Document ID: EPA-HQ-OAR-2021-0324-0002
Agency: epa
Document Type: Proposed Rule
Title: Renewable Fuel Standard Program: Renewable Fuel Standard Annual Rules
Posted Date: 2021-12-21T05:00Z

[Federal Register Volume 86, Number 242 (Tuesday, December 21, 2021)]
[Proposed Rules]
[Pages 72436-72501]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26839]

[[Page 72435]]

Vol. 86

Tuesday,

No. 242

December 21, 2021

Part V

Environmental Protection Agency

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40 CFR Parts 80 and 1090

Renewable Fuel Standard (RFS) Program: RFS Annual Rules; Proposed Rule

  Federal Register / Vol. 86 , No. 242 / Tuesday, December 21, 2021 / 
Proposed Rules  

[[Page 72436]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 80 and 1090

[EPA-HQ-OAR-2021-0324; FRL-8521-02-OAR]
RIN 2060-AV11

Renewable Fuel Standard (RFS) Program: RFS Annual Rules

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: Under section 211 of the Clean Air Act, the Environmental 
Protection Agency (EPA) is required to set standards every year to 
implement nationally applicable renewable fuel volume targets. This 
action proposes to modify the 2021 and 2022 statutory volume targets 
for cellulosic biofuel, advanced biofuel, and total renewable fuel, as 
well as to establish the 2022 volume target for biomass-based diesel. 
This action also proposes to modify the previously established 
cellulosic biofuel, advanced biofuel, and total renewable fuel volume 
requirements for 2020. In addition, this action proposes the 2020, 
2021, and 2022 renewable fuel standards for all four of the above 
biofuel categories. Finally, this action also proposes to address the 
remand of the 2016 standard-setting rulemaking, as well as several 
regulatory changes to the Renewable Fuel Standard (RFS) program 
including regulations for the use of biointermediates to produce 
qualifying renewable fuel, flexibilities for regulated parties, and 
clarifications of existing regulations.

DATES: Comments. Comments must be received on or before February 4, 
2022.
    Public hearing. EPA announced information regarding the public 
hearing for this proposal in a Federal Register document published on 
December 10, 2021, at 86 FR 70426.

ADDRESSES: Comments. You may send your comments, identified by Docket 
ID No. EPA-HQ-OAR-2021-0324, by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov 
(our preferred method). Follow the online instructions for submitting 
comments.
     Email: [email protected]. Include Docket ID No. EPA-
HQ-OAR-2021-0324 in the subject line of the message.
     Mail: U.S. Environmental Protection Agency, EPA Docket 
Center, Air Docket, Mail Code 28221T, 1200 Pennsylvania Avenue NW, 
Washington, DC 20460.
     Hand Delivery or Courier (by scheduled appointment only): 
EPA Docket Center, WJC West Building, Room 3334, 1301 Constitution 
Avenue NW, Washington, DC 20004. The Docket Center's hours of 
operations are 8:30 a.m.-4:30 p.m., Monday-Friday (except Federal 
Holidays).
    Instructions: All submissions received must include the Docket ID 
No. for this rulemaking. Comments received may be posted without change 
to https://www.regulations.gov, including any personal information 
provided. For the full EPA public comment policy, information about 
confidential business information (CBI) or multimedia submissions, and 
general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.
    Out of an abundance of caution for members of the public and our 
staff, the EPA Docket Center and Reading Room are closed to the public, 
with limited exceptions, to reduce the risk of transmitting COVID-19. 
Our Docket Center staff will continue to provide remote customer 
service via email, phone, and webform. We encourage the public to 
submit comments via https://www.regulations.gov or email, as there may 
be a delay in processing mail and faxes. Hand deliveries and couriers 
may be received by scheduled appointment only. For further information 
on EPA Docket Center services and the current status, please visit us 
online at https://www.epa.gov/dockets.
    EPA continues to carefully and continuously monitor information 
from the Centers for Disease Control and Prevention (CDC), local area 
health departments, and our Federal partners so that we can respond 
rapidly as conditions change regarding COVID-19.

FOR FURTHER INFORMATION CONTACT: Dallas Burkholder, Office of 
Transportation and Air Quality, Assessment and Standards Division, 
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 
48105; telephone number: 734-214-4766; email address: [email protected]. Comments on this proposal should not be submitted 
to this email address, but rather through https://www.regulations.gov 
as discussed in the ADDRESSES section.

SUPPLEMENTARY INFORMATION: Entities potentially affected by this 
proposed rule are those involved with the production, distribution, and 
sale of transportation fuels, including gasoline and diesel fuel, as 
well as renewable fuels such as ethanol, biodiesel, renewable diesel, 
and biogas. Potentially affected categories include:

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                                                         Examples of
             Category                  NAICS \1\    potentially affected
                                         codes            entities
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Industry..........................          324110  Petroleum
                                                     refineries.
Industry..........................          325193  Ethyl alcohol
                                                     manufacturing.
Industry..........................          325199  Other basic organic
                                                     chemical
                                                     manufacturing.
Industry..........................          424690  Chemical and allied
                                                     products merchant
                                                     wholesalers.
Industry..........................          424710  Petroleum bulk
                                                     stations and
                                                     terminals.
Industry..........................          424720  Petroleum and
                                                     petroleum products
                                                     merchant
                                                     wholesalers.
Industry..........................          221210  Manufactured gas
                                                     production and
                                                     distribution.
Industry..........................          454319  Other fuel dealers.
------------------------------------------------------------------------
\1\ North American Industry Classification System (NAICS).

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be affected by this 
proposed action. This table lists the types of entities that EPA is now 
aware could potentially be affected by this proposed action. Other 
types of entities not listed in the table could also be affected. To 
determine whether your entity would be affected by this proposed 
action, you should carefully examine the applicability criteria in 40 
CFR parts 80 and 1090. If you have any questions regarding the 
applicability of this proposed action to a particular entity, consult 
the person listed in the FOR FURTHER INFORMATION CONTACT section.

Outline of This Preamble

I. Executive Summary
    A. Legal Authorities To Modify and Establish Renewable Fuel Volumes
    B. 2020 Volumes
    C. 2021 Volumes
    D. 2022 Volumes
    E. Response to the ACE Remand
    F. Annual Percentage Standards

[[Page 72437]]

    G. Biointermediates
    H. Other Changes
    I. Environmental Justice
    J. Endangered Species Act
II. Legal Authorities To Reduce and Establish Volumes
    A. Authorities To Modify Statutory Volumes Targets
    B. Authority To Establish BBD Volumes
    C. Considerations for Retroactive and Late Rulemaking
    D. Considerations in Revisiting an Established RFS Standard
    E. Applicability of Legal Authorities To Establish the Volume 
Requirements
    F. Severability
III. Proposed Volumes
    A. EPA's Assessment of the Statutory Factors for Each Component 
Category of Biofuel
    B. Proposed Volumes for 2020
    C. Proposed Volumes for 2021
    D. Proposed Volumes for 2022
    E. Proposed Biomass-Based Diesel Volume for 2022
    F. Summary of the Proposed Volumes
    G. Impacts of the Proposed Volumes
IV. Interactions Between the RFS Annual Volumes
    A. Treatment of Carryover RINs
    B. Ability for the RFS Volumes To Impact Renewable Fuel Supply
V. Response to ACE Remand
    A. Reevaluating the 2014-2016 Annual Rule
    B. Consideration of Approaches for Responding to the ACE Remand
    C. Demonstrating Compliance With the 2022 Supplemental Standard
    D. Authority and Consideration of the Benefits and Burdens
    E. Calculating a Supplemental Percentage Standard for 2022
VI. Percentage Standards
    A. Calculation of Percentage Standards
    B. Small Refineries and Small Refiners
    C. Modification of the 2020 Biomass-Based Diesel Percentage 
Standard
    D. Proposed Standards
VII. Biointermediates
    A. Background
    B. Re-Proposal of Biointermediates Provisions Previously Proposed 
in REGS
    C. Changes to the Biointermediates Provisions Previously Proposed 
in the REGS Rule
    D. Other Considerations Related to Biointermediates
VIII. Amendments to Fuel Quality and RFS Regulations
    A. BBD Conversion Factor for Percentage Standard
    B. Changes to Registration for Baseline Volume
    C. Changes to Attest Engagements for Parties Owning RINs (``RIN 
Owner Only'')
    D. Public Access to Information
    E. Clarifying the Definition of ``Agricultural Digester''
    F. Definition of ``Produced from Renewable Biomass''
    G. Estimating Landfill Emissions for Lifecycle GHG Analysis of 
Fuels Produced From Separated Municipal Solid Waste
    H. Technical Corrections and Clarifications
IX. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act (RFA)
    D. Unfunded Mandates Reform Act (UMRA)
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments
    G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act (NTTAA) and 1 
CFR part 51
    J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations
X. Statutory Authority
    A red-line version of the regulatory language that incorporates the 
proposed changes in this action is available in the docket for this 
action.

I. Executive Summary

    The Renewable Fuel Standard (RFS) program began in 2006 pursuant to 
the requirements of the Energy Policy Act of 2005 (EPAct), which were 
codified in Clean Air Act (CAA) section 211(o). The statutory 
requirements were subsequently amended by the Energy Independence and 
Security Act of 2007 (EISA). The statute sets forth annual, nationally 
applicable volume targets for each of the four categories of renewable 
fuel. It also directs EPA to modify or establish volume targets in 
certain circumstances. EPA must then translate the volume targets into 
compliance obligations that obligated parties must meet every year.
    In this action we are proposing the applicable volumes for 
cellulosic biofuel, advanced biofuel, and total renewable fuel for 2021 
and 2022, and the biomass-based diesel (BBD) applicable volume for 
2022,\1\ as well as to modify the applicable volumes that EPA 
previously established for cellulosic biofuel, advanced biofuel, and 
total renewable fuel for 2020.2 3 We are also proposing the 
annual percentage standards (also known as ``percent standards'') for 
cellulosic biofuel, BBD, advanced biofuel, and total renewable fuel 
that would apply to gasoline and diesel produced or imported by 
obligated parties in 2020, 2021, and 2022. In addition, we are also 
proposing to address the remand of the 2014-2016 annual rule by the 
D.C. Circuit Court of Appeals, in Americans for Clean Energy v. EPA, 
864 F.3d 691 (2017) (hereafter ``ACE'') by proposing a supplemental 
volume of 250 million gallons in 2022, and we intend to propose an 
additional supplemental volume of 250 million gallons for 2023 in a 
subsequent action.
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    \1\ The 2021 BBD volume requirement was established in the 2020 
final rule. 85 FR 7016 (February 6, 2020).
    \2\ 85 FR 7016 (February 6, 2020).
    \3\ As explained in Section II, we did not trigger the reset 
authority for BBD. Thus, we are not proposing to reset the 
previously finalized 2020 and 2021 BBD volumes. In addition, actual 
BBD use in both 2020 and 2021 is projected to exceed the previously 
finalized volumes, so we see no need to retroactively reconsider the 
BBD volumes in any event. As discussed in Section III.E, we are 
proposing to set the 2022 BBD volume pursuant our ``set'' authority 
under CAA section 211(o)(2)(B)(ii)).

                                     Table I-1--Proposed Volume Requirements
                                               [Billion RINs] \a\
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                            Category                                   2020            2021            2022
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Cellulosic Biofuel..............................................            0.51            0.62            0.77
Biomass-Based Diesel \b\........................................        \c\ 2.43        \d\ 2.43            2.76
Advanced Biofuel................................................            4.63            5.20            5.77

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Total Renewable Fuel............................................           17.13           18.52           20.77
Supplemental Standard...........................................             n/a             n/a            0.25
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\a\ One Renewable Identification Number (RIN) is equivalent to one ethanol-equivalent gallon of renewable fuel.
  Throughout this preamble, RINs are generally used to describe total volumes in each of the four categories
  shown above, while gallons are generally used to describe volumes for individual types of biofuel such as
  ethanol, biodiesel, renewable diesel, etc. Exceptions include BBD, which is always given in physical volumes,
  and biogas and electricity, which are always given in RINs.
\b\ The BBD volumes are in physical gallons (rather than RINs).
\c\ Established in the 2019 RFS annual rule (83 FR 63704, December 11, 2018).
\d\ Established in the 2020 RFS annual rule (85 FR 7016, February 6, 2020).

    Finally, we are proposing several regulatory changes to the RFS 
program, including regulations for the use of biointermediates to 
produce qualifying renewable fuel, flexibilities for regulated parties, 
and clarifications of existing regulations.

A. Legal Authorities To Modify and Establish Renewable Fuel Volumes

    For the 2020, 2021, and 2022 cellulosic biofuel, advanced biofuel, 
and total renewable fuel volumes, EPA is fulfilling our statutory 
obligation to ``reset'' the statutory volumes in accordance with CAA 
section 211(o)(7)(F). This provision, entitled ``Modification of 
Applicable Volumes,'' provides that, if a waiver of any statutory 
volume target exceeds specified thresholds, EPA shall modify or 
``reset'' the statutory volume targets for all years following the year 
that the threshold was exceeded. This obligation has been triggered by 
EPA actions waiving volumes in previous annual standard-setting 
rulemakings. Under this statutory provision, we are proposing new 
volume targets for cellulosic biofuel, advanced biofuel, and total 
renewable fuel for 2020, 2021, and 2022.\4\
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    \4\ As we explain further in Section II, we are also 
independently justifying the 2020, 2021, and 2022 cellulosic biofuel 
volumes and the 2022 advanced biofuel and total renewable fuel 
volumes under the cellulosic waiver authority.
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    When resetting the statutory targets, EPA must comply with the 
processes, criteria, and standards set forth in CAA section 
211(o)(2)(B)(ii). In addition to reviewing the implementation of the 
program during previous years and coordinating with the Secretary of 
Energy and the Secretary of Agriculture, EPA must also analyze several 
factors:
     The impact of the production and use of renewable fuels on 
the environment, including on air quality, climate change, conversion 
of wetlands, ecosystems, wildlife habitat, water quality, and water 
supply;
     The impact of renewable fuels on the energy security of 
the U.S.;
     The expected annual rate of future commercial production 
of renewable fuels, including advanced biofuels in each category 
(cellulosic biofuel and BBD);
     The impact of renewable fuels on the infrastructure of the 
U.S., including deliverability of materials, goods, and products other 
than renewable fuel, and the sufficiency of infrastructure to deliver 
and use renewable fuel;
     The impact of the use of renewable fuels on the cost to 
consumers of transportation fuel and on the cost to transport goods; 
and
     The impact of the use of renewable fuels on other factors, 
including job creation, the price and supply of agricultural 
commodities, rural economic development, and food prices.
    With respect to the 2022 BBD volume, we are setting this volume 
under CAA section 211(o)(2)(B)(ii). The requirement to reset the 
statutory volume targets does not apply to BBD. However, CAA section 
211(o)(2)(B)(ii) separately requires that EPA set the BBD volume for 
years including 2022 based on an analysis of the same statutory factors 
as the reset authority.
    In addition to these statutory provisions, the D.C. Circuit has 
also established principles that EPA must follow when promulgating RFS 
rulemakings after the statutory deadline as well as retroactive RFS 
rulemakings.\5\ Namely, EPA has authority to promulgate such RFS rules, 
but EPA must reasonably consider and mitigate the burdens on obligated 
parties. Several aspects of this rulemaking are either retroactive or 
will be finalized after the statutory deadline, or both. Therefore we 
consider this caselaw as required by the court. We further discuss all 
our legal authorities to modify or establish volumes in Section II.
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    \5\ See, e.g., Americans for Clean Energy v. EPA, 864 F.3d 691 
(D.C. Cir. 2017); Monroe Energy, LLC v. EPA, 750 F.3d 909 (D.C. Cir. 
2014); Nat'l Petrochemical & Refiners Ass'n v. EPA, 630 F.3d 145, 
154-58 (D.C. Cir. 2010).
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B. 2020 Volumes

    EPA established the applicable 2020 volume requirements and 
percentage standards in late 2019.\6\ Since we promulgated those 
standards, several significant and unanticipated events occurred that 
affected the fuels markets in 2020. The two most prominent of these 
events were:
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    \6\ 85 FR 7016 (February 6, 2020).
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     The COVID-19 pandemic and the ensuing fall in 
transportation fuel demand, especially the disproportionate fall in 
gasoline demand relative to diesel demand, which significantly reduced 
the production and use of biofuels in 2020 below the volumes we 
anticipated could be achieved, and
     The potential that the volume of gasoline and diesel 
exempted from 2020 RFS obligations through small refinery exemption 
(SREs) will be far lower than projected in the 2020 final rule.
    These events are expected to adversely affect the ability of 
obligated parties to comply with the applicable standards and to 
achieve the intended volumes in the 2020 final rule.\7\ As a result, we 
are proposing to retroactively adjust the 2020 volumes and standards to 
reflect the actual volumes of renewable fuels and transportation fuel 
consumed in the U.S. As we discuss further in Sections III and IV, 
these revised volumes are supported by our analysis of the statutory 
factors that we must consider when resetting RFS volumes.
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    \7\ EPA extended the 2020 compliance deadline for obligated 
parties to January 31, 2022 (86 FR 17073, April 1, 2021). We have 
proposed to further extend that deadline in a separate action (86 FR 
67419, November 26, 2021).
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C. 2021 Volumes

    We are proposing volumes for 2021 that are equal to our projection 
of the volume of cellulosic biofuel, advanced biofuel, and total 
renewable fuel that will be used in the U.S. in 2021. Much like our 
proposed volumes for 2015,\8\ which were similarly retroactive and 
promulgated after the statutory

[[Page 72439]]

deadline, these volume projections are based on actual renewable fuel 
use for months in 2021 where data are available and projections of 
renewable fuel use for the remainder of the year. These volumes include 
both renewable fuel that is produced domestically as well as imported 
renewable fuel that is used in the U.S. As discussed in further detail 
in Sections III and IV of this proposal, we believe this approach for 
2021 is appropriate based on our analysis of the statutory factors EPA 
must analyze when resetting the RFS volumes, including our finding that 
this retroactive rulemaking has limited ability to incentivize 
increased production and use of renewable fuel in 2021.
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    \8\ 80 FR 33100 (June 10, 2015).
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D. 2022 Volumes

    The proposed volumes for 2022 are significantly higher than the 
proposed volumes for 2020 and 2021. As we discuss further in Sections 
III and IV, these volumes are based on our analysis of the statutory 
factors, including our assessment of the ability for the RFS program to 
incentivize increased production and use of renewable fuel in 2022, the 
statutory intent to support increasing production and use of renewable 
fuels, and the potential positive impacts of renewable fuels on several 
of the statutory factors such as climate change and energy security. 
The proposed volumes for 2022 also reflect the adverse impacts of 
biofuels on some statutory factors, including market and infrastructure 
constraints to the ability of RFS annual volume requirements to 
incentivize increased production and use of renewable fuel in the near 
term. These constraints include the commercial availability of 
cellulosic biofuel, the price and availability of feedstocks, and the 
availability of infrastructure to distribute higher level blends of 
ethanol.

E. Response to the ACE Remand

    In 2015, EPA established the total renewable fuel standard for 
2016. As part of that rule, we relied upon the general waiver authority 
under a finding of inadequate domestic supply to reduce the total 
renewable fuel volume target by 500 million gallons.\9\ Several parties 
challenged that action, and in ACE the U.S. Court of Appeals for the 
D.C. Circuit vacated EPA's use of the general waiver authority, finding 
that such use exceeded EPA's authority under the CAA. Specifically, EPA 
had impermissibly considered demand-side factors in its assessment of 
inadequate domestic supply, rather than limiting that assessment to 
supply-side factors. The court remanded the rule back to EPA for 
further consideration.
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    \9\ See 80 FR 77420 (December 14, 2015); CAA section 
211(o)(7)(A)(ii).
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    We now intend to restore the full 500 million gallons that we 
improperly waived in the 2016 rule but to do so over two years. 
Specifically, as we discuss further in Section V, we are proposing to 
add a supplemental volume obligation of 250 million gallons to the 
proposed 2022 standards. We also intend to propose an additional 
supplemental volume of 250 million gallons for 2023 in a subsequent 
action.

