46174 Federal Register / Vol. 82, No. 191 / Wednesday, October 4, 2017 / Proposed Rules 

7 5 U.S.C. 603(a). 

8 44 U.S.C. 3507(d); 5 CFR part 1320. 9Public Law 105–277, 112 Stat. 2681 (1998). 

Additionally, as a result of 

information we have received from the 

public, the Board proposes to amend 

part 740 to permit a fourth iteration of 

the official advertising statement, 

namely by stating ‘‘Insured by NCUA.’’ 

This change would provide FICUs with 

more flexibility without diminishing the 

purpose of the rule. 

The current part 740 addresses 

conventional forms of advertising such 

as print, radio, and television. The 

Board requests comment about whether 

the regulation should be modified to 

facilitate the trend in advertising via 

new types of social media, mobile 

banking, text messaging and other 

digital communication platforms, 

including Twitter and Instagram. The 

comments should focus on specific 

recommendations that balance the 

regulation’s goal to inform the public 

with space and other constraints 

inherent in new forms of advertising. 

II. Regulatory Procedures 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires NCUA to prepare an analysis to 

describe any significant economic 

impact a regulation may have on a 

substantial number of small entities.7

For purposes of this analysis, NCUA 

considers small credit unions to be 

those having under $100 million in 

assets. The proposed amendments 

provide regulatory relief and thus do not 

impose a significant burden on small 

credit unions. Accordingly, NCUA has 

determined and certifies that the 

proposed rule, if adopted, will not have 

a significant economic impact on a 

substantial number of small credit 

unions within the meaning of the 

Regulatory Flexibility Act, 5 U.S.C. 601– 

612. 

Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(‘‘PRA’’) applies to rulemakings in 

which an agency by rule creates a new 

paperwork burden on regulated entities 

or modifies an existing burden.8 For 

purposes of the PRA, a paperwork 

burden may take the form of either a 

reporting or a recordkeeping 

requirement, both referred to as 

information collections. The proposed 

rule does not constitute a ‘‘collection of 

information’’ within the meaning of 

section 3502(3) and would not increase 

paperwork requirements under the PRA 

or regulations of the Office of 

Management and Budget. 

Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their actions on 

state and local interests. In adherence to 

fundamental federalism principles, 

NCUA, an independent regulatory 

agency as defined in 44 U.S.C. 3502(5), 

voluntarily complies with the executive 

order. The proposed rule would not 

have substantial direct effect on the 

states, on the connection between the 

national government and the states, or 

on the distribution of power and 

responsibilities among the various 

levels of government. NCUA has 

determined that this proposed rule does 

not constitute a policy that has 

federalism implications for purposes of 

the executive order. 

The Treasury and General Government 

Appropriations Act of 1999— 

Assessment of Federal Regulations and 

Policies on Families 

NCUA has determined that this 

proposed rule will not affect family 

well-being within the meaning of 

Section 654 of the Treasury and General 

Government Appropriations Act, 1999.9

List of Subjects in 12 CFR Part 740 

Advertisements, Credit unions, Share 

insurance, Signs and symbols. 

By the National Credit Union 

Administration Board on September 28, 

2017. 

Gerard S. Poliquin, 

Secretary of the Board. 

For the reasons discussed above, the 

NCUA Board proposes to amend 12 CFR 

part 740 as follows: 

PART 740—ACCURACY OF 

ADVERTISING AND NOTICE OF 

INSURED STATUS 

■ 1. The authority for part 740 

continues to read as follows: 

Authority: 12 U.S.C. 1766, 1781, 1785, and 

1789. 

■ 2. Amend § 740.5 by revising 

paragraphs (a), (b), (c)(7) and (c)(8) to 

read as follows: 

§ 740.5 Requirements for the official 

advertising statement. 

(a) Each insured credit union must 

include the official advertising 

statement, prescribed in paragraph (b) of 

this section, in all of its advertisements, 

including on its main Internet page, 

except as provided in paragraph (c) of 

this section. 

(b) The official advertising statement 

is in substance one of the following: 

(1) This credit union is federally 

insured by the National Credit Union 

Administration; 

(2) Federally insured by NCUA; 

(3) Insured by NCUA; or 

(4) A reproduction of the official sign 

as described in § 740.4(b) may be used 

in lieu of the other statements included 

in this section. If the official sign is used 

as the official advertising statement, an 

insured credit union may alter the font 

size to ensure its legibility as provided 

in § 740.4(b)(2). 

(5) The official advertising statement 

must be in a size and print that is clearly 

legible and may be no smaller than the 

smallest font size used in other portions 

of the advertisement intended to convey 

information to the consumer. 

(c) * * * 

(7) Advertisements by radio that are 

less than thirty (30) seconds in time; 

(8) Advertisements by television, 

other than display advertisements, that 

are less than thirty (30) seconds in time; 

* * * * * 

[FR Doc. 2017–21316 Filed 10–3–17; 8:45 am] 

BILLING CODE 7535–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 80 

[EPA–HQ–OAR–2017–0091; FRL–9968–70– 

OAR] 

Renewable Fuel Standard Program: 

Standards for 2018 and BiomassBased Diesel Volume for 2019; 

Availability of Supplemental 

Information and Request for Further 

Comment 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Availability of supplemental 

information; request for further 

comment. 

