[Federal Register Volume 73, Number 192 (Thursday, October 2, 2008)]
[Rules and Regulations]
[Pages 57248-57259]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23131]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2005-0161; FRL-8723-3]
RIN 2060-AO80


Regulation of Fuels and Fuel Additives: Modifications to 
Renewable Fuel Standard Program Requirements

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is taking direct final action on amendments to the 
Renewable Fuel Standard program requirements. Following publication of 
the final rule promulgating the Renewable Fuel Standard regulations, 
EPA discovered a number of technical errors and areas within the 
regulations that could benefit from clarification or modification. This 
direct final rule amends the regulations to make the appropriate 
corrections, clarifications and modifications.

DATES: This direct final rule is effective on December 1, 2008 without 
further notice, unless EPA receives adverse comment by November 3, 
2008. If EPA receives adverse comment, we will publish a timely 
withdrawal in the Federal Register informing the public that the rule 
will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2005-0161, by one of the following methods:
    <bullet> http://www.regulations.gov. Follow the on-line 
instructions for submitting comments.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#f998d498979dd48bd49d969a929c8db99c8998d79e968f"><span class="__cf_email__" data-cfemail="91f0bcf0fff5bce3bcf5fef2faf4e5d1f4e1f0bff6fee7">[email protected]</span></a>, Attention Air and 
Radiation Docket ID No. EPA-HQ-OAR-2005-0161.
    <bullet> Mail: Air and Radiation Docket, Docket No. EPA-HQ-OAR-
2005-0161, Environmental Protection Agency, Mailcode: 6406J, 1200 
Pennsylvania Ave., NW., Washington, DC 20460. Please include a total of 
2 copies.
    <bullet> Hand Delivery: EPA Docket Center, EPA/DC, EPA West, Room 
3334, 1301 Constitution Ave., NW., Washington, DC 20460, Attention Air 
and Radiation Docket, ID No. EPA-HQ-OAR-2005-0161. Such deliveries are 
only accepted during the Docket's normal hours of operation, and 
special arrangements should be made for deliveries of boxed 
information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2005-0161. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through www.regulations.gov or e-mail. 
The www.regulations.gov Web site is an ``anonymous access'' system, 
which means EPA will not know your identity or contact information 
unless you provide it in the body of your comment. If you send an e-
mail comment directly to EPA without going through www.regulations.gov, 
your e-mail address will be automatically captured and included as part 
of the comment that is placed in the public docket and made available 
on the Internet. If you submit an electronic comment, EPA recommends 
that you include your name and other contact information in the body of 
your comment and with any disk or CD-ROM you submit. If EPA cannot read 
your comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
information about EPA's public docket visit the EPA Docket Center 
homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly

[[Page 57249]]

available, e.g., CBI or other information whose disclosure is 
restricted by statute. Certain other material, such as copyrighted 
material, will be publicly available only in hard copy. Publicly 
available docket materials are available either electronically in 
www.regulations.gov or in hard copy at the Air and Radiation Docket, 
EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, 
DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday 
through Friday, excluding legal holidays. The telephone number for the 
Public Reading Room is (202) 566-1744, and the telephone number for the 
Air and Radiation Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Megan Brachtl, Compliance and 
Innovative Strategies Division, Office of Transportation and Air 
Quality, Mail Code: 6406J, Environmental Protection Agency, 1200 
Pennsylvania Avenue, NW., Washington, DC 20460; telephone number: (202) 
343-9473; fax number: (202) 343-2802; e-mail address: 
<a href="/cdn-cgi/l/email-protection#a5c7d7c4c6cdd1c98bc8c0c2c4cbe5c0d5c48bc2cad3"><span class="__cf_email__" data-cfemail="9efcecfffdf6eaf2b0f3fbf9fff0defbeeffb0f9f1e8">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Why is EPA Using a Direct Final Rule?

    EPA is publishing this rule without a prior proposed rule because 
we view this as a noncontroversial action and anticipate no adverse 
comment. However, in the ``Proposed Rules'' section of today's Federal 
Register, we are publishing a separate document that will serve as the 
proposal to adopt the provisions in this direct final rule if adverse 
comments are filed. We will not institute a second comment period on 
this action. Any parties interested in commenting must do so at this 
time. For further information about commenting on this rule, see the 
ADDRESSES section of this document.
    This rule will be effective on December 1, 2008 without further 
notice except to the extent we receive adverse comment by November 3, 
2008. If EPA receives adverse comment, we will publish a timely 
withdrawal in the Federal Register informing the public that the 
portion of the rule on which adverse comment was received will not take 
effect. Any distinct amendment, paragraph, or section of today's rule 
for which we do not receive adverse comment will become effective on 
the date set out above, notwithstanding any adverse comment on any 
other distinct amendment, paragraph, or section of this rule. We will 
address all public comments in any subsequent final rule based on the 
proposed rule.

II. Does This Action Apply to Me?

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

 
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                                               NAICS codes                    Examples of potentially regulated
                  Category                         \a\        SIC codes \b\                parties
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Industry...................................          324110            2911  Petroleum refiners, importers.
Industry...................................          325193            2869  Ethyl alcohol manufacturers.
Industry...................................          325199            2869  Other basic organic chemical
                                                                              manufacturers.
Industry...................................          424690            5169  Chemical and allied products
                                                                              merchant wholesalers.
Industry...................................          424710            5171  Petroleum bulk stations and
                                                                              terminals.
Industry...................................          424720            5172  Petroleum and petroleum products
                                                                              merchant wholesalers.
Industry...................................          454319            5989  Other fuel dealers.
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\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) system code.

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists the types of entities that EPA is now aware 
could be potentially regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
your entity is regulated by this action, you should carefully examine 
the applicability criteria of Part 80, subparts D, E and F of title 40 
of the Code of Federal Regulations. If you have any question regarding 
applicability of this action to a particular entity, consult the person 
in the preceding FOR FURTHER INFORMATION CONTACT section above.

III. What Should I Consider as I Prepare My Comments for EPA?

    A. Submitting CBI. Do not submit this information to EPA through 
www.regulations.gov or e-mail. Clearly mark the part or all of the 
information that you claim to be CBI. For CBI information in a disk or 
CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as 
CBI and then identify electronically within the disk or CD-ROM the 
specific information that is claimed as CBI. In addition to one 
complete version of the comment that includes information claimed as 
CBI, a copy of the comment that does not contain the information 
claimed as CBI must be submitted for inclusion in the public docket. 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR part 2.
    B. Tips for Preparing Your Comments. When submitting comments, 
remember to:
    <bullet> Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
    <bullet> Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
    <bullet> Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
    <bullet> Describe any assumptions and provide any technical 
information and/or data that you used.
    <bullet> If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
    <bullet> Provide specific examples to illustrate your concerns, and 
suggest alternatives.
    <bullet> Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.
    <bullet> Make sure to submit your comments by the comment period 
deadline identified.
    C. Docket Copying Costs. You may be charged a reasonable fee for 
photocopying docket materials, as provided in 40 CFR part 2.

IV. Renewable Fuel Standard Program Amendments

    Following publication of the final Renewable Fuel Standard (RFS) 
program regulations (72 FR 23900, May 1, 2007), EPA discovered a number 
of areas within the RFS regulations at 40

[[Page 57250]]

CFR Part 80, Subpart K that were in error, were unclear, or otherwise 
could benefit from modification. We have attempted to clarify some 
ambiguities in our Question and Answer document for the RFS program.\1\ 
However, in some cases we believe it is appropriate to modify the 
regulations. As a result, we are making the following amendments to the 
RFS regulations in Subpart K.
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    \1\ See ``Questions and Answers on the Renewable Fuel Standard 
Program'' at http://www.epa.gov/otaq/renewablefuels/index.htm#comp.
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A. Summary of Amendments

    Below is a table listing the provisions that we are amending. Many 
of the amendments address grammatical or typographical errors, or 
provide minor clarifications. A few amendments are being made in order 
to assist regulated entities in complying with the RFS program 
requirements and to lessen regulatory requirements where possible 
without compromising the goals of the RFS program. We have provided 
additional explanation for several of these amendments in sections IV.B 
through IV.H below.