F. Annual Percentage Standards

    The statute directs EPA to establish annual standards that 
translate the nationally applicable volume targets into compliance 
obligations on obligated parties. In this action, EPA is proposing 
annual standards for 2020, 2021, and 2022 for all four categories of 
renewable fuel. We are also proposing a supplemental standard to 
address the ACE remand, which will apply in the 2022 compliance year.
    The renewable fuel standards are expressed as a volume percentage 
and are used by each refiner and importer of fossil-based gasoline or 
diesel to determine their renewable fuel volume obligations. The 
specific formulas we use in calculating the renewable fuel percentage 
standards are found in 40 CFR 80.1405. Four separate percentage 
standards are required under the RFS program, corresponding to the four 
separate renewable fuel categories shown in Table I-1. The proposed 
standards are shown in Table I.E-1. Details, including the projected 
gasoline and diesel volumes used, can be found in Section VI.
    In the 2020 standards final rule, we modified the formulas used to 
calculate the percentage standards to account for a projection of 
exempt gasoline and diesel volumes produced by small refineries.\10\ 
Subsequent to the promulgation of that rule, the Tenth Circuit Court of 
Appeals vacated three EPA SRE decisions as exceeding our statutory 
authority in Renewable Fuels Association v. EPA (hereinafter RFA).\11\ 
Most recently, the Supreme Court, in HollyFrontier v. Renewable Fuels 
Association (hereinafter HollyFrontier), vacated one of the bases for 
the RFA decision, holding that small refineries need not have had 
continuous exemptions since the original statutory exemption, but did 
not opine on the other two holdings in RFA because those issues were 
not appealed to the Court. We continue to consider the impact of these 
decisions on our SRE policy, and it is still unclear at this time 
whether we will be granting SREs for 2020, 2021, or 2022, and if so, to 
what degree. Thus, we are proposing a range of exempted volumes of 
gasoline and diesel as a result of SREs in the calculation of the 
applicable percentage standards, ranging from zero to 8.19 billion 
gallons.
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    \10\ 85 FR 7016 (February 6, 2020).
    \11\ Renewable Fuels Ass'n v. EPA, 948 F.3d 1206 (10th Cir. 
2020), rev'd in part sub nom., HollyFrontier Cheyenne Refining, LLC, 
v. Renewable Fuels Ass'n, 114 S. Ct. 2172 (2021).
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    The resulting range in the proposed percentage standards is shown 
in Table I.F-1.

                                                      Table I.F-1--Proposed Percentage Standards a
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                                                                       2020                            2021                            2022
                        Category                         -----------------------------------------------------------------------------------------------
                                                              Low (%)        High (%)         Low (%)        High (%)         Low (%)        High (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel......................................            0.32            0.34            0.36            0.38            0.44            0.46
Biomass-Based Diesel....................................            2.37            2.50            2.19            2.30            2.42            2.54
Advanced Biofuel........................................            2.91            3.07            3.03            3.18            3.27            3.42
Renewable Fuel..........................................           10.78           11.36           10.79           11.33           11.76           12.33
Supplemental Standard...................................             n/a             n/a             n/a             n/a            0.14            0.15
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\a\ Low values do not include any projected exempted gasoline and diesel volumes from SREs. High values include 8.19 billion gallons of projected
  exempted gasoline and diesel from SREs.

[[Page 72440]]

G. Biointermediates

    Since the RFS2 program was finalized in 2010, we have been made 
increasingly aware of renewable fuel producers that would like to 
process fuel at more than one facility. Specifically, renewable fuel 
producers would like to first have a facility process renewable biomass 
into a proto-renewable fuel (or ``biointermediate'') and then have a 
second, separate facility process that biointermediate into renewable 
fuel. In some cases, it may be preferable for economic or practical 
reasons for renewable biomass to be subjected to substantial pre-
processing at one facility before being sent to a different facility 
where it is converted into renewable fuel. For example, renewable 
biomass may be converted into a biointermediate (such as a biocrude) at 
one facility that requires some additional processing at a different 
facility before it can be used as transportation fuel. These production 
methodologies have the potential to lower the cost of using cellulosic 
and other feedstocks for the production of renewable fuels by reducing 
capital costs for new facilities and/or the storage and transportation 
costs associated with feedstock handling--especially for cellulosic 
biomass. Thus, we believe that such technologies provide an opportunity 
for the future growth in production of the cellulosic biofuels required 
under the RFS program. Based on this potential for future growth, in 
2016 we included in the proposed the Renewables Enhancement and Growth 
Support (REGS) rule provisions to allow for the production, transfer, 
and use of biointermediates to generate qualifying renewable fuel under 
the RFS program.\12\
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    \12\ See 81 FR 80828 (November 16, 2016).
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    Due to the elapsed time since the proposed REGS rule and our 
continued consideration of how to most effectively allow 
biointermediates into the program, we are proposing anew provisions to 
allow for the use of biointermediates to produce qualifying renewable 
fuels. Consistent with what we previously proposed in the REGS rule, 
these provisions specify requirements that apply when renewable fuel is 
produced through sequential operations at more than one facility. These 
provisions center around the production, transfer, and use of 
biointermediates and the creation of new regulatory requirements 
related to registration, recordkeeping, and reporting for facilities 
producing or using a biointermediate for renewable fuel production. We 
are reproposing many of the proposed biointermediate provisions from 
the REGS rule without significant changes, making significant changes 
to some of the previously proposed provisions, and proposing some 
provisions for the first time here. We further discuss biointermediates 
in Section VII.

H. Other Changes

    We have identified several areas where regulatory changes would 
assist EPA in implementing our fuel quality and RFS programs. These 
proposed regulatory changes include:

 Changing the BBD weighting factor from 1.50 to 1.55
 Changes to registration for baseline volumes
 Changes to attest engagements for parties owning Renewable 
Identification Numbers (RINs)
 Treatment of confidential business information
 Clarifying the definition of ``agricultural digesters''
 Adding a definition of ``produced from renewable biomass''
 Other minor changes and technical corrections

    Each of these regulatory changes is discussed in greater detail in 
Section VIII. In Section VIII, we also seek comment on potential 
changes to our treatment of landfill emissions in our lifecycle 
greenhouse gas (GHG) analysis for fuels produced from separated 
municipal solid waste.

I. Environmental Justice

    Executive Order 12898 (59 FR 7629, February 16, 1994) establishes 
Federal executive policy on environmental justice (``EJ''). It directs 
Federal agencies, to the greatest extent practicable and permitted by 
law, to make achieving EJ 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 defines EJ as the fair treatment and meaningful 
involvement of all people regardless of race, color, national origin, 
or income with respect to the development, implementation, and 
enforcement of environmental laws, regulations, and policies.\13\ 
Executive Order 14008 (86 FR 7619, February 1, 2021) also calls on 
Federal agencies to make achieving EJ part of their missions ``by 
developing programs, policies, and activities to address the 
disproportionately high and adverse human health, environmental, 
climate-related and other cumulative impacts on disadvantaged 
communities, as well as the accompanying economic challenges of such 
impacts.'' It also declares a policy ``to secure environmental justice 
and spur economic opportunity for disadvantaged communities that have 
been historically marginalized and overburdened by pollution and under-
investment in housing, transportation, water and wastewater 
infrastructure and health care.'' EPA also released its ``Technical 
Guidance for Assessing Environmental Justice in Regulatory Analysis'' 
providing recommendations on conducting the highest quality analysis 
feasible, recognizing that data limitations, time and resource 
constraints, and analytic challenges will vary by media and regulatory 
context.\14\
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    \13\ See, e.g., ``Environmental Justice.'' Epa.gov, 
Environmental Protection Agency, 4 Mar. 2021, https://www.epa.gov/environmentaljustice.
    \14\ The definitions and criteria for ``disproportionate 
impacts,'' ``difference,'' and ``differential'' are contained in 
EPA's June 2016 guidance document ``Technical Guidance for Assessing 
Environmental Justice in Regulatory Analysis.'' Epa.gov, 
Environmental Protection Agency, https://www.epa.gov/sites/production/files/2016-06/documents/ejtg_5_6_16_v5.1.pdf.
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    When assessing the potential for disproportionately high and 
adverse health or environmental impacts of regulatory actions on 
minority populations, low-income populations, tribes, and/or indigenous 
peoples, EPA strives to answer three broad questions: (1) Is there 
evidence of potential EJ concerns in the baseline (the state of the 
world absent the regulatory action)? Assessing the baseline will allow 
EPA to determine whether pre-existing disparities are associated with 
the pollutant(s) under consideration (e.g., if the effects of the 
pollutant(s) are more concentrated in some population groups). (2) Is 
there evidence of potential EJ concerns for the regulatory option(s) 
under consideration? Specifically, how are the pollutant(s) and their 
effects distributed for the regulatory options under consideration? 
And, (3) do the regulatory option(s) under consideration exacerbate or 
mitigate EJ concerns relative to the baseline? It is not always 
possible to assess these questions in ways that produce quantitative 
results, though it may still be possible to describe them 
qualitatively.
    EPA's 2016 Technical Guidance does not prescribe or recommend a 
specific approach or methodology for conducting an EJ analysis, though 
a key consideration is consistency with the assumptions underlying 
other parts of the regulatory analysis when evaluating

[[Page 72441]]

the baseline and regulatory options. Where applicable and practicable, 
the Agency endeavors to conduct such an analysis. Going forward, EPA is 
committed to conducting EJ analysis for rulemakings based on a 
framework similar to what is outlined in EPA's Technical Guidance, in 
addition to investigating ways to further weave EJ into the fabric of 
the rulemaking process.
    In 2009, under the Endangerment and Cause or Contribute Findings 
for Greenhouse Gases Under Section 202(a) of the Clean Air Act 
(``Endangerment Finding''), the Administrator considered how climate 
change threatens the health and welfare of the U.S. population. As part 
of that consideration, he also considered risks to minority and low-
income individuals and communities, finding that certain parts of the 
U.S. population may be especially vulnerable based on their 
characteristics or circumstances. These groups include economically and 
socially disadvantaged communities; individuals at vulnerable 
lifestages, such as the elderly, the very young, and pregnant or 
nursing women; those already in poor health or with comorbidities; the 
disabled; those experiencing homelessness, mental illness, or substance 
abuse; and/or Indigenous or minority populations dependent on one or 
limited resources for subsistence due to factors including but not 
limited to geography, access, and mobility.
    Scientific assessment reports produced over the past decade by the 
U.S. Global Change Research Program (USGCRP),15 16 the 
Intergovernmental Panel on Climate Change (IPCC),17 18 19 20 
and the National Academies of Science, Engineering, and Medicine 
21 22 add more evidence that the impacts of climate change 
raise potential EJ concerns. These reports conclude that poorer or 
predominantly non-White communities can be especially vulnerable to 
climate change impacts because they tend to have limited adaptive 
capacities and are more dependent on climate-sensitive resources such 
as local water and food supplies, or have less access to social and 
information resources. Some communities of color, specifically 
populations defined jointly by ethnic/racial characteristics and 
geographic location, may be uniquely vulnerable to climate change 
health impacts in the United States. In particular, the 2016 scientific 
assessment on the Impacts of Climate Change on Human Health found with 
high confidence that vulnerabilities are place- and time-specific, 
lifestages and ages are linked to immediate and future health impacts, 
and social determinants of health are linked to greater extent and 
severity of climate change-related health impacts.
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    \15\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United 
States: Fourth National Climate Assessment, Volume II [Reidmiller, 
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. 
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research 
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
    \16\ USGCRP, 2016: The Impacts of Climate Change on Human Health 
in the United States: A Scientific Assessment. Crimmins, A., J. 
Balbus, J.L. Gamble, C.B. Beard, J.E. Bell, D. Dodgen, R.J. Eisen, 
N. Fann, M.D. Hawkins, S.C. Herring, L. Jantarasami, D.M. Mills, S. 
Saha, M.C. Sarofim, J. Trtanj, and L. Ziska, Eds. U.S. Global Change 
Research Program, Washington, DC, 312 pp. http://dx.doi.org/10.7930/J0R49NQX.
    \17\ Oppenheimer, M., M. Campos, R.Warren, J. Birkmann, G. 
Luber, B. O'Neill, and K. Takahashi, 2014: Emergent risks and key 
vulnerabilities. In: Climate Change 2014: Impacts, Adaptation, and 
Vulnerability. Part A: Global and Sectoral Aspects. Contribution of 
Working Group II to the Fifth Assessment Report of the 
Intergovernmental Panel on Climate Change [Field, C.B., V.R. Barros, 
D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee, 
K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. 
Levy, S. MacCracken, P.R. Mastrandrea, and L.L.White (eds.)]. 
Cambridge University Press, Cambridge, United Kingdom and New York, 
NY, USA, pp. 1039-1099.
    \18\ Porter, J.R., L. Xie, A.J. Challinor, K. Cochrane, S.M. 
Howden, M.M. Iqbal, D.B. Lobell, and M.I. Travasso, 2014: Food 
security and food production systems. In: Climate Change 2014: 
Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral 
Aspects. Contribution of Working Group II to the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change [Field, 
C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. 
Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, 
E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L. 
White (eds.)]. Cambridge University Press, Cambridge, United Kingdom 
and New York, NY, USA, pp. 485-533.
    \19\ Smith, K.R., A. Woodward, D. Campbell-Lendrum, D.D. Chadee, 
Y. Honda, Q. Liu, J.M. Olwoch, B. Revich, and R. Sauerborn, 2014: 
Human health: Impacts, adaptation, and co-benefits. In: Climate 
Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global 
and Sectoral Aspects. Contribution of Working Group II to the Fifth 
Assessment Report of the Intergovernmental Panel on Climate Change 
[Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, 
T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. 
Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and 
L.L. White (eds.)]. Cambridge University Press, Cambridge, United 
Kingdom and New York, NY, USA, pp. 709-754.
    \20\ IPCC, 2018: Global Warming of 1.5 [deg]C. An IPCC Special 
Report on the impacts of global warming of 1.5 [deg]C above pre-
industrial levels and related global greenhouse gas emission 
pathways, in the context of strengthening the global response to the 
threat of climate change, sustainable development, and efforts to 
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P[ouml]rtner, 
D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. 
P[eacute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. 
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. 
Waterfield (eds.)]. In Press.
    \21\ National Research Council. 2011. America's Climate Choices. 
Washington, DC: The National Academies Press. https://doi.org/10.17226/12781.
    \22\ National Academies of Sciences, Engineering, and Medicine. 
2017. Communities in Action: Pathways to Health Equity. Washington, 
DC: The National Academies Press. https://doi.org/10.17226/24624.
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    This proposed rule has the potential to reduce GHG emissions which 
would benefit all populations including minority populations, low-
income populations, and indigenous populations. The manner in which the 
market responds to the provisions in this proposed rule could also have 
non-GHG impacts. For instance, replacing petroleum fuels with renewable 
fuels could have impacts on water, air, and hazardous waste exposure 
for communities living near either existing or new facilities that 
produce these fuels. Replacing petroleum fuels with renewable fuels 
could also impact feedstock supplies and land-use, which could impact a 
range of communities through their impacts on air, water, and soil 
quality, as well as water quantity. Impacts on water quality in 
particular could impact communities that rely on aquatic ecosystems for 
income or sustenance, including indigenous peoples. While replacing 
petroleum fuels with renewable fuels is projected to cause small 
increases in food and fuel prices, these price impacts also may 
disproportionately affect low-income populations who spend a larger 
portion of their income on food and fuel.
    The extent to which such changes may be unevenly distributed 
spatially in ways that coincide with patterns of pre-existing exposure 
and vulnerabilities for minority populations, low income populations, 
and/or indigenous peoples is uncertain and would require predicting 
where these changes in production and land use change would occur at a 
fine spatial scale. EPA is taking comment on ways in which such effects 
could be better evaluated for future rulemakings. A more detailed 
discussion of potential EJ concerns as a result of this action can be 
found in Chapter 8 of the Draft Regulatory Impacts Analysis (DRIA), 
available in the docket for this action.

J. Endangered Species Act

    Section 7(a)(2) of the Endangered Species Act (ESA), 16 U.S.C. 
1536(a)(2), requires that Federal agencies such as EPA, along with the 
U.S. Fish and Wildlife Service (USFWS) and/or the National Marine 
Fisheries Service (NMFS) (collectively ``the Services''), ensure that 
any action authorized, funded, or carried out by the agency is not 
likely to jeopardize the continued existence of any endangered or 
threatened species or result in the destruction or adverse modification 
of designated critical habitat for such species. Under relevant 
implementing regulations, consultation is required

[[Page 72442]]

only for actions that ``may affect'' listed species or designated 
critical habitat. 50 CFR 402.14. Consultation is not required where the 
action has no effect on such species or habitat. For several prior RFS 
annual standard-setting rules, EPA did not consult with the Services 
under section 7(a)(2).
    On September 6, 2019, the United States Court of Appeals for the 
D.C. Circuit decided American Fuel & Petrochemical Manufacturers v. 
EPA, 937 F.3d 559 (2019), finding that EPA had failed to make an 
effects determination for ESA purposes with regard to the 2018 RFS rule 
and remanding the rule without vacatur to the Agency to make an 
appropriate effects determination. See id. at 598.
    On July 16, 2021, the same court decided Growth Energy v. EPA, 5 
F.4th 1 (2021), finding that EPA's determination that the 2019 RFS rule 
would have no effect on listed species or the designated critical 
habitat of such species was arbitrary and capricious and remanding the 
rule to the Agency without vacatur to comply with the ruling. See id. 
at 32.
    In light of this case law pertaining to EPA's action in prior years 
and consistent with section 7(a)(2) of the ESA and relevant ESA 
implementing regulations at 50 CFR part 402, EPA intends to initiate 
consultation, as appropriate, with the Services regarding this proposed 
rule.\23\ At this time, EPA is evaluating whether any federally listed 
threatened or endangered species or their critical habitat are likely 
to be adversely affected by the finalization of this rulemaking.
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    \23\ EPA also intends to respond to the court's remand of the 
2018 and 2019 RFS rules in a separate proceeding. We are not 
revisiting our ESA obligations related to the 2018 or 2019 rules in 
this rulemaking; any comments received on those topics will be 
deemed beyond the scope of this rulemaking.
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II. Legal Authorities To Reduce and Establish Volumes

    The CAA provides EPA with several authorities to reduce or 
establish the applicable renewable fuel volumes. This section discusses 
the statutory authorities, additional factors we are considering due to 
the retroactivity or lateness of parts of this rulemaking, additional 
factors related to our reconsideration of the previously finalized 
standards for 2020, how we are applying our authorities to propose 
these volumes, as well as the severability of the various portions of 
this proposed rule.