SUMMARY: This document provides 

additional data and an opportunity to 

comment on that data and potential 

options for reductions in the 2018 

biomass-based diesel, advanced biofuel, 

and total renewable fuel volumes, and/ 

or the 2019 biomass-based diesel 

volume under the Renewable Fuel 

Standard (RFS) program. In a July 21, 

2017 notice of proposed rulemaking, the 

EPA proposed certain reductions in the 

statutory volume targets for advanced 

biofuel and total renewable fuel for 

2018, and requested comment on further 

reductions based on various 

considerations. This document presents 

additional data on production, imports 

and cost of renewable fuel and several 

options for how we may consider such 


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1 82 FR 34206. 

2 82 FR 34206. 

3Advanced biodiesel and renewable diesel with 

a D code of 4. 

4We note the possibility that in light of our 

consideration of comments received on this 

document and the NPRM that the final rule could 

implement volume requirements that deviate 

further from the volume targets in the statute than 

the proposed levels. We believe the statutory 

provisions embody multiple Congressional 

objectives, including both increasing renewable 

fuels and limiting in certain circumstances the 

additional cost or economic impact associated with 

such increases. We invite comment on how to 

balance these objectives in exercising our waiver 

authorities. 

5 81 FR 89746, December 12, 2016. 

data in establishing the final volume 

requirements using the waiver 

authorities provided by the statute. 

DATES: Comments must be received on 

or before October 19, 2017. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–HQ– 

OAR–2017–0091, at https://

www.regulations.gov. Follow the online 

instructions for submitting comments. 

Once submitted, comments cannot be 

edited or withdrawn. The EPA may 

publish any comment received to its 

public docket. Do not submit 

electronically any information you 

consider to be Confidential Business 

Information (CBI) or other information 

whose disclosure is restricted by statute. 

Multimedia submissions (audio, video, 

etc.) must be accompanied by a written 

comment. The written comment is 

considered the official comment and 

should include discussion of all points 

you wish to make. The EPA will 

generally not consider comments or 

comment contents located outside of the 

primary submission (i.e., on the Web, 

cloud, or other file sharing system). For 

the full EPA public comment policy, 

information about CBI or multimedia 

submissions, and general guidance on 

making effective comments, please visit 

http://www.epa.gov/dockets/ 

commenting-epa-dockets. 

FOR FURTHER INFORMATION CONTACT: Julia 

MacAllister, Office of Transportation 

and Air Quality, Assessment and 

Standards Division, Environmental 

Protection Agency, 2000 Traverwood 

Drive, Ann Arbor, MI 48105; telephone 

number: 734–214–4131; email address: 

macallister.julia@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Outline of This Preamble 

I. General Information 

A. Does this action apply to me? 

II. Overview 

III. Costs and Supply of Advanced Biofuel 

IV. Possible Further Reductions of 2018 

Volume Requirements 

A. General Waiver Authority 

1. Inadequate Domestic Supply 

2. Severe Economic Harm 

B. Biomass-Based Diesel Waiver Authority 

V. Consideration of Possible Reductions in 

the Biomass-Based Diesel Volume 

Requirement for 2019 

VI. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

I. General Information 

A. Would this rule, if finalized, apply to 

me? 

Entities potentially affected by the 

July 21, 2017 proposed rule 1 (the July 

proposal), should it become final, are 

those involved with the production, 

distribution, and sale of transportation 

fuels, including gasoline and diesel fuel 

or renewable fuels such as ethanol, 

biodiesel, renewable diesel, and biogas. 

Potentially regulated categories include: 

Category NAICS1 codes SIC 2 codes Examples of potentially regulated entities 

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

Industry ........................................ 325193 3869 Ethyl alcohol manufacturing. 

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

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

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

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

Industry ........................................ 221210 4925 Manufactured gas production and distribution. 

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

1 North American Industry Classification System (NAICS). 

2Standard Industrial Classification (SIC) system code. 

This table is not intended to be 

exhaustive, but rather provides a guide 

for readers regarding entities likely to 

engage in activities that may 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 rule, if 

finalized, you should carefully examine 

the applicability criteria in 40 CFR part 

80. If you have any questions regarding 

the applicability of the July proposal to 

a particular entity, consult the person 

listed in the FOR FURTHER INFORMATION

CONTACT section. 

II. Overview 

On July 21, 2017, EPA proposed 

reductions in the statutory volume 

targets for advanced biofuel and total 

renewable fuel using the cellulosic 

waiver authority in Clean Air Act (CAA) 

section 211(o)(7)(D).2 We proposed 

using the maximum reduction permitted 

under that authority (considering the 

proposed cellulosic volume 

requirement) to reduce the 2018 volume 

targets for advanced biofuel and total 

renewable fuel to 4.24 and 19.24 billion 

gallons, respectively, in part by placing 

a greater emphasis on cost 

considerations than we have in the past. 

