Document ID: EPA-HQ-OAR-2015-0092-0001
Agency: epa
Document Type: Notice
Title: Analysis of the Greenhouse Gas Emissions Attributable to Production and Transport of Cotton (Gossypium spp.) Seed Oil for Use in Biofuel Production
Posted Date: 2015-07-14T04:00Z

[Federal Register Volume 80, Number 134 (Tuesday, July 14, 2015)]
[Notices]
[Pages 41033-41040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17262]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2015-0092; FRL-9930-50-OAR]

Notice of Opportunity To Comment on an Analysis of the Greenhouse 
Gas Emissions Attributable to Production and Transport of Cotton 
(Gossypium spp.) Seed Oil for Use in Biofuel Production

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: The Environmental Protection Agency (EPA) is inviting comment 
on its analysis of the greenhouse gas (GHG) emissions attributable to 
the production and transport of Gossypium spp. seed oil (``cottonseed 
oil'') feedstock for use in making biofuels such as biodiesel, 
renewable diesel, and jet fuel. This document explains EPA's analysis 
of the feedstock production and transport-related components of the 
lifecycle GHG emissions of biofuel made from cottonseed oil, including 
both direct and indirect agricultural and forestry sector emissions. 
This notice also describes how EPA may apply this analysis in the 
future to determine whether biofuels produced from cottonseed oil meet 
the necessary GHG reductions required for qualification as renewable 
fuel under the Renewable Fuel Standard program. Based on this analysis, 
we anticipate that biofuels produced from cottonseed oil could qualify 
as biomass-based diesel or advanced biofuel if typical fuel production 
process technologies are used.

DATES: Comments must be received on or before August 13, 2015.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2015-0092, by one of the following methods:
     http://www.regulations.gov. Follow the on-line 
instructions for submitting comments.
     Email: a-and-r-docket@epa.gov, Attention Air and Radiation 
Docket ID No. EPA-HQ-OAR-2015-0092.
     Mail: Air and Radiation Docket, Docket No. EPA-HQ-OAR-
2015-0092, Environmental Protection Agency, Mail

[[Page 41034]]

code: 28221T, 1200 Pennsylvania Ave. NW., Washington, DC 20460.
     Hand Delivery: EPA Docket Center, EPA/DC, EPA WJC West, 
Room 3334, 1301 Constitution Ave. NW., Washington, DC 20460, Attention 
Air and Radiation Docket, ID No. EPA-HQ-OAR-2015-0092. 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-
2015-0092. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through www.regulations.gov or email. The 
www.regulations.gov Web site is an ``anonymous access'' system, which 
means EPA will not know your identity or contact information unless you 
provide it in the body of your comment. If you send an email comment 
directly to EPA without going through www.regulations.gov, your email 
address will be automatically captured and included as part of the 
comment that is placed in the public docket and made available on the 
Internet. If you submit an electronic comment, EPA recommends that you 
include your name and other contact information in the body of your 
comment and with any disk or CD-ROM you submit. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
information about EPA's public docket visit the EPA Docket Center 
homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
for which 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 WJC 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: Christopher Ramig, Office of 
Transportation and Air Quality, Mail Code: 6401A, U.S. Environmental 
Protection Agency, 1200 Pennsylvania Avenue NW., 20460; telephone 
number: (202) 564-1372; fax number: (202) 564-1177; email address: 
ramig.christopher@epa.gov.

SUPPLEMENTARY INFORMATION: 
    This document is organized as follows:

I. Introduction
II. Analysis of GHG Emissions Associated With Use of Cottonseed Oil 
as a Biofuel Feedstock
    A. Feedstock Description, Production, and Distribution
    1. Production of Cottonseed Oil-Based Biofuels
    2. Cottonseed Oil Production Economics
    3. Replacement of Cottonseed Oil in Vegetable Oil Markets
    4. Upstream GHG Implications of Cottonseed Oil Use as a Biofuel 
Feedstock
    B. Summary of Agricultural Sector GHG Emissions
    C. Fuel Production and Distribution
III. Summary

