Document ID: EPA-HQ-OAR-2005-0161-0284
Agency: epa
Document Type: Proposed Rule
Title: Regulation of Fuels and Fuel Additives: Modifications to Renewable Fuel Standard program Requirements
Posted Date: 2008-10-02T04:00Z

[Federal Register: October 2, 2008 (Volume 73, Number 192)]
[Proposed Rules]               
[Page 57274-57280]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02oc08-18]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2005-0161; FRL-8723-4]
RIN 2060-AO80

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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to take action on amendments to the Renewable 
Fuel Standard program requirements. Following publication of the final 
rule promulgating the Renewable Fuel Standard regulations, EPA 
discovered a number of technical errors and areas within the 
regulations that could benefit from clarification or modification. This 
proposed rule would amend the regulations to make the appropriate 
corrections, clarifications and modifications. In the ``Rules and 
Regulations'' section of this Federal Register, we are amending the 
Renewable Fuel Standard program requirements as a direct final rule 
without a prior proposed rule. If we receive no adverse comment, we 
will not take further action on this proposed rule.

DATES: Written comments must be received by November 3, 2008.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2005-0161, by mail to Air and Radiation Docket, Docket No. EPA-HQ-
OAR-2005-0161, Environmental Protection Agency, Mailcode: 6406J, 1200 
Pennsylvania Ave., NW., Washington, DC 20460. Please include a total of 
2 copies. Comments may also be submitted electronically or through hand 
delivery/courier by following the detailed instructions in the 
ADDRESSES section of the direct final rule located in the rules section 
of this Federal Register.

FOR FURTHER INFORMATION CONTACT: Megan Brachtl, Compliance and 
Innovative Strategies Division, Office of Transportation and Air 
Quality, Mail Code: 6406J, Environmental Protection Agency, 1200 
Pennsylvania Avenue, NW., Washington, DC 20460; telephone number: (202) 
343-9473; fax number: (202) 343-2802; e-mail address: 
brachtl.megan@epa.gov.

SUPPLEMENTARY INFORMATION:

I. Why Is EPA Issuing This Proposed Rule?

    This document proposes to take action on amendments to the 
Renewable Fuel Standard program requirements. We have published a 
direct final rule which amends the Renewable Fuel Standard program 
requirements in the ``Rules and Regulations'' section of this Federal 
Register because we view this as a noncontroversial action and 
anticipate no adverse comment. We have explained our reasons for this 
action in the preamble to the direct final rule.
    If we receive no adverse comment, we will not take further action 
on this proposed rule. If we receive adverse comment, we will withdraw 
the direct final rule and it will not take effect. We would address all 
public comments in any subsequent final rule based on this proposed 
rule. If we receive adverse comment on a distinct provision of this 
rulemaking, we will publish a timely withdrawal in the Federal Register 
indicating which provisions we are withdrawing. The provisions that are 
not withdrawn will become effective on the date set out above, 
notwithstanding adverse comment on any other provision.

[[Page 57275]]

    We do not intend to institute a second comment period on this 
action. Any parties interested in commenting must do so at this time. 
For further information, please see the information provided in the 
ADDRESSES section of this document.

II. Does This Action Apply to Me?

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

----------------------------------------------------------------------------------------------------------------
                                                                               Examples of potentially regulated
                 Category                   NAICS codes \a\    SIC codes \b\                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, subparts D, E and F of title 40 
of the Code of Federal Regulations. If you have any question regarding 
applicability of this action to a particular entity, consult the person 
in the preceding FOR FURTHER INFORMATION CONTACT section above.