A. Authorities To Modify Statutory Volumes Targets

    In CAA section 211(o)(2), Congress specified increasing annual 
volume targets for total renewable fuel, advanced biofuel, and 
cellulosic biofuel for each year through 2022. However, Congress also 
recognized that under certain circumstances it would be appropriate for 
EPA to set different volume requirements than the statutory volume 
targets and thus provided waiver provisions in CAA section 211(o)(7). 
In this proposal, we are utilizing the cellulosic waiver authority 
under CAA section 211(o)(7)(D), and the reset authority under CAA 
section 211(o)(7)(F) to reduce volumes for 2020, 2021, and 2022. As 
discussed below, while we have previously sought comment on the use of 
general waiver authority to reduce volumes for 2020, the reductions 
proposed in this action are based on the use of our other authorities.
    1. Cellulosic Waiver Authority.
    Section 211(o)(7)(D)(i) of the CAA provides that if EPA determines 
that the projected volume of cellulosic biofuel production for a given 
year is less than the applicable volume specified in the statute, then 
EPA must reduce the applicable volume of cellulosic biofuel required to 
the projected volume available for that calendar year. In making this 
projection, EPA must take a ``neutral aim at accuracy.'' API v. EPA, 
706 F.3d 474, 479 (D.C. Cir. 2013). Pursuant to this provision, EPA has 
set the cellulosic biofuel requirement lower than the statutory volume 
for each year since 2010.
    CAA section 211(o)(7)(D)(i) also provides EPA with the authority to 
reduce the applicable volume of total renewable fuel and advanced 
biofuel in years when it reduces the applicable volume of cellulosic 
biofuel under that provision. The reduction must be less than or equal 
to the reduction in cellulosic biofuel. EPA has used this aspect of the 
cellulosic waiver authority to lower the advanced biofuel and total 
renewable fuel volumes every year since 2014. Further discussion of the 
cellulosic waiver authority, and EPA's interpretation of it, can be 
found in the preamble to the 2017 final rule.\24\
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    \24\ See 81 FR 89752-89753 (December 12, 2016); see also API v. 
EPA, 706 F.3d 474 (D.C. Cir. 2013) (requiring that EPA's cellulosic 
biofuel projections reflect a neutral aim at accuracy); Monroe 
Energy v. EPA, 750 F.3d 909, 915-16 (D.C. Cir. 2014) (affirming 
EPA's broad discretion under the cellulosic waiver authority to 
reduce volumes of advanced biofuel and total renewable fuel); 
Americans for Clean Energy v. EPA (``ACE''), 864 F.3d 691, 730-735 
(D.C. Cir. 2017) (same); Alon Refining Krotz Spring, Inc. v. EPA, 
936 F.3d 628, 662-663 (D.C. Cir. 2019) (same); American Fuel & 
Petrochemical Manufacturers v. EPA, 937 F.3d 559, 577-78 (D.C. Cir. 
2019) (same).
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    2. Reset Authority.
    The CAA provides that EPA shall modify the statutorily prescribed 
RFS volumes once certain triggers are met. This section discusses the 
statutory requirements that trigger the use of this reset authority, 
describes the process and criteria for such use, and explains the 
impact of this modification on our other waiver authorities.
a. Conditions for Resetting Volume Targets
    CAA section 211(o)(7)(F) sets forth EPA's authority to modify (or 
reset) the applicable volumes once certain triggers have been met. 
Specifically, EPA must reset the applicable volumes for a particular 
category of biofuel when, under CAA section 211(o)(7)(F)(i), we waive 
at least 20 percent of the applicable volume requirement for such 
category for two consecutive years, or, under CAA section 
211(o)(7)(F)(ii), we waive at least 50 percent of such applicable 
volume requirement for a single year. With the promulgation of the 2019 
annual standards, these conditions have been met for three categories 
of biofuel: Cellulosic biofuel, advanced biofuel, and total renewable 
fuel.\25\ We describe below, for each category of biofuel, the specific 
annual rules that satisfied these conditions.
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    \25\ Because the statutory volumes for biomass-based diesel 
lapsed after 2012, the reset provision, which only applies to 2016 
and subsequent years, does not apply to BBD.
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    The conditions for resetting cellulosic biofuel volumes were met by 
the 2010 annual standard, which reduced the applicable cellulosic 
biofuel volume by at least 50 percent triggering application of the 
reset authority under CAA section 211(o)(7)(F). In that rule, we waived 
the cellulosic applicable volume for the first time using the 
cellulosic waiver authority.\26\ We set the cellulosic biofuel 
applicable volume at 6.5 million gallons for 2010.\27\ This waiver 
resulted in an applicable volume that was 93.5 percent lower than the 
applicable volume requirement provided in the statute, 100 million, 
thus triggering the reset requirement under CAA section 
211(o)(7)(F)(ii). However, the statute also provides that ``no such 
modification in applicable volumes shall be made for any year before 
2016.'' CAA section 211(o)(7)(F). Therefore, although the trigger to 
modify the cellulosic biofuel volume target under the reset provision 
was met in 2010, the

[[Page 72443]]

statute did not require a change to the applicable volumes until 2016.
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    \26\ 75 FR 14670 (March 26, 2010).
    \27\ 75 FR 14675.
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    The conditions for resetting advanced biofuel volumes were met by 
the 2014 and 2015 annual standards, which reduced the applicable 
advanced biofuel volume by at least 20 percent for two consecutive 
years. For the 2014 annual standard, we waived the advanced biofuel 
volume for the first time.\28\ We set the advanced biofuel volume at 
2.67 billion gallons.\29\ This represented a reduction of 28.8 percent 
from the applicable volume requirement provided in the statute (3.75 
billion). This reduction therefore triggered the first year of 
reductions of at least 20 percent under CAA section 211(o)(7)(F)(i). 
For the 2015 annual standard, we reduced the advanced biofuel 
applicable volume to 2.88 billion gallons.\30\ This represented a 
reduction of 47.6 percent from the applicable volume requirement 
provided in the statute (5.5 billion). This represented the second 
consecutive year for which the Administrator waived volumes by at least 
20 percent, thus triggering the modification of the advanced biofuel 
volume under CAA section 211(o)(7)(F)(i).
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    \28\ 80 FR 77420 (December 14, 2015).
    \29\ Id.
    \30\ Id.
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    The conditions for resetting total renewable fuel volumes were met 
by the 2018 and 2019 annual standards, which reduced the applicable 
total renewable fuel volume by at least 20 percent for two consecutive 
years. For the 2018 annual standard, we reduced the total renewable 
fuel volume to 19.29 billion gallons.\31\ This represented a reduction 
of 25.8 percent from the applicable volume requirement provided in the 
statute (26 billion). This reduction therefore triggered the first year 
of reductions of at least 20 percent under CAA section 211(o)(7)(F)(i). 
For the 2019 annual standard, we reduced the total renewable fuel 
applicable volume to 19.92 billion gallons.\32\ This represented a 
reduction of 29 percent from the applicable volume requirement provided 
in the statute (28 billion). This represented the second consecutive 
year for which the Administrator waived volumes by at least 20 percent, 
thus triggering the modification of the total renewable fuel volume 
under CAA section 211(o)(7)(F)(i).\33\
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    \31\ 82 FR 58486 (December 12, 2017).
    \32\ 83 FR 63704 (December 11, 2018).
    \33\ Although we are exercising the reset authority in this 
action for 2020-2022 volumes, we could have exercised the reset 
authority for the 2016-2019 cellulosic and advanced biofuel volumes 
as well. We do not, however, have authority to reset total renewable 
fuel volumes for those years. In any event, we are not proposing to 
revisit the 2016-2019 volumes in this rulemaking.
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b. Factors That Must Be Analyzed
    In resetting the statutory volumes, EPA must comply with the 
processes, criteria, and standards set forth in CAA section 
211(o)(2)(B)(ii). That provision provides that the Administrator shall, 
in coordination with the Secretary of Energy and the Secretary of 
Agriculture, determine the applicable volumes of each biofuel category 
specified based on a review of implementation of the program during the 
calendar years specified in the table, and an analysis of the impact 
of:
     The production and use of renewable fuels on the 
environment;
     The impact of renewable fuels on the energy security of 
the U.S.;
     The expected annual rate of future commercial production 
of renewable fuels;
     The impact of renewable fuels on the infrastructure of the 
U.S.;
     The impact of the use of renewable fuels on the cost to 
consumers of transportation fuel and on the cost to transport goods; 
and
     The impact of the use of renewable fuels on other factors, 
including job creation, the price and supply of agricultural 
commodities, rural economic development, and food prices.
    While the statute requires that EPA base its determination on an 
analysis of these factors, it does not establish any numeric criteria, 
require a specific type of analysis (such as quantitative analysis), or 
provide guidance on how EPA should weigh the various factors. 
Additionally, we are not aware of anything in the legislative history 
of EISA that addresses these issues. Thus, as the Act ``does not state 
what weight should be accorded to the relevant factors,'' it ``give[s] 
EPA considerable discretion to weigh and balance the various factors 
required by statute.'' \34\
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    \34\ Nat'l Wildlife Fed'n v. EPA, 286 F.3d 554, 570 (D.C. Cir. 
2002); accord Riverkeeper, Inc. v. United States EPA, 358 F.3d 174, 
195 (2d Cir. 2004); BP Exploration & Oil, Inc. v. EPA, 66 F.3d 784, 
802 (6th Cir. 1995); see also Cal. by Brown v. Watt, 668 F.2d 1290, 
1317 (D.C. Cir. 1981) (``A balancing of factors is not the same as 
treating all factors equally. The obligation instead is to look at 
all factors and then balance the results. The Act does not mandate 
any particular balance, but vests the Secretary with discretion to 
weigh the elements. . . .'').
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    Additionally, we also have authority to consider other factors, 
including implied authority to consider factors that inform our 
analysis of the statutory factors, as well as explicit authority to 
consider ``the impact of the use of renewable fuels on other factors. . 
. .'' \35\ Accordingly, we have considered several other factors, 
including the intertwined nature of compliance with the 2020-2022 
standards, the size of the carryover RIN bank,\36\ how the retroactive 
nature of the 2020 and 2021 standards as compared to the prospective 
nature of the 2022 annual and supplemental standards affects the 
feasibility of compliance (Section IV),\37\ the supply of qualifying 
renewable fuels to U.S. consumers (Section III),\38\ soil quality 
(Chapter 3 of the DRIA),\39\ and environmental justice (Section I of 
this preamble and Chapter 8 of the DRIA).\40\
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    \35\ CAA section 211(o)(2)(B)(ii)(VI).
    \36\ The first two factors inform our analysis of the statutory 
factor ``review of the implementation of the program.'' CAA section 
211(o)(2)(B)(ii).
    \37\ The third factor (how the standards affect the feasibility 
of compliance) also informs our analysis of the statutory factor 
``the expected annual rate of future commercial production of 
renewable fuels.'' CAA section 211(o)(2)(B)(ii)(III).
    \38\ The fourth factor (supply of renewable fuels) is based on 
our analysis of this same statutory factor as well as of downstream 
constraints on biofuel use, including the statutory factors relating 
to infrastructure and costs. CAA section 211(o)(2)(B)(ii)(IV)-(V).
    \39\ Soil quality is closely tied to water quality and is also 
relevant to the impact of renewable fuels on the environment more 
generally.
    \40\ Environmental justice involves consideration of the impact 
of renewable fuels on several factors, including environmental and 
cost factors. This and the other non-enumerated factors are also 
relevant under the statutory factor ``the impact of the use of 
renewable fuels on other factors. . . .'' CAA section 
211(o)(2)(B)(ii)(VI).
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c. Impact on other Statutory Authorities To Waive Volumes
    Our proposed use of the reset authority in this action does not 
preclude our legal authority to waive volumes under the other waiver 
authorities. Nothing in the CAA suggests that once the volumes are 
reset they cannot be modified further, or that the reset authority 
cannot be used in conjunction with other waiver authorities such as the 
cellulosic waiver authority.\41\
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    \41\ See J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Intern., 
Inc., 534 U.S. 124, 143-44 (2001) (holding that when two statutes 
are capable of coexistence and there is not clearly expressed 
legislative intent to the contrary, each should be regarded as 
effective).
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3. General Waiver Authority
    Section 211(o)(7)(A) of the CAA provides that EPA, in consultation 
with the Secretary of Agriculture and the Secretary of Energy, may 
waive the applicable volumes specified in the Act in whole or in part 
based on a petition by one or more States, by any person subject to the 
requirements of the Act, or by the EPA Administrator by his own 
initiative. Such a waiver must be based on a determination by the 
Administrator, after public notice and opportunity for comment that: 
(1)

[[Page 72444]]

Implementation of the requirement would severely harm the economy or 
the environment of a State, a region, or the United States; or (2) 
there is an inadequate domestic supply.
    EPA received several requests for use of the general waiver 
authority for the 2020 standards from stakeholders concerned about the 
impacts on the fuels markets resulting from the COVID-19 pandemic. 
These included requests from the governors of multiple states based on 
their belief that the criteria for application of the general waiver 
authority were satisfied and that lowering the required volumes for 
2020 was appropriate. We published a notice in the Federal Register 
seeking comment on these requests.\42\ We are not proposing 
modifications to the 2020 volumes utilizing the general waiver 
authority in this action. In lieu of doing so, we are proposing to 
revise the 2020 volumes under our reset authority as discussed in 
Section III.B. Our proposal addresses many of the concerns raised in 
the general waiver petitions, including the shortfall in RIN generation 
in 2020, uncertainty regarding SREs following the Tenth Circuit's 
decision in RFA, and the hurdles those may present to obligated 
parties' compliance.
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    \42\ 86 FR 5182 (January 19, 2021). Comments on these requests 
are available in the docket for that notice, EPA-HQ-OAR-2020-0322. 
We have recently received an additional request to waive volumes 
using the general waiver authority from the Governor of Montana, 
available in the docket for this action.
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B. Authority To Establish BBD Volumes

    EPA has established the biomass-based diesel requirement under CAA 
section 211(o)(2)(B)(ii) since 2013 because the statute only provided 
BBD volumes through 2012. Thus, EPA is proposing an applicable volume 
for BBD for 2022 under this authority, which we term the ``set'' 
authority.\43\ As discussed in prior annual rulemakings, EPA is to 
determine the applicable volume of BBD, in coordination with the 
Secretary of Energy and the Secretary of Agriculture, based on an 
analysis of the same statutory factors enumerated above for 
``resetting'' volumes for the other fuel categories.\44\ The statute 
also requires that the BBD volume be set at or greater than the 1.0 
billion gallon volume requirement for 2012 in the statute, but does not 
provide any other numerical criteria that EPA is to consider.
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    \43\ The applicable volume for BBD for 2021 was established in 
the 2020 annual rulemaking. 85 FR 7016 (February 6, 2020).
    \44\ 85 FR 7016, 7047-7048 (February 6, 2020).
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C. Considerations for Retroactive and Late Rulemaking

    In this rulemaking, we are proposing several late or retroactive 
standards. EPA has in the past also missed statutory deadlines for 
promulgating RFS annual standards. In those cases, the D.C. Circuit 
found that EPA retains authority to promulgate annual standards for the 
years in question, so long as EPA exercises this authority 
reasonably.\45\ In doing so, EPA must balance the burden on obligated 
parties of a retroactive standard with the broader goal of the RFS 
program to increase renewable fuel use.\46\ Even if the rule does not 
operate retroactively, but is promulgated after the statutory deadline, 
EPA must consider and mitigate the burdens on obligated parties 
associated with a delayed rulemaking.\47\ In upholding EPA's 
retroactive standards for 2014 and 2015 in ACE, the court considered 
several specific factors, including the availability of RINs for 
compliance, the amount of lead time and adequate notice for obligated 
parties, and the availability of compliance flexibilities. 
Additionally, the court separately addressed rulemakings that were late 
(i.e., those issued after the statutory deadline) but were nonetheless 
not retroactive, emphasizing in that context the amount of lead time 
and adequate notice for obligated parties.\48\
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    \45\ Americans for Clean Energy v. EPA, 864 F.3d 691, 720 (D.C. 
Cir. 2017) (ACE); Monroe Energy, LLC v. EPA, 750 F.3d 909 (D.C. Cir. 
2014); Nat'l Petrochemical & Refiners Ass'n v. EPA, 630 F.3d 145, 
154-58 (D.C. Cir. 2010) (NPRA).
    \46\ NPRA, at 154-58 (D.C. Cir. 2010).
    \47\ ACE, 864 F.3d 691, 718 (D.C. Cir. 2017).
    \48\ Id. at 721.
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    In this rulemaking, we are proposing to exercise our reset 
authority after the statutory deadline of December 11, 2019 (which is 
one year after the promulgation of the 2019 final rule, which triggered 
the reset obligation for total renewable fuel).\49\ We are also 
proposing to exercise our set authority for the 2022 BBD volume after 
the statutory deadline of October 31, 2020. We are also promulgating 
the 2020 and 2021 standards after their statutory deadlines of November 
30, 2019 and 2020 respectively.\50\ These standards are retroactive and 
apply to gasoline and diesel produced or imported in 2020 and 2021. We 
discuss in detail the considerations for late or retroactive rulemaking 
for each of these requirements further in Section III.
---------------------------------------------------------------------------

    \49\ This was the deadline for resetting total renewable fuel 
volumes. The deadline for resetting advanced and cellulosic volumes 
passed earlier.
    \50\ These are also the deadlines for exercising the cellulosic 
waiver authority for those years, which we will also miss.
---------------------------------------------------------------------------

    In addition, in responding to the ACE remand of the 2016 annual 
rule, EPA is proposing a supplemental standard for 2022.\51\ We are 
proposing this supplemental standard after the statutory deadline for 
the 2016 standards (November 30, 2015). However, the proposed 
supplemental standard would prospectively apply to gasoline and diesel 
produced or imported in 2022. We further discuss our response to the 
ACE remand in Section V.
---------------------------------------------------------------------------

    \51\ We also intend to propose a supplemental standard for 2023 
in a subsequent action.
---------------------------------------------------------------------------

    We acknowledge that the final rule will issued after November 30, 
2021, thus rendering the 2022 and supplemental standards late and 
retroactive.\52\ Nonetheless, we are issuing this proposal in advance 
of 2022, and we anticipate that the final rule will apply mostly, if 
not entirely, prospectively to 2022. Thus, we believe the rule will be 
able to incent increased renewable fuel demand in that year consistent 
with the analysis in this proposal.
---------------------------------------------------------------------------

    \52\ As discussed in Section V, the supplemental standard in 
response to the ACE remand is already late.
---------------------------------------------------------------------------

D. Considerations in Revisiting an Established RFS Standard

    We are proposing to revise the previously finalized 2020 standards 
in this rulemaking. We generally have authority to reconsider and 
revise previously finalized RFS standards.\53\ In addition, the D.C. 
Circuit has held that EPA has authority to promulgate RFS standards 
retroactively. CAA section 211(o)(7) generally authorizes EPA to adjust 
the volume requirements based on appropriate considerations as well. In 
this action we are proposing to revise the 2020 standards in response 
to several unanticipated and exceptional events that have occurred 
since the promulgation of the standards and that have had direct and 
significant impacts on the fuels market and the ability of obligated 
parties to comply. We discuss these events and our rationale for 
revising the 2020 standards further in Section III.B.\54\
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    \53\ Nonetheless, we believe that we generally should not 
revisit past RFS standards. Doing so carries inherent costs for 
regulatory certainty and may unduly disrupt market expectations 
created by previously promulgated standards. Moreover, in the 2020 
final rule itself, we expressly stated that we did not intend to 
revisit that rulemaking and subsequently adjust the standards. See 
Response to Comments at 173, EPA-HQ-OAR-2019-0136.
    \54\ EPA also received two petitions from AFPM and API in early 
2020 seeking reconsideration of the 2020 annual rule under CAA 
section 307(d)(7)(B) in light of the RFA decision and its impact on 
EPA's projections of SREs in calculating the percentage standards. 
These petitions are available in the docket. See AFPM, Petition for 
Administrative Reconsideration of Renewable Fuel Standard Program: 
Standards for 2020 and Biomass-Based Diesel Volume for 2021 and 
Other Changes, 85 FR 7016 (Feb. 6, 2020) (Mar. 24, 2020); API, 
Petition for Reconsideration of the RFS 2020 Rule, EPA-HQ-OAR-2019-
0136 (April 6, 2020). We are not at this time determining whether 
these petitions met the standards for reconsideration under CAA 
section 307(d)(7)(B). Nonetheless, for the reasons described in this 
document, we believe it is appropriate to reconsider the 2020 RFS 
standards, and we are providing the procedural process (i.e., a CAA 
section 307(d) rulemaking to reconsider the 2020 RFS standards) 
requested in the petitions.

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[[Page 72445]]

E. Applicability of Legal Authorities To Establish the Volume 
Requirements

    EPA is proposing to reduce the applicable statutory volumes for 
2020, 2021 and 2022 utilizing both the cellulosic waiver and reset 
authorities. As described in Chapter 4 of the DRIA, the projected 
volumes of cellulosic biofuel production for 2020, 2021, and 2022 are 
all significantly less than the volume targets in the statute. 
Therefore, the cellulosic waiver authority requires EPA to lower the 
cellulosic biofuel volume for each year to the projected volumes 
available in each year. We are proposing to do so in this action. 
Additionally, we propose to find that these volumes are also 
appropriate under our reset authority.
    For advanced biofuel and total renewable fuel, we are proposing, 
under the reset authority alone, volumes equal to the projected actual 
volumes of such fuels available in 2020 and 2021. We recognize that 
this exceeds our maximum discretion under the cellulosic waiver 
authority; however, as we explain further in Section III, we do not 
believe that the lowest volumes permissible under the cellulosic waiver 
authority are appropriate based upon our consideration of the reset 
factors.\55\ For 2022, we are proposing, under both the cellulosic 
waiver authority and the reset authority, advanced biofuel and total 
renewable fuel volumes equal to the implied statutory volumes. This 
represents the maximum permitted reduction under the cellulosic waiver 
authority.\56\ We also believe these volumes are appropriate under the 
reset authority.
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    \55\ Under the cellulosic waiver authority, when EPA reduces the 
volume of cellulosic biofuel, EPA may reduce the advanced biofuel 
and total renewable fuel volumes by the same or a lesser amount.
    \56\ This is also consistent with our authority to apply equal 
reductions to the volumes of advanced biofuel and total renewable 
fuel under the cellulosic waiver. CAA(o)(7)(D)(i), see also 85 FR 
7016, 7047-7048 (February 6, 2020).
---------------------------------------------------------------------------

    In Sections III and IV and Chapter 2 of the DRIA, we set forth our 
policy and technical rationale for the proposed 2020, 2021, and 2022 
volumes for cellulosic biofuel, advanced biofuel, and total renewable 
fuel. Our analysis is framed in terms of the statutory factors that the 
reset authority requires us to consider, along with the considerations 
for retroactive and late rules identified by the D.C. Circuit.\57\ 
Since this analysis subsumes our policy and technical rationale for 
exercising the cellulosic waiver authority as well, we are not 
providing a separate analysis for the application of the cellulosic 
waiver authority.
---------------------------------------------------------------------------

    \57\ Further detail on our analysis of the statutory factors is 
found in the DRIA.
---------------------------------------------------------------------------

    We believe that subsuming the analysis for the application of the 
cellulosic waiver authority into the analysis for the application of 
the reset authority is appropriate for three reasons. First, with 
respect to the cellulosic biofuel volume for each year, the cellulosic 
waiver authority requires EPA to lower that volume to the projected 
volume available. This quantity is also a relevant consideration under 
the reset authority, and, accordingly, we have considered it in that 
context. See, e.g., CAA section 211(o)(2)(B)(ii)(III) (``the expected 
annual rate of future commercial production of renewable fuels''). 
Second, with respect to advanced biofuel and total renewable fuel, the 
cellulosic waiver authority does not specify any factors for EPA to 
consider (besides limiting the maximum quantity of reductions to the 
reduction in the cellulosic biofuel volume), and thus provides EPA 
broad discretion to consider relevant factors, including the factors we 
are considering in this proposal under the reset authority.\58\ Third, 
given the significant overlap between the analyses used for the 
cellulosic waiver and reset authorities, we do not believe that two 
sets of analyses would provide significant additional value, but would 
be redundant for both EPA and the public.
---------------------------------------------------------------------------

    \58\ In past annual rules, we considered many of the same 
factors as we do in this proposal, albeit under the guise of 
different terminology, such as ``reasonably attainable'' and 
``attainable'' volumes. See Section IV of the 2020 final rule at 85 
FR 7016. For instance, in that rule, just as in this rule, we 
considered feedstock availability, advanced biofuel production and 
distribution capacity, environmental impacts, and costs. We 
acknowledge that the analytical framework has shifted somewhat given 
the focus on the statutory reset factors. For instance, in the 2020 
final rule, unlike in this proposed rule, we did not explicitly 
consider the impacts of renewable fuels on job creation or rural 
economic development. Nonetheless, we believe those statutory 
factors (along with all the other factors we are considering under 
the reset authority) are ones that EPA may consider under the 
discretion we have under the cellulosic waiver authority. Congress's 
specification of those factors in the reset authority further 
suggests that they are permissible considerations for determining 
volumes generally, including in exercising the cellulosic waiver. 
This approach presents a shift in EPA's policy for the cellulosic 
waiver that we explicitly recognize and adopt as reasonable for the 
reasons described in this proposal. See FCC v. Fox Television 
Stations, Inc., 556 U.S. 502, 515 (2009). Ultimately, we note that 
the 2020, 2021, and 2022 total renewable fuel, advanced biofuel, and 
cellulosic biofuel volumes are all independently justified by the 
reset authority. Thus, any defect in our exercise of the cellulosic 
waiver authority is harmless so long as we have properly exercised 
the reset authority.
---------------------------------------------------------------------------

    We are also proposing a BBD volume for 2022 of 2.76 billion gallons 
under CAA section 211(o)(2)(B)(ii). Our policy and technical rationale 
for this volume is also set forth in Section III and Chapter 10 of the 
DRIA.