I. Introduction

    As part of changes to the Renewable Fuel Standard (RFS) program 
regulations published on March 26, 2010 \1\ (the ``March 2010 rule''), 
EPA specified the types of renewable fuels eligible to participate in 
the RFS program through approved fuel pathways. Table 1 to 40 CFR 
80.1426 of the RFS regulations lists three critical components of an 
approved fuel pathway: (1) Fuel type; (2) feedstock; and (3) production 
process. Fuel produced pursuant to each specific combination of the 
three components, or fuel pathway, is designated in Table 1 to 40 CFR 
80.1426 as eligible for purposes of the Clean Air Act's (CAA) 
requirements for greenhouse gas (GHG) reductions to qualify as 
renewable fuel or one of three subsets of renewable fuel (biomass-based 
diesel, cellulosic biofuel, or advanced biofuel). EPA may also 
independently approve additional fuel pathways not currently listed in 
Table 1 to 40 CFR 80.1426 for participation in the RFS program, or a 
third-party may petition for EPA to evaluate a new fuel pathway in 
accordance with 40 CFR 80.1416.
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    \1\ See 75 FR 14670.
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    Pursuant to 40 CFR 80.1416, EPA received a petition from the 
National Cottonseed Products Association (NCPA), requesting that EPA 
evaluate the lifecycle GHG emissions for biofuels produced using 
Gossypium spp. seed oil (``cottonseed oil''), and that EPA provide a 
determination of the renewable fuel categories, if any, for which such 
biofuels may be eligible. EPA's lifecycle analyses are used to assess 
the overall GHG impacts of a fuel throughout each stage of its 
production and use. The results of these analyses, considering 
uncertainty and the weight of available evidence, are used to determine 
whether a fuel meets the necessary GHG reductions required under the 
CAA for it to be considered renewable fuel or one of the subsets of 
renewable fuel. Lifecycle analysis includes an assessment of emissions 
related to the full fuel lifecycle, including feedstock production, 
feedstock transportation, fuel production, fuel transportation, fuel 
distribution, and tailpipe emissions. Per the CAA definition of 
lifecycle GHG emissions, EPA's lifecycle analyses also include an 
assessment of significant indirect emissions, such as indirect 
emissions from land use changes, agricultural sector impacts, and 
production of co-products from biofuel production.
    In this document, we are describing EPA's evaluation of the GHG 
emissions associated with the feedstock production and feedstock 
transport stages of the lifecycle analysis of cottonseed oil when it is 
used to produce a biofuel, including the indirect agricultural and 
forestry sector impacts. We are seeking public comment on the 
methodology and results of this evaluation. For reasons described in 
Section II below, we believe that, as a conservative estimate, it is 
reasonable to apply the GHG emissions estimates we established in the 
March 2010 rule for the production and transport of soybean oil to 
cottonseed oil.
    If appropriate, EPA will update its evaluation of the feedstock 
production and transport phases of the lifecycle analysis for 
cottonseed oil based on comments received in response to this action. 
EPA will then use this feedstock production and transport information 
to evaluate facility-specific petitions, received pursuant to 40 CFR 
80.1416, that propose to use cottonseed oil as a feedstock for the 
production of biofuel. In evaluating such petitions, EPA will consider 
the GHG emissions associated with the production and transport of 
cottonseed oil feedstock as described in this document, including the 
potential

[[Page 41035]]

indirect impacts. In addition, EPA will determine--based on information 
in the petition and other relevant information, including the 
petitioner's energy and mass balance data--the GHG emissions associated 
with petitioners' biofuel production processes, as well as emissions 
associated with the transport and use of the finished biofuel. We will 
then combine our assessments into a full lifecycle GHG analysis and 
determine whether the fuel produced at an individual facility satisfies 
CAA renewable fuel GHG reduction requirements.

II. Analysis of GHG Emissions Associated With Use of Cottonseed Oil as 
a Biofuel Feedstock

    EPA has evaluated the production and transport portion of the 
lifecycle GHG impacts of using cottonseed oil as a biofuel feedstock, 
based on information provided in the petition and other data gathered 
by EPA. Based on this evaluation, EPA believes that new agricultural 
sector modeling is not needed to evaluate this portion of the lifecycle 
GHG impacts of using cottonseed oil as a biofuel feedstock. As 
explained below, our analysis makes the conservative assumption that 
cottonseed oil diverted from the vegetable oil markets for food and 
industrial use to biofuel production will be replaced with soybean oil 
rather than result in additional production of cottonseed oil or any 
other vegetable oil. Therefore, in this analysis, we are applying the 
same agricultural sector impacts for soybean oil to cottonseed oil on a 
per-pound-of-feedstock basis. Based on this analysis (described below), 
we propose to evaluate the agricultural sector GHG emissions impacts of 
using cottonseed oil in responding to petitions received pursuant to 40 
CFR 80.1416 by assuming that GHG emissions are similar to those 
associated with the use of soybean oil for biofuel production. We 
invite comment on this proposed approach.