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

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

IV. Renewable Fuel Standard Program Amendments

    Following publication of the final Renewable Fuel Standard (RFS) 
program regulations (72 FR 23900, May 1, 2007), EPA discovered a number 
of areas within the RFS regulations at 40 CFR Part 80, Subpart K that 
were in error, were unclear, or otherwise could benefit from 
modification. We have attempted to clarify some ambiguities in our 
Question and Answer document for the RFS program.\1\ However, in some 
cases we believe it is appropriate to modify the regulations. As a 
result, we are proposing to make the following amendments to the RFS 
regulations in Subpart K.
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    \1\ See ``Questions and Answers on the Renewable Fuel Standard 
Program'' at http://www.epa.gov/otaq/renewablefuels/index.htm#comp.
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A. Summary of Amendments

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

[[Page 57276]]

                         RFS Program Amendments
------------------------------------------------------------------------
              Section                            Description
------------------------------------------------------------------------
80.1101(d)(2).....................  Corrected typographical error.
80.1101(d)(3).....................  Clarified that no more than 5 volume
                                     percent denaturant may be included
                                     in the volume of ethanol produced,
                                     imported or exported for purposes
                                     of determining compliance with the
                                     requirements under this subpart.
                                     See Section IV.B.
80.1107(c)........................  Clarified that the gasoline products
                                     to be included in an obligated
                                     party's Renewable Volume Obligation
                                     (RVO) calculation should not be
                                     double-counted.
80.1126(a)(1).....................  Clarified that this provision
                                     pertains to Renewable
                                     Identification Number (RIN)
                                     generation, not RIN transfers.
80.1126(b)........................  Clarified that renewable fuel
                                     producers that are below the 10,000
                                     gallon threshold are exempt from
                                     the attest engagement requirements
                                     in 80.1164 as well as other
                                     reporting and recordkeeping
                                     requirements.
80.1126(d)(1).....................  Clarified that the RIN that must be
                                     generated for each batch of
                                     renewable fuel that is produced or
                                     imported is a ``batch-RIN.''
80.1127(b)(2).....................  Corrected typographical error in
                                     deficit carryover equation.
80.1128(a)(5) (ii) and (iii);       Revised this paragraph to allow
 removed (a)(5) (iv) & (v).          parties to use an equivalence value
                                     of 2.5 RINs per gallon for any
                                     renewable fuel for purposes of
                                     calculating the end-of-quarter
                                     check. See Section IV.C.
80.1128(a)(6); removed (a)(7).....  Deleted. Based on experience with
                                     the program to date, we believe
                                     this requirement is not necessary
                                     to fulfill the goals of the
                                     program. See Section IV.D. (Sec.
                                     80.1128(a) has also been renumbered
                                     to adjust for this change.)
80.1129(b)(1) and (b)(8)..........  Revised to clarify that a party with
                                     a small refinery or small refiner
                                     exemption may only separate RINs
                                     that have been assigned to a volume
                                     of renewable fuel that the party
                                     blends into motor vehicle fuel.
80.1129(b)(2).....................  Revised to clarify that up to 2.5
                                     gallon-RINs may be separated when a
                                     volume of renewable fuel is blended
                                     into gasoline.
80.1129(b)(4).....................  Revised to allow any party to
                                     separate the RINs from renewable
                                     fuel that it produces or markets
                                     for use in motor vehicles in neat
                                     form, or uses in motor vehicles in
                                     neat form. An oversight in the
                                     current regulations only allows
                                     this for renewable fuel producers
                                     and importers.
80.1129(b)(6).....................  Revised to provide that this
                                     provision applies only to neat fuel
                                     for which an obligated party
                                     generates RINs. See Section IV.E.
80.1129(d)........................  Revised to delete the requirement
                                     that a separated RIN may not be
                                     transferred on a product transfer
                                     document that is used to transfer a
                                     volume of renewable fuel, since it
                                     will be clear from other
                                     information required on the product
                                     transfer document whether or not
                                     any assigned RINs have also been
                                     transferred with the fuel.
80.1131(a)(8); removed (b)(4).....  Moved the text in paragraph (b)(4)
                                     to a new paragraph (a)(8) in order
                                     to clarify that a RIN that is
                                     transferred to two or more parties
                                     is considered an invalid RIN.
80.1132(a), (b) and (c)...........  Revised to clarify that the
                                     requirements of Sec.   80.1132
                                     apply to fuel that has been
                                     disposed of as well as fuel that
                                     has been spilled. See Section IV.F.
80.1141(a)(1), 80.1142(a)(1)......  Amended to clarify that a refinery
                                     with an approved small refinery
                                     exemption or a refiner with a small
                                     refiner exemption is exempt from
                                     requirements that apply to
                                     obligated parties during the period
                                     of time that the small refinery or
                                     small refiner exemption is in
                                     effect.
80.1141(a)(1).....................  Corrected calendar year reference.
80.1141(a)(4), 80.1142(a)(4)......  Revised to clarify that the small
                                     refinery and small refiner
                                     exemptions only apply to refineries
                                     or refiners that process crude oil,
                                     or feedstocks derived from crude
                                     oil, through refinery processing
                                     units.
80.1141(b)(2)(ii).................  Revised in order to clarify that
                                     small refinery status can be
                                     transferred with the sale of a
                                     refinery. Section 80.1141(b)(2)(ii)
                                     currently requires the owner of a
                                     small refinery to submit a letter
                                     stating that the company owned the
                                     refinery as of the applicable date
                                     for eligibility for small refinery
                                     status. This provision has been
                                     revised to require the letter only
                                     to state that the refinery was
                                     small as of the applicable date.
                                     Thus, any refinery that qualifies
                                     for small refinery status retains
                                     its status even if the refinery is
                                     sold to another company.
80.1142(e)........................  Revised to clarify that a refiner
                                     who is disqualified as a small
                                     refiner must notify EPA in writing
                                     no later than 20 days following the
                                     disqualifying event.
80.1151(a)(3)(i), (b)(4)(i) and     Deleted requirement to retain
 (d)(3)(i).                          records of ``expired RINs,'' since
                                     it is apparent when a RIN has
                                     expired from the date of the RIN
                                     and information regarding expired
                                     RINs is not required to be reported
                                     to EPA. See Section IV.G.
80.1152(c)(1) (iii) and (v),        Deleted requirement to report
 (c)(2).                             ``expired RINs,'' since it will be
                                     apparent when a RIN has expired
                                     from other information provided in
                                     the reports. Paragraph (c)(2) has
                                     also been renumbered. See Section
                                     IV.G. Deleted provisions relating
                                     to the submission of transaction
                                     and quarterly gallon-RIN reports on
                                     a facility-by-facility basis, since
                                     RIN trading activities are
                                     conducted on a company basis.
80.1153(a)(5).....................  Revised to clarify the language
                                     required to be included on product
                                     transfer documents for transfers of
                                     fuel with no assigned RINs.
80.1154(a)(4) and (b).............  Revised to clarify that producers
                                     who produce less than 10,000
                                     gallons of renewable fuel per year
                                     are exempt from the attest
                                     engagement requirements as well as
                                     the other recordkeeping and
                                     reporting requirements.
80.1160(a), (b)(1), and (f).......  Revised to clarify specific acts
                                     that are prohibited under the RFS
                                     program.
80.1164...........................  Revised to clarify the attest
                                     engagement requirements, and, where
                                     possible, to modify the
                                     requirements to make them less
                                     burdensome. See Section IV.H.
80.1165, 80.1166, 80.1167.........  Corrected typographical errors.
------------------------------------------------------------------------