F. Severability

    The following portions of this rulemaking are mutually severable 
from each other: (1) The volumes and percentage standards for 2020, 
2021, and 2022; (2) The 2022 supplemental volume and standard; (3) The 
proposed provisions for biointermediates (discussed in Section VII); 
and (4) The regulatory amendments discussed in Section VIII. Each of 
the regulatory amendments in Section VIII is also severable from all 
the other regulatory amendments.
    If any of the above portions is set aside by a reviewing court, we 
intend the remainder of this action to remain effective. For instance, 
if a reviewing court sets aside the 2022 supplemental volume and 
standard, we intend the remaining 2020-2022 volumes and percentage 
standards, biointermediates provisions, and other regulatory 
amendments, to remain effective.

III. Proposed Volumes

    We are proposing 2020, 2021, and 2022 cellulosic biofuel, advanced 
biofuel, and total renewable fuel volumes under our reset 
authority.\59\ We are proposing the 2022 biomass-based diesel (BBD) 
volume under our set authority. As required by both the reset and set 
authorities, we have analyzed the statutory factors under CAA section 
211(o)(2)(B)(ii). We have also coordinated with the Secretary of Energy 
and the Secretary of Agriculture, including through the interagency 
review process, and their input is reflected in this proposal.
---------------------------------------------------------------------------

    \59\ As we explained in Section II.D, some of the volumes we are 
proposing in this action are also independently justified under the 
cellulosic waiver authority, but the policy and technical analysis 
for our exercise of the cellulosic waiver is subsumed under our 
analysis of the reset factors.
---------------------------------------------------------------------------

    In Section III.A, we summarize our analyses as they apply to each 
of three component categories of biofuel: Cellulosic biofuel, non-
cellulosic

[[Page 72446]]

advanced biofuel, and conventional renewable fuel.\60\ In Sections 
III.B through F, we describe our proposed volumes for 2020, 2021, and 
2022, along with our supporting assessment of the statutory factors. In 
Section III.G, we summarize the fuel costs and energy security benefits 
of the proposed volumes. In Section IV, we further discuss the 
relationship between the volume requirements for all three years as 
part of our review of the implementation of the program. Our preamble 
discussion provides a high-level, narrative summary of the statutory 
factors, focusing on the factors that we deem most appropriate. A more 
detailed discussion of all the statutory factors is set forth in the 
DRIA.
---------------------------------------------------------------------------

    \60\ Cellulosic biofuel corresponds directly to the statutory 
biofuel category. Cellulosic biofuel plus non-cellulosic advanced 
biofuel constitute the statutory advanced biofuel category. Finally, 
advanced biofuel plus conventional renewable fuel constitute the 
statutory total renewable fuel category. See CAA section 
211(o)(2)(B)(i)(I)-(IV).
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A. EPA's Assessment of the Statutory Factors for Each Component 
Category of Biofuel

1. Cellulosic Biofuel
    In EISA, Congress established escalating targets for cellulosic 
biofuel, reaching 16 billion gallons in 2022. After 2015, 84 percent of 
the growth in statutory volume of total renewable fuel was intended to 
come from cellulosic biofuel.\61\ This indicates that Congress intended 
the RFS program to provide a significant incentive for cellulosic 
biofuels and that the focus for years after 2015 was to be on 
cellulosic. Consistent with this intent, our assessment of the 
statutory factors suggests that cellulosic biofuels have multiple 
benefits, including the potential for very low lifecycle GHG emissions 
that meet or exceed the 60 percent GHG reduction threshold for 
cellulosic biofuel. Many of these benefits stem from the fact that 
nearly all of the feedstocks projected to be used to produce cellulosic 
biofuel through 2022 are either waste materials (as in the case of 
compressed natural gas and liquified natural gas (CNG/LNG) derived from 
biogas) or residues (in the cases of cellulosic ethanol from corn 
kernel fiber and corn stover, as well as cellulosic diesel and heating 
oil from mill residue). The use of many of the feedstocks currently 
being used to produce cellulosic biofuel are not expected to cause 
significant land use changes that might lead to adverse environmental 
impacts.
---------------------------------------------------------------------------

    \61\ From 2015 through 2022 the statutory target for cellulosic 
biofuel increases by 13.0 billion gallons, from 3.0 billion gallons 
to 16.0 billion gallons. During this same time period the statutory 
target for total renewable fuel increases by 15.5 billion gallons, 
from 20.5 billion gallons to 36.0 billion gallons. Thus, cellulosic 
biofuel was expected to account for 84% (13.0 billion gallons/15.5 
billion gallons) of the total renewable fuel increase.
---------------------------------------------------------------------------

    Despite these similarities, there are also significant differences 
between liquid cellulosic biofuels and CNG/LNG derived from biogas. 
None of the cellulosic biofuel feedstocks expected to be used to 
produce liquid cellulosic biofuels through 2022 are specifically 
produced to be used as feedstocks for cellulosic biofuel production. 
Many of these feedstocks (including agricultural residues, mill 
residue, and separated municipal solid waste (MSW)) have limited uses 
in other markets.\62\ Because of this, using these feedstocks to 
produce liquid cellulosic biofuel is not expected to have significant 
adverse impacts related to several of the statutory factors, including 
the conversion of wetlands, ecosystems and wildlife habitat, soil and 
water quality, the price and supply of agricultural commodities, and 
food prices. Notwithstanding these benefits, the cost of producing 
liquid cellulosic biofuel is high. These high costs are generally the 
result of low yields (e.g., gallons of fuel per ton of feedstocks) and 
the high capital costs of liquid cellulosic biofuel production 
facilities. In the near term (through 2022), the production of these 
fuels is likely to be dependent on relatively high cellulosic RIN 
prices (in addition to state level programs such as California's low 
carbon fuel standard (LCFS)) to be economically competitive with 
petroleum-based fuels.
---------------------------------------------------------------------------

    \62\ One potential exception is corn kernel fiber. Corn kernel 
fiber is a component of distillers grains, which is currently sold 
as animal feed. Depending on the type of animal to which the 
distillers grain is fed, corn kernel fiber removed from the 
distillers grain through conversion to cellulosic biofuel may need 
to be replaced with additional feed.
---------------------------------------------------------------------------

    CNG/LNG derived from biogas, like liquid cellulosic biofuel, is 
generally produced from waste materials or residues (e.g., through 
biogas collection from landfills, municipal wastewater treatment 
facility digesters, agricultural digesters, and separated MSW 
digesters) and thus is not expected to affect the conversion of 
wetlands, ecosystems and wildlife habitat, soil and water quality, the 
price and supply of agricultural commodities, and food prices. However, 
in contrast to the feedstocks generally used to produce liquid 
cellulosic biofuels, significant quantities of biogas from these 
sources are currently used to produce electricity, while smaller 
quantities are injected into natural gas pipelines. In some situations, 
such as at larger landfills, CNG/LNG derived from biogas may also be 
able to be produced at a price comparable to fossil natural gas. 
Despite this relatively low cost of production, the combination of the 
high cellulosic biofuel RIN price and the significant volume potential 
for CNG/LNG derived from biogas used as transportation fuel could have 
a relatively significant impact (about $0.01 per gallon) on the price 
of gasoline and diesel.\63\
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    \63\ See Chapter 5.1.2.2 of the DRIA for a further discussion of 
the expected impact of RINs generated for CNG/LNG derived from 
biogas on the transportation fuel market.
---------------------------------------------------------------------------

2. Non-Cellulosic Advanced Biofuel
    The volume targets established by Congress also anticipated 
significant growth in advanced biofuel beyond what is needed to satisfy 
the cellulosic standard. The statutory target for advanced biofuel in 
2022 (21 billion gallons) allowed for up to 5 billion gallons of non-
cellulosic advanced biofuel to be used towards the advanced biofuel 
volume target. In practice the vast majority of non-cellulosic advanced 
biofuel in the RFS program has been biomass-based diesel, with 
relatively small volumes of sugarcane ethanol and other advanced 
biofuels. Some of the statutory factors assessed by EPA suggest that 
the targets for non-cellulosic advanced biofuel established by 
Congress, or even higher volumes, are still appropriate. Notably, all 
advanced biofuels have the potential to provide significant GHG 
reductions as they are required to achieve at least 50 percent GHG 
reductions relative to the petroleum fuels they displace. Some types of 
advanced fuels, such as biodiesel and renewable diesel produced from 
fats, oils, and greases, provide even greater reductions than the 50 
percent threshold. This summary focuses on the impacts of advanced 
biodiesel and renewable diesel.
    Advanced biodiesel and renewable diesel together comprise 95 
percent or more of the total supply of non-cellulosic advanced biofuel 
over the last several years, and is expected to supply all of increase 
in advanced biofuel through 2022. High domestic production capacity and 
availability of imports indicate that volumes of non-cellulosic 
advanced biofuel in 2021 and 2022 may meet or even exceed the implied 
statutory targets. Similarly, the feedstocks used to make advanced 
biodiesel and renewable diesel (such as soy oil, canola oil, and corn 
oil, as well as waste oils such as white grease, yellow grease, trap 
grease, poultry fat, and tallow) currently exist in sufficient 
quantities globally to supply these increasing volumes. These 
feedstocks

[[Page 72447]]

have many existing uses that may require replacement with other 
suitable substitutes, but there is also potential for ongoing growth in 
the production of many of these feedstocks. Higher volume requirements 
for non-cellulosic advanced biofuel may also have energy security 
benefits, increase domestic employment in the biofuels industry, and 
increase income for biofuel feedstock producers.
    However, some of the factors assessed would support lower volumes 
of advanced biofuel. For instance, as described in Chapter 9 of the 
DRIA, the cost of biodiesel and renewable diesel is significantly 
higher than petroleum-based diesel fuel and is expected to remain so 
over the next several years. Even if biodiesel and renewable diesel 
blends are priced similarly to petroleum diesel at the pump after 
accounting for the relevant Federal and state incentives (including the 
RIN value), society as a whole nevertheless bears their full costs. 
Moreover, the fact that sufficient feedstocks exist to produce 
increasing quantities of advanced biodiesel and renewable diesel does 
not mean that those feedstocks are readily available or could be 
diverted to biofuel production without adverse consequences. As 
described in Chapter 5 of the DRIA, we expect only limited quantities 
of fats, oils, and greases and distillers corn oil to be available for 
increased biodiesel and renewable diesel production in future years. We 
expect that the primary feedstock available to biodiesel and renewable 
diesel producers in significant quantities through 2022 will be soybean 
oil and other vegetable oils whose primary markets are for food. 
Increased demand for soybean oil could lead to diversion of feedstocks 
from food and other current uses in addition to further incentivizing 
increased soybean crushing and soybean production. Increased soybean 
production in the U.S. and abroad in turn could result in greater 
conversion of wetlands, adverse impacts on ecosystems and wildlife 
habitat, adverse impacts negative impacts on water quality and supply, 
and increased prices for agricultural commodities and food prices. We 
request comment on the impacts of advanced biofuel production on the 
statutory factors, including impacts on wetlands, ecosystems, and 
wildlife habitat.
3. Conventional Renewable Fuel
    As with non-cellulosic advanced biofuel, some of the statutory 
factors assessed for conventional renewable fuel favor the implied 
statutory volume (15 billion gallons) or higher volumes, while other 
factors favor lower volumes. While conventional renewable fuels are 
generally required by EISA to achieve 20 percent GHG reductions 
relative to the petroleum fuels they displace, some conventional 
biofuel facilities exceed this threshold. Notably, EPA has developed an 
expedited petition process for ethanol production facilities using more 
efficient process technologies.\64\ The statute, however, also contains 
grandfathering provisions exempting any facility that had begun 
construction on or before December 19, 2007, from this requirement, so 
not all producers of conventional renewable fuels meet or are required 
to meet the 20 percent GHG reduction threshold.\65\
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    \64\ EPA has developed an ``Efficient Producer Petition 
Process,'' which encourages adoption of efficiency improvements in 
new ethanol facilities by expediting petition review and approval. 
Existing EPA estimates for corn starch ethanol produced in 2022 
using a dry mill process and natural gas fired process heat range 
from a 42 percent to a 17 percent reduction over baseline gasoline, 
depending on the technologies used at the production facility.
    \65\ See CAA section 211(o)(2)(A)(i).
---------------------------------------------------------------------------

    The vast majority of conventional renewable fuel that has been 
supplied to the U.S. is corn ethanol. Domestic production capacity for 
corn ethanol exceeds 16 billion gallons. Production of corn-ethanol in 
the U.S. reached a peak of 16.1 billion gallons in 2018.\66\ Higher 
volumes of conventional renewable fuel could result in more domestic 
jobs in the biofuels industry. At the same time, there are also 
significant volumes of palm biodiesel and renewable diesel that are 
produced internationally that could qualify as conventional renewable 
fuel under the grandfathering provisions of the RFS program. In the 
past, small volumes of grandfathered biodiesel and renewable diesel 
have been supplied to the U.S.\67\
---------------------------------------------------------------------------

    \66\ Energy Information Administration (EIA) Monthly Energy 
Review.
    \67\ Use of grandfathered biodiesel and renewable diesel reached 
a maximum of 157 million gallons in 2016. Since 2018 use of 
grandfathered biodiesel and renewable diesel has been very small 
(less than 1 million gallons each year). See Chapter 1.6 of the 
DRIA.
---------------------------------------------------------------------------

    However, some of the analyses we conducted support lower volumes of 
conventional renewable fuel. As with soy biodiesel, increased corn 
production in the U.S. could result in greater conversion of wetlands, 
adverse impacts on ecosystems and wildlife habitat, adverse impacts 
negative impacts on water quality and supply, and increased prices for 
agricultural commodities and food prices. Furthermore, constraints on 
ethanol use may also support lower implied volume requirements for 
conventional biofuel. The market has not achieved 15 billion gallons of 
actual use of conventional renewable fuel in any year in which the RFS 
standards were based on it. This was due to various factors, including 
limitations on ethanol use above the E10 blendwall, strong export 
markets for domestically produced ethanol, the effect of exempted small 
refinery volumes in depressing the effective RFS standards, and use of 
advanced biodiesel and renewable diesel, buoyed by its tax subsidy and 
other incentive programs, to meet the implied conventional portion of 
the total renewable fuel requirement.
    While the use of ethanol as E10 has been, and continues to be, 
economical for refiners and blenders, the use of E10 alone has not been 
sufficient to achieve the 15 billion gallons of ethanol use due to 
declining gasoline demand. The RFS program has had limited success in 
helping to increase the use of higher ethanol blends, and growth in the 
nationwide average gasoline ethanol concentration has virtually 
stagnated as the market reached the E10 blendwall. While the use of 
higher ethanol blends has increased since 2011, that growth has been 
small compared to prior growth in the use of E10 and in the use of non-
ethanol biofuels. We do not anticipate that growth in the use of higher 
ethanol blends through 2022 will increase rapidly enough to result in 
significantly greater volumes of ethanol consumption in the U.S., even 
with the incentives created by the RFS program standards and other 
governmental efforts such as Department of Agriculture's (USDA's) 
Blender Infrastructure Program and Higher Blends Infrastructure 
Incentive Program. Moreover, exporting ethanol to be blended with 
gasoline abroad has been more profitable in recent years than selling 
greater volumes of E15 or E85 domestically. We expect these trends in 
exports to continue given international demand for ethanol.
    In addition, total demand for gasoline was lower in 2020 and is 
expected to remain lower in 2021 and 2022 relative to the volume of 
gasoline consumed in 2017-2019 according to EIA's May 2021 Short Term 
Energy Outlook (STEO), which will limit the volume of ethanol used as 
E10.\68\ Most notably, the COVID-19 pandemic caused a significant fall 
in gasoline demand and sales of E10 starting in 2020. We would

[[Page 72448]]

expect, therefore, that even maintaining the implied 15 billion gallon 
statutory volume target for conventional renewable fuel going forward 
would require that volumes of biodiesel and renewable diesel, the least 
costly alternative source, increase to compensate for the reduction in 
ethanol use.
---------------------------------------------------------------------------

    \68\ The May 2021 STEO estimates gasoline consumption of 8.03 
million barrels per day (123.5 billion gallons) in 2020, projects 
8.70 million barrels per day (133.3 billion gallons) in 2021, and 
projects 8.92 million barrels per day (136.8 billion gallons) in 
2022. The STEO reported gasoline consumption in 2017-2019 at 9.31-
9.33 million barrels per day (142.7-143.0 billion gallons) annually.
---------------------------------------------------------------------------

    If biodiesel and/or renewable diesel were able to be supplied in 
sufficient quantities to enable a conventional renewable fuel 
requirement at 15 billion gallons to be met despite lower ethanol 
consumption, there could still be other potentially adverse impacts. We 
project that much of this biodiesel and renewable diesel would be 
imported. Further, these fuels could be sourced from grandfathered 
facilities that may not achieve the desired GHG reductions. If imported 
biodiesel and renewable diesel were to increase, we would expect either 
an increase in the use of petroleum fuels from countries that 
previously used these fuels, or, alternatively, an expansion of palm 
oil production to produce biodiesel and renewable diesel, likely 
resulting in additional foreign land being converted to cropland for 
the production of palm oil. There would likely be both adverse wildlife 
impacts and higher GHG emissions of such international land use changes 
that would be associated with a higher implied conventional volume 
mandate satisfied by grandfathered biodiesel and renewable diesel.
    At the same time, we do not believe that setting volumes such that 
the implied conventional renewable fuel volume is below the E10 
blendwall would be appropriate either. Under such a scenario, imports 
of biodiesel and renewable diesel to meet the demand provided by the 
implied conventional renewable fuel volume would cease altogether which 
would have some benefits for domestic energy independence and may have 
some environmental benefits as well insofar as those imports are 
produced from palm oil. However, impacts on domestic ethanol production 
would be small as E10 would continue to be used regardless. There would 
most likely be some decrease in the small amounts of higher ethanol 
blends used, but the use of E10 would be essentially unchanged, and 
since ethanol blended as E10 dominates the total volume of ethanol 
consumed, the overall ethanol volume would be minimally affected. Thus, 
we expect that setting the implied volume for conventional renewable 
fuel below the E10 blendwall would have little impact on domestic 
biofuel production or use.