                         RFS Program Amendments
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           Section                            Description
------------------------------------------------------------------------
80.1101(d)(2)................  Corrected typographical error.
80.1101(d)(3)................  Clarified that no more than 5 volume
                                percent denaturant may be included in
                                the volume of ethanol produced, imported
                                or exported for purposes of determining
                                compliance with the requirements under
                                this subpart. See Section IV.B.
80.1107(c)...................  Clarified that the gasoline products to
                                be included in an obligated party's
                                Renewable Volume Obligation (RVO)
                                calculation should not be double-
                                counted.
80.1126(a)(1)................   Clarified that this provision pertains
                                to Renewable Identification Number (RIN)
                                generation, not RIN transfers.
80.1126(b)...................   Clarified that renewable fuel producers
                                that are below the 10,000 gallon
                                threshold are exempt from the attest
                                engagement requirements in 80.1164 as
                                well as other reporting and
                                recordkeeping requirements.
80.1126(d)(1)................   Clarified that the RIN that must be
                                generated for each batch of renewable
                                fuel that is produced or imported is a
                                ``batch-RIN.''
80.1127(b)(2)................   Corrected typographical error in deficit
                                carryover equation.
80.1128(a)(5)(ii) and (iii);   Revised this paragraph to allow parties
 removed (a)(5)(iv) and (v).    to use an equivalence value of 2.5 RINs
                                per gallon for any renewable fuel for
                                purposes of calculating the end-of-
                                quarter check. See Section IV.C.
80.1128(a)(6); removed (a)(7)  Deleted. Based on experience with the
                                program to date, we believe this
                                requirement is not necessary to fulfill
                                the goals of the program. See Section
                                IV.D. (Sec.   80.1128(a) has also been
                                renumbered to adjust for this change.)
80.1129(b)(1) and (b)(8).....  Revised to clarify that a party with a
                                small refinery or small refiner
                                exemption may only separate RINs that
                                have been assigned to a volume of
                                renewable fuel that the party blends
                                into motor vehicle fuel.
80.1129(b)(2)................   Revised to clarify that up to 2.5 gallon-
                                RINs may be separated when a volume of
                                renewable fuel is blended into gasoline.
80.1129(b)(4)................   Revised to allow any party to separate
                                the RINs from renewable fuel that it
                                produces or markets for use in motor
                                vehicles in neat form, or uses in motor
                                vehicles in neat form. An oversight in
                                the current regulations only allows this
                                for renewable fuel producers and
                                importers.
80.1129(b)(6)................   Revised to provide that this provision
                                applies only to neat fuel for which an
                                obligated party generates RINs. See
                                Section IV.E.
80.1129(d)...................   Revised to delete the requirement that a
                                separated RIN may not be transferred on
                                a product transfer document that is used
                                to transfer a volume of renewable fuel,
                                since it will be clear from other
                                information required on the product
                                transfer document whether or not any
                                assigned RINs have also been transferred
                                with the fuel.
80.1131(a)(8); removed (b)(4)  Moved the text in paragraph (b)(4) to a
                                new paragraph (a)(8) in order to clarify
                                that a RIN that is transferred to two or
                                more parties is considered an invalid
                                RIN.
80.1132(a), (b) and (c)......  Revised to clarify that the requirements
                                in Sec.   80.1132 apply to fuel that has
                                been disposed of as well as fuel that
                                has been spilled. See Section IV.F.
80.1141(a)(1), 80.1142(a)(1).  Amended to clarify that a refinery with
                                an approved small refinery exemption or
                                a refiner with a small refiner exemption
                                is exempt from requirements that apply
                                to obligated parties during the period
                                of time that the small refinery or small
                                refiner exemption is in effect.
80.1141(a)(1)................   Corrected calendar year reference.
80.1141(a)(4), 80.1142(a)(4).  Revised to clarify that the small
                                refinery and small refiner exemptions
                                only apply to refineries or refiners
                                that process crude oil, or feedstocks
                                derived from crude oil, through refinery
                                processing units.
80.1141(b)(2)(ii)............   Revised in order to clarify that small
                                refinery status can be transferred with
                                the sale of a refinery. Section
                                80.1141(b)(2)(ii) currently requires the
                                owner of a small refinery to submit a
                                letter stating that the company owned
                                the refinery as of the applicable date
                                for eligibility for small refinery
                                status. This provision has been revised
                                to require the letter only to state that
                                the refinery was small as of the
                                applicable date. Thus, any refinery that
                                qualifies for small refinery status
                                retains its status even if the refinery
                                is sold to another company.
80.1142(e)...................   Revised to clarify that a refiner who is
                                disqualified as a small refiner must
                                notify EPA in writing no later than 20
                                days following the disqualifying event.
80.1151(a)(3)(i), (b)(4)(i)    Deleted requirement to retain records of
 and (d)(3)(i).                 ``expired RINs,'' since it is apparent
                                when a RIN has expired from the date of
                                the RIN and information regarding
                                expired RINs is not required to be
                                reported to EPA. See Section IV.G.
80.1152(c)(1)(iii) and (v),    Deleted requirement to report ``expired
 (c)(2).                        RINs,'' since it will be apparent when a
                                RIN has expired from other information
                                provided in the reports. Paragraph
                                (c)(2) has also been renumbered. See
                                Section IV.G.
                               Deleted provisions relating to the
                                submission of transaction and quarterly
                                gallon-RIN reports on a facility-by-
                                facility basis, since RIN trading
                                activities are conducted on a company
                                basis.
80.1153(a)(5)................   Revised to clarify the language required
                                to be included on product transfer
                                documents for transfers of fuel with no
                                assigned RINs.
80.1154(a)(4) and (b)........  Revised to clarify that producers who
                                produce less than 10,000 gallons of
                                renewable fuel per year are exempt from
                                the attest engagement requirements as
                                well as the other recordkeeping and
                                reporting requirements.
80.1160(a), (b)(1), and (f)..  Revised to clarify specific acts that are
                                prohibited under the RFS program.