B. Amount of Denaturant in Ethanol

    Section 80.1101(d)(3) specifies that ethanol must contain a 
denaturant to be covered by the definition of ``renewable fuel'' under 
the RFS rule. For purposes of compliance with the RFS, a volume of 
ethanol includes the volume of denaturant contained in the ethanol. 
Under Sec.  80.1107(d), renewable fuel,

[[Page 57277]]

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

C. Equivalence Values for End-of-Quarter Check

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

D. RIN Transfer Requirements for Producers and Importers

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

E. RINs That an Obligated Party Generates

    Section 80.1129(b)(1) provides that an obligated party must 
separate any RINs that have been assigned to a volume of renewable fuel 
that the obligated party owns. An exception to this requirement is 
provided in Sec.  80.1129(b)(6) for obligated parties who also generate 
RINs. Under this section, an obligated party who generates RINs may 
separate such RINs from volumes of renewable fuel only up to the level 
of gallon-RINs of the party's RVO. The limitation in Sec.  
80.1129(b)(6) was included in the regulations to prevent a renewable 
fuel producer from importing a small amount of gasoline, which would 
qualify the producer as an obligated party, in order to separate the 
RINs from all of the renewable fuel that the party produced.
    It has come to our attention that the limitation in Sec.  
80.1129(b)(6) may be problematic in situations where a party imports 
gasoline that contains renewable fuel. Under Sec.  80.1126(d), RINs 
must be generated for any renewable fuel that is imported, including 
any renewable fuel contained in imported gasoline. For example, if a

