of renewable 
fuel, renewable fuel producer, renewable fuel importer, etc.). Until 
this action, such parties were required to submit an annual attest 
engagement under 40 CFR 80.1464(c), regardless of the number of RINs 
they transacted or held in a compliance year. For example, a party 
whose only activity was to buy and sell a single RIN in any given 
compliance year would have been required to complete an attest 
engagement for that year. Additionally, some parties that own a small 
number of RINs have difficulty selling small denominations of RINs 
(e.g., hundreds of separated D6 RINs) and may end up holding those RINs 
until they expire. These parties would have had to then arrange for an 
annual attest engagement performed by a certified professional 
accountant (CPA) for those RINs, which can be quite costly especially 
when compared to the relatively low value of the small number of RINs 
owned.
    We believe that parties who, in a given compliance year, are 
registered as a ``RIN Owner'' only, who transact 10,000 or fewer RINs, 
and who do not exceed a RIN holding threshold under 40 CFR 80.1435, 
should not be required to complete an attest engagement for that 
compliance year. A party who is registered as a ``RIN Owner Only'' does 
not generate RINs and does not have an RVO. We believe that the 
information contained in EMTS and RIN activity reports for these RIN 
Owners who transact a relatively small number of RINs and who do not 
exceed a RIN holding threshold, conveys the necessary compliance 
information, and that the attest engagements for these parties do not 
add much value relative to their expense. Many of the affected parties 
are smaller businesses that are required to arrange the services of a 
CPA to perform their annual attest engagement. Making this change to 
the attest engagement requirements may result in a cost savings to 
these typically smaller businesses, without adversely affecting RFS 
program oversight.
    We intend that the total number of RINs transacted in the year be 
counted toward the 10,000 RIN limit. RINs ``transacted'' includes RINs 
retired for

[[Page 39652]]

reasons other than compliance retirements, such as the reason code 
``voluntary RIN retirement.'' This means that if a party buys 5,000 
RINs and sells 6,000 RINs in a year, the party will have transacted 
11,000 RINs and must complete the attest engagement for that year. We 
are finalizing the 10,000 RIN limit based upon programmatic 
experience--specifically, we believe it reflects a reasonable level of 
activity below which the utility of the attest engagement is reduced.

D. Public Access to Information

    Exemption 4 of the Freedom of Information Act (FOIA) exempts from 
disclosure ``trade secrets and commercial or financial information 
obtained from a person [that is] privileged or confidential.'' \256\ In 
order for information to meet the requirements of Exemption 4, EPA must 
find that the information is either: (1) a trade secret, or (2) 
commercial or financial information that is: (a) obtained from a 
person, and (b) privileged or confidential. Information meeting these 
criteria is commonly referred to as ``confidential business 
information'' or ``CBI.'' \257\
---------------------------------------------------------------------------

    \256\ 5 U.S.C. 552(b)(4).
    \257\ We note that CAA section 114(c) explicitly excludes 
emissions data from treatment as confidential information.
---------------------------------------------------------------------------

    In June 2019, the U.S. Supreme Court issued its decision in Food 
Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019) 
(Argus Leader). Argus Leader addressed the meaning of ``confidential'' 
within the context of FOIA Exemption 4. The Court held that ``[a]t 
least where commercial or financial information is both customarily and 
actually treated as private by its owner and provided to the government 
under an assurance of privacy, the information is `confidential' within 
the meaning of Exemption 4.'' \258\ The Court identified two conditions 
``that might be required for information communicated to another to be 
considered confidential.'' \259\ Under the first condition, 
``information communicated to another remains confidential whenever it 
is customarily kept private, or at least closely held, by the person 
imparting it.'' \260\ The second condition provides that ``information 
might be considered confidential only if the party receiving it 
provides some assurance that it will remain secret.'' \261\ The Court 
found the first condition necessary for information to be considered 
confidential within the meaning of Exemption 4, but did not address 
whether the second condition must also be met.
---------------------------------------------------------------------------

    \258\ Argus Leader, 139 S. Ct. at 2366.
    \259\ Id. at 2363.
    \260\ Id. (internal citations omitted).
    \261\ Id. (internal citations omitted).
---------------------------------------------------------------------------

    Following the issuance of the Court's opinion, the U.S. Department 
of Justice (DOJ) issued guidance concerning the confidentiality prong 
of Exemption 4, articulating ``the newly defined contours of Exemption 
4'' post-Argus Leader.\262\ Where the Government provides an express or 
implied indication to the submitter prior to or at the time the 
information is submitted to the Government that the Government would 
publicly disclose the information, then the submitter generally cannot 
reasonably expect confidentiality of the information upon submission, 
and the information is not entitled to confidential treatment under 
Exemption 4.\263\
---------------------------------------------------------------------------

    \262\ ``Exemption 4 After the Supreme Court's Ruling in Food 
Marketing Institute v. Argus Leader Media and Accompanying Step-by-
Step Guide,'' Office of Information Policy, U.S. DOJ, (October 4, 
2019), available at https://www.justice.gov/oip/exemption-4-after-supreme-courts-ruling-food-marketing-institute-v-argus-leader-media.
    \263\ See id.; see also ``Step-by-Step Guide for Determining if 
Commercial or Financial Information Obtained from a Person is 
Confidential under Exemption 4 of the FOIA,'' Office of Information 
Policy, U.S. DOJ, (updated October 7, 2019), available at https://www.justice.gov/oip/step-step-guide-determining-if-commercial-or-financial-information-obtained-person-confidential.
---------------------------------------------------------------------------

    Since the proposed rule, we have made some editorial changes to the 
final regulations to improve the readability of the new provisions and 
to harmonize the terminology used. These changes do not change the 
substance of the final regulations from what was proposed.
1. Treatment of Information Contained in Enforcement Actions and 
Invalid RIN Determinations
    EPA has a longstanding practice of posting on its website or 
otherwise publicly releasing information describing fuels violations 
and invalid RIN determinations.\264\ Accordingly, we are finalizing 
regulations to codify the types of information contained in fuels-
related enforcement actions and invalid RIN determinations that are not 
entitled to confidential treatment pursuant to Exemption 4 of FOIA. 
This action covers information within notices of violation, settlement 
agreements, administrative complaints, civil complaints, criminal 
information, and criminal indictments related to EPA's fuel quality and 
RFS regulations in 40 CFR parts 80 and 1090 and invalid RIN 
determinations related to EPA's RFS regulations in 40 CFR part 80.
---------------------------------------------------------------------------

    \264\ See, e.g., ``Clean Air Act Fuels Settlement Information,'' 
U.S. EPA, available at https://www.epa.gov/enforcement/clean-air-act-fuels-settlement-information; ``Civil Enforcement of the 
Renewable Fuel Standard Program,'' U.S. EPA, available at https://www.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program.
---------------------------------------------------------------------------

    Since at least 2013,\265\ EPA has posted on its website or 
otherwise publicly released information relating to violations of the 
fuel quality and RFS regulations. This information includes the company 
name and identification number, the total quantity of fuel and 
information relating to the exceedance of the fuel standard associated 
with the violation, information relating to the generation, transfer, 
or use of credits or RINs, and the total quantity of RINs in question. 
Therefore, EPA has already provided an implied indication to any 
submitters of such information after at least 2013 that EPA may 
publicly disclose such information. Accordingly, the information is not 
entitled to confidential treatment, and EPA intends to continue to 
release such information without further notice.
---------------------------------------------------------------------------

    \265\ EPA began posting RFS enforcement-related determinations 
and actions in 2013. See ``Civil Enforcement of the Renewable Fuel 
Standard Program,'' U.S. EPA, available at https://www.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program. EPA 
has been posting gasoline and diesel enforcement actions for much 
longer. See ``Clean Air Act Fuels Settlement Information,'' U.S. 
EPA, available at https://www.epa.gov/enforcement/clean-air-act-fuels-settlement-information.
---------------------------------------------------------------------------

    Through this action, we are also providing an express indication 
that such information is not entitled to confidential treatment and may 
be affirmatively disclosed to the public without providing further 
notice or process to the affected businesses. This action effectively 
serves as an advance confidentiality determination through rulemaking 
and covers the information identified below. Accordingly, 40 CFR 2.201 
through 2.215 and 2.301 do not apply to the specified information 
submitted under this part and under 40 CFR part 1090, which is 
determined through this rulemaking to not qualify for confidential 
treatment. In particular, this action impacts certain information 
contained in EPA determinations that RINs are invalid under 40 CFR 
80.1474(b)(4)(i)(C)(2) and (b)(4)(ii)(C)(2), notices of violation, 
settlement agreements, administrative complaints, civil complaints, 
criminal information, and criminal indictments. The information that 
EPA intends to continue release in the context of these determinations 
and actions includes the company name and company identification 
number, the facility name and facility identification number, the total 
quantity of fuel and information relating to the exceedance of the fuel 
standard associated with the violation, information relating to the 
generation, transfer, or use of credits or RINs, the

[[Page 39653]]

total quantity of RINs in question, the batch number(s) and the D codes 
of the RINs in question, the time period when the RINs in question were 
generated or when the violation occurred, and any other information 
relevant to describing the violation at issue. Additionally, in 
response to a comment that EPA received on the NPRM, the information 
that EPA intends to continue to release in the context of these 
determinations and actions also includes information relating to an 
obligated party's failure to meet its RVOs. While we believe that this 
information is already included as information relating to the use of 
RINs or as any other information relevant to describing the violation 
at issue, we are explicitly including it in this determination for the 
avoidance of doubt and the sake of clarity. We are codifying this 
determination at 40 CFR 80.11 and 80.1402(b), as well as at 40 CFR 
1090.15.
    Publicly disclosing this information is important for providing 
transparency to stakeholders and the public with respect to violations 
of EPA's fuel quality and RFS programs and the relief EPA is seeking to 
remedy those violations through its enforcement actions. Public 
disclosure is also important to the successful operation and integrity 
of the RFS program as it may prevent parties from unwittingly 
transferring or attempting to use invalid RINs for compliance, in 
contravention of the RFS regulations, or from buying invalid RINs that 
they will be unable to use for compliance. For these reasons, we are 
providing an express indication through this final rule that such 
information is not entitled to confidential treatment.
2. Treatment of Information Contained in Requests Submitted Under the 
RFS Program
    We are finalizing regulations that would help facilitate our 
processing of claims that RFS-related information should be withheld 
from public disclosure under FOIA, 5 U.S.C. 552(b)(4), as CBI. These 
regulations identify certain types of RFS information collected by EPA 
under 40 CFR part 80, subpart M, that EPA considers as not entitled to 
confidential treatment pursuant to Exemption 4 of the FOIA and that EPA 
may release without further notice.
    These regulations provide an express indication that we will not 
consider certain basic information (identified below) incorporated into 
EPA actions on petitions and submissions, as well as that same 
information as it appears in the submissions to EPA under 40 CFR part 
80, subpart M, to be entitled to confidential treatment under Exemption 
4 of the FOIA. This determination will apply prospectively to 
submissions and requests under the RFS program received by EPA after 
publication of the final rule, and EPA's decisions on those submissions 
and requests. In particular, the provisions of 40 CFR 80.1402 will 
apply to all submissions to EPA under 40 CFR part 80, subpart M, 
including, but not limited to: SREs submitted under 40 CFR 80.1441, 
small refiner exemptions under 40 CFR 80.1442, pathway petitions under 
40 CFR 80.1416, and compliance demonstration reports. Accordingly, such 
information will be released to a FOIA requester upon request without 
further notice to the submitter if no other FOIA exemption applies and 
without following EPA's procedures set forth in 40 CFR part 2, subpart 
B. EPA may also elect to proactively release the information without 
further notice to the submitter and without following EPA's procedures 
set forth in 40 CFR part 2, subpart B. We are codifying this 
determination at 40 CFR 80.1402(c) and (d).
    Through this action, we are providing an express indication that 
such information is not entitled to confidential treatment and may be 
affirmatively disclosed to the public without providing further notice 
to affected businesses. This action effectively serves as an advance 
confidentiality determination through rulemaking covering the 
information identified below. Accordingly, the provisions of 40 CFR 
2.201 through 2.215 and 2.301 do not apply to the specified information 
submitted under this part that is determined through this rulemaking 
not to qualify for confidential treatment. In particular, the 
information affected by this action is the submitter's name, the name 
and location of the facility, the date the submission was transmitted 
to EPA, any EPA-issued company or facility identification numbers 
associated with the submission, the general nature or purpose of the 
submission, and the relevant time period for the submission as 
applicable. Additionally, for submissions making requests that EPA must 
adjudicate (e.g., new pathway petitions, petitions for exemptions or 
compliance flexibility, etc.), under this action, once we have 
adjudicated the request, we may release the following information: the 
submitter's name; the name and location of the facility; the date the 
request was transmitted to EPA; any EPA-issued company or facility 
identification numbers associated with the request, the general nature 
or purpose of the request, the relevant time period for the request, 
the extent to which EPA either granted or denied the request (i.e., 
whether EPA grants a request in part and the portions granted and 
denied, but not EPA's basis for the decision or any information that is 
not provided in 40 CFR 80.1402(d)), and any relevant terms and 
conditions. For information submitted under 40 CFR part 80, subpart M, 
and not specified in the regulations at 40 CFR 80.1402, EPA will 
continue to evaluate such CBI claims in accordance with 40 CFR part 2, 
subpart B.
    It is appropriate to release the information described above in the 
interest of transparency and to provide the public with information 
about entities seeking exemptions or requests under part 80, subpart M. 
This approach will also provide certainty to submitters regarding the 
release of information under 40 CFR part 80, subpart M. With this 
advance notice, each submitter will have certainty regarding how EPA 
will treat the information specified above, and, as applicable, have 
the discretion to decide whether to make such a request with the 
understanding that EPA will release certain information about the 
request without further notice to the submitter.

E. Clarifying the Definition of ``Agricultural Digester''

    We are finalizing as proposed our clarifying amendments for the 
definition of ``agricultural digester'' in 40 CFR 80.1401. Row Q in 
Table 1 to 40 CFR 80.1426 makes renewable compressed natural gas, 
renewable liquefied natural gas, and renewable electricity eligible to 
generate cellulosic biofuel (D3) RINs if the fuel is produced from, 
among other feedstocks, biogas from agricultural digesters (and if the 
producer meets all other applicable requirements under the RFS 
program). An agricultural digester was previously defined at 40 CFR 
80.1401 as ``an anaerobic digester that processes predominantly 
cellulosic materials, including animal manure, crop residues, and/or 
separated yard waste.'' In the preamble to the Pathways II final rule, 
we explained that predominantly cellulosic materials are materials that 
are at least 75 percent cellulose, hemi-cellulose or lignin by 
mass.\266\ In the proposed rule, we

[[Page 39654]]

proposed clarifying amendments to the definition of ``agricultural 
digester'' based on multiple questions we have received from 
stakeholders asking if they could generate D3 RINs for biogas produced 
in a digester if materials that are not predominantly cellulosic are 
used in the digester. We are finalizing revisions to the definition of 
agricultural digester to clarify that only animal manure, crop 
residues, and/or separated yard waste with an adjusted cellulosic 
content of at least 75 percent can be processed in such a digester, and 
that each and every material processed in an agricultural digester must 
have an adjusted cellulosic content of at least 75 percent. This 
revision does not change our interpretation or implementation of the 
applicable requirements but will make it easier for the regulated 
community to understand the extant limitations on generating D3 RINs 
for biogas produced in agricultural digesters.
---------------------------------------------------------------------------

    \266\ The Pathways II final rule contained a list of feedstocks 
EPA determined are ``predominately cellulosic feedstocks'': ``Crop 
residue, slash, pre-commercial thinnings and tree residue, 
switchgrass, miscanthus, Arundo donax, Pennisetum purpureum, and 
biogas from landfills, municipal wastewater treatment facility 
digesters, agricultural digesters, and separated MSW digesters'' (79 
FR 42130-31, July 18, 2014). EPA further determined that feedstocks 
with minimum average adjusted cellulosic content of 75 percent, 
measured on a dry mass basis, were ``predominantly cellulosic,'' 
meaning fuel produced from these feedstocks would be eligible to 
generate 100 percent cellulosic RINs.
---------------------------------------------------------------------------

    The preamble to the Pathways II rule makes it clear that the term 
``predominantly cellulosic'' means that eligible feedstocks must 
contain a cellulosic content of at least 75 percent, and that this term 
does not authorize renewable fuel producers to introduce non-
predominantly cellulosic materials into an agricultural digester. In 
the Pathways II rulemaking, we analyzed what we understood to be the 
most common inputs--animal manure, crop residues, and separated yard 
waste--and determined that all are predominantly cellulosic.\267\ 
Consistent with this understanding and analysis, we narrowly defined 
``agricultural digester'' based on use of these three feedstocks. 
Allowing other materials into the digester or any materials that are 
not at least 75 percent cellulosic would therefore be inconsistent with 
the analysis underlying the rule and the definition of agricultural 
digester.
---------------------------------------------------------------------------

    \267\ 79 FR 42128, 42140 (July 18, 2014).
---------------------------------------------------------------------------

    In addition to maintaining consistency with the Pathways II 
analysis, limiting the feedstocks that can be used in an agricultural 
digester to animal manure, crop residue, and separated yard waste also 
makes implementation and oversight of pathways that include biogas from 
agricultural digesters much more straightforward. Specifically, because 
EPA has already determined that these three renewable biomass 
feedstocks are predominantly cellulosic, no further steps are needed to 
demonstrate that 100 percent of the fuel produced from a digester that 
is limited to animal manure, crop residue, and separated yard waste is 
eligible to generate cellulosic RINs. Our clarification of the 
definition of agricultural digester does not, however, mean that 
parties cannot generate D3 RINs for biogas produced from other 
feedstocks or in other types of digesters (e.g., municipal wastewater 
treatment facility digesters, separated MSW digesters, or other waste 
digesters that convert the cellulosic components of biomass to biogas). 
The existing pathways allow D3 RINs to be generated for renewable 
compressed natural gas, renewable liquified natural gas, and renewable 
electricity produced from ``biogas from the cellulosic components of 
biomass processed in other waste digesters'' under Row Q of Table 1 to 
40 CFR 80.1426. For example, if the only renewable biomass inputs to an 
``other waste digester'' are all predominantly cellulosic, the 
resulting fuel would be eligible to generate 100 percent D3 RINs, even 
though the digester may not be an ``agricultural digester.'' If one or 
more of the inputs to an ``other waste digester'' are not predominantly 
cellulosic, the resulting fuel may be eligible to generate D3 RINs for 
only the portion of the fuel that was demonstrated to be produced from 
cellulosic biomass through proper testing and D5 RINs for the rest of 
the fuel produced (under the pathway contained in Row T) as specified 
at 40 CFR 80.1426(f)(15)(i)(B).
    Thus, the ability to generate cellulosic RINs for 100 percent of 
the fuel produced under the pathway in row Q is predicated on the 
assumption and associated requirement that all the inputs to a digester 
are predominantly cellulosic. In order to maintain the streamlined 
approach to qualifying the output of an agricultural digester as 100 
percent cellulosic, we are revising the definition to provide an 
exclusive list of the feedstocks that such digesters may process, as 
well as to clarify that each and every material processed in an 
agricultural digester must have an adjusted cellulosic content of at 
least 75 percent. These revisions are consistent with the RFS 
regulations and the analyses undertaken for the Pathway II rule that 
formed the basis for the agricultural digester pathways. They are a 
clarification of the regulatory text, but not a change in our 
interpretation of our existing regulations or practice in implementing 
them. The revisions additionally clarify that a digester that processes 
a material that is less than 75 percent cellulosic content is not an 
agricultural digester, even if the total cellulosic content of all the 
processed materials taken together exceeds the 75 percent threshold.

