Document ID: EPA-HQ-OAR-2005-0161-0987
Agency: epa
Document Type: Rule
Title: Regulation of Fuels and Fuel Additives: Modifications to Renewable Fuel Standard Program Requirements - Final Rule
Posted Date: 2009-06-24T04:00Z

[Federal Register Volume 74, Number 120 (Wednesday, June 24, 2009)]
[Rules and Regulations]
[Pages 29948-29952]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-14849]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA EPA-HQ-OAR-2005-0161; FRL-8922-6]
RIN 2060-AO80

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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is finalizing amendments to the Renewable Fuel Standard 
program requirements. Following publication of the May 1, 2007, 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. In 
parallel proposed and direct final rules published on October 8, 2008, 
EPA proposed to amend the regulations to make the appropriate 
corrections, clarifications and modifications. However, EPA received 
adverse comment on several provisions in the parallel proposed and 
direct final rules and, on November 26, 2008, withdrew those provisions 
from the direct final rule that drew adverse comment. In today's 
action, EPA is addressing the comments received on the portions of the 
direct final rule that were withdrawn and is finalizing those withdrawn 
provisions with minor clarifying changes.

DATES: This final rule is effective on August 24, 2009.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-HQ-OAR-2005-0161. All documents in the docket are listed on the 
http://www.regulations.gov Web site. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically through http://www.regulations.gov or in hard copy at the Air and Radiation Docket, ID 
No. EPA-HQ-OAR-2005-0161, 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) 566-9744.

FOR FURTHER INFORMATION CONTACT: Meg McCarthy, Compliance and 
Innovative Strategies Division, Office of Transportation and Air 
Quality (6406J), Environmental Protection Agency, 1200 Pennsylvania 
Avenue, NW., 20460; telephone number: (202) 343-9968; fax number: (202) 
343-2802; e-mail address: mccarthy.meg@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. General Information

A. Does This Action Apply to Me?

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

[[Page 29949]]

----------------------------------------------------------------------------------------------------------------
                                                  NAICS codes                        Examples of potentially
                   Category                           \a\        SIC codes \b\          regulated parties
----------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------
\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, subpart K 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.

II. Renewable Fuel Standard Program Amendments

    EPA issued final regulations implementing the Renewable Fuel 
Standard Program on May 1, 2007. EPA subsequently identified a number 
of technical errors and ambiguities in the regulations and, in parallel 
proposed and direct final rules published on October 2, 2008, proposed 
to amend the regulations to correct these deficiencies. EPA received 
adverse comment on certain of the proposed changes, so, on November 26, 
2008, formally withdrew the portions of the direct final rule that were 
the subject of adverse comment. Those provisions consisted of 
amendments to 40 CFR 80.1129(b)(1) and 80.1129(b)(8) (providing 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), 40 CFR 80.1129(b)(4) 
(providing that any party may separate the RINs from renewable fuel 
that it produces or markets for use in motor vehicles, or uses in motor 
vehicles without further blending), and 40 CFR 80.1131(a)(8) and 
80.1131(b)(4) (changing the location in the RFS regulations of a 
provision stating that a RIN that is transferred to two or more parties 
is considered an invalid RIN unless EPA in its sole discretion 
determines that some portion of these RINs is valid). EPA published a 
parallel proposed rule (73 FR 57274) on the same day as the direct 
final rule. The proposed rule invited comment on the substance of the 
direct final rule and indicated that a second comment period would not 
be offered on the proposal in the event that portions of the direct 
final rule were withdrawn in response to adverse comment. In this 
action, we are responding to the comments received on the portions of 
the direct final rule that were withdrawn, and we are finalizing the 
proposed technical corrections with minor clarifying changes.