[[Page 57251]]

 
80.1164......................  Revised to clarify the attest engagement
                                requirements, and, where possible, to
                                modify the requirements to make them
                                less burdensome. See Section IV.H.
80.1165, 80.1166, 80.1167....  Corrected typographical errors.
------------------------------------------------------------------------

B. Amount of Denaturant in Ethanol

    Section 80.1101(d)(3) specifies that ethanol must contain a 
denaturant to be covered by the definition of ``renewable fuel'' under 
the RFS rule. For purposes of compliance with the RFS, a volume of 
ethanol includes the volume of denaturant contained in the ethanol. 
Under Sec.  80.1107(d), renewable fuel, including denatured ethanol, is 
excluded from the volume of gasoline produced or imported for purposes 
of calculating an obligated party's RVO. Under Sec.  80.1130, any 
denatured ethanol that is exported is included in the volume of 
renewable fuel exported for purposes of calculating the exporter's RVO. 
However, the regulations do not specify a maximum limit on the amount 
of denaturant that may be included in the volume of ethanol produced, 
imported or exported for purposes of these compliance calculations and 
other requirements under the RFS rule.
    In promulgating the RFS regulations, we assumed that the amount of 
denaturant included in a volume of ethanol normally would not exceed 
the industry maximum specification under ASTM D-4806, which is 5 
percent. Since the rule was published, it has come to our attention 
that larger amounts of gasoline are sometimes used in ethanol as a 
denaturant. We believe it is appropriate to limit the amount of 
gasoline in ethanol that may be counted as a denaturant to an amount 
that reflects the ASTM specification. As indicated above, under the 
current regulations, any volume of gasoline contained in ethanol as a 
denaturant is excluded from an obligated party's volume of gasoline 
produced or imported for purposes of calculating the party's RVO. As a 
result, an obligated party is not prohibited from adding large amounts 
of gasoline to imported ethanol to avoid including the gasoline in its 
RVO calculation, and, at the same time, increase the volume of 
renewable fuel for which RINs could be generated. Therefore, we are 
amending the RFS regulations to specify a limit of 5 volume percent 
denaturant that may be included in a volume of ethanol for purposes of 
determining compliance with requirements under the RFS rule.

C. Equivalence Values for End-of-Quarter Check

    Section 80.1128(a)(5) provides that any party who owns assigned 
RINs must demonstrate that the sum of all assigned gallon-RINs that the 
party owns at the end of a quarter does not exceed the sum of all 
volumes of renewable fuel the party owns at the end of the quarter 
multiplied by their respective equivalence values. Section 
80.1128(a)(4) allows a party to transfer to another party up to 2.5 
assigned RINs per gallon of any renewable fuel. Therefore, in some 
cases, a party could receive fuel with more assigned RINs than would be 
calculated for that volume of fuel using its equivalence value. As a 
result, the party could be out of compliance with the end-of-quarter 
check requirement in Sec.  80.1128(a)(5), unless the party had enough 
fuel to sell with the excess RINs by the end of the quarter. For 
example, a marketer that receives a gallon of biodiesel with 2.5 
assigned gallon-RINs must calculate compliance with Sec.  80.1128(a)(5) 
based on the equivalence value of the biodiesel, which is 1.5. If this 
were the marketer's only transaction, the marketer would be out of 
compliance at the end of the quarter since he would have an excess of 
1.0 assigned gallon-RINs. To remedy this situation, we are amending 
Sec.  80.1128(a)(5) to allow an equivalence value of 2.5 to be used for 
any volume of renewable fuel for purposes of calculating compliance 
with the end-of-quarter check requirement in Sec.  80.1128(a)(5).

D. RIN Transfer Requirements for Producers and Importers

    The RFS program allows any party that receives assigned RINs with 
renewable fuel to thereafter transfer anywhere from zero to 2.5 gallon-
RINs with each gallon of renewable fuel. This provision provides the 
flexibility to transfer more assigned RINs with some volumes and fewer 
assigned RINs with other volumes depending on the business 
circumstances of the transaction and the number of RINs that the seller 
has available.
    However, this level of flexibility could contribute to short-term 
hoarding on the part of producers and importers of renewable fuel. As a 
result, we implemented a provision at Sec.  80.1128(a)(6) that requires 
producers and importers to transfer assigned gallon-RINs with gallons 
such that the ratio of assigned gallon-RINs to gallons is equal to the 
equivalence value for the renewable fuel. In effect, this requires 
renewable fuel producers and importers to transfer every single batch 
of renewable fuel with all assigned RINs generated for that batch. We 
have interpreted this provision as applying only to producers and 
importers who only sell renewable fuel that they produce or import 
themselves. It does not apply to producers or importers that are also 
marketers of renewable fuel produced or imported by another party.
    Since the start of the RFS program, there have been numerous 
circumstances in which parties who purchase renewable fuel from a 
producer or importer wanted to avoid the registration, recordkeeping 
and reporting requirements of the program. To do this, they had to 
avoid taking ownership of RINs. In some cases the producer or importer 
has accommodated such parties by taking ownership of renewable fuel 
from another party, thereby becoming a marketer who is not subject to 
Sec.  80.1128(a)(6). However, this has not always been possible, and in 
such cases the purchaser has been forced to seek out alternative 
sources of renewable fuel. This latter outcome is inconsistent with one 
of our goals for the RFS program--structuring the program so it would 
have only a minimal effect on common business practices.
    After further consideration, we do not believe that producers and 
importers of renewable fuel should be required to transfer all RINs 
generated with every batch of renewable fuel that is produced. Instead, 
we believe that it should be sufficient that they comply with the end-
of-quarter check in Sec.  80.1128(a)(5) and the restriction in that 
section on the number of gallon-RINs that can be transferred with each 
gallon. This change recognizes that most producers and importers can 
already avoid the limitations of Sec.  80.1128(a)(6) by buying a small 
quantity of renewable fuel from another party and thereby becoming a 
marketer. The change would also have minimal impact on the transfer of 
RINs with volume, as

[[Page 57252]]

producers and importers would be limited in the number of RINs they 
could hold onto given the end-of-quarter check. As a result, we are 
amending the regulations to delete the provisions contained in Sec.  
80.1128(a)(6).

E. RINs That an Obligated Party Generates

    Section 80.1129(b)(1) provides that an obligated party must 
separate any RINs that have been assigned to a volume of renewable fuel 
that the obligated party owns. An exception to this requirement is 
provided in Sec.  80.1129(b)(6) for obligated parties who also generate 
RINs. Under this provision, an obligated party who generates RINs may 
separate such RINs from volumes of renewable fuel only up to the level 
of gallon-RINs of the party's RVO. The limitation in Sec.  
80.1129(b)(6) was included in the regulations to prevent a renewable 
fuel producer from importing a small amount of gasoline, which would 
qualify the producer as an obligated party, in order to separate the 
RINs from all of the renewable fuel that the party produced.
    It has come to our attention that the limitation in Sec.  
80.1129(b)(6) may be problematic in situations where a party imports 
gasoline that contains renewable fuel. Under Sec.  80.1126(d), RINs 
must be generated for any renewable fuel that is imported, including 
any renewable fuel contained in imported gasoline. For example, if a 
party imports 100 gallons of E10, the party would be required to 
generate RINs for the volume of ethanol in the E10, which would be 10 
gallon-RINs. The party also would calculate its RVO based on the 
applicable RFS standard, which for 2008 is 7.76%. The standard as 
applied to the gasoline part of the volume of imported E10 in the 
example would result in an RVO of 6.98 gallon-RINs (7.76% x 90 
gallons). Since the party would be able to separate RINs only up to the 
party's RVO, or 6.98 gallon-RINs, the party would have 3.02 assigned 
gallon-RINs which could not be separated. Under Sec.  80.1128(a)(5), 
each party that owns assigned RINs must demonstrate that the party does 
not own more assigned gallon-RINs at the end of each quarter than the 
amount of renewable fuel in the party's inventory, multiplied by its 
equivalence value. In the example above, the party would own 3.02 
assigned gallon-RINs at the end of the quarter, but would not have any 
renewable fuel in its inventory. As a result, the party would not be in 
compliance with the requirement in Sec.  80.1128(a)(5).
    To address this situation, this rule modifies the regulations to 
apply the limitation in Sec.  80.1129(b)(6) only to neat renewable fuel 
for which the party generates RINs and not to renewable fuel already 
blended in gasoline. Thus, in the example above, the party would 
generate 10 gallon-RINs for the ethanol contained in the E10 and the 
party's RVO would be 6.98 gallon-RINs, but the party would be able to 
separate all of the 10 gallon-RINs from the fuel. The party then would 
have no assigned RINs at the end of the quarter and would not be in 
violation of the requirement in Sec.  80.1128(a)(5). If the party in 
our example imported 100 gallons of non-ethanol gasoline and 10 gallons 
of neat renewable fuel, the party would generate 10 gallon-RINs, but 
could only separate RINs up to the party's RVO, which be 7.76 gallon-
RINs (7.76% x 100 gallons). As a result, the party would have 2.24 
assigned gallon-RINs left, but would also have 10 gallons of renewable 
fuel in its inventory, and, therefore, the party would be in compliance 
with the requirement in Sec.  80.1128(a)(5).