F. Definition of ``Produced From Renewable Biomass''

    We proposed to define, in 40 CFR 80.1401, that ``produced from 
renewable biomass'' means the energy in the finished fuel comes from 
renewable biomass. The purpose of this proposed definition was to 
provide additional clarity on what fuels qualify as renewable fuel, in 
alignment with the statutory and regulatory definition of renewable 
fuel and our pre-existing interpretation of the statute and 
regulations. The RFS regulations include formulas to determine the 
number of gallon-RINs generated for fuel that is produced by co-
processing renewable biomass and non-renewable feedstocks 
simultaneously to produce a fuel based on the share of the feedstock 
energy that is from renewable biomass.\268\ Thus, the proposed 
definition was intended merely to reinforce what the regulations at 40 
CFR 80.1426(f)(4) already require--that the RIN generator must base the 
RINs generated for a renewable fuel on the energy coming from the 
renewable biomass used to produce the fuel.
---------------------------------------------------------------------------

    \268\ The regulations at 40 CFR 80.1426(f)(4) specifying that 
RIN generation is based on the feedstock energy of the renewable 
biomass were established in the March 2010 RFS2 final rule.
---------------------------------------------------------------------------

    We received many comments on this proposed definition. Given the 
breadth and depth of these comments, we require additional time to 
consider these comments and are not finalizing a definition of 
``produced from renewable biomass'' in this rule. During the pendency 
of our consideration, we will continue to implement our long-standing 
interpretation of the existing requirements at 40 CFR 80.1426(f)(4) as 
described above.

G. Esterification Pathway

    We are adding ``esterification'' as a production process in rows F 
and H of Table 1 to 40 CFR 80.1426. This addition makes biodiesel, 
renewable diesel, heating oil, or jet fuel produced from a qualifying 
renewable biomass feedstock through an esterification process eligible 
for BBD (D4) or advanced biofuel (D5) RINs. We expect this revision to 
primarily result in D4 RIN generation for biodiesel produced from FFA 
feedstock through an esterification process.\269\
---------------------------------------------------------------------------

    \269\ FFA feedstock is a biointermediate, as discussed in 
Section VII.C.3.b.
---------------------------------------------------------------------------

    In the 2020 proposed rule, we proposed to revise rows F and H of 
Table 1 to 40 CFR 80.1426 by changing the existing process ``Trans-

[[Page 39655]]

Esterification'' to be ``Transesterification with or without 
esterification pretreatment'' and adding ``esterification'' as eligible 
production processes.\270\ In the 2020 final rule, we added 
``Transesterification with or without esterification pretreatment'' to 
rows F and H of Table 1 to 80.1426, but we did not add the standalone 
esterification pathway at that time, stating that the standalone 
esterification process, which uses FFA feedstocks, ``remains under 
consideration and may be finalized in a future action.'' \271\
---------------------------------------------------------------------------

    \270\ 84 FR 36801 (July 29, 2019).
    \271\ 85 FR 7016, 7058 (February 6, 2020).
---------------------------------------------------------------------------

    In the 2020-2022 proposed rule, we indicated that if we finalized 
the biointermediate program and included FFA feedstocks in the 
definition of biointermediate, then we would also finalize the 
standalone esterification pathway previously proposed in the 2020 
proposed rule.\272\ This final rule includes FFA feedstocks as one of 
the biointermediates specifically included in the definition of 
biointermediate. Thus, as stated in the proposed rule, we are 
finalizing the standalone esterification pathway.
---------------------------------------------------------------------------

    \272\ 86 FR 72473 (December 21, 2021).
---------------------------------------------------------------------------

    The most commonly used method to produce biodiesel is 
transesterification, which involves reacting triglycerides with 
methanol, typically under the presence of a base catalyst.\273\ While 
the main component of renewable biomass feedstocks that are fats, oils, 
and greases is typically triglycerides, other components, such as FFA, 
can also exist. Removal or conversion of the FFA from the fat, oil, or 
grease is important where the traditional base-catalyzed 
transesterification production process is used because FFA will inhibit 
the transesterification reaction. Esterification can be used either as 
a pre-treatment step or as a direct standalone process to convert FFA 
feedstocks to biodiesel. When esterification is used as a pre-treatment 
step, the FFA is converted through acid esterification and then 
followed with the traditional base-catalyzed transesterification of 
triglycerides. When standalone esterification is used, the FFA 
feedstock is converted directly to biodiesel via acid esterification.
---------------------------------------------------------------------------

    \273\ Commonly used base catalysts include sodium hydroxide 
(NaOH), potassium hydroxide (KOH), and sodium methoxide 
(NaOCH<INF>3</INF>).
---------------------------------------------------------------------------

H. Technical Amendments

    We are making numerous technical amendments to the RFS regulations. 
These amendments are being made to correct minor inaccuracies, clarify, 
and update the current regulations. These changes are described in 
Table VIII.H-1 below.

  Table VIII.H-1--Miscellaneous Technical Amendments to RFS Regulations
------------------------------------------------------------------------
 Part and section of title 40           Description of amendment
------------------------------------------------------------------------
80.1401......................  Amended by revising the definition of
                                ``Foreign renewable fuel producer'' to
                                mirror the regional applicability
                                requirement in Sec.   80.1426(b)(1) and
                                clarifying that foreign ethanol
                                producers are considered foreign
                                renewable fuel producers, consistent
                                with this action's biointermediate
                                provisions.
80.1401......................  Amended by revising the definition of
                                ``Renewable fuel'' to reiterate that
                                undenatured ethanol is not renewable
                                fuel.
80.1401, 80.1426(f)(5)(i)-     Amended by moving the definitions of
 (iii), (f)(5)(iv)(A) and       ``Separated yard waste,'' ``Separated
 (B), and (f)(5)(v),            food waste,'' and ``Separated municipal
 80.1450(b)(1)(vii)(A) and      solid waste'' from Sec.   80.1426(f)(5)
 (B) and (b)(1)(viii),          to the RFS definitions section (Sec.
 80.1451(b)(1)(ii)(R), and      80.1401) and updating associated cross-
 80.1454(j).                    references.
80.1401, 80.1426(f)(17)(i),    Amended by updating the incorporation by
 80.1450(b)(1)(xii),            reference (IBR) for ``Standard
 80.1451(b)(1)(ii)(T),          Specification for Diesel Fuel,'' ASTM
 80.1454(l), and 80.1468(b).    D975-13a, to now be ASTM D975-21, which
                                is the most recent ASTM version.
80.1401 and 80.1468(b).......  Amended by updating the IBR for
                                ``Standard Specification for Biodiesel
                                Fuel Blend Stock (B100) for Middle
                                Distillate Fuels,'' ASTM D6751-09, to
                                now be ASTM D6751-20a, which is the most
                                recent ASTM version.
80.1401 and 80.1471(c).......  Amended by adding a definition of
                                ``Professional liability insurance''
                                consistent with its definition in 31 CFR
                                50.5(q) and removing the previous cross-
                                reference to this definition in Sec.
                                80.1471(c).
80.1426(f)(7)(v)(A) and        Amended by updating the IBR for
 80.1468(b).                    ``Standard Test Methods for Analysis of
                                Wood Fuels,'' ASTM E870-82(2006), to now
                                be ASTM E870-82(2019), which is the most
                                recent ASTM version.
80.1426(f)(7)(v)(B) and        Amended by updating the IBR for
 80.1468(b).                    ``Standard Test Methods for Direct
                                Moisture Content Measurement of Wood and
                                Wood-Based Materials,'' ASTM D4442-07,
                                to now be ASTM D4442-20, which is the
                                most recent ASTM version.
80.1426(f)(7)(v)(B) and        Amended by updating the IBR for
 80.1468(b).                    ``Standard Test Method for Laboratory
                                Standardization and Calibration of Hand-
                                Held Moisture Meters,'' ASTM D4444-08,
                                to now be ASTM D4444-13 (2018), which is
                                the most recent ASTM version.
80.1426(f)(8)(ii)(B) and       Amended by updating the IBR for
 80.1468(b).                    ``Standard Guide for the Use of the
                                Joint American Petroleum Institute (API)
                                and ASTM Adjunct for Temperature and
                                Pressure Volume Correction Factors for
                                Generalized Crude Oils, Refined
                                Products, and Lubricating Oils: API
                                Manual of Petroleum Measurement
                                Standards (MPMS) Chapter 11.1,'' ASTM
                                D1250-08, to now be ASTM D1250-19e1,
                                which is the most recent ASTM version.
80.1426(f)(9)(ii),             Amended by updating the IBR for
 80.1430(e)(2), and             ``Standard Test Methods for Determining
 80.1468(b).                    the Biobased Content of Solid, Liquid,
                                and Gaseous Samples Using Radiocarbon
                                Analysis,'' ASTM D6866-08, to now be
                                ASTM D6866-22, which is the most recent
                                ASTM version.
80.1426(f)(17)(i)............  Amended by adding ``renewable gasoline,''
                                consistent with other related sections.
80.1426(f)(17)(i)(B)(1) and    Amended by replacing ``diesel'' with
 (2), 80.1450(b)(1)(xii)(B)     ``distillate'' to clarify that parties
 and (C),                       that blend renewable jet fuel with
 80.1451(b)(1)(ii)(T)(1), and   conventional jet fuel must currently
 80.1454(l)(1).                 comply with these requirements. This
                                would remove perceived ambiguity over
                                whether these provisions apply to
                                producers of blended renewable jet fuel
                                (jet fuel is not diesel fuel per the
                                definition of ``diesel fuel'' at 40 CFR
                                80.2 but rather distillate fuel).

[[Page 39656]]

 
80.1428(b)(2)................  Amended to be consistent with the
                                restriction that independent third-party
                                auditors may not own RINs under Sec.
                                80.1471(a)(3).
80.1429(b)(9)................  Amended to limit the number of RINs that
                                a party can separate when they incur an
                                RVO due to redesignating certified-NTDF
                                under Sec.   80.1408. This is consistent
                                with similar situations involving
                                exporters of renewable fuel or importers
                                of gasoline and diesel fuel.
80.1450(g)(11)(ii),            Amended by updating the email address for
 80.1473(f), 80.1474(b)(2)      EPA's EMTS help desk to
 and (3), (b)(4)(i)(C), and     <a href="/cdn-cgi/l/email-protection#375142525b444745585045565a444247475845437752475619505841"><span class="__cf_email__" data-cfemail="b6d0c3d3dac5c6c4d9d1c4d7dbc5c3c6c6d9c4c2f6d3c6d798d1d9c0">[email protected]</span></a>.
 (b)(4)(ii)(C).
80.1450(h)(2)(i).............  Amended by changing the time for
                                responding to EPA's notice of intent to
                                deactivate a company's registration from
                                14 to 30 calendar days to allow
                                additional time for company action.
80.1451(b)(1)(ii)(T)(2) and    Amended to clarify reporting instructions
 80.1454(l)(3).                 and move the affidavit requirement from
                                the reporting section (Sec.   80.1451)
                                to the recordkeeping section (Sec.
                                80.1454).
80.1460(b)(6)................  Amended to clarify that generating a RIN
                                for fuel for which RINs have previously
                                been generated is not a prohibited act
                                if those RINs were generated pursuant to
                                Sec.   80.1426(c)(6).
80.1464(a)(3)(ii),             Amended to modify the attest engagements
 (b)(3)(ii), and (c)(2)(ii).    requirements to be consistent with the
                                RIN activity report requirements in Sec.
                                  80.1451(c)(2).
80.1464(a)(4)(ii),             Amended by updating outdated references
 (b)(5)(ii), and (c)(3)(ii)     to expired provisions of part 80 to part
 and 80.1475(a)(2) and (d)(4).  1090.
80.1464(a)(7), (b)(8),         Amended to add the requirement that the
 (c)(7), (i)(1)(i), and         attest auditor verifies the submission
 (i)(2)(i).                     of required compliance reports and
                                states as a finding any compliance
                                reports missing.
80.1464(b)(4)(i) and (iii)...  Amended to modify the requirements to
                                include verification of last date of
                                independent third-party engineering
                                review as occurring within the three-
                                year cycle under Sec.   80.1450(d)(3).
80.1469(c)(1)(vii)...........  Amended to modify the requirements for
                                Quality Assurance Plans to allow for a
                                renewable fuel for which RINs were
                                previously generated to be used as a
                                feedstock if done in accordance with
                                Sec.   80.1426(c)(6).
80.1471(c)...................  Amended to correct an erroneous reference
                                to 31 CFR 50.5(q) to now be 31 CFR
                                50.4(t), and to allow comparable
                                financial strength ratings if acceptable
                                to EPA.
80.1475(d)(1) and (3)........  Amended by correcting erroneous
                                references to paragraph (b) to now be to
                                paragraph (c).
------------------------------------------------------------------------

IX. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive orders 
can be found at http://www.epa.gov/laws-regulations/laws-and-executive-orders.

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

    This action is an economically significant regulatory action that 
was submitted to the Office of Management and Budget (OMB) for review. 
Any changes made in response to OMB recommendations have been 
documented in the docket. EPA prepared an analysis of potential costs 
and benefits associated with this action. This analysis is presented in 
the RIA, available in the docket for this action.

B. Paperwork Reduction Act (PRA)

    The information collection activities in this rule have been 
submitted for approval to the Office of Management and Budget (OMB) 
under the PRA. The Information Collection Request (ICR) document that 
EPA prepared has been assigned EPA ICR number 2691.02. You can find a 
copy of the ICR in the docket for this rule, and it is briefly 
summarized here. The information collection requirements are not 
enforceable until OMB approves them.
    The information to be collected is necessary to implement the 
inclusion of biointermediates to the RFS program. Biointermediate 
producers and importers will be added as respondents and certain 
existing respondents (e.g., renewable fuel producers) may have 
additional reporting and recordkeeping requirements related to their 
use of biointermediates. Recordkeeping and reporting requirements 
include the registration of biointermediate producers and their 
facilities; product transfer documentation; records retention related 
to the production, transfer, and use of biointermediates; annual attest 
engagements; quality assurance plans for biointermediates; and the 
submission of information related to renewable fuels produced using 
biointermediates. These items are discussed in detail in the supporting 
statement in the docket.
    Respondents/affected entities: Biointermediate producers, renewable 
fuel producers, biointermediate importers, and third parties who submit 
reports for these parties.
    Respondent's obligation to respond: Mandatory, under 40 CFR parts 
80 and 1090.
    Estimated number of respondents: 5,052.
    Frequency of response: On occasion, daily, quarterly, or annually.
    Total estimated burden: 167,385 hours (per year). Burden is defined 
at 5 CFR 1320.3(b).
    Total estimated cost: $9,262,146 (per year), all of which is 
purchased services, and which includes $0 annualized capital or 
operation & maintenance costs.
    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. When OMB approves 
this ICR, EPA will announce that approval in the Federal Register and 
publish a technical amendment to 40 CFR part 9 to display the OMB 
control number for the approved information collection activities 
contained in this final rule.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. In 
making this determination, EPA concludes that the impact of concern for 
this rule is any significant adverse economic impact on small entities 
and that the agency is certifying that this rule will not have a 
significant economic impact on a substantial number of small entities 
if

[[Page 39657]]

the rule has no net burden on the small entities subject to the rule.
    With respect to the biointermediate provisions, participation in 
the biointermediates program is purely voluntary. We do not believe 
that a small biointermediate producer or renewable fuel producer will 
choose to take advantage of the biointermediate program unless there is 
sufficient economic incentive for them to do so. Current small 
renewable fuel producers will not be compelled to use biointermediates, 
and as such, any costs associated with these provisions are also purely 
voluntary. Also, the biointermediates program will create new 
opportunities for small entities that may be able to build smaller 
operations than a full-scale renewable fuel production facility. These 
entities would likely not be able to otherwise participate in the RFS 
program. With respect to the other amendments to the RFS regulations, 
this action makes relatively minor corrections and modifications to 
those regulations. As such, we do not anticipate that there will be any 
significant adverse economic impact on directly regulated small 
entities as a result of these provisions.
    The small entities directly regulated by the annual percentage 
standards associated with the RFS volumes are small refiners, which are 
defined at 13 CFR 121.201. With respect to the 2020, 2021, and 2022 
percentage standards and 2022 supplemental standard, we have evaluated 
the impacts on small entities from two perspectives: as if the 
standards were a standalone action or if they are a part of the overall 
impacts of the RFS program as a whole.
    To evaluate the impacts of the volume requirements on small 
entities, we have conducted a screening analysis \274\ to assess 
whether we should make a finding that this action will not have a 
significant economic impact on a substantial number of small entities. 
Currently available information shows that the impact on small entities 
from implementation of this rule will not be significant. We have 
reviewed and assessed the available information, which shows that 
obligated parties, including small entities, are able to recover the 
cost of acquiring the RINs necessary for compliance with the RFS 
standards through higher sales prices of the petroleum products they 
sell than would be expected in the absence of the RFS program.\275\ 
This is true whether they acquire RINs by purchasing renewable fuels 
with attached RINs or purchase separated RINs. The costs of the RFS 
program are thus being passed on to consumers in the highly competitive 
marketplace. Even if we were to assume that the cost of acquiring RINs 
was not recovered by obligated parties, a cost-to-sales ratio test 
shows that the costs to small entities of the RFS standards established 
in this action are far less than 1 percent of the value of their 
sales.\276\
---------------------------------------------------------------------------

    \274\ See Chapter 11 of the RIA.
    \275\ For a further discussion of the ability of obligated 
parties to recover the cost of RINs see ``Denial of Petitions for 
Rulemaking to Change the RFS Point of Obligation,'' EPA-420-R-17-
008, November 2017; ``April 2022 Denial of Petitions for RFS Small 
Refinery Exemptions,'' EPA-420-R-22-005, April 2022; ``June 2022 
Denial of Petitions for RFS Small Refinery Exemptions,'' EPA-420-R-
22-011, June 2022.
    \276\ A cost-to-sales ratio of 1 percent represents a typical 
agency threshold for determining the significance of the economic 
impact on small entities. See ``Final Guidance for EPA Rulewriters: 
Regulatory Flexibility Act as amended by the Small Business 
Regulatory Enforcement Fairness Act,'' November 2006.
---------------------------------------------------------------------------

    While the screening analysis described above supports a 
certification that this rule will not have a significant economic 
impact on small refiners, we continue to believe that it is more 
appropriate to consider the standards as a part of our ongoing 
implementation of the overall RFS program. When considered this way, 
the impacts of the RFS program as a whole on small entities were 
addressed in the RFS2 final rule, which was the rule that implemented 
the entire program as required by EISA 2007.\277\ As such, the Small 
Business Regulatory Enforcement Fairness Act (SBREFA) panel process 
that took place prior to the 2010 rule was also for the entire RFS 
program and looked at impacts on small refiners through 2022.
---------------------------------------------------------------------------

    \277\ 75 FR 14670 (March 26, 2010).
---------------------------------------------------------------------------

    For the SBREFA process for the RFS2 final rule, we conducted 
outreach, fact-finding, and analysis of the potential impacts of the 
program on small refiners, which are all described in the Final 
Regulatory Flexibility Analysis, located in the rulemaking docket (EPA-
HQ-OAR-2005-0161). This analysis looked at impacts to all refiners, 
including small refiners, through the year 2022 and found that the 
program would not have a significant economic impact on a substantial 
number of small entities, and that this impact was expected to decrease 
over time, even as the standards increased. For gasoline and/or diesel 
small refiners subject to the standards, the analysis included a cost-
to-sales ratio test, a ratio of the estimated annualized compliance 
costs to the value of sales per company. From this test, we estimated 
that all directly regulated small entities would have compliance costs 
that are less than one percent of their sales over the life of the 
program (75 FR 14862, March 26, 2010).
    We have determined that this final rule will not impose any 
additional requirements on small entities beyond those already 
analyzed, since the impacts of this rule are not greater or 
fundamentally different than those already considered in the analysis 
for the RFS2 final rule assuming full implementation of the RFS 
program. The cellulosic biofuel, advanced biofuel, and total renewable 
fuel volumes remain significantly below the statutory volume targets 
analyzed in the RFS2 final rule. Compared to the burden that would be 
imposed under the volumes that we assessed in the screening analysis 
for the RFS2 final rule (i.e., the volumes specified in the CAA), the 
volume requirements in this rule reduce burden on small entities. 
Regarding the BBD standard, it is a nested standard within the advanced 
biofuel category, and as discussed in Section III.F, the 2022 BBD 
volume requirement is below the volume of BBD that is anticipated to be 
produced and used to satisfy the advanced biofuel and total renewable 
fuel requirements. In other words, the volume of BBD actually used in 
2022 will be driven not by the 2022 BBD standard, but rather by the 
2022 advanced biofuel and total renewable fuel standards. The net 
result of the standards being promulgated in this action is a reduction 
in burden as compared to implementation of the statutory volume targets 
assumed in the RFS2 final rule analysis.
    While the rule will not have a significant economic impact on a 
substantial number of small entities, there are existing compliance 
flexibilities in the program that small entities can take advantage of. 
These flexibilities include being able to comply through RIN trading 
rather than renewable fuel blending, 20 percent RIN rollover allowance 
(up to 20 percent of an obligated party's RVO can be met using 
previous-year RINs), and deficit carry-forward (the ability to carry 
over a deficit from a given year into the following year, provided that 
the deficit is satisfied together with the next year's RVO). In the 
RFS2 final rule, we discussed other potential small entity 
flexibilities that had been suggested by the SBREFA panel or through 
comments, but we did not adopt them, in part because we had serious 
concerns regarding our authority to do so.
    In sum, this final rule will not change the compliance 
flexibilities currently offered to small entities under the RFS program 
and available information shows that the impact on small entities

[[Page 39658]]

from implementation of this rule will not be significant when viewed 
either from the perspective of it being a standalone action or a part 
of the overall RFS program. We have therefore concluded that this 
action will have no net regulatory burden for all directly regulated 
small entities.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain an unfunded mandate of $100 million or 
more as described in UMRA, 2 U.S.C. 1531-1538, and does not 
significantly or uniquely affect small governments. This action 
implements mandates specifically and explicitly set forth in CAA 
section 211(o), and we believe that this action represents the least 
costly, most cost-effective approach to achieve the statutory 
requirements.