A. Feedstock Description, Production, and Distribution

1. Production of Cottonseed Oil-Based Biofuels
    Cottonseed oil is the fourth most produced vegetable oil in the 
U.S., after soybean oil, corn oil, and canola oil respectively. It is 
the seventh most consumed vegetable oil in the U.S., behind soybean 
oil, canola oil, palm oil, corn oil, coconut oil, and olive oil 
respectively. It accounts for about 2.5-4 percent of U.S. production 
and about 1.5-2.5 percent of U.S. consumption of vegetable oil.\2\ 
Internationally, cottonseed oil is the sixth most produced and consumed 
vegetable oil, representing about 3-3.5 percent of global production 
and consumption.\3\ Over the last decade, annual U.S. cottonseed oil 
production has averaged just under 800 million pounds.\4\ If this 
entire supply were used for biodiesel and/or renewable diesel 
production, which is highly unlikely for reasons discussed below, it 
would generate approximately 100 million gallons of fuel. Since U.S. 
biodiesel and renewable diesel production was approximately 1.5 billion 
gallons in 2014, the potential contribution of cottonseed oil is 
relatively small in comparison to the overall biodiesel and renewable 
diesel market.
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    \2\ United States Department of Agriculture, ``National Oil 
Crops Yearbook 2014'', available at: http://www.ers.usda.gov/data-products/oil-crops-yearbook.aspx (Last Accessed: January 14th, 
2015). United Nations Food and Agriculture Organization, 
``FAOSTAT'', available at: http://faostat.fao.org/ (Last Accessed: 
January 29th, 2015).
    \3\ Ibid.
    \4\ Ibid.
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    Cottonseed oil is preferred for a number of specialty uses by 
certain producers, including the frying of potato chips and the 
preservation of smoked shellfish. According to industry experts in 
government and the private sector consulted by EPA, many producers 
strongly prefer cottonseed oil over its alternatives, believing that 
the type of oil used for these products has a very significant impact 
on the quality of the product itself. Market experts also noted to EPA 
that these producers have historically been willing to pay a 
significant premium to maintain their supply of cottonseed oil when 
supplies become limited.\5\
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    \5\ Based on conversations with Michael Dowd of the USDA 
Agricultural Research Service on December 30th, 2014 and June 17th, 
2015.
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    This behavior is supported by available historical data. Figure 
II.A.1-1 below illustrates one of multiple examples from recent 
history. In the 2012/13 crop year, cottonseed oil production was near 
the ten-year average.\6\ However, in the 2013/14 crop year, cottonseed 
oil production was down significantly, about 20 percent below the ten-
year average.\7\ Conversely, these two crop years were both good for 
soybean oil, with production levels just above the ten-year average.\8\ 
In 2012/13, when both oilseeds produced around their recent averages, 
the peak monthly price spread between soybean oil and cottonseed oil 
was about 3 cents per pound.\9\ However, in 2013/14 when cottonseed oil 
supply was heavily constrained, the monthly average price spread grew 
to as much as 43.5 cents per pound.\10\
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    \6\ In the USDA data considered here, crop years begin in 
October of the first year listed and end in September of the second 
year listed.
    \7\ U.S. cottonseed oil production has averaged about 800 
million pounds since the 2003/04 crop year. According to the USDA 
Oil Crops Yearbook 2014, production in 2012/13 was also about 800 
million pounds and production in 2013/14 was approximately 630 
million pounds.
    \8\ U.S. soybean oil production has averaged about 19.5 billion 
pounds since the 2003/04 crop year. According to the USDA Oil Crops 
Yearbook 2014, production in 2012/13 was about 19.8 billion pounds 
and production in 2013/14 was approximately 19.7 billion pounds.
    \9\ This occurred in December 2012, when, according to USDA 
data, soybean oil averaged 47.16 cents per pound and cottonseed oil 
averaged 49.05 cents per pound.
    \10\ This occurred in May of 2014, when, according to USDA data, 
soybean oil averaged 40.68 cents per pound and cottonseed oil 
averaged 84.25 cents per pound.