F. Renewable Fuel That Has Been Disposed Of

    Under Sec.  80.1132, in the event of a spillage of renewable fuel 
that is required by a Federal, State or local authority to be reported, 
the owner of the renewable fuel must retire an appropriate number of 
gallon-RINs. Since the RFS rule was promulgated, it has come to our 
attention that disposal of renewable fuel may also be required to be 
reported to a government authority. We believe it is appropriate to 
treat such disposals of renewable fuel in the same manner as spillages 
of renewable fuel, since in both situations the fuel will not 
ultimately be used in motor vehicle fuel. As a result, Sec.  80.1132 
has been amended to apply to reportable disposals of renewable fuel as 
well as reportable spillages of renewable fuel.

G. Elimination Of Expired RIN Category

    Under Sec.  80.1127(a)(3), RINs may only be used to demonstrate 
compliance with the RVO for the calendar year in which they were 
generated or the following year. Therefore, after two years, RINs have 
no value and are deemed to have expired. The regulations currently 
require information regarding expired RINs to be retained and included 
in the reports submitted to EPA. However, since EPA will know from the 
information contained in the RIN when the RIN was generated, EPA will 
also know when the RIN has expired. Therefore, we have determined that 
the requirements to retain records of expired RINs and to include 
information regarding expired RINs in the reports submitted to EPA are 
unnecessary, and, as a result, we are amending the regulations to 
eliminate the requirements to retain records and report information 
regarding expired RINs.

H. Attest Engagements

    This rule makes several revisions to the attest engagement 
provisions in Sec.  80.1164 in order to correct minor technical errors, 
clarify the procedures required to be fulfilled by the attest auditor, 
and, where possible, revise the procedures to make them less burdensome 
without compromising the goals of the program. For audits of the 
obligated party compliance demonstration reports, the rule is revised 
to require the attest auditor to calculate the total number of RINs 
used for compliance by year of generation and reconcile that total with 
the information reported to EPA rather than calculating and reporting 
as a finding all RINs used for compliance. For audits of the RIN 
transaction and RIN activity reports, the rule is revised to clarify 
the type of documentation that is required to be provided to the attest 
auditor for purposes of verifying the information contained in the 
reports. The rule is also revised to require the attest auditor to 
review product transfer documents (PTDs) for a representative sample of 
RINs used for compliance and for a representative sample of renewable 
fuel batches that any party sells to another party. Under the current 
regulations, the auditor is required to review PTDs for each batch of 
renewable fuel produced or imported by a renewable fuel producer or 
importer, which we believe is unnecessarily burdensome, and does not 
require review of PTDs generated by other parties. In addition, the 
rule is revised to provide that the documentation required for the 
attest audit of the RIN activity reports must include, for owners of 
assigned RINs, the volume of renewable fuel owned at the end of the 
quarter in order to verify the accuracy of information relating to 
compliance with the end-of-quarter inventory check in Sec.  
80.1128(a)(5). The rule adds a requirement that a company 
representative must provide the attest auditor with a written 
representation that the copies of the EPA reports provided to the 
auditor are complete and accurate copies of the reports. This is a 
requirement for attest procedures under other fuels programs and 
omission of this requirement in the RFS rule was an oversight. The rule 
also includes a provision which requires the attest auditor to identify 
the commercial computer program used by the regulated party to track 
the data required for

[[Page 57253]]

purposes of compliance with the RFS requirements.

V. Relationship to the Energy Independence and Security Act of 2007

    The Energy Independence and Security Act of 2007 (EISA) amended 
Clean Air Act section 211(o) in many respects, including requiring a 
substantially greater volume of renewable fuel use in the future. EPA 
is currently developing implementing regulations for this new 
legislation. EISA also included language addressing the transition 
period between its enactment and the time when new regulations are 
promulgated. EISA Section 210(a)(2) provides that ``[u]ntil January 1, 
2009, the Administrator of the Environmental Protection Agency shall 
implement section 211(o) of the Clean Air Act and the rules promulgated 
under that section in accordance with the provisions of that section as 
in effect before the enactment of this Act and in accordance with the 
rules promulgated before the enactment of this Act,'' with certain 
exceptions. EPA believes that the intent of this transition provision 
of EISA was to maintain the fundamental program components and 
requirements of the existing regulations, but that it does not limit 
EPA's ability to make minor programmatic changes that ease the 
administration and implementation of the current program. Accordingly, 
EPA views the changes made today to the 211(o) regulations to be ``in 
accordance'' with the regulations in effect when EISA was enacted, and 
will implement the amended regulations upon their effective date.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866, (58 FR 51735 (October 4, 1993)) the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    It has been determined that this action is not a ``significant 
regulatory action'' under the terms of Executive Order 12866 and is 
therefore not subject to OMB review. This direct final rule simply 
makes minor technical changes to the RFS regulations and modifies the 
requirements to make them less burdensome for regulated parties where 
possible.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
This action makes minor technical corrections to the regulations and 
modifies certain requirements to lessen the burden on related parties 
while maintaining the overall goals of the program. None of the changes 
in the rule require any additional information collection burdens. The 
Office of Management and Budget (OMB) has previously approved the 
information collection requirements contained in the existing 
regulations 40 CFR part 80, subpart K, under the provisions of the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB 
control number 2060-0600. The OMB control numbers for EPA's regulations 
in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) A small business as defined 
by the Small Business Administration's (SBA) regulations at 13 CFR 
121.201; (2) a small governmental jurisdiction that is a government of 
a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field.
    After considering the economic impacts of today's direct final rule 
on small entities, I certify that this action will not have a 
significant economic impact on a substantial number of small entities. 
In determining whether a rule has a significant economic impact on a 
substantial number of small entities, the impact of concern is any 
significant adverse economic impact on small entities, since the 
primary purpose of the regulatory flexibility analyses is to identify 
and address regulatory alternatives ``which minimize any significant 
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604. 
Thus, an agency may certify that a rule will not have a significant 
economic impact on a substantial number of small entities if the rule 
relieves regulatory burden, or otherwise has a positive economic effect 
on all of the small entities subject to the rule.
    This action makes minor technical corrections to the regulations 
and modifies certain requirements to lessen the burden on regulated 
parties while maintaining the overall goals of the program. We have 
therefore concluded that today's direct final rule will relieve 
regulatory burden for affected small entities.

D. Unfunded Mandates Reform Act

    This rule does not contain a Federal mandate that may result in 
expenditures of $100 million or more for State, local, and tribal 
governments, in the aggregate, or the private sector in any one year. 
This action makes minor technical corrections to the RFS regulations 
and modifies certain provisions to lessen the requirements for 
regulated parties. As a result, this rule will have the overall effect 
of reducing the burden of the RFS regulations on regulated parties. 
Thus, this rule is not subject to the requirements of sections 202 or 
205 of UMRA.
    This rule is also not subject to the requirements of section 203 of 
UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments. It only applies to 
gasoline and renewable fuel producers, importers, distributors and 
marketers and makes minor corrections and modifications to the RFS 
regulations.