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.

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

    This action does not have tribal implications as specified in 
Executive Order 13175. This action 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 will be affected only to the extent they 
produce, purchase, or use regulated fuels. Thus, Executive Order 13175 
does not apply to this action.

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

    EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that concern environmental health or safety risks 
that EPA has reason to believe may disproportionately affect children, 
per the definition of ``covered regulatory action'' in section 2-202 of 
the Executive order. This action is not subject to Executive Order 
13045 because it implements specific standards established by Congress 
in statutes (CAA section 211(o)). While this action is not covered by 
Executive Order 13045, a discussion of environmental health impacts is 
included in Chapter 3 of the RIA.

H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This action is not a ``significant energy action'' because it is 
not likely to have a significant adverse effect on the supply, 
distribution, or use of energy. This action establishes the required 
renewable fuel content of the transportation fuel supply for 2020, 
2021, and 2022 pursuant to the CAA. The RFS program and this rule are 
designed to achieve positive effects on the nation's transportation 
fuel supply by increasing energy independence and security.

I. National Technology Transfer and Advancement Act (NTTAA) and 1 CFR 
Part 51

    This action involves technical standards. We are updating the 
existing test methods and standards in the RFS regulations to more 
recent versions. In accordance with the requirements of 1 CFR 51.5, we 
are incorporating by reference the use of test methods and standards 
from ASTM International. A detailed discussion of these test methods 
and standards can be found in Section VIII.H. The standards and test 
methods may be obtained through the ASTM International website 
(www.astm.org) or by calling ASTM International at (877) 909-2786. (In 
addition to the standards and test methods listed below, ASTM E711 is 
also referenced in the regulatory text of this final rule. It was 
approved for IBR as of July 1, 2010, and no changes are being 
finalized.)

Table IX.I-1--Standards and Test Methods To Be Incorporated by Reference
------------------------------------------------------------------------
   Organization and standard or test
                 method                            Description
------------------------------------------------------------------------
ASTM D975-21, Standard Specification     Diesel fuel specifications that
 for Diesel Fuel, approved August 1,      must be met to qualify for
 2021.                                    RINs for renewable fuels.
ASTM D1250-19e1, Standard Guide for the  Standard guide used by industry
 Use of the Joint API and ASTM Adjunct    for determining temperature
 for Temperature and Pressure Volume      corrected standardized volumes
 Correction Factors for Generalized       under the RFS program.
 Crude Oils, Refined Products, and
 Lubricating Oils: API MPMS Chapter
 11.1, approved May 1, 2019.
ASTM D4442-20, Standard Test Methods     Test method used for
 for Direct Moisture Content              determining moisture content
 Measurement of Wood and Wood-Based       of wood samples that must be
 Materials, approved March 1, 2020.       met when qualifying for RINs
                                          for renewable fuels.
ASTM D4444-13 (2018), Standard Test      Test method used for
 Method for Laboratory Standardization    determining moisture content
 and Calibration of Hand-Held Moisture    of wood samples that must be
 Meters, reapproved July 1, 2018.         met when qualifying for RINs
                                          for renewable fuels.
ASTM D6751-20a, Standard Specification   Biodiesel fuel specifications
 for Biodiesel Fuel Blend Stock (B100)    that must be met to qualify
 for Middle Distillate Fuels, approved    for RINs for renewable fuels.
 August 1, 2020.
ASTM D6866-22, Standard Test Methods     Radiocarbon dating test method
 for Determining the Biobased Content     to determine the renewable
 of Solid, Liquid, and Gaseous Samples    content of transportation
 Using Radiocarbon Analysis, approved     fuel.
 March 15, 2022.
ASTM E870-82 (2019), Standard Test       Test method that covers the
 Methods for Analysis of Wood Fuels,      proximate and ultimate
 reapproved April 1, 2019.                analysis of wood fuels, as
                                          well as the determination of
                                          the gross caloric value of
                                          wood sampled and prepared by
                                          prescribed test methods and
                                          analyzed according to ASTM
                                          established procedures that
                                          must be met when qualifying
                                          for RINs for renewable fuels.
------------------------------------------------------------------------


[[Page 39659]]

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

    Due to time constraints and uncertainty about where impacts are 
likely to occur, EPA is able to evaluate only qualitatively the extent 
to which this action may result in disproportionately high and adverse 
human health or environmental effects on minority populations, low-
income populations, and/or indigenous peoples, as specified in 
Executive Order 12898 (59 FR 7629, February 16, 1994). While there is 
the potential for GHG emission reductions as a result of this action, 
both positive and negative changes in air and water quality could also 
occur due to increases in biofuel production. Land use change to bring 
more corn, soy, or other crops into production in response to the 
action could also affect air, water, and soil quality in specific 
locations. These environmental changes, combined with future climate 
change impacts, may be unevenly distributed across geographies and thus 
affect different demographics, such as people of color, low income, or 
indigenous populations. Such effects are uncertain and challenging to 
predict on a granular spatial scale. A summary of our approach for 
considering potential EJ concerns as a result of this action can be 
found in Section I.J, and our EJ analysis (including a discussion of 
this action's potential impacts on GHGs, air quality, water quality, 
and fuel and food prices) can be found in Chapter 8 of the RIA, 
available in the docket for this action.

K. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule 
report to each House of the Congress and to the Comptroller General of 
the United States. This action is a ``major rule'' as defined by 5 
U.S.C. 804(2).

X. Statutory Authority

    Statutory authority for this action comes from sections 114, 203-
05, 208, 211, and 301 of the Clean Air Act, 42 U.S.C. 7414, 7522-24, 
7542, 7545, and 7601.

List of Subjects

40 CFR Part 80

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Diesel fuel, Fuel additives, Gasoline, Imports, 
Incorporation by reference, Oil imports, Petroleum, Renewable fuel.

40 CFR Part 1090

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Diesel fuel, Fuel additives, Gasoline, Imports, 
Oil imports, Petroleum, Renewable fuel.

Michael S. Regan,
Administrator.

    For the reasons set forth in the preamble, EPA amends 40 CFR parts 
80 and 1090 as follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

0
1. The authority citation for part 80 continues to read as follows:

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

Subpart A--General Provisions

0
2. Add Sec.  80.11 to read as follows:


Sec.  80.11   Confidentiality of information.

    (a) Except as specified in paragraph (b) of this section, 
information obtained by the Administrator or his representatives 
pursuant to this part shall be treated, in so far as its 
confidentiality is concerned, in accordance with the provisions of 40 
CFR part 2, subpart B.
    (b) Information contained in EPA notices of violation, settlement 
agreements, administrative complaints, civil complaints, criminal 
information, and criminal indictments is not entitled to confidential 
treatment and therefore EPA may publicly disclose such information. 
Such information includes the company name and EPA-issued company 
identification number, the facility name and EPA-issued facility 
identification number, the total quantity of fuel and parameter, the 
time or time period when the violation occurred, information relating 
to the generation, transfer, or use of credits, and any other 
information relevant to describing the violation.

Subpart M--Renewable Fuel Standard

0
3. Amend Sec.  80.1401 by:
0
a. Revising the definition of ``Agricultural digester'';
0
b. Adding in alphabetical order the definition of ``Approved pathway'';
0
c. Revising the definition of ``Baseline volume'';
0
d. Adding in alphabetical order the definition of ``Biocrude'';
0
e. Revising the definition of ``Biodiesel'';
0
f. Adding in alphabetical order the definitions of ``Biodiesel 
distillation bottoms'', ``Biointermediate'', ``Biointermediate import 
facility'', ``Biointermediate importer'', ``Biointermediate producer'', 
``Biointermediate production facility'', and ``Biomass-based sugars'';
0
g. Revising the definitions of ``Combined heat and power (CHP)'' and 
``Co-processed'';
0
h. Adding in alphabetical order the definition of ``Digestate'';
0
i. Revising the definitions ``Facility'' and ``Foreign renewable fuel 
producer'';
0
j. Adding in alphabetical order the definitions of ``Free fatty acid 
(FFA) feedstock'' and ``Glycerin'';
0
k. Revising paragraph (1) in the definition of ``Non-ester renewable 
diesel'' and the definition of ``Non-renewable feedstock'';
0
l. Adding in alphabetical order the definition of ``Professional 
liability insurance'';
0
m. Revising the definitions of ``Quality assurance audit'' and 
``Quality assurance plan'', paragraph (7) in the definition of 
``Renewable biomass'', and the introductory text and paragraph (1)(i) 
in the definition of ``Renewable fuel''; and
0
m. Adding in alphabetical order the definitions of ``Separated food 
waste'', ``Separated municipal solid waste (MSW)'', ``Separated yard 
waste'', ``Soapstock'', and ``Undenatured ethanol''.
    The revisions and additions read as follows:


Sec.  80.1401   Definitions.

* * * * *
    Agricultural digester means an anaerobic digester that processes 
only animal manure, crop residues, or separated yard waste with an 
adjusted cellulosic content of at least 75%. Each and every material 
processed in an agricultural digester must have an adjusted cellulosic 
content of at least 75%.
* * * * *
    Approved pathway means a pathway listed in Table 1 to Sec.  80.1426 
or in a petition approved under Sec.  80.1416.
* * * * *
    Baseline volume means the permitted capacity or, if permitted 
capacity cannot be determined, the actual peak capacity or nameplate 
capacity as applicable pursuant to Sec.  80.1450(b)(1)(v)(A) through 
(C), of a specific renewable fuel production facility on a calendar 
year basis.
    Biocrude means a liquid biointermediate that meets all the 
following requirements:
    (1) It is produced at a biointermediate production facility using 
one or more of the following processes:

[[Page 39660]]

    (i) A process identified in row M under Table 1 to Sec.  80.1426.
    (ii) A process identified in a pathway listed in a petition 
approved under Sec.  80.1416 for the production of renewable fuel 
produced from biocrude.
    (2) It is to be used to produce renewable fuel at a refinery as 
defined in 40 CFR 1090.80.
    Biodiesel means a mono-alkyl ester that meets ASTM D6751 
(incorporated by reference, see Sec.  80.1468).
    Biodiesel distillation bottoms means the heavier product from 
distillation at a biodiesel production facility that does not meet the 
definition of biodiesel.
* * * * *
    Biointermediate means any feedstock material that is intended for 
use to produce renewable fuel and meets all of the following 
requirements:
    (1) It is produced from renewable biomass.
    (2) It has not previously had RINs generated for it.
    (3) It is produced at a facility registered with EPA that is 
different than the facility at which it is used as feedstock material 
to produce renewable fuel.
    (4) It is produced from the feedstock material identified in an 
approved pathway, will be used to produce the renewable fuel listed in 
that approved pathway, and is produced and processed in accordance with 
the process(es) listed in that approved pathway.
    (5) Is one of the following types of biointermediate:
    (i) Biocrude.
    (ii) Biodiesel distillate bottoms.
    (iii) Biomass-based sugars.
    (iv) Digestate.
    (v) Free fatty acid (FFA) feedstock.
    (vi) Glycerin.
    (vii) Soapstock.
    (viii) Undenatured ethanol.
    (6) It is not a feedstock material identified in an approved 
pathway that is used to produce the renewable fuel specified in that 
approved pathway.
    Biointermediate import facility means any facility as defined in 40 
CFR 1090.80 where a biointermediate is imported from outside the 
covered location into the covered location.
    Biointermediate importer means any person who owns, leases, 
operates, controls, or supervises a biointermediate import facility.
    Biointermediate producer means any person who owns, leases, 
operates, controls, or supervises a biointermediate production 
facility.
    Biointermediate production facility means all of the activities and 
equipment associated with the production of a biointermediate starting 
from the point of delivery of feedstock material to the point of final 
storage of the end biointermediate product, which are located on one 
property, and are under the control of the same person (or persons 
under common control).
* * * * *
    Biomass-based sugars means sugars (e.g., dextrose, sucrose, etc.) 
extracted from renewable biomass under an approved pathway, other than 
through a form change described in Sec.  80.1460(k)(2).
* * * * *
    Combined heat and power (CHP), also known as cogeneration, refers 
to industrial processes in which waste heat from the production of 
electricity is used for process energy in a biointermediate or 
renewable fuel production facility.
* * * * *
    Co-processed means that renewable biomass or a biointermediate was 
simultaneously processed with fossil fuels or other non-renewable 
feedstock in the same unit or units to produce a fuel that is partially 
derived from renewable biomass or a biointermediate.
* * * * *
    Digestate means the material that remains following the anaerobic 
digestion of renewable biomass in an anaerobic digester. Digestate must 
only contain the leftovers that were unable to be completely converted 
to biogas in an anaerobic digestor that is part of an EPA-accepted 
registration under Sec.  80.1450.
* * * * *
    Facility means all of the activities and equipment associated with 
the production of renewable fuel or a biointermediate starting from the 
point of delivery of feedstock material to the point of final storage 
of the end product, which are located on one property, and are under 
the control of the same person (or persons under common control).
* * * * *
    Foreign renewable fuel producer means a person from a foreign 
country or from an area outside the covered locations who produces 
renewable fuel for use in transportation fuel, heating oil, or jet fuel 
for export to the covered location. Foreign ethanol producers are 
considered foreign renewable fuel producers.
* * * * *
    Free fatty acid (FFA) feedstock means a biointermediate that is 
composed of at least 50 percent free fatty acids. FFA feedstock must 
not include any free fatty acids from the refining of crude palm oil.
* * * * *
    Glycerin means a coproduct from the production of biodiesel that 
primarily contains glycerol.
* * * * *
    Non-ester renewable diesel * * *
    (1) A fuel or fuel additive that meets the Grade No. 1-D or No. 2-D 
specification in ASTM D975 (incorporated by reference, see Sec.  
80.1468) and can be used in an engine designed to operate on 
conventional diesel fuel; or
* * * * *
    Non-renewable feedstock means a feedstock (or any portion thereof) 
that does not meet the definition of renewable biomass or 
biointermediate in this section.
* * * * *
    Professional liability insurance means insurance coverage for 
liability arising out of the performance of professional or business 
duties related to a specific occupation, with coverage being tailored 
to the needs of the specific occupation. Examples include abstracters, 
accountants, insurance adjusters, architects, engineers, insurance 
agents and brokers, lawyers, real estate agents, stockbrokers, and 
veterinarians. For purposes of this definition, professional liability 
insurance does not include directors and officers liability insurance.
* * * * *
    Quality assurance audit means an audit of a renewable fuel 
production facility or biointermediate production facility conducted by 
an independent third-party auditor in accordance with a QAP that meets 
the requirements of Sec. Sec.  80.1469, 80.1472, and 80.1477.
    Quality assurance plan, or QAP, means the list of elements that an 
independent third-party auditor will check to verify that the RINs 
generated by a renewable fuel producer or importer are valid or to 
verify the appropriate production of a biointermediate. A QAP includes 
both general and pathway specific elements.
* * * * *
    Renewable biomass * * *
    (7) Separated yard waste or food waste, including recycled cooking 
and trap grease.
* * * * *
    Renewable fuel means a fuel that meets all the following 
requirements:
    (1)(i) Fuel that is produced either from renewable biomass or from 
a biointermediate produced from renewable biomass.
* * * * *
    Separated food waste means a feedstock stream consisting of food

[[Page 39661]]

waste kept separate since generation from other waste materials, and 
which includes food and beverage production waste and post-consumer 
food and beverage waste.
    Separated municipal solid waste (MSW) means material remaining 
after separation actions have been taken to remove recyclable paper, 
cardboard, plastics, rubber, textiles, metals, and glass from municipal 
solid waste, and which is composed of both cellulosic and non-
cellulosic materials.
    Separated yard waste means a feedstock stream consisting of yard 
waste kept separate since generation from other waste materials.
* * * * *
    Soapstock means an emulsion, or the oil obtained from separation of 
that emulsion, produced by washing oils listed as a feedstock in an 
approved pathway with water.
* * * * *
    Undenatured ethanol means a liquid that meets one of the 
definitions in paragraph (1) of this definition:
    (1)(i) Ethanol that has not been denatured as required in 27 CFR 
parts 19 through 21.
    (ii) Specially denatured alcohol as defined in 27 CFR 21.11.
    (2) Undenatured ethanol is not renewable fuel.
* * * * *

0
4. Revise Sec.  80.1402 to read as follows:


Sec.  80.1402   Availability of information; confidentiality of 
information.