We requested comment on possible 

additional reductions in advanced 

biofuel (with corresponding reductions 

in total renewable fuel) using the 

general waiver authority in CAA section 

211(o)(7)(A) or other authorities. 

Similarly, we requested comment on 

whether EPA should, in the final rule, 

reduce the 2019 volume requirement for 

biomass-based diesel (BBD) 3 to a level 

below the proposed level of 2.1 billion 

gallons.4

We did not specifically request 

comment in the proposed rule on a 

possible reduction of the 2018 volume 

requirement for BBD, which was set at 

2.1 billion gallons in 2016.5 We did, 

however, request comment on the use of 

the general waiver authority or other 

authorities to reduce the advanced 

biofuel requirement for 2018, and BBD 

is not only nested within advanced 

biofuel but is also the predominant 

source of advanced biofuel. Therefore, 

considerations leading to a reduction of 

the advanced biofuel volume may also 

be relevant in reducing the 2018 BBD 

volume requirement. In this document 

we are providing additional information 

on renewable fuel costs and supply as 

well as possible options for the exercise 

of our waiver authorities based on these 

and other considerations. 

We note that the statute also provides 

EPA the authority to waive a portion of 

the BBD standard if there is a significant 

renewable feedstock disruption or other 


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6Under CAA section 211(o)(7)(E)(ii). 

7After January 1, 2017 the price of biodiesel and 

the estimated effective price of biodiesel to blenders 

are identical, as the tax credit expired at the end 

of 2016. 

8 ‘‘Commerce Preliminary Finds Countervailable 

Subsidization of Imports of Biodiesel from 

Argentina and Indonesia,’’ available in EPA docket 

number EPA–HQ–OAR–2017–0091. 

9 ‘‘AFPM letter on biodiesel supply in 2017,’’ 

available in docket EPA–HQ–OAR–2017–0091. 

market circumstance that would make 

the price of biomass-based diesel fuel 

increase significantly, and to make 

related reductions in the advanced 

biofuel and total renewable fuel volume 

requirements.6 In light of recent 

developments, described below, we seek 

comment on whether it would be 

appropriate to use this waiver authority 

in the final rule. 

III. Cost and Supply of Advanced 

Biofuel 

As EPA indicated in the July 

proposal, the cost of advanced biofuels 

is high on a per gallon basis compared 

to the petroleum fuels they replace. The 

expiration of the biodiesel tax credit in 

the U.S. at the end of 2016 has already 

impacted the effective price of biodiesel 

to blenders, as well as the price of 

biodiesel blends to consumers. While it 

does not appear that the expiration of 

the tax credit has had a direct impact on 

the price of unblended biodiesel (B100) 

in 2017, we expect that the expiration 

of the tax credit has had a significant 

impact on the effective price of 

biodiesel sold to blenders. This is 

because the biodiesel tax credit that 

expired at the end of 2016 was received 

by biodiesel blenders, rather than 

biodiesel producers. The price of 

biodiesel and EPA’s estimated effective 

price of biodiesel to blenders (net the 

$1/gallon tax credit when applicable) 

from January 2016 through August 2017 

are shown in Figure III–1 below.7 We 

also expect the price of biodiesel used 

in the U.S. could increase further 

following a recent preliminary 

determination by the Department of 

Commerce that it would be appropriate 

to place countervailing duties of 41% to 

68% on imports of biodiesel from 

Argentina and Indonesia.8 Cash deposits 

against preliminary duties are currently 

being collected, potentially impacting 

prices prior to a final determination. 

Such duties could also affect import 

volumes as pointed out in a recent letter 

from the American Fuel and 

Petrochemical Manufacturers (AFPM).9

A final decision from the Department of 

Commerce and the International Trade 

Commission, which could include final 

countervailing duty orders, is scheduled 

for December 29, 2017. 

BILLING CODE 6560–50–P 

BILLING CODE 6560–50–C 

The level of imports and exports can 

also affect the price of renewable fuel 

used in the U.S., and both imports and 

export volumes have varied 

considerably over the last several years. 

Based on data collected on RIN 

generation and retirement from the EPAModerated Transaction System (EMTS), 

we have determined gross domestic 

production and import and export 

volumes for advanced biofuels and 


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10The use of RIN data necessarily excludes 

renewable fuel import or export volumes for which 

no RINs were generated. RINs may not be generated, 

for instance, if ethanol has not been denatured or 

if a producer is exporting the renewable fuel. 

However, for advanced biofuels, RINless volumes 

(which would not be reflected in Tables III–1 or III– 

2) are expected to be an extremely small portion of 

all volumes. 11 ‘‘Imports and exports of renewable fuel in 2013 

through 2016,’’ memorandum from David Korotney 

to docket EPA–HQ–OAR–2017–0091. 

12See e.g., comments from AFPM/API, EPA–HQ– 

OAR–2017–0091–3645. 

13See 80 FR 77420 (December 14, 2015). 