E. Executive Order 13132 (Federalism)

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have

[[Page 57254]]

federalism implications'' is defined in the Executive Order to include 
regulations that 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.''
    This direct final rule does not have federalism implications. It 
will not have substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government, as specified in Executive Order 13132. This action makes 
minor technical corrections and modifications to existing regulations 
in order to lessen the burden on related parties. Thus, Executive Order 
13132 does not apply to this rule.

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

    This direct final rule does not have tribal implications, as 
specified in Executive Order 13175 (65 FR 67249, November 9, 2000). It 
applies to gasoline and renewable fuel producers, importers, 
distributors and marketers. This action makes minor corrections and 
modifications to the RFS regulations, and does not impose any 
enforceable duties on communities of Indian tribal governments. 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 (62 FR 19885, April 23, 1997) 
as applying only to those regulatory actions that concern health or 
safety risks, such that the analysis required under section 5-501 of 
the Executive Order has the potential to influence the regulation. This 
action is not subject to Executive Order 13045 because it does not 
establish an environmental standard intended to mitigate health or 
safety risks.

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

    This rule is not subject to Executive Order 13211 (66 FR 18355 (May 
22, 2001)), because it is not a significant regulatory action under 
Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, section 12(d) (15 U.S.C. 
272 note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. NTTAA directs EPA to 
provide Congress, through OMB, explanations when the Agency decides not 
to use available and applicable voluntary consensus standards.
    This action does not involve technical standards. Therefore, EPA 
did not consider the use of any voluntary consensus standards.

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

    Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this direct final rule will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations because it does not 
affect the level of protection provided to human health or the 
environment. These technical amendments do not relax the control 
measures on sources regulated by the RFS regulations and therefore will 
not cause emissions increases from these sources.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2).

L. Clean Air Act Section 307(d)

    This rule is subject to Section 307(d) of the CAA. Section 
307(d)(7)(B) provides that ``[o]nly an objection to a rule or procedure 
which was raised with reasonable specificity during the period for 
public comment (including any public hearing) may be raised during 
judicial review.'' This section also provides a mechanism for the EPA 
to convene a proceeding for reconsideration, ``[i]f the person raising 
an objection can demonstrate to the EPA that it was impracticable to 
raise such objection within [the period for public comment] or if the 
grounds for such objection arose after the period for public comment 
(but within the time specified for judicial review) and if such 
objection is of central relevance to the outcome of the rule.'' Any 
person seeking to make such a demonstration to the EPA should submit a 
Petition for Reconsideration to the Office of the Administrator, U.S. 
EPA, Room 3000, Ariel Rios Building, 1200 Pennsylvania Ave., NW., 
Washington, DC 20460, with a copy to both the person(s) listed in the 
preceding FOR FURTHER INFORMATION CONTACT section, and the Director of 
the Air and Radiation Law Office, Office of General Counsel (Mail Code 
2344A), U.S. EPA, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

List of Subjects in 40 CFR Part 80

    Environmental protection, Fuel additives, Gasoline, Imports, Motor 
vehicle pollution, Reporting and recordkeeping requirements.

    Dated: September 25, 2008.
Stephen L. Johnson,
Administrator.

0
40 CFR part 80 is amended as follows:

PART 80--REGULATION OF FUEL AND FUEL ADDITIVES

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

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


0
2. Section 80.1101 is amended by revising paragraphs (d)(2) and (d)(3) 
to read as follows:

[[Page 57255]]

Sec.  80.1101  Definitions.

* * * * *
    (d) * * *
    (2) The term ``Renewable fuel'' includes cellulosic biomass 
ethanol, waste derived ethanol, biodiesel (mono-alkyl ester), non-ester 
renewable diesel, and blending components derived from renewable fuel.
    (3) Ethanol covered by this definition shall be denatured as 
required and defined in 27 CFR parts 20 and 21. Any volume of 
denaturant in ethanol in excess of 5 volume percent shall not be 
included in the volume of ethanol for purposes of determining 
compliance with the requirements under this subpart.
* * * * *
0
3. Section 80.1107 is amended by revising paragraph (c) introductory 
text to read as follows:


Sec.  80.1107  How is the Renewable Volume Obligation calculated?

* * * * *
    (c) All of the following products that are produced or imported 
during a compliance period, collectively called ``gasoline'' for 
purposes of this section (unless otherwise specified), are to be 
included (but not double-counted) in the volume used to calculate a 
party's renewable volume obligation under paragraph (a) of this 
section, except as provided in paragraph (d) of this section:
* * * * *
0
4. Section 80.1126 is amended by revising paragraphs (a)(1), (b) and 
(d)(1) to read as follows:


Sec.  80.1126  How are RINs generated and assigned to batches of 
renewable fuel by renewable fuel producers and importers?

    (a) * * *
    (1) Except as provided in paragraph (b) of this section, a batch 
RIN must be generated by a renewable fuel producer or importer for 
every batch of renewable fuel produced by a facility located in the 
contiguous 48 states of the United States, or imported into the 
contiguous 48 states.
* * * * *
    (b) Volume threshold. Renewable fuel producers located within the 
United States that produce less than 10,000 gallons of renewable fuel 
each year, and importers that import less than 10,000 gallons of 
renewable fuel each year, are not required to generate and assign RINs 
to batches of renewable fuel. Such producers and importers are also 
exempt from the registration, reporting, and recordkeeping requirements 
of Sec. Sec.  80.1150-80.1152, and the attest engagement requirements 
of Sec.  80.1164. However, for such producers and importers that 
voluntarily generate and assign RINs, all the requirements of this 
subpart apply.
* * * * *
    (d) * * *
    (1) Except as provided in paragraph (b) of this section, the 
producer or importer of a batch of renewable fuel must generate a 
batch-RIN for that batch, including any renewable fuel contained in 
imported gasoline.
* * * * *
0
5. Section 80.1127 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  80.1127  How are RINs used to demonstrate compliance?

* * * * *
    (b) * * *
    (2) A deficit is calculated according to the following formula:

D<INF>i</INF> = RVO<INF>i</INF> = [([Sigma]RINNUM)<INF>i</INF> + 
([Sigma]RINNUM)<INF>i-1</INF>]

Where:

D<INF>i</INF> = The deficit, in gallons, generated in calendar year 
i that must be carried over to year i+1 if allowed to do so pursuant 
to paragraph (b)(1)(i) of this section.
RVO<INF>i</INF> = The Renewable Volume Obligation for the obligated 
party or renewable fuel exporter for calendar year i, in gallons.
([Sigma]RINNUM)<INF>i</INF> = Sum of all acquired gallon-RINs that 
were generated in year i and are being applied towards the 
RVO<INF>i</INF>, in gallons.
([Sigma]RINNUM)<INF>i-1</INF> = Sum of all acquired gallon-RINs that 
were generated in year i-1 and are being applied towards the 
RVO<INF>i</INF>, in gallons.

0
6. Section 80.1128 is amended as follows:
0
a. By revising paragraphs (a)(5)(ii) and (a)(5)(iii).
0
b. By removing paragraphs (a)(5)(iv) and (a)(5)(v).
0
c. By revising paragraph (a)(6).
0
d. By removing paragraph (a)(7).


Sec.  80.1128  General requirements for RIN distribution.