    (a) Beginning January 1, 2020, no claim of business confidentiality 
may be asserted by any person with respect to information submitted to 
EPA under Sec.  80.1451(c)(2)(ii)(E), whether submitted electronically 
or in paper format.
    (b) The following information contained in EPA determinations that 
RINs are invalid under Sec.  80.1474(b)(4)(i)(C)(2) and 
(b)(4)(ii)(C)(2), notices of violation, settlement agreements, 
administrative complaints, civil complaints, criminal information, and 
criminal indictments arising under this subpart is not entitled to 
confidential treatment and the provisions of 40 CFR 2.201 through 2.215 
and 2.301 do not apply:
    (1) The company name.
    (2) The name and location of the facility at which the fuel 
associated with the RINs in question was allegedly produced or 
imported.
    (3) The EPA-issued company or facility identification number of the 
party that produced the fuel or generated the RINs in question.
    (4) The total quantity of fuel and RINs in question.
    (5) The time period when the fuel was allegedly produced.
    (6) The time period when the RINs in question were generated.
    (7) The batch number(s) and the D code(s) of the RINs in question.
    (8) Information relating to the generation, transfer, or use of 
RINs.
    (9) The shortfall in RINs related to an obligated party's failure 
to meet its renewable volume obligation.
    (10) Any other information relevant to describing the violation.
    (c) The following information contained in submissions under this 
subpart is not entitled to confidential treatment and the provisions of 
40 CFR 2.201 through 2.215 and 2.301 do not apply:
    (1) Submitter's name.
    (2) The name and location of the facility, if applicable.
    (3) The date the submission was transmitted to EPA.
    (4) Any EPA-issued company or facility identification numbers 
associated with the submission.
    (5) The purpose of the submission.
    (6) The relevant time period for the submission, if applicable.
    (d) The following information incorporated into EPA determinations 
on submissions under this subpart is not entitled to confidential 
treatment and the provisions of 40 CFR 2.201 through 2.215 and 2.301 do 
not apply:
    (1) Submitter's name.
    (2) The name and location of the facility, if applicable.
    (3) The date the submission was transmitted to EPA.
    (4) Any EPA-issued company or facility identification numbers 
associated with the submission.
    (5) The purpose of the submission.
    (6) The relevant time period of the submission, if applicable.
    (7) The extent to which EPA granted or denied the request and any 
relevant terms and conditions.
    (e) Except as otherwise specified in this section, any information 
submitted under this part claimed as confidential remains subject to 
evaluation by EPA under 40 CFR part 2, subpart B.
    (f) EPA may disclose the information specified in paragraphs (a) 
through (d) of this section on its website, or otherwise make it 
available to interested parties, without additional notice or process, 
notwithstanding any claims that the information is entitled to 
confidential treatment under 40 CFR part 2, subpart B.

0
5. Amend Sec.  80.1405 by revising paragraph (a)(11) and adding 
paragraphs (a)(12) and (13) to read as follows:


Sec.  80.1405   What are the Renewable Fuel Standards?

    (a) * * *
    (11) Renewable Fuel Standards for 2020. (i) The value of the 
cellulosic biofuel standard for 2020 shall be 0.32 percent.
    (ii) The value of the biomass-based diesel standard for 2020 shall 
be 2.30 percent.
    (iii) The value of the advanced biofuel standard for 2020 shall be 
2.93 percent.
    (iv) The value of the renewable fuel standard for 2020 shall be 
10.82 percent.
    (12) Renewable Fuel Standards for 2021. (i) The value of the 
cellulosic biofuel standard for 2021 shall be 0.33 percent.
    (ii) The value of the biomass-based diesel standard for 2021 shall 
be 2.16 percent.
    (iii) The value of the advanced biofuel standard for 2021 shall be 
3.00 percent.
    (iv) The value of the renewable fuel standard for 2021 shall be 
11.19 percent.
    (13) Renewable Fuel Standards for 2022. (i) The value of the 
cellulosic biofuel standard for 2022 shall be 0.35 percent.
    (ii) The value of the biomass-based diesel standard for 2022 shall 
be 2.33 percent.
    (iii) The value of the advanced biofuel standard for 2022 shall be 
3.16 percent.
    (iv) The value of the renewable fuel standard for 2022 shall be 
11.59 percent.
    (v) The value of the supplemental total renewable fuel standard for 
2022 shall be 0.14 percent.
* * * * *

0
6. Amend Sec.  80.1407 by revising paragraph (f)(1) to read as follows:


Sec.  80.1407   How are the Renewable Volume Obligations calculated?

* * * * *
    (f) * * *
    (1) Any renewable fuel. Renewable fuel for which a RIN is invalidly 
generated under Sec.  80.1431 may not be excluded from a party's 
renewable volume obligations.
* * * * *


Sec.  80.1408   [Amended]

0
7. Amend Sec.  80.1408(a)(2)(i)(B) and (a)(2)(ii)(B) by removing 
``Sec.  80.1454(t)'' and adding ``Sec.  80.1454(o)'' in its place.

0
8. Amend Sec.  80.1415 by revising paragraphs (c)(2)(ii) and (iii) to 
read as follows:


Sec.  80.1415   How are equivalence values assigned to renewable fuel?

* * * * *
    (c) * * *
    (2) * * *
    (ii) For each feedstock, biointermediate, component, or additive

[[Page 39662]]

that is used to make the renewable fuel, provide a description, the 
percent input, and identify whether or not it is renewable biomass or 
is derived from renewable biomass.
    (iii) For each feedstock or biointermediate that also qualifies as 
a renewable fuel, state whether or not RINs have been previously 
generated for such feedstock.
* * * * *

0
9. Amend Sec.  80.1416 by revising paragraphs (b)(1)(ii) and (iii) to 
read as follows:


Sec.  80.1416   Petition process for evaluation of new renewable fuels 
pathways.

* * * * *
    (b)(1) * * *
    (ii) A technical justification that includes a description of the 
renewable fuel, feedstock(s), and biointermediate(s) used to make it, 
and the production process. The justification must include process 
modeling flow charts.
    (iii) A mass balance for the pathway, including feedstocks and 
biointermediates, fuels produced, co-products, and waste materials 
production.
* * * * *

0
10. Amend Sec.  80.1426 by:
0
a. Adding paragraph (a)(4);
0
b. Removing the headings from paragraphs (c)(2) and (3);
0
c. Adding paragraph (c)(8);
0
d. Revising paragraph (f)(1);
0
e. Immediately following paragraph (f)(1), in table 1 to Sec.  80.1426 
revising entries F and H;
0
f. Revising paragraph (f)(3)(vi);
0
g. Revising the heading of paragraph (f)(4);
0
h. In paragraph (f)(4)(i)(A)(1), revising the definitions of 
``FE<INF>R</INF>'' and ``FE<INF>NR</INF>'';
0
i. Adding paragraph (f)(4)(iv);
0
j. Revising and republishing paragraph (f)(5);
0
k. Revising paragraphs (f)(7)(v)(A) and (B), (f)(8)(ii)(B), (f)(9)(ii), 
(f)(15)(i) introductory text, and (f)(16)(iii);
0
l. Adding a heading to paragraph (f)(17);
0
m. Revising paragraphs (f)(17)(i) introductory text and 
(f)(17)(i)(B)(1) and (2).
    The additions and revisions read as follows:


Sec.  80.1426   How are RINs generated and assigned to batches of 
renewable fuel?

    (a) * * *
    (4) Where a feedstock or biointermediate is used to produce 
renewable fuel and is not entirely renewable biomass, RINs may only be 
generated for the portion of fuel that is derived from renewable 
biomass, as calculated under paragraph (f)(4) of this section.
* * * * *
    (c) * * *
    (8) RINs must not be generated for a biointermediate.
* * * * *
    (f) * * *
    (1) Applicable pathways. (i) D codes shall be used in RINs 
generated by producers or importers of renewable fuel according to the 
pathways listed in Table 1 to this section, paragraph (f)(6) of this 
section, or as approved by the Administrator.
    (ii) In choosing an appropriate D code, producers and importers may 
disregard any incidental, de minimis feedstock contaminants that are 
impractical to remove and are related to customary feedstock production 
and transport.
    (iii) Tables 1 and 2 to this section do not apply to, and impose no 
requirements with respect to, volumes of fuel for which RINs are 
generated pursuant to paragraph (f)(6) of this section.
    (iv) Pathways in Table 1 to this section and advanced technologies 
in Table 2 to this section also apply in cases where the renewable fuel 
producer is using a biointermediate.
    (v) For the purposes of identifying the appropriate pathway in 
Table 1 to this section, biointermediates used for the production of 
renewable fuel are considered to be equivalent to the renewable biomass 
from which they were derived, with the following exceptions:
    (A) Oil that is physically separated from any woody or herbaceous 
biomass and used to produce renewable fuel shall not generate D-code 3 
or 7 RINs.
    (B) Sugar or starch that is physically separated from cellulosic 
biomass and used to produce renewable fuel shall not generate D-code 3 
or 7 RINs.
    (vi) If a renewable fuel producer uses a biointermediate for the 
production of renewable fuel, additional requirements apply to both the 
renewable fuel producer and the biointermediate producer as described 
in Sec.  80.1476.

         Table 1 to Sec.   80.1426--Applicable D Codes for Each Fuel Pathway for Use in Generating RINs
----------------------------------------------------------------------------------------------------------------
                                                                              Production process
                                        Fuel type            Feedstock           requirements         D-code
----------------------------------------------------------------------------------------------------------------
 
                                                  * * * * * * *
F................................  Biodiesel,           Soy bean oil; Oil    One of the                        4
                                    renewable diesel,    from annual          following:
                                    jet fuel and         covercrops; Oil      Transesterificatio
                                    heating oil.         from algae grown     n with or without
                                                         photosynthetically   esterification pre-
                                                         ; Biogenic waste     treatment,
                                                         oils/fats/greases;   Esterification, or
                                                         Camelina sativa      Hydrotreating;
                                                         oil; Distillers      excludes processes
                                                         corn oil;            that co-process
                                                         Distillers sorghum   renewable biomass
                                                         oil; Commingled      and petroleum.
                                                         distillers corn
                                                         oil and sorghum
                                                         oil.
 
                                                  * * * * * * *
H................................  Biodiesel,           Soy bean oil; Oil    One of the                        5
                                    renewable diesel,    from annual          following:
                                    jet fuel and         covercrops; Oil      Transesterificatio
                                    heating oil.         from algae grown     n with or without
                                                         photosynthetically   esterification pre-
                                                         ; Biogenic waste     treatment,
                                                         oils/fats/greases;   Esterification, or
                                                         Camelina sativa      Hydrotreating;
                                                         oil; Distillers      includes only
                                                         corn oil;            processes that co-
                                                         Distillers sorghum   process renewable
                                                         oil; Commingled      biomass and
                                                         distillers corn      petroleum.
                                                         oil and sorghum
                                                         oil.
 
                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------


[[Page 39663]]

* * * * *
    (3) * * *
    (vi)(A) If a producer produces a single type of renewable fuel 
using two or more different feedstocks or biointermediates which are 
processed simultaneously, and each batch is comprised of a single type 
of fuel, then the number of gallon-RINs that shall be generated for a 
batch of renewable fuel and assigned a particular D code shall be 
determined according to the formulas in Table 4 to this section.
[GRAPHIC] [TIFF OMITTED] TR01JY22.000


Where:

V<INF>RIN,CB</INF> = RIN volume, in gallons, for use in determining 
the number of gallon-RINs that shall be generated for a batch of 
cellulosic biofuel with a D code of 3.
V<INF>RIN,BBD</INF> = RIN volume, in gallons, for use in determining 
the number of gallon-RINs that shall be generated for a batch of 
biomass-based diesel with a D code of 4.
V<INF>RIN,AB</INF> = RIN volume, in gallons, for use in determining 
the number of gallon-RINs that shall be generated for a batch of 
advanced biofuel with a D code of 5.
V<INF>RIN,RF</INF> = RIN volume, in gallons, for use in determining 
the number of gallon-RINs that shall be generated for a batch of 
renewable fuel with a D code of 6.
V<INF>RIN,CD</INF> = RIN volume, in gallons, for use in determining 
the number of gallon-RINs that shall be generated for a batch of 
cellulosic diesel with a D code of 7.
EV = Equivalence value for the renewable fuel per Sec.  80.1415.
V<INF>S</INF> = Standardized volume of the batch of renewable fuel 
at 60 [deg]F, in gallons, calculated in accordance with paragraph 
(f)(8) of this section.
FE<INF>3</INF> = Feedstock energy from all feedstocks or 
biointermediates whose pathways have been assigned a D code of 3 
under an approved pathway, in Btu.
FE<INF>4</INF> = Feedstock energy from all feedstocks or 
biointermediates whose pathways have been assigned a D code of 4 
under an approved pathway, in Btu.
FE<INF>5</INF> = Feedstock energy from all feedstocks or 
biointermediates whose pathways have been assigned a D code of 5 
under an approved pathway, in Btu.
FE<INF>6</INF> = Feedstock energy from all feedstocks or 
biointermediates whose pathways have been assigned a D code of 6 
under an approved pathway, in Btu.
FE<INF>7</INF> = Feedstock energy from all feedstocks or 
biointermediates whose pathways have been assigned a D code of 7 
under an approved pathway, in Btu.

    (B) Feedstock energy values, FE, shall be calculated according to 
the following formula:

FE = M * (1-m) * CF * E

Where:

FE = Feedstock or biointermediate energy, in Btu.
M = Mass of feedstock or biointermediate, in pounds, measured on a 
daily or per-batch basis.
m = Average moisture content of the feedstock or biointermediate, in 
mass percent.
CF = Converted Fraction in annual average mass percent, except as 
otherwise provided by Sec.  80.1451(b)(1)(ii)(U), representing that 
portion of the feedstock or biointermediate that is converted into 
renewable fuel by the producer.
E = Energy content of the components of the feedstock or 
biointermediate that are converted to renewable fuel, in annual 
average Btu/lb, determined according to paragraph (f)(7) of this 
section.

    (4) Renewable fuel that is produced by co-processing renewable 
biomass (including a biointermediate) and non-renewable feedstocks 
simultaneously to produce a fuel that is partially renewable. (i) * * *
    (A) * * *
    (1) * * *

FE<INF>R</INF> = Feedstock energy from renewable biomass (including 
the renewable portion of a biointermediate) used to make the 
transportation fuel, in Btu.
FE<INF>NR</INF> = Feedstock energy from non-renewable feedstocks 
(including the non-renewable portion of a biointermediate) used to 
make the transportation fuel, heating oil, or jet fuel, in Btu.
* * * * *

[[Page 39664]]

    (iv) RIN-generating parties must calculate RIN volume 
V<INF>RIN</INF> for co-processed fuels produced from a biointermediate 
as described in paragraph (f)(4)(i)(B) of this section and calculate 
the renewable fraction of a fuel R using one of the following:
    (A) Method B of ASTM D6866 (incorporated by reference, see Sec.  
80.1468) as described in paragraph (f)(9)(ii) of this section.
    (B) If the renewable content of the co-processed fuel is 10 percent 
or greater, Method C of ASTM D6866 as described in paragraph (f)(9)(ii) 
of this section.
    (C) Any other EPA-approved method under paragraph (f)(9)(ii) of 
this section.
    (5) Renewable fuel produced from separated yard waste, separated 
food waste, and separated MSW. (i)(A) Separated yard waste is deemed to 
be composed entirely of cellulosic materials.
    (B) Separated food waste is deemed to be composed entirely of non-
cellulosic materials, unless a party demonstrates that a portion of the 
feedstock is cellulosic through approval of their facility 
registration.
    (ii)(A) A feedstock qualifies as separated yard waste or separated 
food waste only if it is collected according to a plan submitted to and 
accepted by EPA under the registration procedures specified in Sec.  
80.1450(b)(1)(vii).
    (B) A feedstock qualifies as separated MSW only if it is collected 
according to a plan submitted to and approved by EPA.
    (iii) Separation and recycling actions for separated MSW are 
considered to occur if:
    (A) Recyclable paper, cardboard, plastics, rubber, textiles, 
metals, and glass that can be recycled are separated and removed from 
the municipal solid waste stream to the extent reasonably practicable 
according to a plan submitted to and approved by U.S. EPA under the 
registration procedures specified in Sec.  80.1450(b)(1)(viii); and
    (B) The fuel producer has evidence of all contracts relating to the 
disposition of paper, cardboard, plastics, rubber, textiles, metals, 
and glass that are recycled.
    (iv)(A) The number of gallon-RINs that shall be generated for a 
batch of renewable fuel derived from separated yard waste shall be 
equal to a volume V<INF>RIN</INF> and is calculated according to the 
following formula:

V<INF>RIN</INF> = EV * V<INF>S</INF>

Where:

V<INF>RIN</INF> = RIN volume, in gallons, for use in determining the 
number of cellulosic biofuel gallon-RINs that shall be generated for 
the batch.
EV = Equivalence value for the batch of renewable fuel per Sec.  
80.1415.
Vs = Standardized volume of the batch of renewable fuel at 60 
[deg]F, in gallons, calculated in accordance with paragraph (f)(8) 
of this section.

    (B) The number of gallon-RINs that shall be generated for a batch 
of renewable fuel derived from separated food waste shall be equal to a 
volume V<INF>RIN</INF> and is calculated according to the following 
formula:

V<INF>RIN</INF> = EV * V<INF>S</INF>

Where:

V<INF>RIN</INF> = RIN volume, in gallons, for use in determining the 
number of cellulosic or advanced biofuel gallon-RINs that shall be 
generated for the batch.
EV = Equivalence value for the batch of renewable fuel per Sec.  
80.1415.
V<INF>S</INF> = Standardized volume of the batch of renewable fuel 
at 60 [deg]F, in gallons, calculated in accordance with paragraph 
(f)(8) of this section.

    (v) The number of cellulosic biofuel gallon-RINs that shall be 
generated for the cellulosic portion of a batch of renewable fuel 
derived from separated MSW shall be determined according to the 
following formula:

V<INF>RIN</INF> = EV * V<INF>S</INF> * R

Where:

V<INF>RIN</INF> = RIN volume, in gallons, for use in determining the 
number of cellulosic biofuel gallon-RINs that shall be generated for 
the batch.
EV = Equivalence value for the batch of renewable fuel per Sec.  
80.1415.
V<INF>S</INF> = Standardized volume of the batch of renewable fuel 
at 60 [deg]F, in gallons, calculated in accordance with paragraph 
(f)(8) of this section.
R = The calculated non-fossil fraction of the fuel as measured by a 
carbon-14 dating test method as provided in paragraph (f)(9) of this 
section, except that for biogas-derived fuels made from separated 
MSW, no testing is required and R = 1.
* * * * *
    (7) * * *
    (v) * * *
    (A) ASTM E870 or ASTM E711 for gross calorific value (both 
incorporated by reference, see Sec.  80.1468).
    (B) ASTM D4442 or ASTM D4444 for moisture content (both 
incorporated by reference, see Sec.  80.1468).
* * * * *
    (8) * * *
    (ii) * * *
    (B) The standardized volume of biodiesel at 60 [deg]F, in gallons, 
as calculated from the use of the American Petroleum Institute Refined 
Products Table 6B, as referenced in ASTM D1250 (incorporated by 
reference, see Sec.  80.1468).
* * * * *
    (9) * * *
    (ii) Parties must use Method B or Method C of ASTM D6866 
(incorporated by reference, see Sec.  80.1468), or an alternative test 
method as approved by EPA.
* * * * *
    (15) * * *
    (i) If a producer seeking to generate D code 3 or D code 7 RINs 
produces a single type of renewable fuel using two or more feedstocks 
or biointermediates converted simultaneously, and at least one of the 
feedstocks or biointermediates does not have a minimum 75% average 
adjusted cellulosic content, one of the following additional 
requirements apply:
* * * * *
    (16) * * *
    (iii) Recordkeeping requirements under Sec.  80.1454(n).
    (17) Qualifying use demonstration for certain renewable fuels. (i) 
For purposes of this section, any renewable fuel other than ethanol, 
biodiesel, renewable gasoline, or renewable diesel that meets the Grade 
No. 1-D or No. 2-D specification in ASTM D975 (incorporated by 
reference, see Sec.  80.1468) is considered renewable fuel and the 
producer or importer may generate RINs for such fuel only if all of the 
following apply:
* * * * *
    (B) * * *
    (1) Blending the renewable fuel into gasoline or distillate fuel to 
produce a transportation fuel, heating oil, or jet fuel that meets all 
applicable standards under this part and 40 CFR part 1090.
    (2) Entering into a written contract for the sale of the renewable 
fuel, which specifies the purchasing party must blend the fuel into 
gasoline or distillate fuel to produce a transportation fuel, heating 
oil, or jet fuel that meets all applicable standards under this part 
and 40 CFR part 1090.
* * * * *

0
11. Amend Sec.  80.1428 by revising paragraph (b)(2) to read as 
follows:


Sec.  80.1428  General requirements for RIN distribution.