A. Separating RINs: Parties With Small Refiner or Small Refinery 
Exemption

    EPA proposed the addition of 40 CFR 80.1129(b)(8) and a conforming 
change to 80.1129(b)(1) to clarify that a party with a small refinery 
or small refiner exemption may only separate Renewable Identification 
Numbers (RINs) that have been assigned to a volume of renewable fuel 
that the party blends into motor vehicle fuel.
    In response to this proposed amendment, EPA received a comment 
which stated that the proposed 80.1129(b)(8) would result in the 
provision being overly broad. The comment further articulated a concern 
that EPA has mistakenly concluded that all refiners who have received 
either a small refiner exemption under 40 CFR 80.1142 or a small 
refinery exemption under 40 CFR 80.1141 are not obligated parties under 
the RFS program, and therefore, that those refiners may only separate 
RINs that have been assigned to volumes of renewable fuel that the 
refiner blends into motor vehicle fuel. Refiners who have received the 
small refinery exemption either are not obligated parties because they 
do not operate other non-exempt refineries or they are obligated 
parties because they do operate other non-exempt refineries. The 
commenter argued that the proposed technical amendment to add 40 CFR 
80.1129(b)(8), as written, applies to both groups, but that it should 
apply only to the former group of refiners and not the latter.
    EPA agrees with the comment and has added a clause to the final 
amendment to 40 80.1129(b)(8) to clarify our intention. Thus, the final 
rule states that it applies only to parties that have received a small 
refinery or small refiner exemption and who are ``not otherwise 
obligated parties.''

B. Separating RINs for Renewable Fuel Designated for Use as Motor 
Vehicle Fuel and Used as Motor Vehicle Fuel

    EPA proposed changes to 40 CFR 80.1129(b)(4) in order to clarify 
that any party, not just renewable fuel producers or importers, may 
separate the RINs from renewable fuel when it designates that fuel for 
use in motor vehicles and the renewable fuel is used in motor vehicles 
in that designated form.
    EPA received a comment on 80.1129(b)(4) which stated that that 
regulation should clarify that EPA intends the provision to apply to 
motor vehicle fuel used in its neat form, deposited directly into a 
motor vehicle fuel supply tank as motor vehicle fuel. In response, EPA 
confirms that the provision was originally meant to apply to neat 
renewable fuel that is designated for use as motor vehicle fuel, and is 
used as motor vehicle fuel in its designated form. In other words, the 
provision applies to neat renewable fuel that is directly used as motor 
vehicle fuel and is not blended any further. For purposes of the RFS 
program, ``neat renewable fuel'' is defined in 80.1101(p) as ``a 
renewable fuel to which only de minimis amounts of conventional 
gasoline or diesel have been added.'' Under the RFS program, denatured 
ethanol is considered neat renewable fuel, as is denatured ethanol with 
only an additional de minimis quantity of gasoline added. In the case 
of biodiesel, a biodiesel producer would be authorized under 
80.1129(b)(4) to separate RINs for B100 or B99 that it designates as 
motor vehicle fuel, providing that the fuel is in fact used that way.

[[Page 29950]]

    In contrast, any party that blends ethanol with more than a de 
minimis additional amount of gasoline beyond what is used for 
denaturing, or blends biodiesel with 20 volume percent or more of 
conventional diesel must separate any RINs assigned to that volume of 
renewable fuel, as required under 80.1129(b)(2). Biodiesel blends in 
which conventional diesel constitutes less than 20 volume percent and 
more than one percent are ineligible for RIN separation under any 
circumstances, as specified in 80.1129(b)(2) and (b)(5). As noted in 
the preamble to the final RFS regulations, it is EPA's understanding 
that in the vast majority of cases, biodiesel is blended with diesel in 
biodiesel concentrations of 80 volume percent or less. Therefore, EPA 
did not anticipate that this restriction would operate to significantly 
restrict biodiesel blending for fuel production, while it would afford 
some measure of protection against the possibility that renewable fuel 
producers could hold back RINs from obligated parties for the purpose 
of driving up their price. However, we may revisit this issue in a 
future RFS rulemaking since circumstances may change such that 
biodiesel blends of 81 percent or greater begin to be used more 
commonly as motor vehicle fuel.
    In the proposed technical amendments, EPA proposed to expand the 
parties eligible to separate RINS for neat renewable fuel to include 
any party that produces, imports, owns, sells or uses such fuel. EPA is 
finalizing the proposed change to 80.1129(b)(4) and, in response to 
comment, is clarifying that this section applies only to neat renewable 
fuel.
    In addition, EPA is making conforming amendments to 80.1151(b)(5) 
and 80.11129(b)5)(ii) to reflect the expanded applicability of 
80.1129(b)(4).