    (a) * * *
    (5) * * *
    (ii) The equivalence value EVi for use in the equation in paragraph 
(a)(5)(i) of this section for any volume of renewable fuel shall be 
2.5.
    (iii) The applicable dates are March 31, June 30, September 30, and 
December 31. For 2007 only, the applicable dates are September 30 and 
December 31.
    (6) Any transfer of ownership of assigned RINs must be documented 
on product transfer documents generated pursuant to Sec.  80.1153.
    (i) The RIN must be recorded on the product transfer document used 
to transfer ownership of the RIN and the volume to another party; or
    (ii) The RIN must be recorded on a separate product transfer 
document transferred to the same party on the same day as the product 
transfer document used to transfer ownership of the volume of renewable 
fuel.
* * * * *
0
7. Section 80.1129 is amended as follows:
0
a. By revising paragraphs (b)(1), (b)(2), (b)(4) and (b)(6).
0
b. By adding paragraph (b)(8).
0
c. By revising paragraph (d).


Sec.  80.1129  Requirements for separating RINs from volumes of 
renewable fuel.

* * * * *
    (b) * * *
    (1) Except as provided in paragraphs (b)(6) and (b)(8) of this 
section, a party that is an obligated party according to Sec.  80.1106 
must separate any RINs that have been assigned to a volume of renewable 
fuel if they own that volume.
    (2) Except as provided in paragraph (b)(5) of this section, any 
party that owns a volume of renewable fuel must separate any RINs that 
have been assigned to that volume once the volume is blended with 
gasoline or diesel to produce a motor vehicle fuel. A party may 
separate up to 2.5 RINs per gallon of fuel that is blended.
* * * * *
    (4) Any person that produces, imports, owns, sells or uses a volume 
of renewable fuel may separate any RINs that have been assigned to that 
volume of renewable fuel if the person designates the renewable fuel as 
motor vehicle fuel and the renewable fuel is used as a motor vehicle 
fuel.
* * * * *
    (6) For RINs that an obligated party generates from renewable fuel 
that has not been blended into gasoline, the obligated party can only 
separate such RINs from volumes of renewable fuel if the number of 
gallon-RINs separated is less than or equal to its annual RVO.
* * * * *
    (8) For a party that has received a small refinery exemption under 
Sec.  80.1141 or a small refiner exemption under Sec.  80.1142, during 
the period of time that the small refinery or small refiner exemption 
is in effect, the party may only separate RINs that have been assigned 
to volumes of renewable fuel that the party blends into motor vehicle 
fuel.
* * * * *
    (d) Upon and after separation of a RIN from its associated volume, 
product transfer documents used to transfer ownership of the volume 
must continue

[[Page 57256]]

to meet the requirements of Sec.  80.1153(a)(5)(iii).
* * * * *
0
8. Section 80.1131 is amended by adding paragraph (a)(8) and removing 
paragraph (b)(4) to read as follows:


Sec.  80.1131  Treatment of invalid RINs.

    (a) * * *
    (8) In the event that the same RIN is transferred to two or more 
parties, all such RINs will be deemed to be invalid, unless EPA in its 
sole discretion determines that some portion of these RINs is valid.
* * * * *
0
9. Section 80.1132 is amended as follows:
0
a. By revising the section heading.
0
b. By revising paragraph (a).
0
c. By revising paragraph (b) introductory text.
0
d. By revising paragraph (c).


Sec.  80.1132  Reported spillage or disposal of renewable fuel.

    (a) A reported spillage or disposal under this subpart means a 
spillage or disposal of renewable fuel associated with a requirement by 
a federal, state or local authority to report the spillage or disposal.
    (b) Except as provided in paragraph (c) of this section, in the 
event of a reported spillage or disposal of any volume of renewable 
fuel, the owner of the renewable fuel must retire a number of gallon-
RINs corresponding to the volume of spilled or disposed of renewable 
fuel multiplied by the lesser of its equivalence value or the number of 
RINs received with the spilled or disposed fuel, not to exceed 2.5 RINs 
per gallon.
* * * * *
    (c) If the owner of a volume of renewable fuel that is spilled or 
disposed of and reported establishes that no RINs were generated to 
represent the volume, then no gallon-RINs shall be retired.
* * * * *
0
10. Section 80.1141 is amended by revising paragraph (a)(1), adding 
paragraph (a)(4), and revising paragraph (b)(2)(ii) to read as follows:


Sec.  80.1141  Small refinery exemption.

    (a)(1) Gasoline produced at a refinery by a refiner, or foreign 
refiner (as defined at Sec.  80.1165(a)), is exempt from the renewable 
fuel standards of Sec.  80.1105 and the requirements that apply to 
obligated parties under this subpart if that refinery meets the 
definition of a small refinery under Sec.  80.1101(g) for calendar year 
2004.
* * * * *
    (4) This exemption shall only apply to refineries that process 
crude oil, or feedstocks derived from crude oil, through refinery 
processing units.
    (b) * * *
    (2) * * *
    (ii) A letter signed by the president, chief operating or chief 
executive officer of the company, or his/her designee, stating that the 
information contained in the letter is true to the best of his/her 
knowledge, and that the refinery was small as of December 31, 2004.
* * * * *
0
11. Section 80.1142 is amended by revising paragraph (a)(1) 
introductory text, adding paragraph (a)(4), and revising paragraph (e) 
to read as follows:


Sec.  80.1142  What are the provisions for small refiners under the RFS 
program?

    (a)(1) Gasoline produced by a refiner, or foreign refiner (as 
defined at Sec.  80.1165(a)), is exempt from the renewable fuel 
standards of Sec.  80.1105 and the requirements that apply to obligated 
parties under this subpart if the refiner or foreign refiner does not 
meet the definition of a small refinery under Sec.  80.1101(g) but 
meets all of the following criteria:
* * * * *
    (4) This exemption shall only apply to refineries that process 
crude oil, or feedstocks derived from crude oil, through refinery 
processing units.
* * * * *
    (e) A refiner who qualifies as a small refiner under this section 
and subsequently fails to meet all of the qualifying criteria as set 
out in paragraph (a) of this section will have its small refiner 
exemption terminated effective January 1 of the next calendar year.
    (1) In the event such disqualification occurs, the refiner shall 
notify EPA in writing no later than 20 days following the disqualifying 
event.
    (2) Disqualification under this paragraph (e) shall not apply in 
the case of a merger between two approved small refiners.
* * * * *
0
12. Section 80.1151 is amended by revising paragraphs (a)(3)(i), 
(b)(4)(i), and (d)(3)(i) to read as follows:


Sec.  80.1151  What are the recordkeeping requirements under the RFS 
program?

    (a) * * *
    (3) * * *
    (i) A list of the RINs owned, purchased, sold, or retired.
* * * * *
    (b) * * *
    (4) * * *
    (i) A list of the RINs owned, purchased, sold, or retired.
* * * * *
    (d) * * *
    (3) * * *
    (i) A list of the RINs owned, purchased, sold or retired.
* * * * *
0
13. Section 80.1152 is amended by removing and reserving paragraph 
(c)(1)(iii), and revising paragraphs (c)(1)(v) and (c)(2) to read as 
follows:


Sec.  80.1152  What are the reporting requirements under the RFS 
program?