14See, e.g., comments from American Fuels and 

Petrochemical Manufacturers/American Petroleum 

Institute (AFPM/API) (Docket Item No. EPA–HQ– 

OAR–2017–0091–3645) and Valero (Docket Item 

No. EPA–HQ–OAR–2017–0091–3677). 

biomass-based diesel for the years 2013 

through 2016.10 Further details can be 

found in a memorandum to the 

docket.11

TABLE III–1—SUPPLY OF ADVANCED BIOFUEL

[million RINs] 

2013 2014 2015 2016 

Gross domestic production .............................................................................. 2,278 2,308 2,327 3,023 

Imports ............................................................................................................. 911 479 710 1,177 

Exports ............................................................................................................. 128 134 143 202 

TABLE III–2—SUPPLY OF BIOMASS-BASED DIESEL

[million RINs] 

2013 2014 2015 2016 

Gross domestic production .............................................................................. 2,162 2,196 2,155 2,791 

Imports ............................................................................................................. 476 415 596 1,121 

Exports ............................................................................................................. 125 134 143 202 

Commenters raised concerns that 

along with affecting prices of renewable 

fuels in the U.S., imports may also have 

an impact on the energy independence 

and security status of the U.S.12

Increasing the energy independence and 

security of the U.S. is one of the stated 

goals in the Energy Security and 

Independence Act of 2007, and the RFS 

program’s standards affect the volumes 

of both domestic production and 

imports. EPA requests comment on 

whether it is appropriate to consider 

possible impacts of these volumes on 

U.S. energy independence and security 

in setting the applicable standards 

under the RFS program, insofar as they 

impact those factors that we are 

permitted to consider and evaluate 

under the available waiver authorities, 

and/or the standard-setting authority for 

BBD. 

EPA remains concerned about the 

high cost of advanced biofuels. As a 

result, and in light of the pending action 

on countervailing duties on imported 

biodiesel from Argentina and Indonesia 

which we believe could, if finalized, 

further increase the cost and/or decrease 

the supply of advanced biofuel in the 

U.S., we believe it is appropriate to 

request further comment on appropriate 

ways to determine the applicable 

volume requirements for 2018, and the 

BBD volume requirement for 2019. 

IV. Possible Further Reductions of 2018 

Volume Requirements 

A. 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 on his own 

motion. 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. We 

sought comment on the possible use of 

the general waiver authority in the 

proposal, and here are once again 

seeking comment in light of the data 

provided in Section III of this document 

and a possible revised interpretation of 

the inadequate domestic supply waiver 

authority, as discussed below. We also 

solicit further comment on our use of 

the general waiver authority under a 

determination of either inadequate 

domestic supply or severe economic 

harm to reduce volumes of renewable 

fuel. 

1. Inadequate Domestic Supply 

In the annual rule establishing the 

2014–2016 renewable fuel standards, we 

determined that there would be an 

‘‘inadequate domestic supply’’ of 

renewable fuel to consumers in 2016, 

and so exercised the general waiver 

authority to reduce volumes to levels we 

believed could be supplied.13 The 

United States Court of Appeals for the 

District of Columbia Circuit recently 

ruled in a lawsuit challenging that rule 

that EPA improperly focused on supply 

of renewable fuel to consumers, and that 

the statue instead requires a ‘‘supplyside’’ assessment of the volumes of 

renewable fuel that can be supplied to 

refiners, importers and blenders. 

Americans for Clean Energy (‘‘ACE’’) v. 

EPA, 864 F.3d 691 (2017). Other 

components of EPA’s interpretation of 

‘‘inadequate domestic supply’’ were 

either upheld by the court in ACE (e.g., 

EPA’s interpretation that carryover RINs 

are not part of the ‘‘supply’’ for 

purposes of this waiver authority) or 

were not challenged (e.g., EPA’s 

consideration of biofuel imports as part 

of the domestic supply). In response to 

the proposed 2018 standards, we 

received comments suggesting that EPA 

should interpret the undefined term 

‘‘domestic’’ in ‘‘inadequate domestic 

supply’’ to account for only volumes of 

renewable fuel that are produced 

domestically.14 As we understand this 

suggestion, in determining the adequacy 

of supply, EPA would consider only 

whether there was an adequate supply 

of domestically produced volumes to 

satisfy the statutory volume targets. If 

there were not, EPA would be 

authorized to reduce the statutory 


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15AFPM/API comments (citing Merriam-Webster 

Dictionary). 

16 Id. (citing Oxford English Dictionary). 

17See, e.g., Comments from Valero (Docket Item 

No. EPA–HQ–OAR–2017–0091–3677). EPA notes 

that we also received comments from the biodiesel 

industry that reducing volumes based on imports 

could actually harm domestic producers, see, e.g., 

comments from the National Renderers Association 

(Docket Item No. EPA–HQ–OAR–2017–0091–3959), 

National Biodiesel Board (Docket Item No. EPA– 

HQ–OAR–2017–0091–3880). 