* * * * *
    (b) * * *
    (2) Unless otherwise specified, any person that has registered 
pursuant to Sec.  80.1450 can own a separated RIN.
* * * * *

0
12. Amend Sec.  80.1429 by revising paragraph (b)(9) introductory text 
to read as follows:


Sec.  80.1429   Requirements for separating RINs from volumes of 
renewable fuel.

* * * * *

[[Page 39665]]

    (b) * * *
    (9) Except as provided in paragraphs (b)(2) through (5) and (8) of 
this section, parties whose non-export renewable volume obligations are 
solely related to the importation of products listed in Sec.  
80.1407(c) or (e), the addition of blendstocks into a volume of 
finished gasoline, finished diesel fuel, or BOB, or that incur a 
renewable volume obligation (RVO) under Sec.  80.1408, can only 
separate RINs from volumes of renewable fuel if the number of gallon-
RINs separated in a calendar year is less than or equal to a limit set 
as follows:
* * * * *

0
13. Amend Sec.  80.1430 by revising paragraph (e)(2) to read as 
follows:


Sec.  80.1430  Requirements for exporters of renewable fuels.

* * * * *
    (e) * * *
    (2) Determination of the renewable portion of the blend using 
Method B or Method C of ASTM D6866 (incorporated by reference, see 
Sec.  80.1468), or an alternative test method as approved by the EPA.
* * * * *

0
14. Amend Sec.  80.1431 by adding paragraph (a)(3) to read as follows:


Sec.  80.1431  Treatment of invalid RINs.

    (a) * * *
    (3) If any RIN generated for a batch of renewable fuel produced 
using a biointermediate is invalid, then all RINs generated for that 
batch of renewable fuel are deemed invalid, unless EPA in its sole 
discretion determines that some portion of those RINs are valid.
* * * * *


Sec.  80.1435  [Amended]

0
15. Amend Sec.  80.1435(a)(4) by removing ``Sec.  80.1454(u)'' and 
adding ``Sec.  80.1454(p)'' in its place.

0
16. Amend Sec.  80.1449 by revising paragraph (a)(4)(iii) to read as 
follows:


Sec.  80.1449  What are the Production Outlook Report requirements?

    (a) * * *
    (4) * * *
    (iii) Feedstocks, biointermediates, and production processes to be 
used at each production facility.
* * * * *

0
17. Amend Sec.  80.1450 by:
0
a. Revising paragraphs (b) introductory text, (b)(1) introductory text, 
(b)(1)(i), and (b)(1)(ii) introductory text;
0
b. Adding paragraph (b)(1)(ii)(B);
0
c. Revising paragraphs (b)(1)(iii), (b)(1)(iv)(A)(1) and (2), 
(b)(1)(iv)(B)(3), (b)(1)(v)(B) and (C), (b)(1)(vii)(A) introductory 
text, (b)(1)(vii)(B) introductory text, (b)(1)(viii) introductory text, 
(b)(1)(viii)(B)(1) through (3), (b)(1)(xii) introductory text, 
(b)(1)(xii)(B), (b)(1)(xii)(C) introductory text, (b)(1)(xiii)(A), 
(b)(1)(xiii)(B) introductory text, (b)(1)(xiii)(B)(1) and (5), and 
(b)(1)(xv) introductory text;
0
d. Adding paragraph (b)(1)(xvi);
0
e. Revising paragraphs (b)(2)(i)(A) and (B), (b)(2)(ii)(A) through (C), 
(b)(2)(iv), and (d);
0
f. Adding a heading to paragraph (g); and
0
g. Revising the second sentence of paragraph (g) introductory text, 
paragraphs (g)(5) through (7) and (9) and (g)(10)(ii), the second 
sentence of paragraph (g)(11)(ii), (h)(1)(i), and the last sentence of 
paragraph (h)(2)(i).
    The revisions and additions read as follows:


Sec.  80.1450  What are the registration requirements under the RFS 
program?

* * * * *
    (b) Producers. Any RIN-generating foreign producer, any non-RIN-
generating foreign producer, any domestic renewable fuel producer that 
generates RINs, or any biointermediate producer that transfers any 
biointermediate for the production of a renewable fuel for RIN 
generation, must provide EPA the information specified under 40 CFR 
1090.805 if such information has not already been provided under the 
provisions of this part, and must receive EPA-issued company and 
facility identification numbers prior to the generation of any RINs for 
their fuel or for fuel made with their ethanol, or prior to the 
transfer of any biointermediate to be used in the production of a 
renewable fuel for which RINs may be generated. Unless otherwise 
specifically indicated, all the following registration information must 
be submitted to EPA at least 60 days prior to the intended generation 
of RINs or the intended transfer of any biointermediate to be used in 
the production of a renewable fuel for which RINs may be generated. 
Renewable fuel producers may generate RINs for a renewable fuel under 
this part after EPA has accepted their registration and they have met 
all other applicable requirements under this part.
    (1) A description of the types of renewable fuels, ethanol, or 
biointermediates that the producer intends to produce at the facility 
and that the facility is capable of producing without significant 
modifications to the existing facility. For each type of renewable 
fuel, ethanol, or biointermediate the renewable fuel producer or 
foreign ethanol producer must also provide all the following:
    (i)(A) A list of all the feedstocks and biointermediates the 
facility intends to utilize without significant modification to the 
existing facility.
    (B) A description of the type(s) of renewable biomass that will be 
used as feedstock material to produce the biointermediate, if 
applicable.
    (C) A list of the EPA-issued company and facility registration 
numbers of all biointermediate producers and biointermediate production 
facilities that will supply biointermediates for renewable fuel 
production.
    (ii) A description of the facility's renewable fuel, ethanol, or 
biointermediate production processes, including:
* * * * *
    (B) For registrations indicating the production of any 
biointermediate, the biointermediate producer must provide all of the 
following:
    (1) For each biointermediate production facility, the company name, 
EPA company registration number, and EPA facility registration number 
of the renewable fuel producer and renewable fuel production facility 
at which the biointermediate produced from the biointermediate 
production facility will be transferred and used.
    (2) Copies of documents and corresponding calculations 
demonstrating production capacity of each biointermediate produced at 
the biointermediate production facility.
    (3) For each type of feedstock that the biointermediate producer 
intends to process the biointermediate producer must provide all the 
following:
    (i) A list of all the feedstocks the facility intends to utilize 
without significant modification to the existing facility.
    (ii) A description of the type(s) of renewable biomass that will be 
used as feedstock material to produce the biointermediate.
    (4) The approved pathway(s) that the biointermediate could be used 
in to produce renewable fuel.
    (iii) The type(s) of co-products produced with each type of 
renewable fuel, ethanol, or biointermediate.
    (iv) * * *
    (A) * * *
    (1) Each type of process heat fuel used at the facility to produce 
the renewable fuel, ethanol, or biointermediate.
    (2) The name and address of the company supplying each process heat 
fuel to the renewable fuel facility, foreign ethanol facility, or 
biointermediate production facility.
    (B) * * *

[[Page 39666]]

    (3) An affidavit from the biogas supplier stating its intent to 
supply biogas to the renewable fuel producer, foreign ethanol producer, 
or biointermediate producer, and the quantity and energy content of the 
biogas that it intends to provide to the renewable fuel producer or 
foreign ethanol producer.
    (v) * * *
    (B) For facilities claiming the exemption described in Sec.  
80.1403(c) or (d):
    (1) Applicable air permits issued by EPA, state, local air 
pollution control agencies, or foreign governmental agencies that 
govern the construction and/or operation of the renewable fuel facility 
that were:
    (i) Issued or revised no later than December 19, 2007, for 
facilities described in Sec.  80.1403(c); or
    (ii) Issued or revised no later than December 31, 2009, for 
facilities described in Sec.  80.1403(d).
    (2) If the air permits specified in paragraph (b)(1)(v)(B)(1) of 
this section do not specify the maximum rated annual volume output of 
renewable fuel, copies of documents demonstrating the facility's actual 
peak capacity.
    (C) For facilities not claiming the exemption described in Sec.  
80.1403(c) or (d) and that are exempt from air permit requirements or 
for which the maximum rated annual volume output of renewable fuel is 
not specified in their air permits, appropriate documentation 
demonstrating the facility's actual peak capacity or nameplate 
capacity.
* * * * *
    (vii)(A) For a renewable fuel producer, foreign ethanol producer, 
or biointermediate producer using separated yard waste:
* * * * *
    (B) For a renewable fuel producer, foreign ethanol producer, or 
biointermediate producer using separated food waste:
* * * * *
    (viii) For a renewable fuel producer, foreign ethanol producer, or 
biointermediate producer using separated municipal solid waste:
* * * * *
    (B) * * *
    (1) Extent and nature of recycling that occurred prior to receipt 
of the waste material by the renewable fuel producer, foreign ethanol 
producer, or biointermediate producer;
    (2) Identification of available recycling technology and practices 
that are appropriate for removing recycling materials from the waste 
stream by the fuel producer, foreign ethanol producer, or 
biointermediate producer; and
    (3) Identification of the technology or practices selected for 
implementation by the fuel producer, foreign ethanol producer, or 
biointermediate producer including an explanation for such selection, 
and reasons why other technologies or practices were not.
* * * * *
    (xii) For a producer or importer of any renewable fuel other than 
ethanol, biodiesel, renewable gasoline, renewable diesel that meets the 
Grade No. 1-D or No. 2-D specification in ASTM D975 (incorporated by 
reference, see Sec.  80.1468), biogas, or renewable electricity, all 
the following:
* * * * *
    (B) A statement regarding whether the renewable fuel producer or 
importer will blend the renewable fuel into gasoline or diesel fuel or 
enter into a written contract for the sale and use of a specific 
quantity of the renewable fuel with a party who blends the fuel into 
gasoline or distillate fuel to produce a transportation fuel, heating 
oil, or jet fuel that meets all applicable standards under this part 
and 40 CFR part 1090.
    (C) If the renewable fuel producer or importer enters into a 
written contract for the sale and use of a specific quantity of the 
renewable fuel with a party who blends the fuel into gasoline or 
distillate fuel to produce a transportation fuel, heating oil, or jet 
fuel, provide all the following:
* * * * *
    (xiii)(A) A renewable fuel producer seeking to generate D code 3 or 
D code 7 RINs, a foreign ethanol producer seeking to have its product 
sold as cellulosic biofuel after it is denatured, or a biointermediate 
producer seeking to have its biointermediate made into cellulosic 
biofuel, who intends to produce a single type of fuel using two or more 
feedstocks converted simultaneously, where at least one of the 
feedstocks does not have a minimum 75% average adjusted cellulosic 
content, and who uses only a thermochemical process to convert 
feedstock into renewable fuel, must provide all the following:
    (1) Data showing the average adjusted cellulosic content of the 
feedstock(s) to be used to produce fuel or biointermediate, based on 
the average of at least three representative samples. Cellulosic 
content data must come from an analytical method certified by a 
voluntary consensus standards body or using a method that would produce 
reasonably accurate results as demonstrated through peer reviewed 
references provided to the third party engineer performing the 
engineering review at registration. Samples must be of representative 
feedstock from the primary feedstock supplier that will provide the 
renewable fuel or biointermediate producer with feedstock subsequent to 
registration.
    (2) For renewable fuel and biointermediate producers who want to 
use a new feedstock(s) after initial registration, updates to their 
registration under paragraph (d) of this section indicating the average 
adjusted cellulosic content of the new feedstock.
    (3) For renewable fuel producers already registered as of August 
18, 2014, to produce a single type of fuel that qualifies for D code 3 
or D code 7 RINs (or would do so after denaturing) using two or more 
feedstocks converted simultaneously using only a thermochemical 
process, the information specified in this paragraph (b)(1)(xiii)(A) 
shall be provided at the next required registration update under 
paragraph (d) of this section.
    (B) A renewable fuel producer seeking to generate D code 3 or D 
code 7 RINs, a foreign ethanol producer seeking to have its product 
sold as cellulosic biofuel after it is denatured, or a biointermediate 
producer seeking to have its biointermediate made into cellulosic 
biofuel, who intends to produce a single type of fuel using two or more 
feedstocks converted simultaneously, where at least one of the 
feedstocks does not have a minimum 75% adjusted cellulosic content, and 
who uses a process other than a thermochemical process or a combination 
of processes to convert feedstock into renewable fuel or 
biointermediate, must provide all the following:
    (1) The expected overall fuel or biointermediate yield, calculated 
as the total volume of fuel produced per batch (e.g., cellulosic 
biofuel plus all other fuel) divided by the total feedstock mass per 
batch on a dry weight basis (e.g., cellulosic feedstock plus all other 
feedstocks).
* * * * *
    (5) For renewable fuel producers already registered as of August 
18, 2014, to produce a single type of fuel that qualifies for D code 3 
or D code 7 RINs (or would do so after denaturing) using two or more 
feedstocks converted simultaneously using a combination of processes or 
a process other than a thermochemical process, the information 
specified in this paragraph (b)(1)(xiii)(B) shall be provided at the 
next required registration update under paragraph (d) of this section.
* * * * *
    (xv) For a producer of cellulosic biofuel made from crop residue, a

[[Page 39667]]

foreign ethanol producer making ethanol from crop residue and seeking 
to have it sold after denaturing as cellulosic biofuel, or a 
biointermediate producer producing a biointermediate for use in the 
production of a cellulosic biofuel made from crop residue, provide all 
the following information:
* * * * *
    (xvi) For FFA feedstock, the biointermediate producer must provide 
a description of how the biointermediate producer will determine FFA 
concentration.
    (2) * * *
    (i) * * *
    (A) For a domestic renewable fuel production facility, a foreign 
ethanol production facility, or a biointermediate production facility, 
a professional engineer who is licensed by an appropriate state agency 
in the United States, with professional work experience in the chemical 
engineering field or related to renewable fuel production.
    (B) For a foreign renewable fuel or foreign biointermediate 
production facility, an engineer who is a foreign equivalent to a 
professional engineer licensed in the United States with professional 
work experience in the chemical engineering field or related to 
renewable fuel production.
    (ii) * * *
    (A) The third-party shall not be operated by the renewable fuel 
producer, foreign ethanol producer, or biointermediate producer, or any 
subsidiary or employee of the renewable fuel producer foreign ethanol 
producer, or biointermediate producer.
    (B) The third-party shall be free from any interest in the 
renewable fuel producer, foreign ethanol producer, or biointermediate 
producer's business.
    (C) The renewable fuel producer, foreign ethanol producer, or 
biointermediate producer shall be free from any interest in the third-
party's business.
* * * * *
    (iv) The renewable fuel producer, foreign ethanol producer, or 
biointermediate producer must retain records of the review and 
verification, as required in Sec.  80.1454(b)(6) or (i)(4), as 
applicable.
* * * * *
    (d) Registration updates. (1)(i)(A) Any renewable fuel producer or 
any foreign ethanol producer that makes changes to their facility that 
will allow them to produce renewable fuel or use a biointermediate that 
is not reflected in the producer's registration information on file 
with EPA must update their registration information and submit a copy 
of an updated independent third-party engineering review on file with 
EPA at least 60 days prior to producing the new type of renewable fuel.
    (B) Any biointermediate producer who makes changes to their 
biointermediate production facility that will allow them to produce a 
biointermediate for use in the production of a renewable fuel that is 
not reflected in the biointermediate producer's registration 
information on file with EPA must update their registration information 
and submit a copy of an updated independent third-party engineering 
review on file with EPA at least 60 days prior to producing the new 
biointermediate for use in the production of the renewable fuel.
    (ii) The renewable fuel producer, foreign ethanol producer, or 
biointermediate producer may also submit an addendum to the independent 
third-party engineering review on file with EPA provided the addendum 
meets all the requirements in paragraph (b)(2) of this section and 
verifies for EPA the most up-to-date information at the producer's 
existing facility.
    (2)(i) Any renewable fuel producer or any foreign ethanol producer 
that makes any other changes to a facility that will affect the 
producer's registration information but will not affect the renewable 
fuel category for which the producer is registered per paragraph (b) of 
this section must update their registration information 7 days prior to 
the change.
    (ii)(A) Any biointermediate producer that makes any other changes 
to a biointermediate production facility that will affect the 
biointermediate producer's registration must update their registration 
information 7 days prior to the change.
    (B)(1) Any biointermediate producer that intends to change the 
designated renewable fuel production facility under paragraph 
(b)(1)(ii)(B)(1) of this section for one of its biointermediate 
production facilities must update their registration information with 
EPA at least 30 days prior to transferring the biointermediate to the 
newly designated renewable fuel production facility.
    (2) A biointermediate producer may only change the designated 
renewable fuel production facility under paragraph (b)(1)(ii)(B)(1) of 
this section for each biointermediate production facility one time per 
calendar year unless EPA, in its sole discretion, allows the 
biointermediate producer to change the designated renewable fuel 
production facility more frequently.
    (3) All renewable fuel producers, foreign ethanol producers, and 
biointermediate producers must update registration information and 
submit an updated independent third-party engineering review according 
to the schedule in paragraph (d)(3)(i) or (ii) of this section, and 
include the information specified in paragraph (d)(3)(iii) or (iv) of 
this section, as applicable:
    (i) For all renewable fuel producers and foreign ethanol producers 
registered in calendar year 2010, the updated registration information 
and independent third-party engineering review must be submitted to EPA 
by January 31, 2013, and by January 31 of every third calendar year 
thereafter; or
    (ii) For all renewable fuel producers, foreign ethanol producers, 
and biointermediate producers registered in any calendar year after 
2010, the updated registration information and independent third-party 
engineering review must be submitted to EPA by January 31 of every 
third calendar year after the first year of registration.
    (iii) For all renewable fuel producers, in addition to conducting 
the engineering review and written report and verification required by 
paragraph (b)(2) of this section, the updated independent third-party 
engineering review must include a detailed review of the renewable fuel 
producer's calculations used to determine V<INF>RIN</INF> of a 
representative sample of batches of each type of renewable fuel 
produced since the last registration. The representative sample must be 
selected in accordance with the sample size guidelines set forth at 40 
CFR 1090.1805.
    (iv) For biointermediate producers, in addition to conducting the 
engineering review and written report and verification required by 
paragraph (b)(2) of this section, the updated independent third-party 
engineering review must include a detailed review of the 
biointermediate producer's calculations used to determine the renewable 
biomass and cellulosic renewable biomass proportions, as required to be 
reported to EPA under Sec.  80.1451(j), of a representative sample of 
batches of each type of biointermediate produced since the last 
registration. The representative sample must be selected in accordance 
with the sample size guidelines set forth at 40 CFR 1090.1805.
* * * * *
    (g) Independent third-party auditors. * * * Registration 
information must be submitted at least 30 days prior to conducting 
audits of renewable fuel production or biointermediate production 
facilities. * * *
* * * * *

[[Page 39668]]

    (5) List of audited producers. Name, address, and company and 
facility identification numbers of all renewable fuel production or 
biointermediate production facilities that the independent third-party 
auditor intends to audit under Sec.  80.1472.
    (6) Audited producer associations. An affidavit, or electronic 
consent, from each renewable fuel producer, foreign renewable fuel 
producer, or biointermediate producer stating its intent to have the 
independent third-party auditor conduct a quality assurance audit of 
any of the renewable fuel producer's or foreign renewable fuel 
producer's facilities.
    (7) Independence affidavits. An affidavit stating that an 
independent third-party auditor and its contractors and subcontractors 
are independent, as described in Sec.  80.1471(b), of any renewable 
fuel producer, foreign renewable fuel producer, or biointermediate 
producer.
* * * * *
    (9) Registration updates. (i) Any independent third-party auditor 
who makes changes to its quality assurance plan(s) that will allow it 
to audit new renewable fuel production or biointermediate production 
facilities that is not reflected in the independent third-party 
auditor's registration information on file with EPA must update its 
registration information and submit a copy of an updated QAP on file 
with EPA at least 60 days prior to auditing new renewable fuel 
production or biointermediate production facilities.
    (ii) Any independent third-party auditor who makes any changes 
other than those specified in paragraphs (g)(9)(i), (iii), and (iv) of 
this section that will affect the third-party auditor's registration 
information must update its registration information 7 days prior to 
the change.
    (iii) Independent third-party auditors must update their QAPs at 
least 60 days prior to verifying RINs generated or biointermediate 
produced by a renewable fuel or biointermediate production facility, 
respectively, for a pathway not covered in the independent third-party 
auditor's QAPs.
    (iv) Independent third-party auditors must update their QAPs at 
least 60 days prior to verifying RINs generated or biointermediate 
produced by any renewable fuel or biointermediate production facility 
not identified in the independent third-party auditor's existing 
registration.
    (10) * * *
    (ii) The independent third-party auditor submits an affidavit 
affirming that he or she has only verified RINs and biointermediates 
using a QAP approved under Sec.  80.1469, notified all appropriate 
parties of all potentially invalid RINs as described in Sec.  
80.1471(d), and fulfilled all of his or her RIN replacement obligations 
under Sec.  80.1474.
* * * * *
    (11) * * *
    (ii) * * * Communications should be sent to the EMTS support line 
(<a href="/cdn-cgi/l/email-protection#4f293a2a233c3f3d20283d2e223c3a3f3f203d3b0f2a3f2e61282039"><span class="__cf_email__" data-cfemail="f09685959c8380829f9782919d838580809f8284b0958091de979f86">[email protected]</span></a>). * * *
* * * * *
    (h) * * *
    (1) * * *
    (i) Unless the party is a biointermediate producer, the party has 
reported no activity in EMTS for twenty-four consecutive months.
* * * * *
    (2) * * *
    (i) * * * The party will have 30 calendar days from the date of the 
notification to correct the deficiencies identified or explain why 
there is no need for corrective action.
* * * * *

0
18. Amend Sec.  80.1451 by:
0
a. Revising paragraphs (b)(1)(ii)(K) and (L), the first sentence of 
paragraph (b)(1)(ii)(R), (b)(1)(ii)(T), (b)(1)(ii)(U) introductory 
text, (g)(1)(i), (g)(1)(ii) introductory text, (g)(1)(ii)(A) through 
(C), (K), and (L), and (g)(2)(vii) and (viii);
0
b. Redesignating paragraph (g)(2)(x) as paragraph (g)(2)(xi) and adding 
a new paragraph (g)(2)(x); and
0
c. Redesignating paragraphs (j) and (k) as paragraphs (k) and (l) and 
adding a new paragraph (j).
    The revisions and additions read as follows:


Sec.  80.1451  What are the reporting requirements under the RFS 
program?