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[[Page 41036]]

[GRAPHIC] [TIFF OMITTED] TN14JY15.011

    As Figure II.A.1-1 illustrates, cottonseed oil can approach price 
parity with soybean oil at times of average or above-average supply of 
cottonseed oil. However, the price trend shown above for 2013 should 
not be taken as representative of the full historical record. 
Cottonseed oil does not often achieve actual price parity with soybean 
oil. According to historical monthly price data from the U.S. 
Department of Agriculture (USDA), the national average monthly price 
for cottonseed oil was approximately equal to or below that of soybean 
oil in only 23 of the last 180 months (15 years).\12\ Even in the 
middle months of 2013, when soybean oil and cottonseed oil prices 
appear to converge in Figure II.A.1-1, cottonseed oil actually 
maintained a small premium over soybean oil, though in a few months of 
2013 this premium was less than a cent per pound. In only one month out 
of the last fifteen years, September 2004, was the monthly average 
price of cottonseed oil more than one cent per pound cheaper than that 
of soybean oil. For the majority of the recent historical record, 
cottonseed oil has maintained a significant price premium over soybean 
oil, averaging approximately 7 cents per pound over the last 15 years.
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    \11\ United States Department of Agriculture, ``National Oil 
Crops Yearbook 2014'', available at: http://www.ers.usda.gov/data-products/oil-crops-yearbook.aspx (Last Accessed: January 14th, 
2015).
    \12\ USDA Agricultural Marketing Service, ``Monthly Feedstuff 
Prices and Milling and Baking News'', multiple editions. In this 
example, by ``approximately equal'' we mean that there was less than 
a 1 cent difference between the prices of cottonseed oil and soybean 
oil.
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    Based on information from USDA vegetable oil market experts, demand 
for cottonseed oil for specialty uses like those cited above is 
extremely inelastic, meaning that demand for this volume of cottonseed 
oil would not be significantly impacted by an increase in the price of 
cottonseed oil.\13\ It is therefore highly unlikely that biofuel 
producers could bid cottonseed oil away from such specialty uses. This 
inelasticity of demand dramatically shrinks the potential amount of 
cottonseed oil that might be utilized for biofuel production and the 
potential impact that approving a pathway for cottonseed oil might have 
on vegetable oil markets. The data suggest that, in most years, 
cottonseed oil would not be price competitive with soybean oil for 
biofuel feedstock use in most locations. This suggests that cottonseed 
oil is unlikely to be used for biofuel production except in years where 
cottonseed oil prices are significantly lower than normal relative to 
soybean oil. Even then, as discussed below, cottonseed oil is likely to 
be used as a feedstock predominantly by biofuel production facilities 
located near cottonseed crushing facilities.
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    \13\ Based on conversations with Michael Dowd of the USDA 
Agricultural Research Service on December 30th, 2014 and June 17th, 
2015.
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    Conversely, the data also suggest that in some circumstances, 
cottonseed oil may achieve approximate price parity with soybean oil. 
This trend in pricing indicates cottonseed oil could compete on price 
with soybean oil as biofuel feedstock in times of abundant supply, or 
possibly in a year with low soybean oil production but normal 
cottonseed oil production, both of which might be expected to narrow 
the normal price gap. This trend also indicates that, when cottonseed 
oil prices are relatively low, the U.S. market values cottonseed oil at 
about the same price as soybean oil, rather than cheaper alternatives 
like palm oil or waste oils and greases or more expensive alternatives 
like sunflower seed oil. In other words, the historical pricing data 
available indicates that the primary competitor of cottonseed oil under 
these circumstances is soybean oil, since the prices converge, or at 
least nearly converge, under such circumstances.
    Based on consultation with USDA and private sector vegetable oil 
industry experts and given the historical data presented above, we 
believe that the actual potential for biodiesel and non-ester renewable 
diesel production from cottonseed oil is considerably smaller than the 
100 million gallons noted above.\14\ Based on a conversation with NCPA 
we believe that the actual potential is more likely in the range of 20 
million gallons of biodiesel per year (representing roughly 150-160 
million pounds of cottonseed oil), and could be considerably smaller 
than that