18See e.g., ACE, 864 F.3d at 709. 19Moreover, EPA’s interpretation of the term 

‘‘domestic’’ in the phrase ‘‘inadequate domestic 

supply’’ and the relevance of imports to EPA’s 

assessment was not challenged in the litigation or 

necessary for the court’s decision, so we believe 

that the court’s statements in this regard are dicta. 20See, e.g., Renewable Fuel Standard Program: 

Standards for 2017 and Biomass-Based Diesel 

Volume for 2018, 81 FR 89746, 89764–65 

(December 12, 2016). 

applicable volumes. Having made the 

threshold finding that there was an 

inadequate domestic supply, EPA could 

consider the availability of imports as 

one factor among others in determining 

whether to exercise its discretion to use 

the waiver authority. 

Some commenters suggested that this 

interpretation would rely on common 

dictionary definitions of ‘‘domestic,’’ as 

meaning ‘‘of, or relating to, or 

originating within a country and 

especially one’s own country,’’ 15 or 

‘‘[o]f or pertaining to one’s own country 

or nation; not foreign, internal, inland, 

‘home.’’’ 16 Commenters suggested that 

this interpretation could lead to volume 

requirements providing greater stability 

and certainty for obligated parties; they 

noted the increasing uncertainty in 

international trade markets for biofuels, 

including the potential for disruptions 

in supply and duties being placed on 

these biofuels. These commenters 

suggested that by basing the volume 

requirements on the projected domestic 

supply of biofuels, EPA could set 

volume requirements that would better 

ensure the availability of renewable fuel 

for compliance.17

We note that this interpretation of the 

statutory phrase ‘‘inadequate domestic 

supply,’’ would not in any way limit the 

use of qualifying imported biofuel by 

obligated parties to ultimately comply 

with the annual percentage standards. 

Imported and domestically produced 

biofuels would still have the same 

opportunities to compete in the U.S. 

market as they do now. The 

interpretation would only affect the way 

in which EPA calculates the volumes 

used to set the percentage standards 

with which obligated parties must 

comply, by allowing EPA to consider 

the supply of domestically produced 

biofuels in deciding whether to use the 

general waiver authority. Once the 

standards were established, however, 

qualifying imported renewable fuel 

could still be used to comply with the 

established standards, exactly as it is 

currently. 

We request comment on whether this 

interpretation would comply with the 

Court’s direction in ACE that we only 

consider ‘‘supply-side factors’’ in 

determining whether there is an 

inadequate domestic supply. Although 

the Court in ACE explained that EPA 

‘‘may’’ or is ‘‘authorized’’ to consider 

renewable fuel imports as part of a 

supply-side assessment under this 

waiver authority,18 we note that these 

statements were made in the context of 

comparing supply-side considerations 

to demand-side considerations, and 

finding EPA’s demand-side 

consideration to be impermissible. 

Thus, the court’s statements may 

indicate the scope of permissible, but 

not required, interpretations, and not 

foreclose further consideration by EPA 

of the scope of appropriate supply-side 

considerations in light of the statute and 

the court’s decision.19

We believe there are a number of 

reasons why this interpretation of the 

phrase ‘‘inadequate domestic supply’’ 

may be appropriate. First, as noted by 

commenters, this interpretation may be 

consistent with a straightforward 

reading of the term ‘‘domestic supply’’ 

as referring to volumes of domesticallyproduced renewable fuels. Second, as 

also noted by commenters, basing EPA’s 

use of the general waiver authority on 

domestic supply only may better meet 

the energy independence and security 

purposes of EISA. Third, as EPA has 

noted in past rulemakings,20 it is 

extremely difficult to project volumes 

that can be made available in the U.S. 

through imports, and we believe that in 

light of this substantial uncertainty, that 

EPA could reasonably interpret the 

statute as allowing it the discretion to 

waive statutory applicable volumes on 

the basis of a more certain assessment 

of the likely supply of domesticallyproduced fuels. 

We invite comment on this possible 

interpretation of the term ‘‘inadequate 

domestic supply,’’ and the possibility of 

applying this interpretation to reduce 

the final 2018 advanced biofuel volume 

requirement beyond the level proposed. 

In Section III of this document we 

provide data on the domestic 

production of advanced biofuels for 

2013 through 2016. We solicit comment 

on data and methodologies we should 

use for estimating the 2018 supply of 

domestically-produced BBD and other 

advanced biofuels if we adopt this 

interpretation. We also invite comment 

on the potential impact on imports and 

the domestic production of advanced 

biofuel if EPA were to further reduce the 

proposed applicable volume of 

advanced biofuel on the basis of an 

interpretation of the term ‘‘inadequate 

domestic supply’’ as discussed in this 

section. We also request comment on 

whether and how EPA should consider 

the potential level of imports in 

determining whether to use its 

discretionary general waiver authority 

to reduce the required volume 

requirements should this interpretation 

be adopted. 

Considering the nested nature of the 

standards, we also seek comment on the 

appropriateness of (and possible basis 

for) providing a reduction in the total 

renewable fuel applicable volume 

requirement commensurate with any 

reduction in the advanced biofuel 

volume requirement that may be 

finalized based on a reinterpretation of 

the inadequate domestic supply waiver 

authority as discussed in this section. 