* * * * *
    (b) * * *
    (1) * * *
    (ii) * * *
    (K) The types and quantities of feedstocks and biointermediates 
used.
    (L) The process(es), feedstock(s), and biointermediate(s) used and 
proportion of renewable volume attributable to each process, feedstock, 
and biointermediate.
* * * * *
    (R) Producers or importers of renewable fuel made from separated 
municipal solid waste must report the amount of paper, cardboard, 
plastics, rubber, textiles, metals, and glass separated from municipal 
solid waste for recycling. * * *
* * * * *
    (T) Producers or importers of any renewable fuel other than 
ethanol, biodiesel, renewable gasoline, renewable diesel that meets the 
Grade No. 1-D or No. 2-D specification in ASTM D975 (incorporated by 
reference, see Sec.  80.1468), biogas or renewable electricity, must 
report, on a quarterly basis, all the following for each volume of 
fuel:
    (1) Total volume of renewable fuel produced or imported, total 
volume of renewable fuel blended into gasoline and distillate fuel by 
the producer or importer, and the percentage of renewable fuel in each 
batch of finished fuel.
    (2) If the producer or importer generates RINs under Sec.  
80.1426(f)(17)(i)(B)(2), report the name, location, and contract 
information for each party that purchased the renewable fuel.
    (U) Producers generating D code 3 or D code 7 RINs for fuel derived 
from feedstocks or biointermediates other than biogas (including 
through pathways listed in rows K, L, M, and N of Table 1 to Sec.  
80.1426), and that was produced from two or more feedstocks converted 
simultaneously, at least one of which has less than 75% average 
adjusted cellulosic content, and using a combination of processes or a 
process other than a thermochemical process or a combination of 
processes shall report all of the following:
* * * * *
    (g) * * *
    (1)(i) RIN and biointermediate verification reports for each 
renewable fuel or biointermediate production facility audited by the 
independent third-party auditor shall be submitted according to the 
schedule specified in paragraph (f)(2) of this section.
    (ii) The RIN and biointermediate verification reports shall include 
all the following information for each batch of renewable fuel produced 
or imported verified per Sec.  80.1469(c), where ``batch'' means a 
discrete quantity of renewable fuel produced or imported and assigned a 
unique batch-RIN per Sec.  80.1426(d):
    (A) The RIN generator or biointermediate producer's name.
    (B) The RIN generator or biointermediate producer's EPA company 
registration number.
    (C) The renewable fuel or biointermediate producer's EPA facility 
registration number.
* * * * *
    (K) The volume and type of each feedstock and biointermediate used 
to produce the verified batch.
    (L) Whether the feedstocks and biointermediates used to produce 
each verified batch met the definition of renewable biomass.
* * * * *

[[Page 39669]]

    (2) * * *
    (vii) A list of all renewable fuel and biointermediate facilities 
including the EPA's company and facility registration numbers audited 
under an approved quality assurance plan under Sec.  80.1469 along with 
the date the independent third-party auditor conducted the on-site 
visit and audit.
    (viii) Mass and energy balances calculated for each renewable fuel 
and biointermediate production facility audited under an approved 
quality assurance plan under Sec.  80.1469.
* * * * *
    (x) A list of all biointermediates that were identified as 
potentially improperly produced biointermediates under Sec.  
80.1477(d).
* * * * *
    (j) Biointermediate producers. For each biointermediate production 
facility, any biointermediate producer must submit quarterly reports 
for biointermediate batch production to EPA containing all of the 
information in this paragraph (j).
    (1) Include all the following information for each batch of 
biointermediate produced:
    (i) The biointermediate producer's name.
    (ii) The biointermediate producer's EPA company registration 
number.
    (iii) The biointermediate producer's EPA facility registration 
number.
    (iv) The applicable compliance period.
    (v) The production date.
    (vi) The batch number.
    (vii) For batches of biointermediates intended for use to produce 
cellulosic biofuels, the adjusted cellulosic content of each batch and 
certification that the cellulosic content of each batch was derived 
from cellulose, hemicellulose, or lignin that was derived from 
renewable biomass.
    (viii) The volume of each batch produced.
    (ix) The types and quantities of feedstocks used.
    (x) The renewable fuel type(s) each batch of biointermediate was 
designated to be used as a feedstock material for.
    (xi) The EPA company registration number and EPA facility 
registration number for each renewable fuel producer or foreign 
renewable fuel producer that received each batch.
    (xii) The percentage of each batch of biointermediate that met the 
definition of renewable biomass and certification that this portion of 
the batch of biointermediate was derived from renewable biomass.
    (xiii) The process(es) and feedstock(s) used and proportion of 
biointermediate volume attributable to each process and feedstock.
    (xiv) The type of co-products produced with each batch.
    (xv) The quantity of co-products produced in each quarter.
    (xvi) Any additional information the Administrator may require.
    (2) Quarterly reports under this paragraph (j) must be submitted 
according to the schedule in paragraph (f)(2) of this section.
* * * * *

0
19. Amend Sec.  80.1452 by redesignating paragraph (b)(16) as paragraph 
(b)(18) and adding new paragraphs (b)(16) and (17) to read as follows:


Sec.  80.1452   What are the requirements related to the EPA Moderated 
Transaction System (EMTS)?

* * * * *
    (b) * * *
    (16) The type and quantity of each biointermediate used for the 
batch, if applicable.
    (17) The EPA facility registration number of each biointermediate 
production facility at which a biointermediate used for the batch was 
produced, if applicable.
* * * * *

0
20. Amend Sec.  80.1453 by adding paragraph (f) to read as follows:


Sec.  80.1453   What are the product transfer document (PTD) 
requirements for the RFS program?

* * * * *
    (f)(1) On each occasion when any party transfers title or custody 
of a biointermediate, the transferor must provide to the transferee 
documents that include all of the following information:
    (i) The name and address of the transferor and transferee.
    (ii) The transferor's and transferee's EPA company registration and 
applicable facility registration numbers.
    (iii) The volume of biointermediate that is being transferred.
    (iv) The date of the transfer.
    (v) The location of the biointermediate at the time of the 
transfer.
    (vi) The following statement designating the volume of 
biointermediate as feedstock for the production of a renewable fuel: 
``This volume is designated and intended for use as biointermediate in 
the production of renewable fuel as defined in 40 CFR 80.1401. Parties 
may not generate RINs on this feedstock material and it must remain 
segregated from all products until received by a designated renewable 
fuel production facility.''
    (2) In addition to the information specified in paragraph (f)(1) of 
this section, on each occasion when any party transfers title of a 
biointermediate or when any party transfers a biointermediate to a 
renewable fuel production facility, the transferor must provide to the 
transferee documents that include all of the following information:
    (i) The renewable fuel type the biointermediate was designated to 
be used as a feedstock material for by the biointermediate producer 
under Sec.  80.1476(i).
    (ii) The composition of the biointermediate being transferred, 
including:
    (A) The type and quantity of each feedstock that was used to make 
the biointermediate.
    (B) The percentage of each feedstock that is renewable biomass, 
rounded to two decimal places.
    (C) For a biointermediate that contains both renewable and non-
renewable feedstocks:
    (1) The percentage of each feedstock that is not renewable biomass, 
rounded to two decimal places.
    (2) The feedstock energy from the renewable biomass used to make 
the biointermediate, in Btu.
    (3) The feedstock energy from the non-renewable biomass used to 
make the biointermediate, in Btu.
    (4) The total percentage of the biointermediate that may generate 
RINs, rounded to two decimal places.
    (5) The total percentage of the biointermediate that may not 
generate RINs, rounded to two decimal places.
    (D) For a biointermediate that contains cellulosic material:
    (1) The percentage of each feedstock that is cellulosic, rounded to 
two decimal places.
    (2) The percentage of each feedstock that is non-cellulosic, 
rounded to two decimal places, if applicable.
    (3) If the biointermediate is intended for use in the production of 
a cellulosic biofuel, the total percentage of the biointermediate that 
may generate cellulosic RINs, rounded to two decimal places.
    (4) For separated municipal solid waste, the cellulosic portion of 
the biointermediate is equivalent to the biogenic portion.
    (5) For separated food waste, the non-cellulosic percentage is 
assumed to be zero percent unless it is demonstrated to be partially 
cellulosic.
    (6) For separated yard waste, 100% of separated yard waste is 
deemed to be cellulosic.
    (7) The following statement: ``I certify that the cellulosic 
content of this feedstock was derived from cellulose, hemicellulose, or 
lignin that was derived from renewable biomass.''

[[Page 39670]]

    (iii) Copies of records specified in Sec.  80.1454(i)(3), (5), and 
(6) for the volume being transferred, as applicable.

0
21. Amend Sec.  80.1454 by:
0
a. Redesignating paragraphs (b)(3)(vii) through (xii) as paragraphs 
(b)(3)(viii) through (xiii), respectively, and adding a new paragraph 
(b)(3)(vii);
0
b. Revising paragraph (b)(6), the first sentence of paragraph (d)(4), 
and paragraphs (i) and (j) introductory text;
0
c. Adding a heading to paragraph (k);
0
d. Revising paragraphs (l) introductory text and (l)(1);
0
e. Redesignating paragraph (l)(3) as paragraph (l)(4) and adding a new 
paragraph (l)(3);
0
f. Revising the first sentence of paragraph (m) introductory text;
0
g. Redesignating paragraph (m)(10) as paragraph (m)(11) and adding a 
new paragraph (m)(10);
0
h. Removing paragraphs (n) through (q);
0
i. Redesignating paragraphs (s) through (v) as paragraphs (n) through 
(q);
0
j. Revising newly redesignated paragraph (n) introductory text;
0
k. Revising paragraph (r);
0
l. Adding new paragraphs (s) through (v); and
0
m. Removing paragraph (w).
    The revisions and additions read as follows:


Sec.  80.1454   What are the recordkeeping requirements under the RFS 
program?

* * * * *
    (b) * * *
    (3) * * *
    (vii) Type and quantity of biointermediates used.
* * * * *
    (6) Copies of registration documents required under Sec.  80.1450, 
including information on fuels and products, feedstocks, 
biointermediates, facility production processes, process changes, and 
capacity, energy sources, and a copy of the independent third party 
engineering review report submitted to EPA per Sec.  80.1450(b)(2).
* * * * *
    (d) * * *
    (4) Domestic producers of renewable fuel or biointermediates made 
from any other type of renewable biomass must have documents from their 
feedstock supplier certifying that the feedstock qualifies as renewable 
biomass, describing the feedstock. * * *
* * * * *
    (i) Requirements for biointermediate producers. In addition to any 
other applicable records a biointermediate producer must maintain under 
this section, any biointermediate producer producing a biointermediate 
must keep all of the following records:
    (1) Product transfer documents consistent with Sec.  80.1453(f) and 
associated with the biointermediate producer's activities, if any, as 
transferor or transferee of biointermediates.
    (2) Copies of all reports submitted to EPA under Sec.  80.1451(i).
    (3) Records related to the production of biointermediates for each 
biointermediate production facility, including all of the following:
    (i) Batch volume.
    (ii) Batch number.
    (iii) Type and quantity of co-products produced.
    (iv) Type and quantity of feedstocks used.
    (v) Type and quantity of fuel used for process heat.
    (vi) Calculations per Sec.  80.1426(f), as applicable.
    (vii) Date of production.
    (viii) Results of any laboratory analysis of batch chemical 
composition or physical properties.
    (4) Copies of registration documents required under Sec.  80.1450, 
including information on products, feedstocks, facility production 
processes, process changes, and capacity, energy sources, and a copy of 
the independent third party engineering review submitted to EPA per 
Sec.  80.1450(b)(2)(i).
    (5) Records demonstrating that feedstocks are renewable biomass, as 
required under paragraphs (d), (g), (h), and (j) of this section, as 
applicable.
    (6) For any biointermediate made from Arundo donax or Pennisetum 
purpureum per Sec.  80.1426(f)(14), all applicable records described in 
paragraph (b)(7) of this section.
    (7) Records, including contracts, related to the implementation of 
a QAP under Sec. Sec.  80.1469 and 80.1477.
    (j) Additional requirements for producers that use separated yard 
waste, separate food waste, separated municipal solid waste, or 
biogenic waste oils/fats/greases. A renewable fuel or biointermediate 
producer that produces fuel or biointermediate from separated yard 
waste, separated food waste, separated municipal solid waste, or 
biogenic waste oils/fats/greases must keep all the following additional 
records:
* * * * *
    (k) Additional requirements for producers of renewable fuel using 
biogas. * * *
* * * * *
    (l) Additional requirements for producers or importers of any 
renewable fuel other than ethanol, biodiesel, renewable gasoline, 
renewable diesel, biogas, or renewable electricity. A renewable fuel 
producer that generates RINs for any renewable fuel other than ethanol, 
biodiesel, renewable gasoline, renewable diesel that meets the Grade 
No. 1-D or No. 2-D specification in ASTM D975 (incorporated by 
reference, see Sec.  80.1468), biogas or renewable electricity shall 
keep all of the following additional records:
    (1) Documents demonstrating the total volume of renewable fuel 
produced, total volume of renewable fuel blended into gasoline and 
distillate fuel, and the percentage of renewable fuel in each batch of 
finished fuel.
* * * * *
    (3) For each batch of renewable fuel that generated RINs under 
Sec.  80.1426(f)(17)(i)(B)(2), one or more affidavits from the party 
that blended or used the renewable fuel that includes all the following 
information:
    (i) Quantity of renewable fuel received from the producer or 
importer.
    (ii) Date the renewable fuel was received from producer.
    (iii) A description of the fuel that the renewable fuel was blended 
into and the blend ratios for each batch, if applicable.
    (iv) A description of the finished fuel, and a statement that the 
fuel meets all applicable standards and was sold for use as a 
transportation fuel, heating oil or jet fuel.
    (v) Quantity of assigned RINs received with the renewable fuel, if 
applicable.
    (vi) Quantity of assigned RINs that the end user separated from the 
renewable fuel, if applicable.
* * * * *
    (m) Requirements for independent third-party auditors. * * *
    (10) Copies of all reports required under Sec.  80.1464.
* * * * *
    (n) Additional requirements for producers of renewable fuel using 
crop residue. Producers of renewable fuel using crop residue must keep 
records of all of the following:
* * * * *
    (r) Transaction requirement. Beginning July 1, 2010, all parties 
must keep transaction information sent to EMTS in addition to other 
records required under this section.
    (1) For buy or sell transactions of separated RINs, parties must 
retain records substantiating the price reported to EPA under Sec.  
80.1452.
    (2) For buy or sell transactions of separated RINs on or after 
January 1, 2020, parties must retain records demonstrating the 
transaction mechanism (e.g., spot market or fulfilling a term 
contract).

[[Page 39671]]

    (s) Record retention requirement. (1) The records required under 
paragraphs (a) through (d), (f) through (l), (n), and (r) of this 
section and under Sec.  80.1453 must be kept for five years from the 
date they were created, except that records related to transactions 
involving RINs must be kept for five years from the date of the RIN 
transaction.
    (2) The records required under paragraph (e) of this section must 
be kept through calendar year 2022.
    (t) Record availability requirement. On request by the EPA, the 
records required under this section and under Sec.  80.1453 must be 
made available to the Administrator or the Administrator's authorized 
representative. For records that are electronically generated or 
maintained, the equipment or software necessary to read the records 
shall be made available; or, if requested by the EPA, electronic 
records shall be converted to paper documents.
    (u) Record transfer requirement. The records required in paragraphs 
(b)(3) and (c)(1) of this section must be transferred with any 
renewable fuel sent to the importer of that renewable fuel by any non-
RIN-generating foreign producer.
    (v) English language records. Any document requested by the 
Administrator under this section must be submitted in English or must 
include an English translation.

0
22. Amend Sec.  80.1460 by revising paragraphs (b)(5) and (6) and 
adding paragraphs (b)(8) and (k) to read as follows:


Sec.  80.1460   What acts are prohibited under the RFS program?

* * * * *
    (b) * * *
    (5) Introduce into commerce any renewable fuel produced from a 
feedstock, biointermediate, or through a process that is not described 
in the person's registration information.
    (6) Generate a RIN for fuel for which RINs have previously been 
generated unless the RINs were generated under Sec.  80.1426(c)(6).
* * * * *
    (8) Generate a RIN for fuel that was produced from a 
biointermediate for which the fuel and biointermediate were not audited 
under an EPA-approved quality assurance plan.
* * * * *
    (k) Biointermediate-related violations. No person may do any of the 
following:
    (1) Introduce into commerce for use in the production of a 
renewable fuel any biointermediate produced from a feedstock or through 
a process that is not described in the person's registration 
information.
    (2) Produce a renewable fuel at more than one facility unless the 
person uses a biointermediate or the renewable biomass is not 
substantially altered. Form changes of renewable biomass such as 
bleaching through adsorption, rendering fats, chopping, crushing, 
grinding, pelletizing, filtering, compacting/compression, centrifuging, 
degumming, dewatering/drying, melting, triglycerides resulting from 
deodorizing, or the addition of water to produce a slurry do not 
constitute substantial alteration.
    (3) Transfer a biointermediate from a biointermediate production 
facility to a facility other than the renewable fuel production 
facility specified in the biointermediate producer's registration under 
Sec.  80.1450(b)(1)(ii)(B)(1).
    (4) Isolate or concentrate non-characteristic components of the 
feedstock to yield a biointermediate not identified in a registration 
accepted by EPA.
    (5) No person may transfer a biointermediate without complying with 
the PTD requirements in Sec.  80.1453(f)

0
23. Amend Sec.  80.1461 by revising paragraphs (a)(1) and (2) and 
adding paragraph (e) to read as follows:


Sec.  80.1461   Who is liable for violations under the RFS program?