[[Page 41037]]

depending on market conditions.\15\ As noted above, this is largely due 
to the inelastic nature of cottonseed oil demand for specialty uses, 
which have demonstrated their willingness to pay prices for cottonseed 
oil that would be prohibitive to biofuel producers when forced to 
compete for limited supplies of cottonseed oil. Except in years with 
high levels of cottonseed oil production or uncharacteristically low 
demand from specialty users (for example, if potato chip production 
were to be unusually low in a particular year), we do not expect that 
there will be significant quantities of cottonseed oil available at 
prices that biodiesel producers would consider competitive. As a 
result, were EPA to approve pathways for cottonseed oil-based fuels and 
begin registering producers, we would not expect it to have a 
significant impact on U.S. biofuel production or U.S. vegetable oil 
production, consumption, and trade patterns.
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    \14\ Based on conversations with Michael Dowd of the USDA 
Agricultural Research Service on December 30th, 2014 and June 17th, 
2015; based also on memo from NCPA [EPA-HQ-OAR-2015-0092-0001; EPA-
HQ-OAR-2015-0092-0002].
    \15\ Based on memo from NCPA [EPA-HQ-OAR-2015-0092-0001; EPA-HQ-
OAR-2015-0092-0002].
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2. Cottonseed Oil Production Economics
    The methods of producing cottonseed oil are nearly identical to 
those of other vegetable seed oils. The seeds are crushed, oil and meal 
are separated, and the two products are sold separately into the 
vegetable oil and animal feed markets respectively. However, the 
production of the cotton oilseed is unique among major oilseeds because 
the seed itself is not a primary crop product. Rather, it is generally 
considered a byproduct of the production of cotton lint for fiber. 
Fiber production is the primary purpose of cotton farming, representing 
approximately 85 percent of the value of the average U.S. acre of 
cotton, and it drives the decisions of farmers regarding whether to 
plant cotton and what types of farming practices to utilize.\16\ The 
cotton seed and its products represent the remaining approximately 15 
percent of average value per acre. Conversely, for soybeans and other 
major oilseeds, the seed itself comprises nearly 100 percent of the 
value per acre.
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    \16\ According to the USDA NASS database, cotton lint has 
represented about 85 percent of revenue per acre fairly consistently 
since at least the year 1980. (Source: United States Department of 
Agriculture, ``National Agricultural Statistical Service Database'', 
available at: http://quickstats.nass.usda.gov/ [Last Accessed: 
January 14th, 2015]).
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    While cottonseed does have value and provides farmers with a 
secondary revenue stream, most cotton farmers consider it to be a 
byproduct of producing cotton lint. The efforts of cotton breeders over 
a long time period to maximize lint yields relative to seed yields, 
demonstrated by yield trends in cottonseed and cotton lint, support 
this hypothesis. Since 1985, the U.S. average cottonseed yield per bale 
of cotton lint produced has declined from nearly 800 pounds per bale to 
less than 700 pounds per bale (See Figure II.A.2-1 below).
[GRAPHIC] [TIFF OMITTED] TN14JY15.012

    Conversely, over that same period, the U.S. average cotton lint 
yield has increased from 630 pounds per acre harvested to over 800 
pounds per acre harvested.
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    \17\ United States Department of Agriculture, ``National 
Agricultural Statistical Service Database'', available at: http://quickstats.nass.usda.gov/ (Last Accessed: January 14th, 2015).

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[[Page 41038]]