B. Proposed Volumes for 2020

    We are proposing to revise previously finalized 2020 total 
renewable fuel, advanced biofuel, and cellulosic biofuel volumes to 
equal the volume of such fuels actually used in the U.S. in 2020.\69\ 
As we discuss in Section VI, we are also proposing to make 
corresponding adjustments to the percent standards applicable to 
obligated parties.\70\
---------------------------------------------------------------------------

    \69\ We also call such volumes the volumes that are actually 
consumed or actually supplied. In this context, we are using the 
term ``supply'' distinct from the statutory term ``inadequate 
domestic supply'' in CAA section 211(o)(7)(A)(ii).
    \70\ As discussed in Section VI, the adjustments to the 
percentage standards would also include changes to the non-renewable 
gasoline and diesel volumes to reflect actual 2020 consumption.
---------------------------------------------------------------------------

    Since 2020 has already passed, this rulemaking has no ability to 
affect actual production, imports, and use of renewable fuel in 2020. 
The impact of the rule on each of the statutory factors is similarly 
limited. In contrast, were we to revise the 2020 volumes to be greater 
than the volume of renewable fuel that was supplied or were we to 
simply leave the original volumes from the 2020 final rule in place, we 
would expect some combination of potentially disruptive outcomes: (1) A 
reduction in the quantity of carryover RINs; (2) obligated parties 
carrying deficits into 2021; and/or (3) obligated parties being out of 
compliance with their RFS obligations.\71\ While this approach could 
have the effect of prospectively increasing demand for renewable fuels 
in 2022, simply establishing higher volumes for 2022 is expected to 
have the same effect on renewable fuel producers with a much lower risk 
of market disruptions that could result from maintaining volume 
obligations for 2020. As we explain in Section IV.B, we are proposing 
to revise the 2020 volume obligations to forestall potential 
disruptions in the fuels market that would impair the ongoing 
implementation of the RFS program.
---------------------------------------------------------------------------

    \71\ See Section IV.A for a discussion of carryover RINs.
---------------------------------------------------------------------------

    We acknowledge that this proposal to reconsider and revise the 
already finalized 2020 standards will be finalized after the November 
30, 2019, statutory deadline for the 2020 standards and can operate 
only retroactively.\72\ We generally do not think it is appropriate to 
reconsider and revise previously finalized RFS standards. Nonetheless, 
we are proposing to do so because critical and unanticipated events 
have occurred affecting fuels markets and RFS compliance. First, we 
anticipate a significant and unprecedented shortfall in renewable fuel 
use in 2020 relative to the volumes that we required in the 2020 final 
rule. This is largely due to the COVID-19 pandemic, which caused an 
unforeseen and drastic fall in transportation fuel demand generally and 
in biofuel demand more specifically.
---------------------------------------------------------------------------

    \72\ 85 FR 7016 (February 6, 2020). In addition, the 2020 BBD 
volume was established in the 2019 final rule. 83 FR 63704.
---------------------------------------------------------------------------

    In general, under the RFS program, a shortfall in gasoline and 
diesel fuel consumption relative to the projected volumes results in a 
corresponding decrease in the volume of renewable fuel required. This 
self-adjusting nature of the program is a function of the fact that the 
RFS standards are applied as a percentage to an obligated party's 
gasoline and diesel fuel production; the obligation to acquire RINs for 
compliance rises and falls along with gasoline and diesel fuel 
production volume. Further, historical deviations between the volumes 
of gasoline and diesel actually used relative to their projected 
volumes have been relatively small. As a result, we have historically 
not adjusted the RFS standards after they have been established to 
account for updated gasoline and diesel consumption levels. This is 
consistent with our general policy of not reconsidering and revising 
previously finalized RFS standards.
    However, the situation in 2020 was different. As explained further 
in Section IV.B, the shortfalls in 2020 were both significantly larger 
than in any previous year and disproportionately affected gasoline more 
than diesel fuel. This is important because on average finished 
gasoline contains more renewable content than finished diesel. The vast 
majority of gasoline contains at least 10% ethanol, mostly in the form 
of E10, whereas the average concentration of renewables in diesel falls 
far short of that. Thus, while the decrease in transportation fuel 
demand in 2020 proportionally decreased the required renewable fuel 
volume, the decrease in the demand for renewable fuel was greater given 
the greater drop in gasoline versus diesel demand.
    Further, even with the lesser impact on diesel fuel consumption, we 
still observed a shortfall in the use of biodiesel and renewable diesel 
relative to our projections in the 2020 final rule. That is to say, the 
projections in the 2020 final rule overestimated the use of biodiesel 
and renewable diesel, even if we adjust those projections by the 
shortfall in diesel demand.
    Second, when we promulgated the 2020 volume requirements, we did so 
while projecting for the first time that we would be granting a large 
number of SREs for 2020. The 2020 final rule

[[Page 72449]]

reallocated the projected exempted volumes onto the remaining obligated 
parties, thereby significantly increasing the obligations on those 
parties. As we explain in Section VI.B, there continues to be 
substantial uncertainty regarding whether we will grant or deny the 
many SRE petitions for 2020 in the wake of the Tenth Circuit's decision 
in RFA and the Supreme Court's reversal of one of the bases for the 
Tenth Circuit's decision in HollyFrontier.\73\ Among the uncertainties 
are the impacts of the additional holdings in RFA that were not 
addressed on appeal to the Supreme Court. The significant impact of our 
earlier projection on the standards and the consequent impact on our 
SRE policy by the litigation in RFA and HollyFrontier suggest that 
reconsideration is warranted.\74\
---------------------------------------------------------------------------

    \73\ Renewable Fuels Ass'n v. EPA, 948 F.3d 1206 (10th Cir. 
2020), rev'd in part sub nom., HollyFrontier Cheyenne Refining, LLC, 
v. Renewable Fuels Ass'n, 114 S. Ct. 2172 (2021).
    \74\ As noted in Section II.D, we have received petitions 
seeking reconsideration of the 2020 annual rule under CAA section 
307(d)(7)(B).
---------------------------------------------------------------------------

    The decrease in biofuel use, together with the potential impacts of 
SRE decisions, means that compliance with the original 2020 standards 
would likely result in a significant drawdown of the number of 
carryover RINs available for use in 2021, which could negatively impact 
the functionality of the RIN market that enables the successful 
implementation of the RFS program. A well-functioning RIN market is 
foundational for allowing obligated parties to comply with their RFS 
mandates, particularly for obligated parties that do not themselves 
produce or blend renewable fuels. As discussed in Section IV.A, the 
carryover RIN bank is already projected to drop from 3.48 billion RINs 
in 2019 to 1.85 billion RINs in 2020, following 2019 compliance. We 
project that the 2020 standards, if unmodified and SREs are not 
granted, would result in a significant drawdown of the total number of 
carryover RINs, to a volume (630 million RINs) that would represent 
less than 4 percent of the proposed 2021 and 2022 total renewable fuel 
standards.\75\ The number of carryover cellulosic biofuel RINs would 
also be projected to decrease significantly, as we project that the 
number of cellulosic carryover RINs would be reduced to just 2.2 
million RINs, which is less than 0.5 percent of the proposed 2021 and 
2022 cellulosic biofuel volumes. Such a drastic reduction in the 
carryover RIN bank has the potential to reduce the liquidity of RINs 
and could negatively impact parties that do not currently have 
sufficient RINs to meet their 2020 obligation. This could make it 
difficult for some parties to acquire enough RINs to comply with their 
2020 RFS obligations, as well as the 2021 and 2022 standards being 
proposed, and could cause those parties to carry forward deficits or to 
become non-compliant. This could lead to significant negative impacts 
on the fuels market and the ongoing implementation of the RFS program, 
as discussed in Section IV.B.
---------------------------------------------------------------------------

    \75\ See Section VI of ``Carryover RIN Bank Calculations for 
2020-2022 Proposed Rule,'' available in the docket for this action.
---------------------------------------------------------------------------

    These considerations also support our decision to retroactively 
reduce the 2020 volumes to those actually used. In doing so, we are 
relieving burdens on obligated parties, and in some cases, the 
potentially onerous burden of non-compliance with the RFS program and 
the possibility of penalty payments. This approach also ensures 
sufficient RINs for compliance. It also ensures the continued 
functioning of the carryover RIN bank, a necessary compliance 
flexibility for obligated parties. It also protects the ongoing 
implementation of the RFS program and facilitates the higher volumes 
proposed for 2022, as we discuss further in Section IV.B.
    With regard to lead time, less lead time is needed for obligated 
parties given that we are reducing the stringency of their obligations, 
as opposed to increasing the stringency of their obligations. 
Nonetheless, we are providing significant lead time. We extended the 
2020 compliance deadline for obligated parties to January 31, 2022, 
providing these parties with additional time to acquire RINs,\76\ and 
have proposed to further extend that deadline in a separate action.\77\ 
Had we not adjusted the compliance deadline, obligated parties would 
have needed to demonstrate compliance by March 31, 2021.
---------------------------------------------------------------------------

    \76\ 86 FR 17073 (April 1, 2021).
    \77\ 86 FR 67419 (November 26, 2021).
---------------------------------------------------------------------------

    We recognize that retroactively adjusting the 2020 standards will 
disrupt market expectations created by the prior final rule, for 
instance on the part of biofuel producers who made investments or other 
parties who transacted biofuels or RINs, based on the higher standards 
originally finalized. As a general matter, these expectations may not 
rise to the level of reliance interests recognized by the courts.\78\ 
Even if they do, however, we believe that revising the standards is 
nonetheless warranted based on the events and factors described above, 
which likely confounded market expectations in any event.
---------------------------------------------------------------------------

    \78\ Monroe Energy, LLC v. EPA, 750 F.3d 909, 919-20 (D.C. Cir. 
2014).
---------------------------------------------------------------------------

    As explained in Section II.A.2, the statutory deadline for 
resetting the total renewable fuel volume was in December 2019, or one 
year after the promulgation of the 2019 final rule. The statutory 
deadlines for resetting the advanced biofuel and cellulosic biofuel 
volumes occurred even earlier. Despite being late to meet our statutory 
obligations, we are proposing to exercise the reset authority for 
several reasons. First, doing so satisfies our statutory obligation to 
reset the statutory volumes. Second, we have already notified the 
public that we intended to exercise the reset authority.\79\ This 
proposal is a key step in making good on that intent and meeting our 
statutory obligation. Third, the reset authority also provides EPA 
broad discretion to modify the renewable fuel volumes and to establish 
biofuel volume requirements at the volumes actually consumed. Such 
volumes for advanced biofuel and total renewable fuel could not be 
established under the cellulosic waiver authority, which was the legal 
basis for the original 2020 final rule.\80\ Nonetheless, we believe 
that these are the appropriate volumes for the reasons explained above.
---------------------------------------------------------------------------

    \79\ See 84 FR 36766 (July 29, 2019).
    \80\ The cellulosic waiver authority limits reductions in the 
statutory total renewable fuel and advanced biofuel volumes to no 
more than the reduction in the cellulosic biofuel volume. In the 
2020 final rule, we exercised the cellulosic waiver to the maximum 
extent, resulting in an implied conventional renewable fuel volume 
of 15 billion gallons and an implied non-cellulosic advanced biofuel 
volume of 4.5 billion gallons. However, the volumes of advanced 
biofuel and total renewable fuel actually supplied in 2020 fell 
short of these numbers.
---------------------------------------------------------------------------

    The proposed revised 2020 volumes, along with the original volumes, 
are shown in Table III.B-1. The proposed revised 2020 percentage 
standards, along with the original percentage standards, are provided 
in Section VI.C.

[[Page 72450]]

      Table III.B-1--Proposed Revised Volume Requirements for 2020
                             [Billion RINs]
------------------------------------------------------------------------
                Standard                     Original         Revised
------------------------------------------------------------------------
Cellulosic Biofuel......................            0.59            0.51
Biomass-Based Diesel....................        \a\ 2.43        \a\ 2.43
Advanced Biofuel........................            5.09            4.63
Total Renewable Fuel....................           20.09           17.13
------------------------------------------------------------------------
Source: EMTS (EPA Moderated Transaction System). See ``RIN supply as of
  3-22-21''.
\a\ The BBD volume for 2020 is in physical gallons (rather than RINs)
  and was established in the 2019 final rule (83 FR 63704, December 11,
  2018). We are not proposing to revise the 2020 BBD volume in this
  action.

    We request comment on our proposed approach of reconsidering and 
revising the 2020 RFS volumes from those promulgated in the prior final 
rule. We also request comment on modifying 2020 volumes to the volumes 
of renewable fuel actually supplied in 2020. We further request comment 
on whether we should include the approximately 40 million cellulosic 
biofuel carryover RINs in the 2020 cellulosic biofuel volume 
requirement. We discuss this issue in detail in Section IV.A.3.

C. Proposed Volumes for 2021

    We are proposing 2021 total renewable fuel, advanced biofuel, and 
cellulosic biofuel volumes at our projections of the volume of such 
fuels used in the U.S. this year. This is the same general approach as 
for 2020, with the difference that we do not yet have complete data for 
biofuel use in 2021, and therefore we are projecting biofuel use 
throughout the remainder of 2021.
    Given that we are using the same basic approach as for 2020, the 
rationale for our 2021 volumes is similar to the rationale for our 2020 
volumes. Below we present some of the key similarities and also note 
differences where they exist. As with 2020, due to the expected timing 
of the finalization of this rule, the ability for the rule to affect 
renewable fuel production, imports, and use in the U.S. in 2021 is 
limited. As such, the impact of the rule on each of the statutory 
factors is similarly limited. Also, as for 2020, we could also set 
volumes for 2021 that are greater or lesser than the volume of 
renewable fuel that is actually supplied in 2021, but we do not believe 
that doing so would be appropriate for similar reasons. EPA does, 
however, believe that the RFS program should drive increases in 
renewable fuel volumes over time. Given that we are setting volumes for 
2020-2022 in this rule and the fact that retrospective volumes have 
limited ability to affect biofuel use, we believe that increases in 
volume requirements are more appropriate in 2022. That is when this 
rule applies prospectively and has the potential to affect actual 
biofuel use. We discuss this relationship between the three years 
further in Section IV.B.
    As with 2020, the 2021 volumes both are late and would operate 
retroactively. Unlike for 2020, however, we are not modifying 
previously finalized standards for 2021. The lateness and retroactivity 
of the 2021 volumes are appropriate for similar reasons as for 2020. We 
believe that establishing the 2021 volumes at the volumes projected to 
be used properly balances the statutory goal of increasing renewable 
fuel use with mitigating burdens on obligated parties. It ensures that 
the obligated parties should have sufficient RINs to comply. In a 
separate action, we have proposed to extend the compliance and attest 
engagement dates for 2021, providing additional lead time, as well as 
compliance flexibilities for obligated parties including access to 
carryover RINs and carryforward deficits.\81\ In addition, we note that 
this approach, of setting volumes at those actually used, is consistent 
with our approach in the 2014 and 2015 standards, which the D.C. 
Circuit upheld in ACE.
---------------------------------------------------------------------------

    \81\ 86 FR 67419 (November 26, 2021).
---------------------------------------------------------------------------

    As with the 2020 volumes, the 2021 volumes also depend upon a 
belated exercise of the reset authority. We believe using the reset 
authority is appropriate for similar reasons as 2020: We are 
statutorily obligated to reset 2021 volumes, we have previously 
informed the public that we intended to reset the volumes, and the 
reset authority gives us discretion to reduce the total renewable fuel 
volume beyond what we could establish under the cellulosic waiver. 
There is also an additional reason, which is that the statute indicates 
that when we reset the volumes, we must do so for all remaining years 
in the statutory volume tables, which extend through 2022. Thus, in 
resetting the 2020 volumes, we are obligated to reset the 2021 and 2022 
volumes.\82\
---------------------------------------------------------------------------

    \82\ See CAA section 211(o)(7)(F) (``the Administrator shall 
promulgate a rule . . . that modifies the applicable volumes set 
forth in the table concerned for all years following the final year 
to which the waiver applies'').
---------------------------------------------------------------------------

    The volumes of cellulosic biofuel, advanced biofuel, and total 
renewable fuel we are proposing for 2021 are shown in Table III.C-1. 
The biomass-based diesel volume for 2021 was previously established in 
the 2020 final rule and is included in Table III.C-1 for context. These 
volumes are based on the projected use of renewable fuels in the U.S., 
as discussed in greater detail in Chapter 5 of the DRIA.

              Table III.C-1--Proposed RFS Volumes for 2021
                             [Billion RINs]
------------------------------------------------------------------------
                                                             Proposed
                        Category                              volume
------------------------------------------------------------------------
Cellulosic Biofuel......................................            0.62
Biomass-Based Diesel....................................        \a\ 2.43
Advanced Biofuel........................................            5.20
Total Renewable Fuel....................................           18.52
------------------------------------------------------------------------
\a\ The BBD volume for 2021 is in physical gallons (rather than RINs)
  and was established in the 2020 final rule (85 FR 7016, February 6,
  2020). We are not proposing to revise the 2021 BBD volume in this
  action.

    In the final rule, we intend to consider additional data, including 
more recent data on renewable fuel production and use, and public 
comments, and update our projections accordingly. We request comment on 
both our proposed approach of establishing the RFS volumes for 2021 at 
the volume of renewable fuel projected to be supplied in 2021, as well 
as our projections of these volumes. We also request comment on whether 
or not to include volumes of cellulosic ethanol produced from corn 
kernel fiber in our projection of cellulosic biofuel production in 
2021, as discussed in Chapter 5 of the DRIA.

D. Proposed Volumes for 2022

    We are proposing 2022 total renewable fuel, advanced biofuel, and 
cellulosic biofuel volumes that represent growth compared to historical 
volumes and compared to the volumes proposed for 2020 and 2021. We are

[[Page 72451]]

proposing a 150 million gallon increase in the 2022 cellulosic biofuel 
volume over the proposed 2021 volume based on the expected continued 
growth in biogas use. We are also proposing the full implied statutory 
volumes for non-cellulosic advanced biofuel (i.e., 5 billion gallons, 
or 500 million gallons more than the proposed 2021 volume) and 
conventional renewable fuel (15 billion gallons).\83\ We anticipate 
significant growth in the use of non-cellulosic advanced biofuels, 
especially in advanced renewable diesel.\84\ While we expect that 
conventional ethanol use will fall short of the implied 15 billion 
gallon volume in 2022 by roughly 1.2 billion gallons, we project that 
greater volumes of biodiesel and renewable diesel could be produced and 
imported to offset this shortfall. We discuss the 2022 BBD volume 
separately in Section III.D.
---------------------------------------------------------------------------

    \83\ The implied statutory volume for non-cellulosic advanced 
biofuel in 2022 (5 billion gallons) is the difference between the 
statutory volumes for advanced biofuel (21 billion gallons) and 
cellulosic biofuel (16 billion gallons) in 2022. Similarly, the 
implied statutory volume for conventional renewable fuel in 2022 (15 
billion gallons) is the difference between the statutory volumes for 
total renewable fuel (36 billion gallons) and advanced biofuel (21 
billion gallons) in 2022.
    \84\ See Chapter 2 of the DRIA.
---------------------------------------------------------------------------

    The proposed cellulosic biofuel volume for 2022 is equal to the 
projected available volume of cellulosic biofuel (see Chapter 5.1 of 
the DRIA). This volume represents the highest volume of cellulosic 
biofuel we can establish for 2022 given the cellulosic waiver 
provision, which requires EPA to reduce the statutory cellulosic volume 
to the projected volume available. While EPA does have the authority to 
establish a lower cellulosic volume under the reset authority, we do 
not believe this would be appropriate for 2022, as discussed below.
    EPA's approach to the proposed cellulosic biofuel volume for 2022 
seeks to realize the potential for GHG benefits associated with 
increased cellulosic biofuel production despite the relatively high 
costs (or in the case of CNG/LNG derived from biogas, the relatively 
high impact on the price of transportation fuel). Thus, while some of 
the statutory factors (such as the cost to consumers of transportation 
fuel) may suggest that a volume of cellulosic biofuel lower than the 
volume projected to be produced in 2022 would be appropriate, we have 
determined that these factors are outweighed by other factors (such as 
climate change).
    The proposed advanced biofuel and total renewable fuel volumes 
strike a balance between numerous competing statutory factors. They 
reflect the potential for growth in the volume of renewable fuel 
produced and consumed in the U.S., and the energy security and 
potential climate change benefits that producing and consuming 
increasing volumes of qualifying renewable fuels provide. They also 
take into consideration the potential negative impacts of renewable 
fuels produced from crops such as corn or soybeans on environmental 
factors such as the conversion of wetlands, ecosystems, and wildlife 
habitat, water quality, and water supply.
    We acknowledge that the implied conventional renewable fuel volume 
is higher than the volume of these fuels projected to be consumed in 
the U.S. in 2022. We believe this may incentivize the continued 
expansion of the infrastructure necessary to use higher level blends of 
ethanol, which remains the dominant form of conventional renewable 
fuel. In recent years, ethanol consumption beyond the E10 blendwall in 
the U.S. has been limited by infrastructure constraints (as well as 
other factors) to a volume significantly lower than the volume of 
ethanol produced in the U.S. and the total production capacity of the 
U.S. ethanol industry. If these infrastructure constraints are 
addressed, domestic ethanol consumption and ultimately domestic ethanol 
production could increase, and this could result in job creation, rural 
economic development, higher corn prices for farmers, and a greater 
supply of agricultural commodities. Alternatively, additional volumes 
of conventional biodiesel and renewable diesel could be supplied in 
2022, including renewable fuels that are grandfathered under 40 CFR 
80.1403 and are thus not required to meet the minimum 20 percent GHG 
reduction required for all qualifying renewable fuel. These fuels would 
most likely be produced in foreign facilities, which may cause 
additional environmental impacts and would not provide the same 
benefits to domestic job creation and rural economic development, but 
they could still provide energy security benefits.\85\
---------------------------------------------------------------------------