* * * * *
    (c) * * *
    (1) * * *
    (iii) [Reserved]
* * * * *
    (v) Transaction type (RIN purchase, RIN sale, retired RIN).
* * * * *
    (2) A quarterly gallon-RIN activity report shall be submitted to 
EPA according to the schedule specified in paragraph (d) of this 
section. Each report shall summarize gallon-RIN activities for the 
reporting period, separately for RINs assigned to a renewable fuel 
volume and RINs separated from a renewable fuel volume. The quarterly 
gallon-RIN activity report shall include all of the following 
information:
    (i) The submitting party's name.
    (ii) The party's EPA company registration number.
    (iii) The number of current-year gallon-RINs owned at the start of 
the quarter.
    (iv) The number of prior-year gallon-RINs owned at the start of the 
quarter.
    (v) The total current-year gallon-RINs purchased.
    (vi) The total prior-year gallon-RINs purchased.
    (vii) The total current-year gallon-RINs sold.
    (viii) The total prior-year gallon-RINs sold.
    (ix) The total current-year gallon-RINs retired.
    (x) The total prior-year gallon-RINs retired.
    (xi) The number of current-year gallon-RINs owned at the end of the 
quarter.
    (xii) The number of prior-year gallon-RINs owned at the end of the 
quarter.
    (xiii) For parties reporting gallon-RIN activity under this 
paragraph for RINs assigned to a volume of renewable fuel, the total 
volume of renewable fuel (in gallons) owned at the end of the quarter.
    (xiv) Any additional information that the Administrator may 
require.
* * * * *

[[Page 57257]]

0
14. Section 80.1153 is amended by revising paragraph (a)(5)(iii) to 
read as follows:


Sec.  80.1153  What are the product transfer document (PTD) 
requirements for the RFS program?

    (a) * * *
    (5) * * *
    (iii) If no assigned RINs are being transferred with the renewable 
fuel, the PTD which is used to transfer ownership of the renewable fuel 
shall state ``No assigned RINs transferred''.
* * * * *
0
15. Section 80.1154 is amended by adding paragraph (a)(4) and revising 
paragraph (b) to read as follows:


Sec.  80.1154  What are the provisions for renewable fuel producers and 
importers who produce or import less than 10,000 gallons of renewable 
fuel per year?

    (a) * * *
    (4) The attest engagement requirements of Sec.  80.1164.
    (b) Renewable fuel producers and importers who produce or import 
less than 10,000 gallons of renewable fuel each year and that generate 
and/or assign RINs to batches of renewable fuel are subject to the 
provisions of Sec. Sec.  80.1150 through 80.1152, and Sec.  80.1164.
0
16. Section 80.1160 is amended by revising paragraphs (a) and (b)(1), 
and by adding paragraph (f) to read as follows:


Sec.  80.1160  What acts are prohibited under the RFS program?

    (a) Renewable fuel producer or importer violation. Except as 
provided in Sec.  80.1154, no person shall produce or import a 
renewable fuel without generating a batch-RIN as required under Sec.  
80.1126.
    (b) * * *
    (1) Improperly generate a RIN (e.g., generate a RIN for which the 
applicable renewable fuel volume was not produced).
* * * * *
    (f) Failure to meet a requirement. No person shall fail to meet any 
requirement that applies to that person under this subpart.
0
17. Section 80.1164 is amended as follows:
0
a. By revising paragraphs (a)(1)(ii) through (a)(1)(v).
0
b. By adding paragraphs (a)(1)(vi) through (a)(1)(viii).
0
c. By revising paragraphs (a)(2)(i) and (a)(2)(ii).
0
d. By adding paragraph (a)(2)(iii).
0
e. By revising paragraph (a)(3)(ii).
0
e. By revising paragraphs (b)(1)(ii) through (b)(1)(iv).
0
f. By revising paragraphs (b)(2)(i) and (b)(2)(ii).
0
g. By adding paragraph (b)(2)(iii).
0
h. By revising paragraph (b)(3)(ii).
0
i. By revising paragraphs (c)(1)(i) and (c)(1)(ii).
0
j. By adding paragraph (c)(1)(iii).
0
k. By revising paragraph (c)(2)(ii).
0
l. By adding paragraphs (e) and (f).


Sec.  80.1164  What are the attest engagement requirements under the 
RFS program?

* * * * *
    (a) * * *
    (1) * * *
    (ii) Obtain documentation of any volumes of renewable fuel used in 
gasoline at the refinery or import facility or exported during the 
reporting year; compute and report as a finding the total volumes of 
renewable fuel represented in these documents.
    (iii) Compare the volumes of gasoline reported to EPA in the report 
required under Sec.  80.1152(a)(1) with the volumes, excluding any 
renewable fuel volumes, contained in the inventory reconciliation 
analysis under Sec.  80.133, and verify that the volumes reported to 
EPA agree with the volumes in the inventory reconciliation analysis.
    (iv) Compute and report as a finding the obligated party's or 
exporter's RVO, and any deficit RVO carried over from the previous year 
or carried into the subsequent year, and verify that the values agree 
with the values reported to EPA.
    (v) Obtain the database, spreadsheet, or other documentation for 
all RINs used for compliance during the year being reviewed; calculate 
the total number of RINs used for compliance by year of generation 
represented in these documents; state whether this information agrees 
with the report to EPA and report as a finding any exceptions.
    (vi) Identify a representative sample, selected in accordance with 
the guidelines in Sec.  80.127, of RINs used for compliance during the 
year being reviewed.
    (vii) Obtain contracts, invoices or other documentation for RINs in 
the representative sample obtained in paragraph (a)(1)(vi) of this 
section, and the product transfer documents for the RINs in the 
representative sample; state whether the information in these documents 
agrees with the information in the party's report to EPA and report as 
a finding any exceptions.
    (viii) Verify that the product transfer documents for the 
representative sample of RINs used for compliance contain the 
applicable information required under Sec.  80.1153 and report as a 
finding any product transfer document that does not contain the 
required information; verify the accuracy of the information contained 
in the product transfer documents for the representative sample and 
report as a finding any exceptions.
    (2) * * *
    (i) Identify a representative sample, selected in accordance with 
the guidelines in Sec.  80.127, separately for each RIN transaction 
type (RINs purchased, RINs sold, RINs retired) included in the RIN 
transaction reports required under Sec.  80.1152(a)(2) for the 
compliance year.
    (ii) Obtain contracts, invoices, or other documentation for each of 
the representative samples of RIN transactions, and the product 
transfer documents for each of the representative samples of RIN 
transactions; compute the transaction types, transaction dates, and 
RINs traded; state whether the information agrees with the party's 
reports to EPA and report as a finding any exceptions.
    (iii) Verify that the product transfer documents for the 
representative sample of RINs sold and the representative sample of 
RINs purchased contain the applicable information required under Sec.  
80.1153 and report as a finding any product transfer document that does 
not contain the required information; verify the accuracy of the 
information contained in the product transfer documents for the 
representative samples and report as a finding any exceptions.
    (3) * * *
    (ii) Obtain the database, spreadsheet, or other documentation used 
to generate the information in the gallon-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 gallon-RINs owned at the start and end of 
the quarter, purchased, sold and retired, and for parties that reported 
gallon-RIN activity for RINs assigned to a volume of renewable fuel, 
the volume of renewable fuel owned at the end of the quarter, as 
represented in these documents; and state whether this information 
agrees with the party's reports to EPA.
    (b) * * *
    (1) * * *
    (ii) Obtain production data for each renewable fuel batch produced 
or imported during the year being reviewed; compute the RIN numbers, 
production dates, types, volumes of denaturant and applicable 
equivalence values, and production volumes for each batch; state 
whether this