[GRAPHIC] [TIFF OMITTED] TN14JY15.013

    The secondary nature of cottonseed production for cotton farmers 
has significant implications for our study of the impacts of cottonseed 
oil production for use in making biofuels. In a given year, weather 
conditions may reduce lint yields and force farmers to rely more on 
seed revenue. But when making decisions about what to plant, when to 
plant, and what types and quantities of crop inputs to utilize, lint 
yields are the first priority of cotton farmers. Further, the fact that 
cottonseed oil will only be competitive as a biofuel feedstock under 
certain relatively uncommon and unpredictable circumstances makes it 
even more unlikely that establishing pathways for cottonseed oil-based 
fuels under the RFS would have any impact on planting decisions. While 
farmers will seek to maximize the price they receive for cottonseed, it 
is highly unlikely that an increase in cottonseed value would have any 
significant impact on the behavior of cotton farmers.
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    \18\ United States Department of Agriculture, ``National 
Agricultural Statistical Service Database'', available at: http://quickstats.nass.usda.gov/ (Last Accessed: June 2nd, 2015).
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    Because changes in cottonseed oil prices are unlikely to affect 
overall cotton production decisions, it is highly unlikely that the use 
of cottonseed oil as a biofuel feedstock will significantly affect 
cottonseed production or the supply of cottonseed oil in the U.S. 
vegetable oil markets. Imports of cottonseed oil are approximately 
zero. We do not expect demand for cottonseed oil as biofuel feedstock 
to change this, since the costs of creating and operating new trade 
routes would make cottonseed oil uncompetitive with alternative oil 
feedstocks, especially soybean oil. Instead, we expect that, in the 
rare instances when cottonseed oil prices approach parity with soybean 
oil prices, biofuel producers might utilize some quantity of cottonseed 
oil. Since, in most previous historical instances of this near price 
parity, cottonseed oil is still somewhat more expensive than soybean 
oil, we would expect to only see this behavior amongst biofuel 
producers with renewable fuel production facilities near cottonseed 
crushing locations, since this oil could be sourced with minimal 
transport costs. If some quantity of cottonseed oil is diverted from 
the vegetable oil markets to the biofuel market, any unfilled demand 
for vegetable oil will most likely be met with increased consumption of 
other vegetable oils, for the reasons outlined in the next section.
3. Replacement of Cottonseed Oil in Vegetable Oil Markets
    As noted in Section II.A.1 above, cottonseed oil demand in the U.S. 
tends to be inelastic until the needs of specialty consumers are fully 
met, and the amount of cottonseed oil that could be bid away from such 
users for biofuel production is likely small until that threshold is 
reached. Whether or not any of this remaining cottonseed oil will 
actually be used for biofuel production will depend on the price of 
cottonseed oil relative to soybean oil at that time.
    In the event that cottonseed oil is used as a biofuel feedstock, 
the small volume likely to be available in any given region makes it 
highly unlikely that cottonseed oil could meet the total feedstock 
needs of a biofuel production facility. Rather, we expect that U.S. 
biofuel producers who are already utilizing vegetable oil feedstocks 
and are located near cottonseed crushing facilities will have the 
option to include some amount of cottonseed oil in their mix of 
feedstocks when the price is right.
    There are two likely ways that biofuel producers may include some 
amount of cottonseed oil in their feedstock mix. First, biofuel 
producers may at times substitute cottonseed oil for some amount of 
soybean oil and produce the same volume of fuel as before. Second, they 
may at times use low-priced cottonseed oil to increase their total 
volume of fuel production. While the market response is likely to be 
some combination of both scenarios, for this analysis we have assumed 
the more conservative scenario from a lifecycle

[[Page 41039]]