We note that absent a commensurate 

reduction, the implied volume for 

conventional biofuels (i.e., the 

difference between advanced and total 

volumes), would exceed the 15 billion 

gallon implied cap that can be discerned 

from the statutory tables. We note that 

both the cellulosic waiver authority in 

CAA section 211(o)(7)(D) and the BBD 

waiver authority in section 211(o)(7)(E) 

stipulate that when nested cellulosic or 

BBD volumes, respectively, are waived 

under these authorities, that reductions 

in the advanced and total renewable 

fuel volume requirements are 

authorized. Similarly, due to the nested 

nature of the standards, advanced 

biofuel can be used to meet the total 

renewable fuel requirement. This 

program structure, established in EISA, 

suggests that, in general, a reduction in 

a nested renewable fuel type can justify 

a corresponding reduction in the other 

renewable fuel standard or standards 

that the fuel can also be used to meet. 

We seek comment on the extent to 

which EPA should interpret the 

inadequate domestic supply waiver 

authority in CAA section 211(o)(7)(A) as 

also authorizing EPA to make a 

commensurate reduction in total 

renewable fuel volumes when waiving 

advanced biofuel volumes on the basis 

of inadequate domestic supply. 

2. Severe Economic Harm 

Section 211(o)(7)(A)(1) of the CAA 

provides that EPA may waive the 

applicable volume based on a 

determination that implementation of 

the requirement would severely harm 

the economy or environment of a State, 

a region, or the United States. We 

received comments from several 


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21See, e.g., comments from American Fuels and 

Petrochemical Manufacturers/American Petroleum 

Institute (AFPM/API) (Docket Item No. EPA–HQ– 

OAR–2017–0091–3645) and Valero (Docket Item 

No. EPA–HQ–OAR–2017–0091–3677). 

22See e.g., 73 FR 47168 (August 13, 2008) (Notice 

of Decision Regarding the State of Texas Request for 

a Waiver of a Portion of the Renewable Fuel 

Standard); 77 FR 70752 (November 27, 2012) 

(Notice of Decision Regarding Requests for a Waiver 

of the Renewable Fuel Standard). 

23 82 FR 34206 (July 21, 2017). 

24Both advanced and conventional biodiesel are 

imported from these two countries. 

25This approach would arguably be consistent 

with the focus of the ACE Court on the ability of 

these parties to blend the statutorily required 

volumes of renewable fuel. 

26 81 FR 89746, December 12, 2016. 

27 2.10 billion gallon BBD volume requirement × 

15% = 315 mill gal. 

28 In the context of calculating the applicable 

percentage standards from the volume 

requirements, one gallon of BBD is equivalent to 1.5 

gallons of ethanol. The advanced biofuel and total 

renewable fuel applicable volumes are expressed as 

ethanol-equivalent volumes, whereas the BBD 

applicable volume requirement is expressed in 

terms of biodiesel equivalence. 29The statute does not specifically require notice 

and opportunity for comment prior to EPA issuance 

of a waiver under CAA section 211(o)(7)(E)(ii); that 

EPA is providing an opportunity for comment 

regarding EPA’s possible first use of this authority 

at this time should not be viewed as suggesting that 

EPA would always do so in the future. 

stakeholders suggesting that EPA should 

reduce volumes on the basis of severe 

economic harm.21 We note that EPA has 

previously expressed an interpretation 

of the severe economic harm waiver in 

denying petitions to exercise the 

waiver.22 We solicit comment on the 

appropriateness of this interpretation, as 

well as rationales and data to support 

approaches for identifying volumes that 

would be associated with severe 

economic harm, or other means of 

implementing this waiver authority 

consistent with the statutory provision. 

In particular, we seek input on whether 

there is information indicating that 

severe economic harm is occurring 

under current standards or would occur 

for any volume requirement that could 

be established in the current 

rulemaking 23 and, if so, whether and 

how volumes should be adjusted to 

address such harm. 

B. Biomass-Based Diesel Waiver 

Authority 

CAA section 211(o)(7)(E)(ii) provides 

that if EPA determines that there is a 

significant renewable feedstock 

disruption or other market circumstance 

that would make the price of BBD 

increase significantly, EPA shall, in 

consultation with the Secretary of 

Energy, and the Secretary of 

Agriculture, issue an order to reduce, for 

up to a 60-day period, the annual 

volume requirement for BBD by an 

appropriate quantity that does not 

exceed 15 percent. The statute also 

stipulates that EPA is authorized to 

reduce applicable volumes of advanced 

biofuel and total renewable fuel by the 

same or a lesser volume than the 

reduction in BBD. Also, the statute 

provides that EPA may provide 

additional 60-day waivers, with an 

appropriate additional reduction in the 

annual requirement of up to 15%, if 

EPA determines that the feedstock 

disruptions or circumstances warranting 

the initial waiver are continuing. 