    (a) * * *
    (1) Any person who violates a prohibition under Sec.  80.1460(a) 
through (d) or (g) through (k) is liable for the violation of that 
prohibition.
    (2) Any person who causes another person to violate a prohibition 
under Sec.  80.1460(a) through (d) or (g) through (k) is liable for a 
violation of Sec.  80.1460(e).
* * * * *
    (e) Biointermediate liability. When a biointermediate contained in 
any storage tank at any facility owned, leased, operated, controlled, 
or supervised by any biointermediate producer, biointermediate 
importer, renewable fuel producer, or foreign ethanol producer is found 
in violation of a prohibition described in Sec.  80.1460(k)(1) and (3), 
the following persons shall be deemed in violation:
    (1) Each biointermediate producer, biointermediate importer, 
renewable fuel producer, renewable fuel importer, or foreign ethanol 
producer who owns, leases, operates, controls, or supervises the 
facility where the violation is found.
    (2) Each biointermediate producer, biointermediate importer, 
renewable fuel producer, renewable fuel importer, or foreign ethanol 
producer who manufactured, imported, sold, offered for sale, dispensed, 
offered for supply, stored, transported, or caused the transportation 
of any biointermediate that is in the storage tank containing the 
biointermediate found to be in violation.
    (3) Each carrier who dispensed, supplied, stored, or transported 
any biointermediate that was in the storage tank containing the 
biointermediate found to be in violation, provided that EPA 
demonstrates, by reasonably specific showings using direct or 
circumstantial evidence, that the carrier caused the violation.

0
24. Amend Sec.  80.1463 by revising paragraph (d) to read as follows:


Sec.  80.1463   What penalties apply under the RFS program?

* * * * *
    (d) Any person liable under Sec.  80.1461(a) for a violation of 
Sec.  80.1460(b)(1) through (4) or (6) through (8) is subject to a 
separate day of violation for each day that an invalid RIN remains 
available for an obligated party or exporter of renewable fuel to 
demonstrate compliance with the RFS program.

0
25. Amend Sec.  80.1464 by:
0
a. Removing ``Sec.  80.127'' everywhere it appears and adding ``40 CFR 
1090.1805'' in its place;
0
b. Revising paragraph (a)(3)(ii);
0
c. Adding paragraph (a)(7);
0
d . Revising paragraph (b)(1)(v)(A);
0
e. Adding paragraph (b)(1)(v)(C);
0
f. Revising paragraphs (b)(3)(ii) and (b)(4)(i);
0
g. Adding paragraphs (b)(4)(iii) and (b)(8);
0
h. Revising paragraphs (c) introductory text and (c)(2)(ii);
0
i. Adding paragraphs (c)(6) and (7) and (h); and
0
j. Revising the heading of paragraph (i)(1), paragraphs (i)(1)(i) and 
(iii), the heading of paragraph (i)(2), and paragraphs (i)(2)(i) and 
(ii).
    The revisions and additions read as follows:


Sec.  80.1464   What are the attest engagement requirements under the 
RFS program?

* * * * *
    (a) * * *
    (3) * * *
    (ii) Obtain the database, spreadsheet, or other documentation used 
to generate the information in the RIN activity reports; compare the 
RIN transaction samples reviewed under paragraph (a)(2) of this section 
with the corresponding entries in the database or spreadsheet and 
report as a finding any discrepancies; compute the total number of 
current-year and prior-year RINs owned at the start and end of each 
quarter, and for parties that reported RIN activity for RINs assigned 
to a

[[Page 39672]]

volume of renewable fuel, the volume and type of renewable fuel owned 
at the end of each quarter, as represented in these documents; and 
state whether this information agrees with the party's reports to EPA.
* * * * *
    (7) Compliance reports. Compare the list of compliance reports 
submitted to EPA during the compliance period to the reporting 
requirements for the entity in Sec.  80.1451. Report as a finding any 
reporting requirements that were not completed.
    (b) * * *
    (1) * * *
    (v)(A) Obtain documentation, as required under Sec.  80.1451(b), 
(d), and (e), associated with feedstock and biointermediate purchases 
for a representative sample of feedstocks and biointermediates 
separately, selected in accordance with the guidelines in 40 CFR 
1090.1805, of renewable fuel batches produced or imported during the 
year being reviewed.
* * * * *
    (C) Verify that biointermediates were properly identified in the 
reports, as applicable.
* * * * *
    (3) * * *
    (ii) Obtain the database, spreadsheet, or other documentation used 
to generate the information in the RIN activity reports; compare the 
RIN transaction samples reviewed under paragraph (b)(2) of this section 
with the corresponding entries in the database or spreadsheet and 
report as a finding any discrepancies; report the total number of each 
RIN generated during each quarter and compute and report the total 
number of current-year and prior-year RINs owned at the start and end 
of each quarter, and for parties that reported RIN activity for RINs 
assigned to a volume of renewable fuel, the volume of renewable fuel 
owned at the end of each quarter, as represented in these documents; 
and state whether this information agrees with the party's reports to 
EPA.
    (4) * * *
    (i) Obtain documentation of independent third-party engineering 
reviews required under Sec.  80.1450(b)(2). Such documentation must 
include the date of the last engineering review along with date of the 
actual site visit by the professional engineer.
* * * * *
    (iii) Verify that independent third-party engineering reviews 
conducted under Sec.  80.1450(d)(3) occurred within the three-year 
cycle. Report as a finding if the engineering review was not updated as 
part of the three-year cycle under Sec.  80.1450(d)(3).
* * * * *
    (8) Compliance reports. Compare the list of compliance reports 
submitted to EPA during the compliance period to the reporting 
requirements for the entity in Sec.  80.1451. Report as a finding any 
reporting requirements that were not completed.
    (c) Other parties owning RINs. Except as specified in paragraph 
(c)(6) of this section, the following attest procedures must be 
completed for any party other than an obligated party or renewable fuel 
producer or importer that owns any RINs during a calendar year:
* * * * *
    (2) * * *
    (ii) Obtain the database, spreadsheet, or other documentation used 
to generate the information in the RIN activity reports; compare the 
RIN transaction samples reviewed under paragraph (c)(1) of this section 
with the corresponding entries in the database or spreadsheet and 
report as a finding any discrepancies; compute the total number of 
current-year and prior-year RINs owned at the start and end of each 
quarter, and for parties that reported RIN activity for RINs assigned 
to a volume of renewable fuel, the volume of renewable fuel owned at 
the end of each quarter, as represented in these documents; and state 
whether this information agrees with the party's reports to EPA.
* * * * *
    (6) Low-volume RIN owner exemption. Any party who meets all the 
following criteria in a given compliance period is not required to 
submit an attest engagement for that compliance period:
    (i) The party must be solely registered as a party owning RINs 
(i.e., a ``RIN Owner Only'') and must not also be registered in any 
other role under Sec.  80.1450 (e.g., the party must not also be an 
obligated party, exporter of renewable fuel, renewable fuel producer, 
RIN generating importer, etc.).
    (ii) The party must have transacted (e.g., generated, bought, sold, 
separated, or retired) 10,000 or fewer RINs in the given compliance 
period.
    (iii) The party has not exceeded the RIN holding threshold(s) 
specified in Sec.  80.1435.
    (7) Compliance reports. Compare the list of compliance reports 
submitted to EPA during the compliance period to the reporting 
requirements for the entity in Sec.  80.1451. Report as a finding any 
reporting requirements that were not completed.
* * * * *
    (h) Biointermediate producers. The following attest reports must be 
completed for any biointermediate producer that produces a 
biointermediate in a compliance year:
    (1) Biointermediate production reports. (i) Obtain and read copies 
of the quarterly biointermediate production reports required under 
Sec.  80.1451(i); compare the reported information to the requirements 
under Sec.  80.1451(i); and report as a finding any missing or 
incomplete information in the reports.
    (ii) Obtain any database, spreadsheet, or other documentation used 
to generate the information in the biointermediate production reports; 
compare the corresponding entries in the database or spreadsheet and 
report as a finding any discrepancies.
    (iii) For a representative sample of biointermediate batches, 
selected in accordance with the guidelines in 40 CFR 1090.1805, obtain 
records required under Sec.  80.1454(i); compare these records to the 
corresponding batch entries in the reports procured in paragraph 
(h)(1)(i) of this section and report as a finding any discrepancies.
    (iv) Obtain the list of designated renewable fuel production 
facilities under Sec.  80.1450(b)(1)(ii)(B)(1); compare the list of 
registered designated renewable fuel production facilities to those 
identified in the biointermediate production report; and report as a 
finding any discrepancies.
    (v) Provide the list of renewable fuel producers receiving any 
transfer of biointermediate batches and calculate the total volume from 
the batches received.
    (2) Independent third-party engineering review. (i) Obtain 
documentation of independent third-party engineering reviews required 
under Sec.  80.1450(b)(2).
    (ii) Review and verify the written verification and records 
generated as part of the independent third-party engineering review.
    (iii) Provide the date of the submission of the last engineering 
review along with the date of the actual site visit by the professional 
engineer. Report as a finding if the engineering review was not updated 
as part of the three-year cycle under Sec.  80.1450(d)(3).
    (iv) Compare and provide the total volume of produced 
biointermediate during the compliance year as compared to the 
production capacity stated in the engineering review and report as a 
finding if the volume of produced biointermediate is greater than the 
stated production capacity.
    (3) Product transfer documents. (i) Obtain contracts, invoices, or 
other documentation for each batch in the

[[Page 39673]]

representative sample under paragraph (h)(1)(iii) of this section and 
the corresponding copies of product transfer documents required under 
Sec.  80.1453; compare the product transfer documents with the 
contracts and invoices and report as a finding any discrepancies.
    (ii) Verify that the product transfer documents obtained in 
paragraph (h)(3)(i) of this section contain the applicable information 
required under Sec.  80.1453 and report as a finding any product 
transfer document that does not contain the required information.
    (iii) Verify the accuracy of the information contained in the 
product transfer documents reviewed pursuant to paragraph (h)(3)(ii) of 
this section with the records obtained and reviewed under paragraph 
(h)(1)(iii) of this section and report as a finding any exceptions.
    (i) * * *
    (1) Comparing RIN and biointermediate verification reports with 
approved QAPs. (i) Obtain and read copies of reports required under 
Sec.  80.1451(g)(1). Compare the list of compliance reports submitted 
to EPA during the compliance period to the reporting requirements for 
the entity in Sec.  80.1451. Report as a finding any reporting 
requirements that were not completed.
* * * * *
    (iii) Confirm that the independent third-party auditor only 
verified RINs and biointermediates covered by approved QAPs under Sec.  
80.1469. Identify as a finding any discrepancies.
    (2) Checking third-party auditor's RIN and biointermediate 
verification. (i) Obtain and read copies of reports required under 
Sec.  80.1451(g)(2). Compare the list of compliance reports submitted 
to EPA during the compliance period to the reporting requirements for 
the entity in Sec.  80.1451. Report as a finding any reporting 
requirements that were not completed.
    (ii) Obtain all notifications of potentially invalid RINs and 
potentially improperly produced biointermediate submitted to the EPA 
under Sec. Sec.  80.1474(b)(3) and 80.1477(d)(2) respectively.
* * * * *

0
26. Revise Sec.  80.1468 to read as follows:


Sec.  80.1468   Incorporation by reference.

    (a) Certain material is incorporated by reference into this part 
with the approval of the Director of the Federal Register under 5 
U.S.C. 552(a) and 1 CFR part 51. All approved incorporation by 
reference (IBR) material is available for inspection at U.S. EPA and at 
the National Archives and Records Administration (NARA). Contact U.S. 
EPA at: U.S. EPA, Air and Radiation Docket and Information Center, WJC 
West Building, Room 3334, 1301 Constitution Ave. NW, Washington, DC 
20460; (202) 566-1742. For information on the availability of this 
material at NARA, email <a href="/cdn-cgi/l/email-protection#92f4e0bcfbfce1e2f7f1e6fbfdfcd2fcf3e0f3bcf5fde4"><span class="__cf_email__" data-cfemail="deb8acf0b7b0adaebbbdaab7b1b09eb0bfacbff0b9b1a8">[email protected]</span></a>, or go to 
www.archives.gov/federal-register/cfr/ibr-locations.html. The material 
may be obtained from the source(s) in the following paragraph(s) of 
this section.
    (b) ASTM International, 100 Barr Harbor Dr., P.O. Box C700, West 
Conshohocken, PA 19428-2959; (877) 909-2786; www.astm.org.
    (1) ASTM D975-21, Standard Specification for Diesel Fuel, approved 
August 1, 2021 (``ASTM D975''); IBR approved for Sec. Sec.  80.1401; 
80.1426(f); 80.1450(b); 80.1451(b); 80.1454(l).
    (2) ASTM D1250-19e1, Standard Guide for the Use of the Joint API 
and ASTM Adjunct for Temperature and Pressure Volume Correction Factors 
for Generalized Crude Oils, Refined Products, and Lubricating Oils: API 
MPMS Chapter 11.1, approved May 1, 2019 (``ASTM D1250''); IBR approved 
for Sec.  80.1426(f).
    (3) ASTM D4442-20, Standard Test Methods for Direct Moisture 
Content Measurement of Wood and Wood-Based Materials, approved March 1, 
2020 (``ASTM D4442''); IBR approved for Sec.  80.1426(f).
    (4) ASTM D4444-13 (Reapproved 2018), Standard Test Method for 
Laboratory Standardization and Calibration of Hand-Held Moisture 
Meters, reapproved July 1, 2018 (``ASTM D4444''); IBR approved for 
Sec.  80.1426(f).
    (5) ASTM D6751-20a, Standard Specification for Biodiesel Fuel Blend 
Stock (B100) for Middle Distillate Fuels, approved August 1, 2020 
(``ASTM D6751''); IBR approved for Sec.  80.1401.
    (6) ASTM D6866-22, Standard Test Methods for Determining the 
Biobased Content of Solid, Liquid, and Gaseous Samples Using 
Radiocarbon Analysis, approved March 15, 2022 (``ASTM D6866''); IBR 
approved for Sec. Sec.  80.1426(f); 80.1430(e).
    (7) ASTM E711-87 (R2004), Standard Test Method for Gross Calorific 
Value of Refuse-Derived Fuel by the Bomb Calorimeter, reapproved 2004 
(``ASTM E711''); IBR approved for Sec.  80.1426(f).
    (8) ASTM E870-82 (Reapproved 2019), Standard Test Methods for 
Analysis of Wood Fuels, reapproved April 1, 2019 (``ASTM E870''); IBR 
approved for Sec.  80.1426(f).

0
27. Amend Sec.  80.1469 by revising the introductory text and 
paragraphs (c)(1)(vi) and (vii), (c)(2)(i), (c)(3)(i), (c)(5), and 
(f)(1) and (2) to read as follows:


Sec.  80.1469   Requirements for Quality Assurance Plans.

    This section specifies the requirements for Quality Assurance Plans 
(QAPs) for renewable fuels and biointermediates.
* * * * *
    (c) * * *
    (1) * * *
    (vi) Feedstock(s) and biointermediate(s) are consistent with 
production process and D code being used as permitted under the 
approved pathway and is consistent with information recorded in EMTS.
    (vii) Feedstock(s) and biointermediate(s) are not renewable fuel 
for which RINs were previously generated unless the RINs were generated 
under Sec.  80.1426(c)(6). For renewable fuels that have RINs generated 
under Sec.  80.1426(c)(6), verify that renewable fuels used as a 
feedstock meet all applicable requirements of this paragraph (c)(1).
* * * * *
    (2) * * *
    (i) Production process is consistent with the renewable fuel 
producer or biointermediate producer's registration under Sec.  
80.1450(b).
* * * * *
    (3) * * *
    (i) If applicable, renewable fuel was designated for qualifying 
uses as transportation fuel, heating oil, or jet fuel in the covered 
location pursuant to Sec.  80.1453.
* * * * *
    (5) Representative sampling. Independent third-party auditors may 
use a representative sample of batches of renewable fuel or 
biointermediate in accordance with the procedures described in 40 CFR 
1090.1805 for all components of this paragraph (c) except for 
paragraphs (c)(1)(ii) and (iii), (c)(2)(ii), (c)(3)(vi), and (c)(4)(ii) 
and (iii) of this section. If a facility produces both a renewable fuel 
and a biointermediate, the independent third-party auditor must select 
separate representative samples for the renewable fuel and 
biointermediate.
* * * * *
    (f) * * *
    (1) A new QAP must be submitted to EPA according to paragraph (e) 
of this section and the independent third-party auditor must update 
their registration according to Sec.  80.1450(g)(9) whenever any of the 
following changes occur at a renewable fuel or biointermediate 
production facility audited by an

[[Page 39674]]

independent third-party auditor and the auditor does not possess an 
appropriate pathway-specific QAP that encompasses the change:
    (i) Change in feedstock or biointermediates.
    (ii) Change in type of fuel or biointermediate produced.
    (iii) Change in facility operations or equipment that may impact 
the capability of the QAP to verify that RINs are validly generated or 
biointermediates are properly produced.
    (2) A QAP ceases to be valid as the basis for verifying RINs or a 
biointermediate under a new pathway until a new pathway-specific QAP, 
submitted to the EPA under this paragraph (f), is approved pursuant to 
paragraph (e) of this section.

0
28. Amend Sec.  80.1471 by:
0
a. Revising paragraphs (b)(1), (4), (5), and (6) and (c);
0
b. Adding paragraph (e)(5); and
0
c. Revising paragraphs (f)(1) introductory text, (f)(1)(ii), and (g).
    The revisions and addition read as follows:


Sec.  80.1471   Requirements for QAP auditors.

* * * * *
    (b) * * *
    (1) The independent third-party auditor and its contractors and 
subcontractors must not be owned or operated by the renewable fuel 
producer, foreign renewable fuel producer, or biointermediate producer 
or any subsidiary or employee of the renewable fuel producer, foreign 
ethanol producer, or biointermediate producer.
* * * * *
    (4) The independent third-party auditor and its contractors and 
subcontractors must be free from any interest or the appearance of any 
interest in the renewable fuel producer, foreign renewable fuel 
producer, or biointermediate producer's business.
    (5) The renewable fuel producer, foreign renewable fuel producer, 
or biointermediate producer must be free from any interest or the 
appearance of any interest in the third-party auditor's business and 
the businesses of third-party auditor's contractors and subcontractors.
    (6) The independent third-party auditor and its contractors and 
subcontractors must not have performed an attest engagement under Sec.  
80.1464 for the renewable fuel producer, foreign renewable fuel 
producer, or biointermediate producer in the same calendar year as a 
QAP audit conducted pursuant to Sec.  80.1472.
* * * * *
    (c) Independent third-party auditors must maintain professional 
liability insurance. Independent third-party auditors must use 
insurance providers that possess a financial strength rating in the top 
four categories from Standard & Poor's or Moody's (i.e., AAA, AA, A, or 
BBB for Standard & Poor's and Aaa, Aa, A, or Baa for Moody's), or a 
comparable rating acceptable to EPA. Independent third-party auditors 
must disclose the level of professional liability insurance they 
possess when entering into contracts to provide RIN verification 
services.
* * * * *
    (e) * * *
    (5) The independent third-party auditor must not identify RINs 
generated for renewable fuel produced using a biointermediate as having 
been verified under a QAP unless the biointermediate used to produce 
the renewable fuel was verified under an approved QAP pursuant to Sec.  
80.1477.
    (f)(1) Except as specified in paragraph (f)(2) of this section, 
auditors may only verify RINs that have been generated after the audit 
required under Sec.  80.1472 has been completed. Auditors may only 
verify biointermediates that were produced after the audit required 
under Sec.  80.1472 has been completed. Auditors must only verify RINs 
generated from renewable fuels produced from biointermediates after the 
audit required under Sec.  80.1472 has been completed for both the 
biointermediate production facility and the renewable fuel production 
facility.
* * * * *
    (ii) Verification of RINs or biointermediates may continue for no 
more than 200 days following an on-site visit or 380 days after an on-
site visit if a previously the EPA-approved remote monitoring system is 
in place at the renewable fuel production facility.
* * * * *
    (g) The independent third-party auditor must permit any 
representative of the EPA to monitor at any time the implementation of 
QAPs and renewable fuel and biointermediate production facility audits.
* * * * *

0
29. Amend Sec.  80.1472 by revising paragraphs (a)(4), (b)(3)(i) 
introductory text, (b)(3)(ii)(B), and (b)(3)(iii) to read as follows:


Sec.  80.1472   Requirements for quality assurance audits.