    \85\ Registered capacity to produce conventional biodiesel and 
renewable diesel exists at grandfathered facilities. Because 
grandfathered renewable fuels are not required to meet the GHG 
reduction thresholds, the GHG impacts of these fuels are highly 
uncertain.
---------------------------------------------------------------------------

    At the same time, this higher volume requirement means that 
obligated parties will likely need to look to other sources of 
renewable fuel beyond corn ethanol to meet their compliance obligations 
for 2022. While we are proposing the non-cellulosic portion of the 
advanced biofuel standard at the full implied statutory volume of 5 
billion gallons, our assessment of potential supply indicates that some 
additional volume will likely be used in 2022. This means that if, as 
expected, the market falls short of the implied volume of conventional 
renewable fuel in 2022, as has happened in several years in the past, 
excess volumes of advanced biofuel beyond what is needed to meet the 
advanced biofuel volume could be available to fulfill some portion of 
the shortfall. Finally, as discussed for in the context of the proposed 
volume requirements for 2020 and 2021, there may also be implications 
of the proposed 2022 volume requirements on the carryover RIN bank. 
While we are projecting that sufficient renewable diesel, both advanced 
and conventional, will be available to meet the proposed 2022 volume 
requirements, there is the potential that the market may fall short, in 
which case the existence of sufficient carryover RINs in the carryover 
RIN bank can still enable compliance. Specifically, obligated parties 
may use carryover RINs to help them comply with the proposed 2022 
standards. See Section IV.A for a more detailed discussion of carryover 
RINs.
    We acknowledge that in lieu of maintaining the implied statutory 
volumes of non-cellulosic advanced biofuel and conventional renewable 
fuel and relying on higher volumes of advanced biofuel to fulfill an 
expected shortfall in conventional biofuel, we could instead raise the 
advanced biofuel requirement and lower the conventional biofuel volume. 
However, we have chosen not to propose this. We expect that the impact 
on GHG emissions of the decision not to propose a higher advanced 
biofuel volume with a corresponding lower implied conventional biofuel 
volume will be minimal, given that additional volumes of advanced 
biofuels will likely be used to satisfy the conventional portion of the 
total renewable fuel requirement. Moreover, we believe that providing 
incentives for increased ethanol distribution and blending 
infrastructure through the higher implied volumes of conventional 
renewable fuel may result in the potential for greater renewable fuel 
consumption in future years.
    We note that this approach of maintaining the statutory implied 
conventional and non-cellulosic advanced biofuel volumes is inherently 
consistent with the volumes Congress itself established in EISA. It is 
also consistent with EPA's policy in prior years, during which we have 
never established prospective volume requirements lower than the 
implied statutory volume targets, with a single

[[Page 72452]]

exception.\86\ While we have discretion to deviate from this policy, we 
continue to believe that maintaining the implied statutory volumes 
strikes the proper balance based upon our consideration of the reset 
factors.
---------------------------------------------------------------------------

    \86\ We prospectively established a volume for conventional 
renewable fuel for 2016 (14.5 billion gallons) that was lower than 
the statutory implied volume (15 billion gallons). In doing so, we 
exercised our ``inadequate domestic supply'' waiver authority based 
largely on the limited demand for ethanol in the United States. That 
decision that was subsequently set aside by the U.S. Court of 
Appeals for the District of Columbia Circuit in ACE, as exceeding 
our waiver authority.
---------------------------------------------------------------------------

    We also acknowledge that we are already late in resetting the 2022 
volumes. We nonetheless believe that this late exercise of our reset 
authority is appropriate for similar reasons as for 2020 and for 2021. 
Moreover, the proposed 2022 volumes are also independently justified 
under our cellulosic waiver authority.
    The volumes of cellulosic biofuel, biomass-based diesel, advanced 
biofuel, and total renewable fuel we are proposing for 2022 are shown 
in Table III.D-1. We request comment on these proposed volumes. (The 
proposed BBD volume for 2022 is also included in Table III.D-1 for 
context, although we discuss it in Section III.E)

              Table III.D-1--Proposed RFS Volumes for 2022
                             [Billion RINs]
------------------------------------------------------------------------
                                                             Proposed
                        Category                              volume
------------------------------------------------------------------------
Cellulosic Biofuel......................................            0.77
Biomass-Based Diesel....................................        \a\ 2.76
Advanced Biofuel........................................            5.77
Total Renewable Fuel....................................           20.77
------------------------------------------------------------------------
\a\ The BBD volume for 2022 is in physical gallons (rather than RINs).

    In particular, we request comment on our projection of cellulosic 
biofuel for 2022. As discussed in greater detail in Chapter 4 of the 
DRIA, our cellulosic biofuel projections for 2022 do not include any 
volume of cellulosic ethanol produced from corn kernel fiber from 
facilities that are not currently registered to generate cellulosic 
RINs due to outstanding issues. If these technical and regulatory 
issues are resolved, we project that as much as 210 million additional 
gallons of cellulosic biofuel could be produced from corn kernel fiber 
in 2022. Our projections also do not include any volumes that might 
result from our proposed biointermediate regulations, as we believe the 
impacts of that proposal will not occur until after 2022. We request 
comment on whether we should project additional cellulosic biofuel 
production from corn kernel fiber or biointermediates in 2022, and, if 
so, the volume we should project.

E. Proposed Biomass-Based Diesel Volume for 2022

    As described above, we are proposing an increase of 500 million 
gallons in the non-cellulosic advanced biofuel volume for 2022. 
Consistent with this, we are also proposing to increase the BBD volume 
requirement by the same energy-equivalent amount (330 million physical 
gallons) to 2.76 billion gallons.
    As in recent years, we believe that excess volumes of BBD (above 
2.76 billion gallons) will be used in 2022 to satisfy the advanced 
standard. Historically, the BBD standard has not independently driven 
the use of BBD in the market. This is due to the nested nature of the 
standards and the competitiveness of BBD relative to other advanced 
biofuels. Instead, the advanced biofuel standard, and occasionally the 
total renewable fuel standard, have driven the use of BBD in the 
market. We believe this trend will continue in 2022, and that the 2022 
advanced standard, and potentially the total renewable fuel standard, 
will drive the use of BBD in the market in 2022.
    At the same time, we think it is important to maintain space for 
other advanced biofuels to participate in the RFS program. Although the 
BBD industry has matured over the past decade, the production of other 
advanced biofuels continues to be relatively low and uncertain. 
Maintaining this space for other advanced biofuels can facilitate in 
the long-term increased commercialization and use of other advanced 
biofuels, which may have superior environmental benefits and lower 
costs relative to BBD. Conversely, we do not think increasing the size 
of this space is necessary for 2022 given that only small quantities of 
these other advanced biofuels have been used in recent years relative 
to the space we have already provided.
    The proposed BBD volume for 2022 is consistent with our policy in 
previous annual rules, where we also set the BBD volume consistent with 
the change, if any, in the advanced volume. In the 2019 final rule, we 
set the 2020 BBD volume at 2.43 billion gallons. This was an increase 
from the prior year's BBD volume by the same energy-equivalent amount 
(330 million physical gallons) as the increase in the 2019 non-
cellulosic advanced biofuel volume (500 million ethanol-equivalent 
gallons). By contrast, in the 2020 final rule, when the 2020 non-
cellulosic advanced biofuel volume did not change, we also maintained 
the 2021 BBD volume at 2.43 billion gallons. In both rules, we 
preserved a significant space for other advanced biofuels to compete, 
approximately equal to 850 million RINs (approximately equal to 566 
million physical gallons). In reality, only 334 million ethanol-
equivalent gallons of other advanced biofuel was consumed in 2020.
    We acknowledge that in proposing the 2022 BBD volume in this 
action, we are proposing a late BBD volume. CAA section 
211(o)(2)(B)(ii) provides that EPA shall determine the applicable 
volume 14 months prior to the year for which the standard will apply. 
That deadline has already passed. However, we do anticipate 
establishing the 2022 BBD standard ahead of the 2022 compliance year. 
The D.C. Circuit in ACE has affirmed EPA's ability to promulgate late 
BBD standards as long as those standards are reasonable.\87\ In 
evaluating the reasonableness of EPA's standards, the Court suggested 
that EPA must ``consider[ ] various ways to minimize the hardship 
caused to obligated parties.'' \88\ In this action, we are providing 
obligated parties with notice of the potential 2022 BBD volume 
requirement well in advance of the 2022 compliance deadline. 
Additionally, we are proposing a volume requirement that is consistent 
with our treatment of the BBD volume requirement in the past, i.e., 
increasing the BBD volume requirement in accordance with increases in 
the implied statutory non-cellulosic advanced volume. Further, as in 
this case of previous annual rules, we continue to believe that it will 
be the advanced biofuel standard for 2022 that will drive the use of 
BBD in the market, and thus, the BBD standard we propose to establish 
is unlikely to result in additional burdens on obligated parties. 
Finally, we solicit comment on whether we should instead maintain the 
BBD standard for 2022 at 2.43 billion gallons. This would increase the 
space allowed for other advanced biofuels, as we are proposing to 
increase the advanced biofuel volume for 2022 by 500 million gallons 
over the proposed 2021 volume.
---------------------------------------------------------------------------

    \87\ ACE at 721.
    \88\ Id. (quoting Monroe Energy, LLC v. EPA, 750 F.3d 909, 920 
(D.C. Cir. 2014)).
---------------------------------------------------------------------------

F. Summary of the Proposed Volumes

    The proposed volumes for 2020, 2021, and 2022 are summarized in 
Table III.F-1. We request comment on these volumes (excepting the 2020 
and 2021 BBD volumes, which were set in the 2019 and 2020 final rules, 
respectively), as well as any data or analysis that

[[Page 72453]]

would support alternative volumes for these years.

                          Table III.F-1--Proposed RFS Volumes for 2020, 2021, and 2022
                                                 [Billion RINs]
----------------------------------------------------------------------------------------------------------------
                            Category                                   2020            2021            2022
----------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel..............................................            0.51            0.62            0.77
Biomass-Based Diesel \a\........................................        \b\ 2.43        \c\ 2.43            2.76
Advanced Biofuel................................................            4.63            5.20            5.77
Total Renewable Fuel............................................           17.13           18.52           20.77
----------------------------------------------------------------------------------------------------------------
\a\ The BBD volumes are in physical gallons (rather than RINs).
\b\ The BBD volume for 2020 was established in the 2019 final rule (83 FR 63704, December 11, 2018).
\c\ The BBD volume for 2021 was established in the 2020 final rule (85 FR 7016, February 6, 2020).

G. Impacts of the Proposed Volumes

    As explained in Chapter 2.2 of the DRIA, we have used a baseline of 
the volumes actually supplied in 2020 to assess the impacts of this 
proposed rule, and thus the proposed 2020 volumes have no costs or 
benefits. We therefore focus on the projected impacts of the 2021 and 
2022 volumes.\89\ We recognize that there are other possible baselines 
that could be used as a point of comparison, and that the choice of 
baseline significantly influences our impact analyses. A potential 
alternative baseline that might be informative would be the volumes of 
renewable fuels that would be used each year from 2020-2022 in the 
absence of RFS obligations. While we have not used this alternative 
baseline in this rule, Chapter 2.2 of the DRIA contains a brief 
description of what such a baseline might look like. We request comment 
on the volumes of renewable fuel and feedstock use that would occur in 
these years in the absence of the RFS obligations.
---------------------------------------------------------------------------

    \89\ The values for both 2021 and 2022 are calculated relative 
to the actual volumes of renewable fuel used in 2020. The 2022 
values therefore reflect the incremental volumes for both 2021 and 
2022.
---------------------------------------------------------------------------

    For two of the statutory factors (fuel costs and energy security 
benefits) we were able to quantify and monetize the expected impacts of 
this proposed rule.\90\ Information and specifics on how fuel costs are 
calculated are presented in Chapter 9 of the DRIA, while energy 
security benefits are discussed in Chapter 4 of the DRIA. A summary of 
the fuel costs and energy security benefits are shown in Table III.G-1 
and Table III.G-2. Other factors, such as job creation and the price 
and supply of agricultural commodities, are quantified but have not 
been monetized. Further information and the quantified impacts of this 
proposed rule on these factors can be found in the DRIA. We were not 
able to quantify many of the impacts of this rulemaking, including 
impacts on many of the statutory factors such as the environmental 
impacts and rural economic development.
---------------------------------------------------------------------------

    \90\ Due to the uncertainty related to the GHG emission impacts 
of this proposed rule (discussed in further detail in Chapter 3.2 of 
the RIA) we have not included a quantified projection of the GHG 
emission impacts of this proposal. However, to provide perspective 
regarding the scope of the potential benefits, Chapter 3.2.2 of the 
RIA illustrates the potential GHG benefits associated with the 
proposed volumes in this rule using the lifecycle GHG values 
calculated in the 2010 RFS final rule and other prior actions.

                                Table III.G-1--Fuel Costs of the Proposed Volumes
                                  [2020 and nominal year dollars, millions] \a\
----------------------------------------------------------------------------------------------------------------
                                                                                            Discounted
                              Year                                 Undiscounted  -------------------------------
                                                                                     Rate: 7%        Rate: 3%
----------------------------------------------------------------------------------------------------------------
2021............................................................             278             278             278
2022
    Excluding Supplemental Volumes..............................           2,158           2,017           2,095
    Including Supplemental Volumes..............................           2,302           2,151           2,235
----------------------------------------------------------------------------------------------------------------
\a\ These costs represent the costs of producing and using biofuels relative to the petroleum fuels they
  displace. They do not include other factors, such as the potential impacts on soil and water quality or
  potential GHG reduction benefits.

                         Table III.G-2--Energy Security Benefits of the Proposed Volumes
                                            [2020 dollars, millions]
----------------------------------------------------------------------------------------------------------------
                                                                                            Discounted
                              Year                                 Undiscounted  -------------------------------
                                                                                     Rate: 7%        Rate: 3%
----------------------------------------------------------------------------------------------------------------
2021............................................................              64              64              64
2022
    Excluding Supplemental Volumes..............................             151             141             147
    Including Supplemental Volumes..............................             162             151             157
----------------------------------------------------------------------------------------------------------------

    Regardless of whether or not we were able to quantify or monetize 
the impact of this proposed rule on each of the statutory factors, 
consideration of these factors is still required by the statute. We 
believe that the proposed standards

[[Page 72454]]

in this rulemaking are appropriate under our reset authority when we 
balance all of the relevant factors described throughout this preamble 
and the DRIA. We request comment generally on how costs and benefits 
quantified in this proposed rule are calculated and accounted for, as 
well as methods to quantify and monetize additional statutory factors.

IV. Interactions Between the RFS Annual Volumes

    In resetting the volumes, EPA must review the implementation of the 
program. In conducting this review, we have assessed the carryover RIN 
bank \91\ and carryforward deficits, which are two important compliance 
mechanisms. Specifically, the RFS regulations contain provisions that 
allow an obligated party to satisfy their RFS obligations for a given 
year by using up to 20 percent of RINs generated in the previous 
year.\92\ Similarly, the RFS regulations also allow an obligated party 
to carry forward a compliance deficit from one year to the next, 
provided the party meets their full RFS obligations in the following 
year.\93\ These provisions operate such that any excess RINs generated 
in one year, or any RIN deficits, can impact the market for RINs and 
renewable fuels in the next year. As such, compliance with the RFS 
standards for one year is inherently intertwined with compliance for 
the prior year. This section discusses the projected volume of 
carryover RINs (net of carryforward deficits) that will be available 
for use towards compliance with the 2020, 2021, and 2022 RFS 
obligations. We also evaluate whether we should intentionally set the 
2020, 2021, and 2022 volumes at levels that would intentionally reduce 
the size of the carryover RIN bank, and we propose that this would not 
be appropriate.
---------------------------------------------------------------------------

    \91\ CAA section 211(o)(5) requires that EPA establish a credit 
program as part of its RFS regulations, and that the credits be 
valid for obligated parties to show compliance for 12 months as of 
the date of generation. EPA implemented this requirement through the 
use of RINs, which are generated for the production of qualifying 
renewable fuels. Obligated parties can comply by blending renewable 
fuels themselves, or by purchasing the RINs that represent the 
renewable fuels from other parties that perform the blending. There 
are different ``D'' codes representing the different RFS standards 
that the various renewable fuels can be used to comply with. (e.g., 
D3 represents cellulosic biofuel that can be used to comply with the 
cellulosic biofuel standard.) RINs can be used to demonstrate 
compliance for the year in which they are generated or the 
subsequent compliance year. Obligated parties can obtain more RINs 
than they need in a given compliance year, allowing them to ``carry 
over'' these excess RINs for use in the subsequent compliance year, 
although our regulations limit the use of these carryover RINs to 20 
percent of the obligated party's RVO. For the bank of carryover RINs 
to be preserved from one year to the next, individual carryover RINs 
are used for compliance before they expire and are essentially 
replaced with newer vintage RINs that are then held for use in the 
next year. For example, vintage 2020 carryover RINs must be used for 
compliance in 2021, or they will expire. However, vintage 2021 RINs 
can then be ``banked'' for use in 2022.
    \92\ 40 CFR 80.1427(a)(5).
    \93\ 40 CFR 80.1427(b).
---------------------------------------------------------------------------

    In addition, in reviewing the implementation of the program, we 
recognize the difference between the ability of retroactive versus 
prospective volume requirements to affect renewable fuel use. As we 
explained in Section II, we anticipate that the 2020 and 2021 standards 
will be largely retrospective, while the 2022 standards will be 
prospective. In this section, we explain that we do not expect the 
retroactive 2020 and 2021 standards to significantly affect renewable 
fuel use in 2020 and 2021, respectively, but we do expect the 
prospective 2022 standards to significantly affect renewable fuel use 
in 2022. Given this dynamic, we generally believe that higher renewable 
fuel volumes should occur in 2022 as opposed to 2020 or 2021.\94\
---------------------------------------------------------------------------

    \94\ We further discuss our review of the implementation of the 
program throughout the preamble and DRIA, especially in Chapter 1 of 
the DRIA.
---------------------------------------------------------------------------

A. Treatment of Carryover RINs

    Consistent with our approach in recent annual rules, we have also 
considered the availability and role of carryover RINs in setting the 
volume requirements for 2020, 2021, and 2022. In general, we have 
authority to consider the size of the carryover RIN bank in deciding 
whether and to what extent to exercise any of our discretionary waiver 
authorities.\95\ EPA's approach to the consideration of carryover RINs 
in exercising our cellulosic waiver authority was affirmed in Monroe 
Energy and ACE.\96\
---------------------------------------------------------------------------

    \95\ These discretionary waiver authorities include the reset 
and set authorities, CAA section 211(o)(7)(F) and 211(o)(2)(B)(ii) 
(both of which allow EPA to establish RFS volumes based upon a 
``review of the implementation of the program''), discretionary 
portion of the cellulosic waiver authority, CAA section 
211(o)(7)(D)(i) (``the Administrator may also reduce the applicable 
volume of renewable fuel and advanced biofuels requirement''), the 
general waiver authority, CAA section 211(o)(7)(A) (``The 
Administrator . . . may waive the requirements''), and the BBD 
waiver authority with regard to the extent of the reduction in the 
BBD volume, CAA section 211(o)(7)(E)(ii) (``the Administrator . . . 
shall issue an order to reduce . . . the quantity of biomass-based 
diesel . . . by an appropriate quantity'').
    \96\ Monroe Energy v. EPA, 750 F.3d 909 (D.C. Cir. 2014); ACE, 
864 F.3d at 713.
---------------------------------------------------------------------------