GHG perspective. This second scenario is more conservative because in 
the first scenario the displaced soybean oil could backfill in other 
vegetable oil markets for the cottonseed oil consumed for biofuel 
production and total vegetable oil production is unlikely to change. In 
the second scenario, where total biofuel production increases, 
cottonseed oil is being diverted away from some other use, creating a 
shortfall in vegetable oil supplies for some portion of the market. 
Either prices for vegetable oil will rise (in which case it is less 
likely that biofuel producers would still consume the cottonseed oil, 
since they were only purchasing it because of the low price) or 
additional vegetable oil will need to be supplied. In either case, the 
GHG emissions will be greater in the second scenario, where there is an 
incentive to expand crop production. If the results of analyzing the 
conservative scenario associated with greater GHG emissions indicates 
that biofuels produced from cottonseed oil satisfy the 50 percent 
lifecycle GHG emissions reduction requirement for biomass-based diesel 
and advanced biofuels, we can conclude that the threshold determination 
would be the same under the less conservative but more likely scenario.
    If the use of cottonseed oil for biofuel does create an increase in 
total demand for vegetable oil, we believe the direct result will be a 
corresponding increase in soybean oil consumption in the United States. 
As we established above, cotton farmers are unlikely to respond to 
increased demand for cottonseed oil. Instead, we are likely to see an 
increase in production of the vegetable oil most competitive with the 
cottonseed oil being diverted to biofuel feedstock use. Based on 
consultation with oilseed market experts at USDA and recent historical 
data (see Section II.A.1), which shows cottonseed oil prices tracking 
soybean oil prices, the marginal users of cottonseed oil are largely 
indifferent between cottonseed and soybean oil when they approach price 
parity.\19\ Therefore, it follows that if vegetable oil is needed to 
backfill for cottonseed oil used as biofuel, soybean oil would be the 
most likely vegetable oil to meet this demand in the United States.
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    \19\ Based on conversations with Michael Dowd of the USDA 
Agricultural Research Service on December 30th, 2014 and June 17th, 
2015.
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    To the extent that soybean oil is used to satisfy U.S. domestic 
demand for vegetable oil that would have otherwise been met with 
cottonseed oil, there would likely be secondary impacts on the 
production and consumption of other vegetable oils internationally and 
the agricultural sector more broadly. In the modeling we conducted for 
the March 2010 rule, we projected that the use of soybean oil for 
biofuel feedstock would cause a global increase in vegetable oil 
production. In that analysis, we projected that the majority of this 
increase would come in the form of additional soybean oil production, 
but that additional canola, palm, peanut, and sunflower oil production 
would also occur in some parts of the world, with secondary impacts on 
other parts of the agricultural sector.\20\ Therefore, by assuming that 
cottonseed oil would have similar indirect impacts on other vegetable 
oils, our analysis takes into account the ripple effects in the 
vegetable oil and other agricultural markets resulting from an increase 
in biofuel demand in the U.S. We invite comment on this approach.
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    \20\ See EPA-HQ-OAR-2005-0161-3173.9 and EPA-HQ-OAR-2005-0161-
3173.10 for more information.
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4. Upstream GHG Implications of Cottonseed Oil Use as a Biofuel 
Feedstock
    Our analysis indicates that the most likely market impact of the 
use of cottonseed oil as biofuel feedstock is some feedstock swapping 
between cottonseed oil and soybean oil and some increase in total 
biofuel production from vegetable oil, as explained in the previous 
section. However, as a conservative assumption, we assume in our 
analysis that any use of cottonseed oil as biofuel feedstock will 
result in an increase in total biofuel production and that there would 
be a corresponding increase in U.S. demand for vegetable oil. In such a 
hypothetical situation, the alternative product used by marginal U.S. 
consumers of vegetable oil is likely to be soybean oil. We do not 
expect any shift in the supply of cotton or cottonseed oil. The GHG 
emissions associated with cottonseed oil at the feedstock production 
and transport stages of the lifecycle are likely to be similar to or 
less than those we have previously estimated for soybean oil on a 
normalized basis.\21\ Therefore, we are proposing to use the upstream 
GHG emissions associated with an increase in soybean oil in our 
lifecycle analysis for cottonseed oil. In the March 2010 rule, we 
determined that the GHG emissions associated with soybean oil at the 
feedstock production and transport stages of the lifecycle were 
approximately 646 grams of carbon dioxide equivalent (gCO2e) 
per pound of soybean oil.\22\ Based on our evaluation, we believe that 
it is reasonable, as a conservative estimate, to apply the same value 
for the emissions associated with cottonseed oil at the feedstock 
production and transport stages of the lifecycle. We invite comment on 
this approach.
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    \21\ EPA's lifecycle analysis of soybean oil biodiesel for the 
March 2010 RFS rule evaluated the GHG impacts for a scenario with 
increased soybean oil biodiesel production compared to a control 
case. To calculate the results on a normalized basis for the 
scenario evaluated, we divide the increase in GHG emissions by the 
increase in the amount of soybean oil used for biodiesel production, 
which gives the normalized results in units of gCO2e per 
pound of soybean oil. The lifecycle GHG analysis that EPA conducted 
for the March 2010 RFS rule for biofuel derived from soybean oil 
feedstock is described in section 2.6.1.3 (Biodiesel Results) of the 
Regulatory Impact Analysis for the March 2010 RFS rule (EPA-420-R-
10-006).
    \22\ EPA's soybean oil biodiesel assessment uses a biodiesel 
conversion efficiency of 7.76 pounds of soybean oil per gallon of 
biodiesel, and biodiesel lower heating value of 118,000 British 
Thermal Units (Btu) per gallon. Therefore, GHG emissions of 646 
gCO2e/lb soybean oil converts to 41,247 gCO2e per million 
Btu of soybean oil biodiesel. This value includes the emissions 
associated with soybean oil delivered to a biodiesel production 
facility, including the emissions from growing and harvesting the 
soybeans, transporting the soybeans to a crushing facility, 
extracting the soybean oil, transporting the soybean oil to a 
biodiesel facility, and all of the significant indirect emissions 
such as from land use change.
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B. Summary of Agricultural Sector GHG Emissions