We note that the renewable fuels 

standards apply on an annual basis and 

compliance is determined three months 

after the end of the year. Waiving the 

standard for 60 days without adjusting 

the annual standard would provide no 

relief. We thus solicit comment on 

whether it would be appropriate to 

implement the provision by waiving the 

annual standard (in circumstances 

where use of the provision is 

authorized) by a volume that does not 

exceed 15%. Alternatively, it may be 

possible to implement the provision by 

allowing each refiner or importer to 

subtract from its compliance obligation 

calculations an amount of gasoline and 

diesel produced or imported during a 

specific 60-day period, subject to a 15% 

limitation on the reduction in their 

annual RVO. We note that the statute 

also allows for an extension of any 

initial waiver for additional 60-day 

periods if the feedstock disruption or 

other market circumstance persists. We 

invite comment on how to interpret and 

implement the BBD waiver provision 

consistent with the text and goals of the 

Act. 

As described in Section III of this 

action, the price of biodiesel, 

particularly advanced biodiesel, has 

been impacted by the expiration of the 

federal tax credit at the end of 2016 and 

may be expected to be impacted further 

by the imposition of new duties on 

imports of biodiesel from Argentina and 

Indonesia.24 We seek comment on the 

likely result of these and any other 

factors on biodiesel prices, and the 

extent to which any expected price 

increases should be considered 

‘‘significant’’ for purposes of the waiver 

authority in CAA section 

211(o)(7)(E)(ii). We also seek comment 

on whether the relevant biodiesel prices 

are those paid by refiners, importers and 

blenders,25 and if so whether it is 

appropriate to consider the increase in 

the ‘‘effective price’’ of biomass-based 

diesel (net of any tax credit) to blenders 

for these purposes. We note that the 

2018 BBD volume requirement was 

established by rule in 2016 at 2.1 billion 

gallons.26 Therefore, if EPA were to 

make the appropriate findings under the 

statute, CAA section 211(o)(7)(E)(ii) 

would authorize an initial waiver of up 

to 315 million gallons (15% as specified 

in the statute) of the 2018 applicable 

volume requirement of 2.1 billion gallon 

(resulting in an applicable volume as 

low as 1.79 billion gallons), with 

additional incremental reductions 

possible in 60 day intervals if the 

circumstances warranted.27

This statutory provision also indicates 

that EPA may reduce the applicable 

volume of renewable fuel and advanced 

biofuels requirement by the same or a 

lesser volume as the reduction in the 

BBD volume requirement. Were we to 

exercise this BBD waiver authority, we 

believe it would be appropriate to lower 

the advanced biofuel and total 

renewable fuel volumes by the same 

amount, since the predominant form of 

advanced biofuel is BBD and a 

reduction in the BBD volume 

requirement may have little or no 

impact on BBD prices if there is no 

commensurate reduction in advanced 

biofuel and total renewable fuel 

volumes. If the BBD volume 

requirement were to be reduced by 315 

million gallons, an equivalent reduction 

in advanced biofuel and total renewable 

fuel would be 473 million ethanol 

equivalent RINs.28 This would bring the 

2018 advanced biofuel volume 

requirement down from the proposed 

level of 4.24 billion gallons to 3.77 

billion gallons and the 2018 total 

renewable fuel volume requirement 

from the proposed level of 19.24 billion 

gallons to 18.77 billion gallons.29

We request comment on the possible 

use of the waiver authority provided in 

CAA section 211(o)(7)(E)(ii) to reduce 

the 2018 volume requirement for BBD 

by as much as 315 million gallons, and 

to concurrently reduce the advanced 

biofuel and total renewable fuel volume 

requirements by as much as 473 million 

gallons. In particular, we seek data on 

recent BBD price increases and 

expectations for additional price 

increases, and we seek comment on the 

extent to which these price increases 

should be considered ‘significant’’ for 

purposes of the CAA section 

211(o)(7)(E)(ii) waiver authority and the 

extent of a waiver (up to 15%) that 

would be necessary to address or avoid 

a significant price increase. 

V. Consideration of Possible Reductions 

in the Biomass-Based Diesel Volume 

Requirement for 2019 

The statute establishes applicable 

volume targets for BBD only through 

2012. For years after those for which 


sradovich on DSK3GMQ082PROD with PROPOSALS
46180 Federal Register / Vol. 82, No. 191 / Wednesday, October 4, 2017 / Proposed Rules 

30See e.g., comments from AFPM/API, EPA–HQ– 

OAR–2017–0091–3645. 

31See 82 FR 40746 and 82 FR 40748 (July 21, 

2017). 

32 Ibid. 

volumes are specified in the statute, 

EPA is required under CAA section 

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

applicable volume of BBD, in 

coordination with the Secretary of 

Energy and the Secretary of Agriculture, 

based on a review of implementation of 

the program during calendar years for 

which the statute specifies the volumes 

and an analysis of the following factors: 

1. 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; 

2. The impact of renewable fuels on 

the energy security of the United States; 

3. The expected annual rate of future 

commercial production of renewable 

fuels, including advanced biofuels in 

each category (cellulosic biofuel and 

BBD); 

4. 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; 

5. The impact of the use of renewable 

fuels on the cost to consumers of 

transportation fuel and on the cost to 

transport goods; and 

6. The impact of the use of renewable 

fuels on other factors, including job 

creation, the price and supply of 

agricultural commodities, rural 

economic development, and food prices. 