    As noted in past RFS annual rules, carryover RINs are a 
foundational element of the design and implementation of the RFS 
program.\97\ A bank of carryover RINs is extremely important in 
providing a liquid and well-functioning RIN market upon which success 
of the entire program depends, and in providing obligated parties 
compliance flexibility in the face of substantial uncertainties in the 
transportation fuel marketplace.\98\ Carryover RINs enable parties 
``long'' on RINs to trade them to those ``short'' on RINs instead of 
forcing all obligated parties to comply through physical blending. 
Carryover RINs also provide flexibility in the face of a variety of 
unforeseeable circumstances that could limit the availability of RINs 
and reduce spikes in compliance costs, including weather-related damage 
to renewable fuel feedstocks and other circumstances potentially 
affecting the production and distribution of renewable fuel.
---------------------------------------------------------------------------

    \97\ See, e.g., 72 FR 23904 (May 1, 2007).
    \98\ See 80 FR 77482-87 (December 14, 2015), 81 FR 89754-55 
(December 12, 2016), 82 FR 58493-95 (December 12, 2017), 83 FR 
63708-10 (December 11, 2018), 85 FR 7016 (February 6, 2020).
---------------------------------------------------------------------------

    Just as the economy as a whole is able to function efficiently when 
individuals and businesses prudently plan for unforeseen events by 
maintaining inventories and reserve money accounts, we believe that the 
RFS program is able to function when sufficient carryover RINs are held 
in reserve for potential use by the RIN holders themselves, or for 
possible sale to others that may not have established their own 
carryover RIN reserves. Were there to be too few RINs in reserve, then 
even minor disruptions causing shortfalls in renewable fuel production 
or distribution, or higher than expected transportation fuel demand 
(requiring greater volumes of renewable fuel to comply with the 
percentage standards that apply to all volumes of transportation fuel, 
including the unexpected volumes) could result in deficits and/or 
noncompliance by parties without RIN reserves. Because carryover RINs 
are individually and unequally held by market participants, a small RIN 
bank may negatively impact the RIN market, even where the market 
overall could satisfy the standards. Consequently, were market 
disruptions to occur with an insufficient carryover RIN bank, it could 
force the need for a new waiver of the standards, undermining the 
market certainty so critical to the RFS program. For all of these 
reasons, the collective carryover RIN bank provides a necessary 
programmatic buffer that both facilitates individual compliance, 
provides for smooth overall functioning of the program to the benefit 
of all market

[[Page 72455]]

participants, and is consistent with the statutory provision allowing 
for the generation and use of credits. We anticipate that the carryover 
RIN bank will serve this very purpose for compliance with the 2019 
standards, when actual biofuel use in that year is expected to have 
fallen short of the RFS standards.\99\
---------------------------------------------------------------------------

    \99\ EPA extended the 2019 compliance deadline for small 
refineries to November 30, 2021. See 86 FR 17073 (April 1, 2021). We 
have proposed to further extend that deadline in a separate action 
(86 FR 67419, November 26, 2021).
---------------------------------------------------------------------------

    EPA can also rely on the availability of carryover RINs to support 
ambitious volumes that may not be able to be met with renewable fuel 
production and use in that year, and in the context of the 2013 RFS 
rulemaking we noted that an abundance of carryover RINs available in 
that year, together with possible increases in renewable fuel 
production and import, justified maintaining the advanced and total 
renewable fuel volume requirements for that year at the levels 
specified in the statute.\100\
---------------------------------------------------------------------------

    \100\ 79 FR 49793-95 (August 15, 2013).
---------------------------------------------------------------------------

1. Carryover RIN Bank Size
    We project a significant drawdown in the number of carryover RINs 
as a result of compliance with the 2019 standards. After compliance 
with the 2019 RFS standards, we project that there will be 
approximately 1.85 billion total carryover RINs available, a decrease 
of 1.62 billion RINs from the previous estimate of 3.48 billion total 
carryover RINs in the 2020 final rule.\101\ Since we are proposing to 
set both the 2020 and 2021 volume requirements at the actual volume of 
renewable fuel produced in those years, we project that 1.85 billion 
total carryover RINs would be available for compliance with the 2022 
standards as well.
---------------------------------------------------------------------------

    \101\ The calculations performed to estimate the size of the 
carryover RIN bank can be found in the memorandum, ``Carryover RIN 
Bank Calculations for 2020-2022 Proposed Rule,'' available in the 
docket for this action.
---------------------------------------------------------------------------

    However, there remains considerable uncertainty surrounding the 
ultimate number of carryover RINs that will be available for compliance 
with the 2020, 2021, and 2022 standards for several reasons, including 
the possibility of SREs and the fact that compliance with the 2019 
standards has not yet occurred for all parties. Furthermore, as 
discussed in Section V, our proposed response to the remand of the 2016 
rulemaking may reduce the total number of carryover RINs by up to 250 
million RINs in 2022 (and up to another 250 million RINs in 2023). 
Finally, we note that there have been enforcement actions in past years 
that have resulted in the retirement of carryover RINs to make up for 
the generation and use of invalid RINs and/or the failure to retire 
RINs for exported renewable fuel. Future enforcement actions could have 
similar results and require that obligated parties or renewable fuel 
exporters settle past enforcement-related obligations in addition to 
complying with the annual standards. In light of these uncertainties, 
the net result could be a total carryover RIN bank larger or smaller 
than 1.85 billion RINs.
2. EPA's Decision Regarding the Treatment of Carryover RINs
    We evaluated the volume of carryover RINs projected to be available 
and considered whether we should intentionally draw down the carryover 
RIN bank in setting the 2020, 2021, and 2022 volume requirements. We do 
not believe that would be appropriate. As described above, the current 
bank of carryover RINs provides an important and necessary programmatic 
and cost spike buffer that will both facilitate individual compliance 
and provide for smooth overall functioning of the program. We believe 
that a balanced consideration of the possible role of carryover RINs in 
achieving the statutory volumes for cellulosic biofuel, advanced 
biofuel, and total renewable fuel, versus maintaining an adequate bank 
of carryover RINs for important programmatic functions, is appropriate 
when EPA exercises its discretion under its statutory authorities. 
Furthermore, as noted earlier, after compliance with the 2019 
standards, we project that there will be a significant drawdown in the 
number of carryover RINs. The advanced biofuel and total renewable fuel 
standards we are proposing for 2022, moreover, are significantly higher 
than the volume of renewable fuel used in previous years, as well as 
the volume of renewable fuel expected to be used in 2020 and 2021. As 
we explain further in Sections III and V, it may be challenging for the 
market to satisfy the 2022 annual standards and the 2022 supplemental 
standard entirely with renewable fuel use in 2022. Given this, the 
projected shortfall in RIN generation in 2019, and the uneven holding 
of carryover RINs among obligated parties, we expect that further 
increasing the standards with the intent to draw down the carryover RIN 
bank would lead to significant deficit carryovers and potential non-
compliance by some obligated parties that own relatively few or no 
carryover RINs. We do not believe this is an appropriate outcome. 
Therefore, consistent with the approach we have taken in previous 
annual rules, we are not proposing to set the 2020, 2021, and 2022 
volume requirements at levels that would intentionally draw down in the 
bank of carryover RINs.
    As noted above, it is possible the size of the RIN bank may be 
different than our projection. Regardless, however, we do not believe 
an intentional drawdown of the carryover RIN bank would be appropriate 
for many of the reasons stated above. The carryover RIN bank would 
continue to be an important compliance flexibility for obligated 
parties. Moreover, the standards we are proposing for 2022, along with 
the 2022 supplemental standard, are forward leaning and if the 
projected growth in renewable fuel volumes do not materialize would 
lead to a drawdown of the carryover RIN bank.
3. Consideration of Cellulosic Carryover RINs
    In comments on the 2020 proposed rule and supplemental proposal, 
several parties suggested that EPA prospectively establish the 
cellulosic biofuel volume at the volume projected to be supplied plus 
the volume of available carryover RINs from the prior year.\102\ That 
is, these parties argued that EPA should set the cellulosic biofuel 
volume at a level that would intentionally eliminate the entire 
cellulosic carryover RIN bank. Because EPA established volumes solely 
under the cellulosic waiver authority that year, those parties focused 
their arguments on a legal interpretation of that provision, asserting 
that it required or allowed EPA to include, in its projection of the 
available volume, cellulosic carryover RINs that are projected to be 
available for compliance.
---------------------------------------------------------------------------

    \102\ For example, see comments from the Coalition for Renewable 
Natural Gas (EPA-HQ-OAR-2019-0136-0723) and AJW and Iogen (EPA-HQ-
OAR-2019-0136-0467).
---------------------------------------------------------------------------

    Section 211(o)(7)(D)(i) of the CAA requires EPA to set the 
applicable volume of cellulosic biofuel at the ``projected volume 
available during [the] calendar year.'' EPA has consistently 
interpreted the statutory phrase ``projected volume available'' to 
refer to the volume of qualifying cellulosic biofuel projected to be 
produced or imported and available for use as transportation fuel in 
the U.S. in that year. This is equivalent to the projected number of 
cellulosic RINs generated in the year that are available for obligated 
parties to use for compliance. Since we first exercised the cellulosic 
waiver authority in the 2010 annual rule, we have never included 
carryover cellulosic RINs in this projection.
    Parties that requested that EPA include carryover RINs in our 
projection of the available volume of cellulosic biofuel generally 
argued that despite the

[[Page 72456]]

continued rapid growth in cellulosic biofuel volumes, excess carryover 
cellulosic RINs in 2018 and 2019 resulted in low cellulosic RIN prices, 
which in turn may have negatively affected investment in cellulosic 
biofuel production. They further claimed that by including carryover 
RINs in the projected volume available, EPA would ensure that there was 
a strong market for cellulosic biofuel and cellulosic biofuel RINs in 
years when cellulosic biofuel production exceeded the number of 
cellulosic biofuel RINs needed by obligated parties for compliance. 
Commenters stated that this increased market certainty would result in 
increased investment in cellulosic biofuel production and ultimately 
increased cellulosic biofuel production. One commenter suggested that 
in conjunction with adding projected carryover RINs to the projected 
production volume of cellulosic biofuel when establishing the 
cellulosic biofuel volume, EPA could also subtract any projected 
deficits to account for years when cellulosic biofuel production falls 
short of EPA's projected production volume.\103\
---------------------------------------------------------------------------

    \103\ See comment from AJW and Iogen (Docket Item No. EPA-HQ-
OAR-2019-0136-0467).
---------------------------------------------------------------------------

    In our response to these comments in the 2020 final rule,\104\ we 
disagreed with parties who claimed that the statutory language of the 
cellulosic waiver authority requires EPA to include carryover RINs in 
establishing the required volume of cellulosic biofuel. The statutory 
term ``projected volume available'' does not directly address the topic 
of carryover RINs. Indeed, the cellulosic waiver provision, CAA section 
211(o)(7)(D)(i), does not mention carryover RINs at all, or otherwise 
refer to the statutory basis for such RINs, CAA section 211(o)(5). 
Thus, we believe there are multiple reasonable interpretations of this 
ambiguous statutory provision, including both the interpretation put 
forward by the stakeholders as well as the interpretation adopted by 
EPA in previous years.
---------------------------------------------------------------------------

    \104\ See Section 3.3 of the Response to Comments document for 
the 2020 final rule (EPA-420-R-19-018, December 2019).
---------------------------------------------------------------------------

    We further stated that the interpretation EPA adopted in previous 
years struck an appropriate balance between the interests of the 
cellulosic producers, those obligated to purchase and use cellulosic 
biofuels and cellulosic biofuel RINs, and consumers; and best ensured 
the ongoing smooth implementation of the RFS program.\105\ Finally, 
since the 2020 proposed rule did not raise the possibility of including 
cellulosic carryover RINs in the projected volume available, we did not 
think it would be appropriate to make such a change without first 
giving all stakeholders an opportunity to comment.
---------------------------------------------------------------------------

    \105\ See Chevron USA, Inc. v. Natural Resources Defense 
Council, Inc., 467 U.S. 837 (1984).
---------------------------------------------------------------------------

    We are now providing stakeholders notice and opportunity for 
comment in this proposal on whether to include cellulosic carryover 
RINs as part of the projected volume available. With respect to the 
volumes in this rule, were we to include cellulosic carryover RINs, it 
would increase the 2020 cellulosic biofuel volume by 40 million gallons 
over the currently proposed volume.\106\ It would not affect the 2021 
and 2022 cellulosic biofuel volumes, since we are establishing the 
cellulosic biofuel volumes based on actual supply for 2020 and 2021, 
and therefore at this time we do not project that excess RINs will be 
generated for carryover into 2021 or 2022.\107\
---------------------------------------------------------------------------

    \106\ The calculations performed to estimate the number of 
cellulosic carryover RINs can be found in the memorandum, 
``Carryover RIN Bank Calculations for 2020-2022 Proposed Rule,'' 
available in the docket for this action.
    \107\ We acknowledge of course that our projections of the 
available volume of cellulosic biofuel are inherently uncertain, and 
that there may be more or fewer cellulosic RINs generated in 2020 
and 2021 than what we project. However, at the time of this rule, we 
have done our best to take neutral aim at accuracy of the projected 
volume available.
---------------------------------------------------------------------------

    While we acknowledge that some aspects of the cellulosic category 
(such as the cellulosic waiver authority and the cellulosic waiver 
credits) \108\ are unique, at this time we believe the benefits of 
carryover RINs, discussed in Section IV.A, also apply to cellulosic 
carryover RINs. Adding carryover RINs to the volume projected to be 
produced would effectively guarantee that the demand for these RINs was 
always equal to the overall market supply and would likely result in 
cellulosic RIN prices at or near the price of an advanced biofuel RIN 
plus the price of a cellulosic waiver credit in future years. While 
raising prices would increase revenue for cellulosic biofuel producers, 
it may also increase the price of cellulosic biofuel. These higher 
prices would be passed on to consumers, who ultimately bear these 
costs.
---------------------------------------------------------------------------

    \108\ Cellulosic waiver credits may be purchased from EPA by 
obligated parties in years when EPA uses the cellulosic waiver 
authority to reduce the statutory volumes of cellulosic biofuel. 
Regulations related to cellulosic waiver credits can be found in 40 
CFR 80.1456.
---------------------------------------------------------------------------

    We also note that the legal arguments made by the previous 
commenters, while still relevant, are less so in the context of this 
rulemaking. The prior comments focused on an interpretation of the 
cellulosic waiver authority. In this rulemaking, however, we are 
concurrently exercising both our cellulosic waiver and reset 
authorities. Under the reset authority, we have broad discretion to 
establish volumes, including cellulosic biofuel volumes lower than the 
volume required under the cellulosic waiver. Thus, regardless of 
whether the prior commenters are correct about EPA's legal authority 
under the cellulosic waiver, we have legal authority under reset to 
establish volumes at actual supply, excluding any carryover RINs. At 
the same time, however, the cellulosic waiver authority establishes the 
ceiling for cellulosic biofuel volumes. If we agree with the commenters 
that the cellulosic waiver mandates or allows volumes at supply plus 
carryover RINs, then we may establish cellulosic biofuel volumes up to 
that level. Thus, although the legal framework has changed somewhat 
since the comments were submitted, their arguments remain relevant, and 
EPA is soliciting comment on this issue.

B. Ability for the RFS Volumes To Impact Renewable Fuel Supply

    In developing the proposed volume requirements, we considered the 
timing of this action and its ability to impact renewable fuel 
production, imports, and use. Since only prospective requirements have 
a significant chance of affecting actual renewable fuel use, we are 
proposing to require higher volumes for 2022. Imposing higher volumes 
for 2020 or 2021, in contrast, would have no effect on demand for fuels 
in those years. By contrast, retroactively requiring volumes higher 
than what the market has actually supplied could create market 
disruption and thus interfere with program implementation without 
advancing program goals. Setting 2020 and 2021 volumes at those 
actually supplied reflects the fact that we are acting retroactively, 
while in requiring higher volumes for 2022 we are setting prospective 
obligations.
    With respect to 2020, that year has already passed, so our 
retroactive revision of the RFS volumes cannot affect the production or 
use of renewable fuels in 2020 or consequently the statutory reset 
factors (e.g., the impacts of the use of renewable fuels on cost, the 
environment, and so forth). Any actual market effects will be felt 
after the rule is promulgated and mediated through the carryover RIN 
bank.
    With respect to 2021, there will not be sufficient time for the 
market to respond to the volumes that we finalize for 2021. The market 
may also respond in a more limited fashion to this proposed rule.

[[Page 72457]]

Regardless, any impact on the production, import, and use of renewable 
fuel in 2021 is likely to be limited, and therefore the ability for 
this rule to affect the statutory factors is likewise limited.
    The situation for 2022, however, is different. The RFS standards 
for 2022 will be in place throughout 2022 and should be able to affect 
market decisions for renewable fuel production, import, and use in 
2022, albeit still within the bounds of the lead time available. 
Similarly, the ability for this action to affect the statutory factors 
in 2022 will be significantly greater than in 2021 or 2020. Thus, we 
believe that increased renewable fuel requirements should be imposed in 
2022, when this rule has a much greater chance of actually increasing 
renewable fuel use and production, as opposed to 2020 or 2021.
    Conversely, there are also disadvantages to requiring higher 
volumes for 2020 and 2021 retroactively, or similarly, to maintaining 
the 2020 standards in the original final rule. Notably, such higher 
volumes would cause some combination of a drawdown of the carryover RIN 
bank, carryforward deficits, or non-compliance by obligated parties. 
While we have previously found an intentional drawdown of the carryover 
RIN bank to be appropriate in one case, we do not think that this is 
appropriate in this situation for reasons we describe below. We also do 
not think that intentionally relying on or effectively compelling 
carryforward deficits or intentionally causing non-compliance is 
generally appropriate.
    Given the drastic shortfall in renewable fuel use relative to what 
we projected in the 2020 final rule as discussed in Section III.B, 
compliance with the original 2020 standards would likely result in a 
significant drawdown in the number of carryover RINs available for use 
in 2021 and 2022. As discussed in Section IV.A.1, we currently project 
that as a result of compliance with the 2019 RFS standards, the number 
of carryover RINs available for compliance with the 2020 standards will 
be approximately 1.85 billion RINs, a considerable drop from the 3.48 
billion total carryover RINs we projected in the 2020 final rule. We 
expect that as a result of revising the 2020 standards to equal the 
actual volume of renewable fuels consumed, the number of carryover RINs 
available for compliance with the 2021 and 2022 standards will remain 
at 1.85 billion RINs. Were we not to modify the 2020 standards, we 
anticipate that the total number of carryover RINs available for 
compliance with the 2021 and 2022 standards would decrease dramatically 
to 630 million RINs, or less than 4 percent of the proposed 2021 and 
2022 total renewable fuel standards.\109\ This would be the lowest 
quantity of carryover RINs available since EPA began projecting the 
size of the carryover RIN bank in 2013, and the relatively small 
carryover RIN bank could increase the risk of disruptions in the RIN 
trading market. A number of obligated parties would also likely have to 
carry deficits into 2022, fail to comply with the 2021 total renewable 
fuel standard if they had already carried a deficit forward from 2020, 
or similarly fail to comply with the 2022 total renewable fuel 
standard.\110\
---------------------------------------------------------------------------

    \109\ The calculations performed to project the number of 
carryover RINs that would be available if we did not revise the 2020 
standards can be found in the memorandum, ``Carryover RIN Bank 
Calculations for 2020-2022 Proposed Rule,'' available in the docket 
for this action.
    \110\ The regulations at 40 CFR 80.1427(b) allows obligated 
parties to only carry forward a deficit if they did not carry 
forward a deficit from the previous calendar year; thus, an 
obligated party that carries forward a deficit from 2020 into 2021 
may not carry forward a deficit from 2021 into 2022.
---------------------------------------------------------------------------

    If these compliance difficulties occur, we believe that the harms 
would not just be felt by directly affected obligated parties but also 
extend to the entire fuels market and the RFS program. Notably, if 
insufficient RINs are available to obligated parties to meet their 
compliance obligations, that could negatively impact the regulatory and 
market certainty critical to the investments needed to increase 
renewable fuel volumes in 2022 and into the future. This could in turn 
diminish the expected future rate of production of renewable fuels, 
impair the development of infrastructure to distribute and use 
increased volumes of such fuels, and reduce the expected energy 
security, job creation, and rural economic benefits associated with 
higher renewable fuel use and production. Reduced business certainty 
could also deter the commercialization of novel advanced biofuels, 
which have the potential for lower costs and superior environmental 
benefits.
    Retroactively reducing the 2020 volumes mitigates these concerns. 
Specifically, our proposal to reduce the 2020 volumes to those actually 
supplied preserves an estimated carryover RIN bank of 1.85 billion RINs 
for use in 2021 and establishing the 2021 volumes at those actually 
supplied preserves the same estimated carryover RIN bank for compliance 
with the relatively aggressive 2022 standards.
    We note lesser reductions to 2020 or 2021 would give rise to the 
same concerns. The magnitude of those concerns would depend on how high 
the resulting volumes are. We think that some of these concerns, 
moreover, would remain even were we to make offsetting reductions to 
the 2022 volumes (e.g., were we to increase the proposed 2021 volumes 
by 500 million gallons and decrease the proposed 2022 volumes by the 
same amount). In that case, even though the aggregate incentive for 
renewable fuels across all three years might remain the same, 
retroactively requiring compliance for past years would be more likely 
to lead more RIN bank drawdowns, carryforward deficits, and non-
compliance, and less likely to lead to actual increases in renewable 
fuel use and production.
    In sum, in proposing the 2020, 2021, and 2022 volumes, we recognize 
the interconnected nature of the RFS annual volume requirements. We 
believe that the volume should reflect both a desire to provide the 
necessary incentives for significant growth in renewable fuel 
production and use and our obligation to consider and mitigate the 
burdens on obligated parties associated with a retroactive rulemaking. 
In general, this indicates that required growth in renewable fuel use 
should occur prospectively in 2022, as opposed to retroactively in 2020 
and 2021. We request comment on how EPA should consider the carryover 
RIN bank in establishing RFS volume obligations.