[[Page 57258]]

information agrees with the party's reports to EPA and report as a 
finding any exceptions.
    (iii) Verify that the proper number of RINs were generated and 
assigned for each batch of renewable fuel produced or imported, as 
required under Sec.  80.1126.
    (iv) Identify a representative sample, selected in accordance with 
the guidelines in Sec.  80.127, of renewable fuel batches produced or 
imported during the year being reviewed; obtain product transfer 
documents for the representative sample; verify that the product 
transfer documents contain the applicable information required under 
Sec.  80.1153; verify the accuracy of the information contained in the 
product transfer documents; report as a finding any product transfer 
document that does not contain the applicable information required 
under Sec.  80.1153.
    (2) * * *
    (i) Identify a representative sample, selected in accordance with 
the guidelines in Sec.  80.127, separately for each transaction type 
(RINs purchased, RINs sold, RINs retired) included in the RIN 
transaction reports required under Sec.  80.1152(b)(2) for the 
compliance year.
    (ii) Obtain contracts, invoices, or other documentation for each of 
the representative samples of RIN transactions, and the product 
transfer documents for each of the representative samples of RIN 
transactions; compute the transaction types, transaction dates, and the 
RINs traded; state whether this information agrees with the party's 
reports to EPA and report as a finding any exceptions.
    (iii) Verify that the product transfer documents for the 
representative sample of RINs sold and the representative sample of 
RINs purchased contain the applicable information required under Sec.  
80.1153 and report as a finding any product transfer document that does 
not contain the required information; verify the accuracy of the 
information contained in the product transfer documents for the 
representative samples and report as a finding any exceptions.
    (3) * * *
    (ii) Obtain the database, spreadsheet, or other documentation used 
to generate the information in the gallon-RIN activity reports; compare 
the RIN transaction samples reviewed under paragraph (b)(2) of this 
section with the corresponding entries in the data base or spreadsheet 
and report as a finding any discrepancies; compute the total number of 
current-year and prior-year gallon-RINs owned at the start and end of 
the quarter, purchased, sold and retired, and for parties that reported 
gallon-RIN activity for RINs assigned to a volume of renewable fuel, 
the volume of renewable fuel owned at the end of the quarter, as 
represented in these documents; and state whether this information 
agrees with the party's reports to EPA.
    (c) * * *
    (1) * * *
    (i) Identify a representative sample, selected in accordance with 
the guidelines in Sec.  80.127, separately for each RIN transaction 
type (RINs purchased, RINs sold, RINs retired) included in the RIN 
transaction reports required under Sec.  80.1152(c)(1) for the 
compliance year.
    (ii) Obtain contracts, invoices, or other documentation for the 
representative samples of RIN transactions, and the product transfer 
documents for the representative samples of RIN transactions; compute 
the transaction types, transaction dates, and the RINs traded; state 
whether this information agrees with the party's reports to EPA and 
report as a finding any exceptions.
    (iii) Verify that the transfer documents for the representative 
sample of RINs sold and the representative sample of RINs purchased 
contain the applicable information required under Sec.  80.1153 and 
report as a finding any product transfer document that does not contain 
the required information; verify the accuracy of the information 
contained in the product transfer documents for the representative 
samples and report as a finding any exceptions.
    (2) * * *
    (ii) Obtain the database, spreadsheet, or other documentation used 
to generate the information in the gallon-RIN activity reports; compare 
the RIN transaction samples reviewed under paragraph (c)(1) of this 
section with the corresponding entries in the data base or spreadsheet 
and report as a finding any discrepancies; compute the total number of 
current-year and prior-year gallon-RINs owned at the start and end of 
the quarter, purchased, sold and retired, and for parties that reported 
gallon-RIN activity for RINs assigned to a volume of renewable fuel, 
the volume of renewable fuel owned at the end of the quarter, as 
represented in these documents; and state whether this information 
agrees with the party's reports to EPA.
* * * * *
    (e) The party conducting the procedures under this section shall 
obtain a written representation from a company representative that the 
copies of the reports required by this section are complete and 
accurate copies of the reports filed with EPA.
    (f) The party conducting the procedures under this section shall 
identify and report as a finding the commercial computer program used 
by the party to track the data required by the regulations in this 
subpart, if any.
0
18. Section 80.1165 is amended by revising paragraphs (f)(1)(vi) and 
(o)(2) to read as follows:


Sec.  80.1165  What are the additional requirements under this subpart 
for a foreign small refiner?

* * * * *
    (f) * * *
    (1) * * *
    (vi) Inspections and audits by EPA may include interviewing 
employees.
* * * * *
    (o) * * *
    (2) Signed by the president or owner of the foreign refiner 
company, or by that person's immediate designee, and shall contain the 
following declaration:
    I hereby certify: (1) That I have actual authority to sign on 
behalf of and to bind [insert name of foreign refiner] with regard to 
all statements contained herein; (2) that I am aware that the 
information contained herein is being Certified, or submitted to the 
United States Environmental Protection Agency, under the requirements 
of 40 CFR part 80, subpart K, and that the information is material for 
determining compliance under these regulations; and (3) that I have 
read and understand the information being Certified or submitted, and 
this information is true, complete and correct to the best of my 
knowledge and belief after I have taken reasonable and appropriate 
steps to verify the accuracy thereof. I affirm that I have read and 
understand the provisions of 40 CFR part 80, subpart K, including 40 
CFR 80.1165 apply to [insert name of foreign refiner]. 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.
0
19. Section 80.1166 is amended by revising paragraph (o)(2) to read as 
follows:


Sec.  80.1166  What are the additional requirements under this subpart 
for a foreign producer of cellulosic biomass ethanol or waste derived 
ethanol?

* * * * *
    (o) * * *
    (2) Signed by the president or owner of the foreign producer 
company, or by that person's immediate designee, and shall contain the 
following declaration:
    I hereby certify: (1) That I have actual authority to sign on 
behalf of and to

[[Page 57259]]

bind [insert name of foreign producer] with regard to all statements 
contained herein; (2) that I am aware that the information contained 
herein is being Certified, or submitted to the United States 
Environmental Protection Agency, under the requirements of 40 CFR part 
80, subpart K, and that the information is material for determining 
compliance under these regulations; and (3) that I have read and 
understand the information being Certified or submitted, and this 
information is true, complete and correct to the best of my knowledge 
and belief after I have taken reasonable and appropriate steps to 
verify the accuracy thereof. I affirm that I have read and understand 
the provisions of 40 CFR part 80, subpart K, including 40 CFR 80.1165 
apply to [insert name of foreign producer]. Pursuant to Clean Air Act 
section 113(c) and 18 U.S.C. 1001, the penalty for furnishing false, 
incomplete or misleading information in this certification or 
submission is a fine of up to $10,000 U.S., and/or imprisonment for up 
to five years.
0
20. Section 80.1167 is amended by revising paragraph (e) introductory 
text and paragraph (j)(2) to read as follows:


Sec.  80.1167  What are the additional requirements under this subpart 
for a foreign RIN owner?

* * * * *
    (e) Bond posting. Any foreign entity shall meet the requirements of 
this paragraph (e) as a condition to approval as a foreign RIN owner 
under this subpart.
* * * * *
    (j) * * *
    (2) Signed by the president or owner of the foreign RIN owner 
company, or by that person's immediate designee, and shall contain the 
following declaration:
    I hereby certify: (1) That I have actual authority to sign on 
behalf of and to bind [insert name of foreign RIN owner] with regard to 
all statements contained herein; (2) that I am aware that the 
information contained herein is being Certified, or submitted to the 
United States Environmental Protection Agency, under the requirements 
of 40 CFR part 80, subpart K, and that the information is material for 
determining compliance under these regulations; and (3) that I have 
read and understand the information being Certified or submitted, and 
this information is true, complete and correct to the best of my 
knowledge and belief after I have taken reasonable and appropriate 
steps to verify the accuracy thereof. I affirm that I have read and 
understand the provisions of 40 CFR part 80, subpart K, including 40 
CFR 80.1167 apply to [insert name of foreign RIN owner]. 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.

[FR Doc. E8-23131 Filed 10-1-08; 8:45 am]
BILLING CODE 6560-50-P


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