[[Page 57278]]

party imports 100 gallons of E10, the party would be required to 
generate RINs for the volume of ethanol in the E10, which would be 10 
gallon-RINs. The party also would calculate its RVO based on the 
applicable RFS standard, which for 2008 is 7.76%. The standard as 
applied to the gasoline part of the volume of imported E10 in the 
example would result in an RVO of 6.98 gallon-RINs (7.76% x 90 
gallons). Since the party would be able to separate RINs only up to the 
party's RVO, or 6.98 gallon-RINs, the party would have 3.02 assigned 
gallon-RINs which could not be separated. Under Sec.  80.1128(a)(5), 
each party that owns assigned RINs must demonstrate that the party does 
not own more assigned gallon-RINs at the end of each quarter than the 
amount of renewable fuel in the party's inventory, multiplied by its 
equivalence value. In the example above, the party would own 3.02 
assigned gallon-RINs at the end of the quarter, but would not have any 
renewable fuel in its inventory. As a result, the party would not be in 
compliance with the requirement in Sec.  80.1128(a)(5).
    To address this situation, this rule would modify the regulations 
to apply the limitation in Sec.  80.1129(b)(6) only to neat renewable 
fuel for which the party generates RINs and not to renewable fuel 
already blended in gasoline. Thus, in the example above, the party 
would generate 10 gallon-RINs for the ethanol contained in the E10 and 
the party's RVO would be 6.98 gallon-RINs, but the party would be able 
to separate all of the 10 gallon-RINs from the fuel. The party then 
would have no assigned RINs at the end of the quarter and would not be 
in violation of the requirement in Sec.  80.1128(a)(5). If the party in 
our example imported 100 gallons of non-ethanol gasoline and 10 gallons 
of neat renewable fuel, the party would generate 10 gallon-RINs, but 
could only separate RINs up to the party's RVO, which be 7.76 gallon-
RINs (7.76% x 100 gallons). As a result, the party would have 2.24 
assigned gallon-RINs left, but would also have10 gallons of renewable 
fuel in its inventory, and, therefore, the party would be in compliance 
with the requirement in Sec.  80.1128(a)(5).

F. Renewable Fuel That Has Been Disposed of

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

G. Elimination of Expired RIN Category

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

H. Attest Engagements

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

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

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

[[Page 57279]]

to the 211(o) regulations to be ``in accordance'' with the regulations 
in effect when EISA was enacted, and will implement the finalized 
regulations upon their effective date.

VI. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

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

B. Paperwork Reduction Act

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

C. Regulatory Flexibility Act

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

D. Unfunded Mandates Reform Act

    This proposed 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 proposed rule will have the 
overall effect of reducing the burden of the RFS regulations on 
regulated parties. Thus, this proposal is not subject to the 
requirements of sections 202 or 205 of UMRA.
    This proposed 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 proposed rule does not have federalism implications. It would 
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 proposes to make 
minor technical corrections and modifications to existing regulations 
in order to lessen the burden on related parties. Thus, Executive Order 
13132 does not apply to this rule.

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

    This proposed 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

[[Page 57280]]

enforceable duties on communities of Indian tribal governments. Thus, 
Executive Order 13175 does not apply to this action.

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

    EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) 
as applying only to those regulatory actions that concern health or 
safety risks, such that the analysis required under section 5-501 of 
the Executive Order has the potential to influence the regulation. This 
proposed action is not subject to Executive Order 13045 because it 
would 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 proposal is not subject to Executive Order 13211 (66 FR 18355 
(May 22, 2001)), because it is not a significant regulatory action 
under Executive Order 12866.

I. National Technology Transfer and Advancement Act

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

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

    Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this proposal 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.

List of Subjects in 40 CFR Part 80

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

    Dated: September 25, 2008.
Stephen L. Johnson,
Administrator.
 [FR Doc. E8-23130 Filed 10-1-08; 8:45 am]

BILLING CODE 6560-50-P