    (a) * * *
    (4) Each audit shall include a review of documents generated by the 
renewable fuel producer or biointermediate producer.
    (b) * * *
    (3) * * *
    (i) As applicable, the independent third-party auditor shall 
conduct an on-site visit at the renewable fuel production facility, 
foreign ethanol production facility, or biointermediate production 
facility:
* * * * *
    (ii) * * *
    (B) 380 days after the previous on-site visit if a previously 
approved (by EPA) remote monitoring system is in place at the renewable 
fuel production facility, foreign ethanol production facility, or 
biointermediate production facility, as applicable. The 380-day period 
shall start the day after the previous on-site visit ends.
    (iii) An on-site visit shall include verification of all QAP 
elements that require inspection or evaluation of the physical 
attributes of the renewable fuel production facility, foreign ethanol 
production facility, or biointermediate production facility, as 
applicable.
* * * * *


Sec.  80.1473   [Amended]

0
30. Amend Sec.  80.1473(f) by removing the text ``<a href="/cdn-cgi/l/email-protection#f4878184849b8680b4918495998087d9c895d49c869192c9" http: support.com">support.com</a>">support@epamts-support.com</a>'' and adding, in its place, the text 
``<a href="/cdn-cgi/l/email-protection#a1c7d4c4cdd2d1d3cec6d3c0ccd2d4d1d1ced3d5e1c4d1c08fc6ced7"><span class="__cf_email__" data-cfemail="88eefdede4fbf8fae7effae9e5fbfdf8f8e7fafcc8edf8e9a6efe7fe">[email protected]</span></a>''.


Sec.  80.1474   [Amended]

0
31. Amend Sec.  80.1474(b) by removing the text ``<a href="/cdn-cgi/l/email-protection#592a2c2929362b2d193c2938342d2a74653879312b3c3f64" http: support.com">support.com</a>">support@epamts-support.com</a>'' wherever it appears and adding, in its place, the text 
``<a href="/cdn-cgi/l/email-protection#3a5c4f5f56494a48555d485b57494f4a4a55484e7a5f4a5b145d554c"><span class="__cf_email__" data-cfemail="167063737a656664797164777b656366667964625673667738717960">[email protected]</span></a>''.

0
32. Amend Sec.  80.1475 by:
0
a. In paragraph (a)(2), removing the text ``Sec. Sec.  80.125 through 
80.127 and Sec.  80.130'' and adding, in its place, the text ``40 CFR 
1090.1800 through 1090.1850'';
0
b. Revising the first sentence of paragraph (d)(1) and paragraph 
(d)(3); and
0
c. In paragraph (d)(4) introductory text, removing the text ``Sec.  
80.127'' and adding, in its place, the text ``40 CFR 1090.1805''.
    The revisions read as follows:


Sec.  80.1475   What are the additional attest engagement requirements 
for parties that redesignate certified NTDF as MVNRLM diesel fuel?

* * * * *
    (d) * * *
    (1) For each of the volumes listed in paragraphs (c)(1)(iii) 
through (vi) of this section, obtain a separate listing of all tenders 
from the refiner or importer for the reporting period. * * *
* * * * *
    (3) Agree the volume totals on the listing to the tender volume 
total in the

[[Page 39675]]

inventory reconciliation analysis obtained in paragraph (c) of this 
section.
* * * * *

0
33. Add Sec.  80.1476 to read as follows:


Sec.  80.1476   Requirements for biointermediate producers.

    Biointermediate producers must comply with the following 
requirements:
    (a) Registration. No later than 60 days prior to the transfer of 
any biointermediate to be used in the production of a renewable fuel 
for which RINs may be generated, biointermediate producers must 
register with EPA pursuant to the requirements of Sec.  80.1450(b).
    (b) Reporting. Biointermediate producers must comply with the 
reporting requirements in Sec.  80.1451(j).
    (c) Recordkeeping. Biointermediate producers must comply with the 
recordkeeping requirements in Sec.  80.1454(i).
    (d) PTDs. Biointermediate producers must comply with the PTD 
requirements in Sec.  80.1453(f).
    (e) Quality Assurance Plans. Prior to the transfer of any 
biointermediate to be used in the production of a renewable fuel for 
which RINs may be generated, biointermediate producers must have an 
approved quality assurance plan pursuant to Sec.  80.1477(b) and the 
independent third-party auditor must have conducted a site visit of the 
biointermediate production facility under Sec.  80.1472.
    (f) Attest engagements. Biointermediate producers must comply with 
the annual attest engagement requirements in Sec.  80.1464(h).
    (g) Limitations on biointermediate transfers and production. (1) A 
biointermediate producer must transfer all biointermediates produced 
from a single biointermediate facility to a single renewable fuel 
production facility as designated under Sec.  80.1450(b)(1)(ii)(B)(1).
    (2)(i) Except as specified in paragraph (g)(2)(ii) of this section, 
a batch of biointermediate must be segregated from other batches of 
biointermediate (even if it is the same type of biointermediate), other 
feedstocks, foreign ethanol, and renewable fuels from the point that 
the batch of biointermediate is produced to the point where the batch 
of biointermediate is received at the renewable fuel production 
facility designated under Sec.  80.1450(b)(1)(ii)(B)(1).
    (ii)(A) Batches of biointermediate may be commingled between the 
biointermediate production facility and the designated renewable fuel 
production facility as long as each batch is produced at the same 
biointermediate production facility, is the same type of 
biointermediate, and no other feedstocks, biointermediates, foreign 
ethanol, or renewable fuels are comingled.
    (B) A renewable fuel producer may commingle batches of 
biointermediate at an off-site storage tank if all the following 
conditions are met:
    (1) Only batches of the same type of biointermediate are commingled 
and no other feedstocks, biointermediates, foreign ethanol, or 
renewable fuels are comingled in the off-site storage tank.
    (2) The renewable fuel producer owns or is the sole position holder 
in the off-site storage tank.
    (3) Renewable fuel producers that receive biointermediate at a 
renewable fuel production facility may not be a biointermediate 
producer.
    (4) A biointermediate must not be used to make another 
biointermediate.
    (5) A foreign biointermediate producer must not transfer 
biointermediate to a non-RIN-generating foreign producer.
    (h) Batch numbers and volumes. (1) Each batch of biointermediate 
produced at a biointermediate production facility must be assigned a 
number (the ``batch number''), consisting of the EPA-assigned company 
registration number, the EPA-assigned facility registration number, the 
last two digits of the year in which the batch was produced, and a 
unique number for the batch, beginning with the number one for the 
first batch produced each calendar year and each subsequent batch 
during the calendar year being assigned the next sequential number 
(e.g., 4321-54321-95-000001, 4321-54321-95-000002, etc.).
    (2) For biointermediates measured on a volume basis, the volume of 
each batch of biointermediate must be adjusted to a standard 
temperature of 60 [deg]F as specified in Sec.  80.1426(f)(8).
    (i) Designation. Each batch of biointermediate produced at a 
biointermediate production facility must be designated for use in the 
production of a renewable fuel in accordance with the biointermediate 
producer's registration under Sec.  80.1450. The designation for the 
batch of biointermediate must be clearly indicated on PTDs for the 
biointermediate as described in Sec.  80.1453(f)(1)(vi). The same batch 
or a portion of a batch may not be designated as both a biointermediate 
and a renewable fuel.

0
34. Add Sec.  80.1477 to read as follows:


Sec.  80.1477   Requirements for QAPs for biointermediate producers.

    (a) Independent third-party auditors that verify biointermediate 
production must meet the requirements of Sec.  80.1471(a) through (c) 
and (f) through (h), as applicable.
    (b) QAPs approved by EPA to verify biointermediate production must 
meet the requirements in Sec.  80.1469(c) through (f), as applicable.
    (c) Quality assurance audits, when performed, must be conducted in 
accordance with the requirements in Sec.  80.1472(a) and (b)(3).
    (d)(1) If an independent third-party auditor identifies a 
potentially improperly produced biointermediate, the independent third-
party auditor must notify EPA, the biointermediate producer, and the 
renewable fuel producer that may have been transferred the 
biointermediate within five business days of the identification, 
including an initial explanation of why the biointermediate may have 
been improperly produced.
    (2) If RINs were generated from the potentially improperly produced 
biointermediate, the RIN generator must follow the applicable 
identification and treatment of PIRs as specified in Sec.  80.1474.
    (e) For the generation of Q-RINs for renewable fuels that were 
produced from a biointermediate, the biointermediate must be verified 
under an approved QAP as described in paragraph (b) of this section and 
the RIN generating facility must be verified under an approved QAP as 
described in Sec.  80.1469.

0
35. Add Sec.  80.1478 to read as follows:


Sec.  80.1478   Requirements for foreign biointermediate producers and 
importers.

    (a) Foreign biointermediate producer. For purposes of this subpart, 
a foreign biointermediate producer is a person located outside the 
United States, the Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, and the Commonwealth of the Northern Mariana 
Islands (collectively referred to in this section as ``the United 
States'') that has been approved by EPA to produce biointermediate for 
use in the production of renewable fuel by a RIN-generating renewable 
fuel producer.
    (b) Foreign biointermediate producer requirements. Any foreign 
biointermediate producer must meet all requirements that apply to 
biointermediate producers under this subpart as a condition of being 
approved as a foreign biointermediate producer under this subpart.
    (c) Foreign biointermediate producer commitments. Any foreign

[[Page 39676]]

biointermediate producer must commit to the following provisions as a 
condition of being registered as a foreign biointermediate producer 
under this subpart:
    (1) Any EPA inspector or auditor must be given full, complete, and 
immediate access to conduct inspections and audits of the foreign 
biointermediate producer facility.
    (i) Inspections and audits may be either announced in advance by 
EPA, or unannounced.
    (ii) Access will be provided to any location where:
    (A) Biointermediate is produced.
    (B) Documents related to foreign biointermediate producer 
operations are kept.
    (C) Biointermediate is stored or transported between the foreign 
biointermediate producer and the renewable fuel producer, including 
storage tanks, vessels, and pipelines.
    (iii) EPA inspectors and auditors may be EPA employees or 
contractors to EPA.
    (iv) Any documents requested that are related to matters covered by 
inspections and audits must be provided to an EPA inspector or auditor 
on request.
    (v) Inspections and audits may include review and copying of any 
documents related to the following:
    (A) The volume of biointermediate produced or delivered to 
renewable fuel production facilities.
    (B) Transfers of title or custody to the biointermediate.
    (C) Work performed and reports prepared by independent third 
parties and by independent auditors under the requirements of this 
section, including work papers.
    (vi) Inspections and audits by EPA may include interviewing 
employees.
    (vii) Any employee of the foreign biointermediate producer must be 
made available for interview by the EPA inspector or auditor, on 
request, within a reasonable time period.
    (viii) English language translations of any documents must be 
provided to an EPA inspector or auditor, on request, within 10 business 
days.
    (ix) English language interpreters must be provided to accompany 
EPA inspectors and auditors, on request.
    (2) An agent for service of process located in the District of 
Columbia must be named, and service on this agent constitutes service 
on the foreign biointermediate producer or any employee of the foreign 
biointermediate producer for any action by EPA or otherwise by the 
United States related to the requirements of this subpart.
    (3) The forum for any civil or criminal enforcement action related 
to the provisions of this section for violations of the Clean Air Act 
or regulations in this title promulgated thereunder must be governed by 
the Clean Air Act, including the EPA administrative forum where allowed 
under the Clean Air Act.
    (4) United States substantive and procedural laws apply to any 
civil or criminal enforcement action against the foreign 
biointermediate producer or any employee of the foreign biointermediate 
producer related to the provisions of this section.
    (5) Applying to be an approved foreign biointermediate producer 
under this section, or producing or exporting biointermediate under 
such approval, and all other actions to comply with the requirements of 
this subpart relating to such approval constitute actions or activities 
covered by and within the meaning of the provisions of 28 U.S.C. 
1605(a)(2), but solely with respect to actions instituted against the 
foreign biointermediate producer, its agents and employees in any court 
or other tribunal in the United States for conduct that violates the 
requirements applicable to the foreign biointermediate producer under 
this subpart, including conduct that violates the False Statements 
Accountability Act of 1996 (18 U.S.C. 1001) and section 113(c)(2) of 
the Clean Air Act (42 U.S.C. 7413).
    (6) The foreign biointermediate producer, or its agents or 
employees, will not seek to detain or to impose civil or criminal 
remedies against EPA inspectors or auditors for actions performed 
within the scope of EPA employment or contract related to the 
provisions of this section.
    (7) The commitment required by this paragraph (c) must be signed by 
the owner or president of the foreign biointermediate producer company.
    (8) In any case where the biointermediate produced at a foreign 
biointermediate production facility is stored or transported by another 
company between the production facility and the vessel that transports 
the biointermediate to the United States, the foreign biointermediate 
producer must obtain from each such other company a commitment that 
meets the requirements specified in paragraphs (c)(1) through (7) of 
this section, and these commitments must be included in the foreign 
biointermediate producer's application to be an approved foreign 
biointermediate producer under this subpart.
    (d) Sovereign immunity. By submitting an application to be an 
approved foreign biointermediate producer under this subpart, or by 
producing and exporting biointermediate fuel to the United States under 
such approval, the foreign biointermediate producer, and its agents and 
employees, without exception, become subject to the full operation of 
the administrative and judicial enforcement powers and provisions of 
the United States without limitation based on sovereign immunity, with 
respect to actions instituted against the foreign biointermediate 
producer, its agents and employees in any court or other tribunal in 
the United States for conduct that violates the requirements applicable 
to the foreign biointermediate producer under this subpart, including 
conduct that violates the False Statements Accountability Act of 1996 
(18 U.S.C. 1001) and section 113(c)(2) of the Clean Air Act (42 U.S.C. 
7413).
    (e) English language reports. Any document submitted to EPA by a 
foreign biointermediate producer must be in English or must include an 
English language translation.
    (f) Withdrawal or suspension of foreign biointermediate producer 
approval. EPA may withdraw or suspend a foreign biointermediate 
producer's approval where any of the following occur:
    (1) A foreign biointermediate producer fails to meet any 
requirement of this section.
    (2) A foreign government fails to allow EPA inspections or audits 
as provided in paragraph (c)(1) of this section.
    (3) A foreign biointermediate producer asserts a claim of, or a 
right to claim, sovereign immunity in an action to enforce the 
requirements in this subpart.
    (g) Additional requirements for applications, reports, and 
certificates. Any application for approval as a foreign biointermediate 
producer, any report, certification, or other submission required under 
this section shall be:
    (1) Submitted in accordance with procedures specified by the 
Administrator, including use of any forms that may be specified by the 
Administrator.
    (2) Signed by the president or owner of the foreign biointermediate 
producer company, or by that person's immediate designee, and must 
contain the following declarations:
    (i) Certification.

    ``I hereby certify:
    That I have actual authority to sign on behalf of and to bind [NAME 
OF FOREIGN BIOINTERMEDIATE PRODUCER] with regard to all statements 
contained herein;
    That I am aware that the information contained herein is being 
Certified, or

[[Page 39677]]

submitted to the United States Environmental Protection Agency, under 
the requirements of 40 CFR part 80, subpart M, and that the information 
is material for determining compliance under these regulations; and
    That I have read and understand the information being Certified or 
submitted, and this information is true, complete and correct to the 
best of my knowledge and belief after I have taken reasonable and 
appropriate steps to verify the accuracy thereof.''

    (ii) Affirmation.

    ``I affirm that I have read and understand the provisions of 40 CFR 
part 80, subpart M, including 40 CFR 80.1478 apply to [NAME OF FOREIGN 
BIOINTERMEDIATE PRODUCER]. Pursuant to Clean Air Act section 113(c) and 
18 U.S.C. 1001, the penalty for furnishing false, incomplete or 
misleading information in this certification or submission is a fine of 
up to $10,000 U.S., and/or imprisonment for up to five years.''

    (h) Requirements for biointermediate importers. Any biointermediate 
importer must meet all the following requirements:
    (1) For each biointermediate batch, any biointermediate importer 
must have an independent third party do all the following:
    (i) Determine the volume of biointermediate in the truck, railcar, 
vessel, or other shipping container.
    (ii) Determine the name and EPA-assigned registration number of the 
foreign biointermediate producer that produced the biointermediate.
    (iii) Determine the name and country of registration of the truck, 
railcar, vessel, or other shipping container used to transport the 
biointermediate to the United States.
    (iv) Determine the date and time the truck, railcar, vessel, or 
other shipping container arrives at the United States port of entry.
    (2) Any biointermediate importer must submit documentation of the 
information determined under paragraph (h)(1) of this section within 30 
days following the date any truck, railcar, vessel, or other shipping 
container transporting biointermediate arrives at the United States 
port of entry to all the following:
    (i) The foreign biointermediate producer.
    (ii) The renewable fuel producer.
    (3) The biointermediate importer and the independent third party 
must keep records of the audits and reports required under paragraphs 
(h)(1) and (2) of this section for five years from the date of 
creation.

PART 1090--REGULATION OF FUELS, FUEL ADDITIVES, AND REGULATED 
BLENDSTOCKS

0
36. The authority citation for part 1090 continues to read as follows:

    Authority:  42 U.S.C. 7414, 7521, 7522-7525, 7541, 7542, 7543, 
7545, 7547, 7550, and 7601.

Subpart A--General Provisions

0
37. Amend Sec.  1090.15 by:
0
a. In paragraphs (a) and (d), removing the text ``(b) and (c)'' and 
adding, in its place, the text ``(b) through (d)''
0
b. In paragraph (c) introductory text, removing the word ``section'' 
and adding, in its place, the word ``part'';
0
c. Redesignating paragraph (d) as paragraph (e); and
0
d. Adding a new paragraph (d).
    The addition reads as follows:


Sec.  1090.15   Confidential business information.

* * * * *
    (d)(1) The following information contained in any enforcement 
action taken under this part is not entitled to confidential treatment 
under 40 CFR part 2, subpart B:
    (i) The company's name.
    (ii) The facility's name.
    (iii) Any EPA-issued company and facility identification numbers.
    (iv) The time or time period when any violation occurred.
    (v) The quantity of fuel, fuel additive, or regulated blendstock 
affected by the violation.
    (vi) Information relating to the exceedance of the fuel standard 
associated with the violation.
    (vii) Information relating to the generation, transfer, or use of 
credits associated with the violation.
    (viii) Any other information relevant to describing the violation.
    (2) Enforcement actions within the scope of paragraph (d)(1) of 
this section include notices of violation, settlement agreements, 
administrative complaints, civil complaints, criminal information, and 
criminal indictments.
* * * * *
[FR Doc. 2022-12376 Filed 6-30-22; 8:45 am]
BILLING CODE 6560-50-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>