C. Duplicate RINs

    EPA proposed changes to 40 CFR 80.1131(a)(8) and 80.1131(b)(4), 
which consisted of changing the location in the RFS regulations of a 
provision stating that a RIN that is transferred to two or more parties 
is considered an invalid RIN unless EPA in its sole discretion 
determines that some portion of these RINs is valid.
    EPA received a comment which stated that EPA should not invalidate 
all duplicate RINs, but, rather, the party transferring duplicate RINs 
should be required to take appropriate actions such as notifying all 
parties who have received the duplicate RINs, determine which RINs are 
valid and which are invalid, and transfer replacement RINs to those 
parties that received invalid RINs.
    In response, EPA believes that if duplicate RINs are not made 
automatically invalid, problems associated with the duplicate RINs may 
be compounded downstream from the original duplication. For example, 
additional downstream transfers of duplicate RINs could occur if 
transferees are confused about which RINs are valid and which are not. 
EPA believes this type of confusion is minimized by automatically 
invalidating all RINs for which duplicates have been identified, and 
giving EPA sole discretion to determine if any of the duplicate RINs 
are valid. Since EPA received no comment on its proposed relocation of 
this provision within the RFS program regulations, EPA is finalizing 
the technical amendments to 40 CFR 80.1131(a)(8) and 80.1131(b)(4) as 
proposed.

III. 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 final rule simply makes minor 
technical changes to the RFS regulations and modifies certain 
requirements to make them less burdensome for regulated parties.

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.
    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

[[Page 29951]]

makes minor technical corrections to the regulations and modifies 
certain requirements to lessen the burden on regulated parties. Thus, 
after considering the economic impacts of today's final rule on small 
entities, I certify that this action will not have a significant 
economic impact on a substantial number of 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 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 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 certain modifications that 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 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 EO 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 EO has the 
potential to influence the regulation. This action is not subject to EO 
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, 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 (EO) 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 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).

List of Subjects in 40 CFR Part 80

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

    Dated: June 18, 2009.
Lisa P. Jackson,
Administrator.

0
40 CFR Part 80 is amended as follows:

[[Page 29952]]

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 80.1129 is amended as follows:
0
a. By revising paragraph (b)(1).
0
b. By revising paragraph (b)(4).
0
c. By revising paragraph (b)(5)(ii).
0
d. By adding paragraph (b)(8).

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.
* * * * *
    (4) Any party that produces, imports, owns, sells or uses a volume 
of neat renewable fuel may separate any RINs that have been assigned to 
that volume of neat renewable fuel if the party designates the neat 
renewable fuel as motor vehicle fuel, and the neat renewable fuel is 
used as a motor vehicle fuel.
    (5) * * *
    (ii) This paragraph (b)(5) shall not apply to any party meeting the 
requirements of paragraph (b)(4) of this section.
* * * * *
    (8) For a party that has received a small refinery exemption under 
Sec.  80.1141 or a small refiner exemption under Sec.  80.1142, and who 
is not otherwise an obligated party, 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 in accordance with 
paragraph (b)(2) of this section.
* * * * *
    3. 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.
* * * * *
    4. Section 80.1151 is amended by revising paragraph (b)(5) to read 
as follows:

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

* * * * *
    (b) * * *
    (5) Records related to the production, importation, ownership, sale 
or use of any volume of neat renewable fuel that any party designates 
as motor vehicle fuel and uses as motor vehicle fuel.
* * * * *
[FR Doc. E9-14849 Filed 6-23-09; 8:45 am]
BILLING CODE 6560-50-P