    Based on our comparison of cottonseed oil to soybean oil, EPA 
proposes to apply the estimate of upstream soybean oil feedstock 
production and transport emissions, including indirect agricultural and 
forestry sector impacts, to future evaluations of petitions proposing 
to use cottonseed oil as a feedstock for biofuel production. We believe 
this approach will provide a conservative estimate of potential 
emissions associated with the production and transport of cottonseed 
oil. EPA solicits comment on this proposed approach.

C. Fuel Production and Distribution

    Cottonseed oil has physical properties that are similar to soybean 
oil, and is suitable for the same conversion processes as soybean oil 
feedstock. In addition, the fuel yield per pound of oil is expected to 
be the same for each of these feedstocks. After reviewing comments 
received in response to this action, we will combine our evaluation of 
agricultural sector GHG emissions associated with the use of cottonseed 
oil feedstock with our evaluation of the GHG emissions associated with 
individual producers' production processes and finished fuels to 
determine whether any proposed pathway satisfies CAA lifecycle GHG 
emissions reduction requirements for RFS-qualifying renewable fuels. 
Each

[[Page 41040]]

biofuel producer seeking to generate RINs for non-grandfathered volumes 
of biofuel produced from cottonseed oil will first need to submit a 
petition requesting EPA's evaluation of their new renewable fuel 
pathway pursuant to 40 CFR 80.1416 of the RFS regulations, and include 
all of the information specified at 40 CFR 80.1416(b)(1). Because EPA 
is evaluating the greenhouse gas emissions associated with the 
production and transport of cottonseed oil feedstock through this 
action and comment process, petitions requesting EPA's evaluation of 
biofuel pathways involving cottonseed oil feedstock will not have to 
include the information for new feedstocks specified at 40 CFR 
80.1416(b)(2).\23\ Based on our evaluation of the lifecycle GHG 
emissions attributable to the production and transport of cottonseed 
oil feedstock, EPA anticipates that fuel produced from cottonseed oil 
feedstock through the same transesterification or hydrotreating process 
technologies that EPA evaluated for the March 2010 RFS rule for biofuel 
derived from soybean oil and the March 2013 RFS rule for biofuel 
derived from camelina oil would qualify for biomass-based diesel (D-
code 4) renewable identification numbers (RINs) or advanced biofuel (D-
code 5) RINs.\24\ However, EPA will evaluate petitions for fuel 
produced from cottonseed oil feedstock on a case-by-case basis.
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    \23\ For information on how to submit a petition for biofuel 
produced from cottonseed oil see EPA's Web page titled ``How to 
Submit a Complete Petition'' (http://www.epa.gov/otaq/fuels/renewablefuels/new-pathways/how-to-submit.htm) including the 
document on that Web page titled ``How to Prepare a Complete 
Petition.'' Petitions for biofuel produced from cottonseed oil 
should include all of the applicable information outlined in Section 
3 of the ``How to Prepare a Complete Petition'' document, but they 
do not need to provide the information outlined in section 3(F)(2) 
(Information for New Feedstocks).
    \24\ The transesterification process that EPA evaluated for the 
March 2010 RFS rule for biofuel derived from soybean oil feedstock 
is described in section 2.4.7.3 (Biodiesel) of the Regulatory Impact 
Analysis for the March 2010 RFS rule (EPA-420-R-10-006). The 
hydrotreating process that EPA evaluated for the March 2013 rule for 
biofuel derived from camelina oil feedstock is described in section 
II.A.3.b of the March 2013 rule (78 FR 14190).
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III. Summary

    EPA invites public comment on our analysis of GHG emissions 
associated with the production and transport of cottonseed oil as a 
feedstock for biofuel production. EPA will consider public comments 
received when evaluating the lifecycle GHG emissions of biofuel 
production pathways described in petitions received pursuant to 40 CFR 
80.1416 which use cottonseed oil as a feedstock.

    Dated: June 30, 2015.
Christopher Grundler,
Director, Office of Transportation and Air Quality, Office of Air and 
Radiation.
[FR Doc. 2015-17262 Filed 7-13-15; 8:45 am]
 BILLING CODE 6560-50-P