The statute also specifies that the 

volume requirement for BBD cannot be 

less than the applicable volume 

specified in the statute for calendar year 

2012, which is 1.0 billion gallons. The 

statute does not, however, establish any 

other numeric criteria, or specify how 

EPA should weigh the importance of the 

often competing factors, and the 

overarching goals of the statute when 

EPA sets the applicable volumes of BBD 

in years after those for which the statute 

specifies such volumes. In the period 

2013–2022, the statute specifies 

increasing applicable volumes of 

cellulosic biofuel, advanced biofuel, and 

total renewable fuel, but does not do so 

for BBD, instead specifying only a 1.0 

billion gallon minimum and factors that 

EPA must evaluate in determining the 

volume requirement that EPA is to set. 

We received comments on our July 

proposal requesting that EPA reduce the 

proposed applicable volume of BBD for 

2019 due to the large volume of 

imported biodiesel and renewable diesel 

in recent years (See Table 2 for import 

volumes of BBD),30 which could affect 

our analysis of several of the factors 

listed above. Additionally, on August 

28, 2017, the Department of Commerce 

published a preliminary determination 

that countervailing subsidies are being 

provided to producers and/or exporters 

of biodiesel from Argentina and 

Indonesia, and began requiring cash 

deposits equal to the subsidy rates.31

These subsidies ranged from 50%–64% 

for biodiesel from Argentina and 41%– 

68% for biodiesel from Indonesia.32 If 

finalized, the determination would have 

a direct impact on the cost of biodiesel 

imported from these countries, and 

could ultimately lead to increased cost 

to consumers of transportation fuel and 

the cost to transport goods, and/or could 

lead to reduced imports from these 

countries and potentially more limited 

supplies in the United States. 

In our proposed assessment of the 

statutory factors listed above, we noted 

that the proposed BBD standard for 

2019, if finalized, would not likely 

impact the advanced biodiesel and 

renewable diesel supply to the U.S. 

market. Instead, the higher advanced 

biofuel volume requirement would be 

the determinant, and the market would 

supply more advanced biodiesel and 

renewable diesel than the BBD standard 

would require. We further noted in the 

July proposal our expectation that the 

historic trend in establishing the 

advanced volume requirements (i.e., 

annual increases) would continue into 

2019, and the current production levels 

and costs for different types of advanced 

biofuel led us to believe that the same 

volume of BBD would likely be 

produced and imported to satisfy the 

anticipated 2019 advanced biofuel 

standard regardless of the applicable 

volume of BBD we ultimately required 

for purposes of the 2019 BBD standard. 

Any differences in the production and 

import of BBD were expected to be 

marginal and uncertain as BBD 

competes with other advanced biofuels 

in meeting the 2019 advanced biofuel 

volume. We proposed a level that we 

reasoned would provide a level of 

guaranteed support to the BBD industry, 

while also ensuring an opportunity 

under the advanced standard for the 

further development and marketing of 

non-BBD advanced biofuels that might 

have superior environmental 

characteristics or cost implications. As 

noted above, we are now also soliciting 

comment on options for reducing the 

2018 advanced biofuel volume 

requirement. If we determine that it is 

appropriate to use one of the waiver 

authorities discussed above to reduce 

the required volume of advanced biofuel 

in 2018, it is possible that similar 

considerations would lead us to provide 

reductions of the 2019 advanced biofuel 

volume requirement for similar reasons. 

A lower required volume of advanced 

biofuel in 2019 could result in the 

proposed required volume of BBD for 

2019 (2.1 billion gallons or 3.15 billion 

ethanol-equivalent RINs) driving 

demand for advanced biodiesel and 

renewable diesel, and could provide 

insufficient room under the advanced 

standard for non-BBD advanced biofuels 

to compete for market share within the 

advanced biofuel category and an 

inappropriate level of guaranteed 

support to the BBD industry. 

In addition to these considerations, 

we seek comment on the extent to 

which the successful BBD industry 

requires the proposed level of 

guaranteed support, or if the advanced 

standard together with a significantly 

lower BBD standard would be sufficient 

for that purpose while advancing the 

goals of energy independence and 

security by providing additional 

encouragement for the growth of other 

types of advanced biofuels. 

We request comment on how EPA 

should take into consideration the costs 

of biodiesel and the factors that 

influence those costs, together with 

other relevant factors discussed above or 

which commenters may wish to bring to 

our attention, in setting the appropriate 

required volume of BBD for 2019. We 

also request comment on what the 

volume requirement should be, noting 

that it could be equal to or greater than 

the statutory minimum of 1.0 billion 

gallons. 

VI. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

This rulemaking is a significant 

regulatory action that was submitted to 

the Office of Management and Budget 

(OMB) for review, as it raises novel legal 

or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. Any changes made in response to 

OMB recommendations have been 

documented in the docket. 

Dated: September 26, 2017. 

E. Scott Pruitt, 

Administrator. 

[FR Doc. 2017–21128 Filed 10–3–17; 8:45 am] 

BILLING CODE 6560–50–P 


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