V. Response to ACE Remand

    In addition to proposing the applicable volume requirements and 
percentage standards for 2020, 2021, and 2022, in this rulemaking we 
are also proposing to address the remand of the 2014-2016 annual rule 
\111\ by the U.S. Court of Appeals for the D.C. Circuit in ACE.\112\ In 
the 2020 proposal, we proposed to address the D.C. Circuit's remand by 
retaining the original 2016 total renewable fuel standard.\113\ We 
received many comments both in support of and against this 
approach.\114\ In the 2020 final rule, we deferred taking action in 
response to the remand.\115\ We now believe that we should address the 
remand through supplemental renewable fuel volume requirements totaling 
500 million gallons spread over two years. We are proposing a 
supplemental renewable fuel obligation of 250 million gallons to be 
applied in 2022 coupled with the intention of proposing an additional 
250

[[Page 72458]]

million gallon supplemental standard in a subsequent action for 2023. 
We propose to establish the supplemental total renewable fuel volume 
requirement and the corresponding percentage standard for 2022 in this 
rulemaking. This section describes the relevant aspects of the 2014-
2016 annual rule, the court's decision, EPA's responsibilities 
following the court's remand, and our proposed approach.
---------------------------------------------------------------------------

    \111\ 80 FR 77420 (December 14, 2015).
    \112\ 864 F.3d 691 (2017).
    \113\ 84 FR 36762 (July 29, 2019).
    \114\ See Docket No. EPA-HQ-OAR-2019-0136.
    \115\ 85 FR 7016 (February 6, 2020).
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A. Reevaluating the 2014-2016 Annual Rule

1. The 2016 Renewable Fuel Standard
    On December 14, 2015, we promulgated a rulemaking establishing the 
volume requirements and percentage standards for 2014, 2015, and 
2016.\116\ In establishing those standards for 2016, we utilized the 
cellulosic waiver authority under CAA section 211(o)(7)(D) to lower the 
cellulosic biofuel, advanced biofuel, and total renewable fuel volume 
requirements, and the general waiver authority under CAA section 
211(o)(7)(A) to lower total renewable fuel by an additional 
increment.\117\
---------------------------------------------------------------------------

    \116\ 80 FR 77420. The rule also established BBD volumes for 
2017.
    \117\ 80 FR 77439.
---------------------------------------------------------------------------

    As an initial step, under CAA section 211(o)(7)(D), we lowered the 
cellulosic biofuel volume requirement by 4.02 billion gallons, to the 
projected production of cellulosic biofuel for 2016, as required by the 
statute.\118\ Using that same authority, we then elected to reduce the 
advanced biofuel and total renewable fuel volumes. We did not reduce 
the advanced biofuel volume requirement by the full 4.02 billion 
gallons that was permitted under this authority, but rather by a lesser 
3.64 billion gallons that resulted in an advanced biofuel volume 
requirement that was ``reasonably attainable.'' \119\ This allowed some 
advanced biofuel to ``backfill'' for the shortfall in cellulosic 
biofuel. We then reduced the total renewable fuel volume by an amount 
equivalent to the reduction in advanced biofuel in accordance with our 
longstanding interpretation that when making reductions to advanced 
biofuel and total renewable fuel under CAA section 211(o)(7)(D), the 
best reading of the statute is to reduce them both by the same 
amount.\120\
---------------------------------------------------------------------------

    \118\ See 80 FR 77499.
    \119\ 80 FR 77427.
    \120\ Id.
---------------------------------------------------------------------------

    As a second step, under CAA section 211(o)(7)(A), under a finding 
of inadequate domestic supply, we further lowered the total renewable 
fuel standard by 500 million gallons for 2016.\121\ In assessing 
``inadequate domestic supply,'' we considered the availability of 
renewable fuel to consumers. Based on such demand-side considerations, 
we made the additional 500 million gallon reduction in the total 
renewable fuel requirement.
---------------------------------------------------------------------------

    \121\ 80 FR 77444.
---------------------------------------------------------------------------

    The 2016 total renewable fuel standard was challenged in court. In 
an opinion issued on July 28, 2017, the D.C. Circuit vacated our use of 
the general waiver authority under a finding of inadequate domestic 
supply to reduce the 2016 total renewable fuel standard, the second 
step of setting the 2016 total renewable fuel standard.\122\ The court 
in ACE held that we had improperly focused on supply of renewable fuel 
to consumers, and that the statute instead requires a ``supply-side'' 
assessment of the volumes of renewable fuel that can be supplied to 
refiners, blenders, and importers.\123\ Other components of our 
interpretation of ``inadequate domestic supply'' were either upheld by 
the court in ACE (e.g., EPA need not consider carryover RINs as a 
``supply source of renewable fuel for purposes of determining the 
supply of renewable fuel in a given year'') or were not challenged 
(e.g., our consideration of biofuel imports as part of the domestic 
supply). Our use of the cellulosic waiver authority to provide the 
initial reduction in total renewable fuel was also upheld by the court. 
In establishing volume requirements for subsequent years, EPA has 
applied the court's holding and not proposed to reduce volumes under a 
finding of inadequate domestic supply.\124\
---------------------------------------------------------------------------

    \122\ ACE, 864 F.3d 691.
    \123\ Id. at 696.
    \124\ We note that the precedential effect of the ACE decision 
has governed subsequent RFS annual rules. Compare, e.g., 82 FR 34229 
& n.82 (July 21, 2017) (2018 annual rule proposal, issued prior to 
ACE) (soliciting comment on whether it would be appropriate to 
exercise the inadequate domestic supply waiver authority based on 
the maximum reasonably achievable volume'' of renewable fuel, which 
incorporates demand-side considerations), with 82 FR 46177 (Oct. 4, 
2017) (2018 annual rule availability of supplemental information and 
request for comment, issued after ACE) (recognizing, under ACE, that 
EPA may not consider demand-side constraints in determining 
inadequate domestic supply).
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2. Agency Responsibility
    The court in ACE upheld our volume requirements for advanced 
biofuel, BBD, and cellulosic biofuel; there is, therefore, no need for 
the agency to adjust those 2016 final volume requirements, or to take 
further action with regard to these standards in light of the court's 
decision. The court also upheld EPA's use of the cellulosic waiver 
authority to reduce the 2016 total renewable fuel volume requirement. 
The court only vacated our decision to further reduce that requirement 
under the ``inadequate domestic supply'' waiver authority, remanding 
this issue to the Agency for further consideration consistent with the 
court's opinion.\125\ Our obligation is thus to reevaluate the 2016 
total renewable fuel volume requirement in accordance with the court's 
decision.
---------------------------------------------------------------------------

    \125\ Id. at 703.
---------------------------------------------------------------------------

B. Consideration of Approaches for Responding to the ACE Remand

    As discussed in the previous section, we waived 500 million gallons 
of total renewable fuel volume associated with the 2016 volume 
requirements. In 2017, after the compliance year had passed, and after 
obligated parties had complied with those requirements, we received the 
ACE court's decision rejecting our use of the general waiver authority 
under a finding of inadequate domestic supply to reduce volumes as 
being beyond our statutory authority, and remanded the rulemaking 
action back to EPA. In this action, we propose to address the court's 
remand through a supplemental standard of 250 million gallons of total 
renewable fuel in 2022, with the intent of proposing an additional 
supplemental volume of 250 million gallons of renewable fuel to be 
required in 2023 in a subsequent action. As the court invalidated only 
the 500 million gallon total renewable fuel reduction, we therefore 
would limit our response to the remand to only the 2016 total renewable 
fuel standard and the corresponding 500 million gallon reduction 
stemming from our use of the general waiver authority. As the total 
renewable fuel volume is the outermost standard in the nested renewable 
fuel standards, this approach would not affect the other standards.
1. Proposed Response to the ACE Remand
    We are proposing to address the ACE decision by applying a 
supplemental standard of 250 million gallons in 2022 with the intention 
of proposing an additional 250-million-gallon supplemental standard in 
a subsequent action for 2023. Under this approach, the original 2016 
standard for total renewable fuel would remain unchanged and the 
compliance demonstrations that obligated parties made for it would 
likewise remain in place. A supplemental standard would thus avoid the 
difficulties associated with reopening 2016 compliance, as discussed 
below. This proposed supplemental standard would have the

[[Page 72459]]

same practical effect as increasing the 2022 total renewable fuel 
volume requirement by 250 million gallons, as compliance would be 
demonstrated using the same RINs as used for the 2022 standard. The 
percentage standard for the supplemental standard would be calculated 
the same way as the 2022 percentage standards (i.e., using the same 
gasoline and diesel projections), such that the supplemental standard 
would be additive to the 2022 total renewable fuel percentage standard. 
The proposed approach would provide a meaningful remedy in response to 
the court's vacatur and remand in ACE and would effectuate the 
Congressionally determined renewable fuel volume for 2016, modified 
only by the proper exercise of EPA's waiver authorities, as upheld by 
the court in ACE. It is with emphasis on these considerations that we 
are proposing a different approach from the one proposed in the 2020 
proposal.\126\
---------------------------------------------------------------------------

    \126\ See FCC v. Fox, 556 U.S. 502 (2009), acknowledging an 
agency's ability to change policy direction.
---------------------------------------------------------------------------

    We propose to treat such a supplemental standard as a supplement to 
the 2022 standards, rather than as a supplement to standards for 2016, 
which has passed. In order to comply with any supplemental standard, 
obligated parties would need to retire available RINs; it is thus 
logical to require the retirement of available RINs in the marketplace 
at the time of compliance with this supplemental standard. As discussed 
below, there are insufficient 2015 and 2016 RINs currently available to 
meet a supplemental 2016 standard, and additional 2015 or 2016 RINs 
cannot be generated. By applying the supplemental standard to 2022 
instead of 2016, RINs generated in 2021 and 2022 could be used to 
comply with the 2022 supplemental standard.
    In applying the supplemental standard to 2022, we would treat the 
supplemental standards like a 2022 standard in all respects. That is, 
producers and importers of gasoline and diesel that are subject to the 
2022 standards would also be subject to the supplemental standard. The 
applicable deadlines for attest engagements and compliance 
demonstrations that apply to the 2022 standards would also apply to the 
supplemental standard. The gasoline and diesel volumes used by 
obligated parties to calculate their obligation would be their 2022 
gasoline and diesel production or importation. Additionally, obligated 
parties could use 2021 RINs for up to 20 percent of their 2022 
supplemental standard.
    As described more fully in Section III, the proposed volume 
requirements for 2022 are forward leaning, requiring a growth in 
renewable fuel volumes that we believe is achievable. We also believe 
that compliance with the 2022 supplemental standard in addition to the 
proposed standards for 2022 is feasible. If it cannot be fully met 
through the supply of additional renewable fuel volumes in 2022, it 
could be met through a drawdown of the carryover RIN bank.\127\ After 
compliance with the 2019 standards, the carryover RIN bank is expected 
to consist of approximately 1.85 billion total carryover RINs for 
compliance in 2022 as discussed in Section IV.A.\128\ We acknowledge 
that the size of the carryover RIN bank may change by the time this 
action is finalized. However, given the projected size of the carryover 
RIN bank, we think it is very likely that more than 250 million total 
carryover RINs will be available in 2022 for compliance with the 
supplemental standard, enabling the market to meet the supplemental 
standard entirely with carryover RINs, if necessary.
---------------------------------------------------------------------------

    \127\ See Section IV.A for a discussion of carryover RINs.
    \128\ The calculations performed to estimate the number of 
carryover RINs currently available can be found in the memorandum, 
``Carryover RIN Bank Calculations for 2020-2022 Proposed Rule,'' 
available in the docket for this action.
---------------------------------------------------------------------------

    We believe that the potential drawdown of the carryover RIN bank by 
250 million RINs is appropriate. As we stated in the 2020 final rule, 
``[t]he current bank of carryover RINs provides an important and 
necessary programmatic and cost spike buffer that will both facilitate 
individual compliance and provide for smooth overall functioning of the 
program.'' \129\ As discussed in Section IV.A, we continue to believe 
that a significant carryover RIN bank is fundamental to the 
functionality and success of the RFS program. Therefore, we are 
reluctant to take potentially counterproductive actions which would 
force any significant drawdown of its volume. However, we believe that 
the important programmatic benefits of the carryover RIN bank would be 
preserved even if the market were to satisfy the supplemental standard 
purely by drawing down the carryover RIN bank. It is important to note 
that we would only be reducing the carryover RIN bank by up to 250 
million RINs per year due to the phased-in nature of our response.
---------------------------------------------------------------------------

    \129\ 85 FR 7020-22 (February 6, 2020).
---------------------------------------------------------------------------

    By phasing in the 500 million gallons of total renewable fuel 
associated with the ACE remand through the implementation of two 
supplemental standards over two compliance years we believe we can 
maintain the functionality of the carryover RIN bank and lessen both 
the disruption to the market and the burden on obligated parties. 
Imposing two 250 million gallon standards in two compliance years, as 
opposed to one 500 million gallon supplemental standard in a single 
compliance year, provides additional notice for both obligated parties 
and the renewable fuel industry about the additional volume 
requirements and lessens the additional requirements for each 
compliance year. This could increase the likelihood that the volumes 
are met with additional renewable fuel use and, in turn, lessen the 
likelihood that the carryover RIN bank be drawn down.
    In summary, we are proposing to implement a 250 million gallon 
supplemental volume requirement in 2022 and intend to propose an 
additional 250 million gallon supplemental volume requirement in 2023, 
totaling 500 million gallons, that represent the reduction in the 2016 
total renewable fuel volume improperly waived under the general waiver 
authority. This approach would address our obligation to respond to the 
ACE remand while accounting for the unique timing of imposing a 2016 
requirement in 2022. Importantly, because there are insufficient 2015 
and 2016 RINs to satisfy a supplemental standard, this approach would 
allow obligated parties to comply with the 2022 supplemental standard 
using 2021 and 2022 RINs. We seek comment on this approach of applying 
a supplemental standard for 2022 associated with the ACE remand on top 
of the proposed standards for 2022.
2. Reopening 2016 Compliance
    In the alternative, we considered an approach where EPA could have 
obligated parties comply with a modified 2016 total renewable fuel 
standard that requires an additional 500 million gallons of renewable 
fuel relative to the 2016 standard promulgated in 2015. However, we 
have determined that such an approach would be impractical if not 
infeasible to implement. Under our current regulations, only 2015 and 
2016 RINs can be used to demonstrate compliance with the 2016 
standard.\130\ There are far fewer 2015 and 2016 RINs available today 
(i.e., RINs that are valid but have not already been retired to comply 
with the 2015, 2016, or 2017 standards) than would be needed to comply 
with a supplemental standard commensurate

[[Page 72460]]

with our exercise of the general waiver authority for 2016 (i.e., 500 
million gallons).\131\ Additionally, the few 2015 and 2016 RINs 
available are unevenly held among obligated parties; because of the 
small number of RINs, any parties that held excess 2015 and 2016 RINs 
could attempt to sell them at a high price, creating dysfunction within 
the RIN market. These high prices would create a burden on obligated 
parties without providing any incentive for additional renewable fuel 
use in 2016 since that year has already passed. Because this approach 
would result in some parties being in noncompliance, we do not consider 
this a viable option to respond to the court's remand.
---------------------------------------------------------------------------

    \130\ 40 CFR 80.1427(a).
    \131\ RINs have a 2-year lifespan. Based on EMTS data, 29 
million 2016 RINs are still being held in obligated party accounts. 
Although these RINs still show up in the database as ``available,'' 
it is likely that many of these RINs are not actually valid. This 
simply means that these RINs have not been retired by obligated 
parties as the compliance year has passed and they are expired.
---------------------------------------------------------------------------

    As we have stated in the past, we believe the burdens associated 
with altering the 2016 standard are high.\132\ To illustrate the 
burdens associated with such an approach, we considered the steps that 
would be required to implement a revised 2016 standard. First, we would 
need to rescind the 2016 standard and promulgate a new 2016 standard. 
Next, we would need to return all of the RINs used for compliance to 
the original owners. Once those RINs were unretired (a process that 
could take several months), trading of those RINs could resume for a 
designated amount of time before retirements would again be required to 
demonstrate compliance. Obligated parties could then attempt to comply 
with a new, higher standard that includes an adjustment to the required 
total renewable fuel volume to address the ACE decision. However, 
simply unretiring 2016 RINs would not result in sufficient RINs for 
compliance with the higher standard. Furthermore, because the suite of 
obligated parties is no longer the same as it was in 2016, with some 
companies no longer in business, the distribution of unretired RINs 
could be perceived as unfair as well as uneven, highlighting the 
complexity of attempting to go back in time.
---------------------------------------------------------------------------

    \132\ 84 FR 36762, 36788 (July 29, 2019).
---------------------------------------------------------------------------

    To remedy the insufficient 2016 RINs used for compliance with the 
2016 standard, we also considered an approach where 2016 RINs used for 
compliance with the 2017 standards could be unretired and used for 
compliance with the increased 2016 standard, but this would essentially 
also reopen 2017 compliance, with cascading impacts on each subsequent 
year's compliance. Reopening compliance would impose a significant 
burden on both obligated parties and EPA as described above. Moreover, 
stakeholders have expressed strong desires for consistent compliance 
requirements on an annual basis. Having compliance demonstrations for 
the prior year complete before requiring compliance with the subsequent 
year is considered essential to allow obligated parties to properly 
account for the vintage of the various RINs in their holdings as they 
develop their compliance strategies and avoid having RINs expire. 
Therefore, we do not find that it would be appropriate or reasonable to 
reopen compliance with the 2016 total renewable fuel standard.
    Aside from the paucity of available 2015 and 2016 RINs, applying a 
supplemental standard to the 2016 compliance year would require us to 
consider whether the obligated gasoline and diesel volumes used in the 
calculation of the percentage standards would be derived from the 
projected volumes used in the rulemaking that established the 2016 
standards, or instead the actual obligated gasoline and diesel volumes 
in 2016. Of these two choices, using the actual obligated gasoline and 
diesel volumes would more accurately result in the full volume of the 
adjustment being realized through the retirement of RINs.\133\ However, 
using the actual obligated gasoline and diesel volumes for the 
supplemental standard would make it inconsistent with the other 2016 
standards, and call into question whether the other percentage 
standards should also be revised to account for actual obligated 2016 
gasoline and diesel volumes and compliance revised for all obligated 
parties. We do not believe that it would be appropriate to revise the 
other 2016 percentage standards when only the total renewable fuel 
standard is at issue under the ACE remand. Applying the supplemental 
standard to 2022 and 2023 would avoid this issue.
---------------------------------------------------------------------------

    \133\ The projected 2016 non-renewable gasoline volume and 
diesel volume used in the rulemaking that set the 2016 standards was 
179.33 billion gallons. According to EIA's May 2021 STEO, the actual 
non-renewable gasoline and diesel consumption volume in 2016 was 
179.16 billion gallons.
---------------------------------------------------------------------------

C. Demonstrating Compliance With the 2022 Supplemental Standard

    We intend to prescribe formats and procedures as specified in 40 
CFR 80.1451(j) for how obligated parties would demonstrate compliance 
with the 2022 supplemental standard that simplifies the process in this 
unique circumstance.\134\ Although the proposed 2022 supplemental 
standard would be a regulatory requirement separate from and in 
addition to the 2022 total renewable fuel standard, we intend that 
obligated parties would submit a single annual compliance report for 
both the 2022 annual standards and the supplemental standard. Under 
this intended approach, obligated parties would only report a single 
number for their total renewable fuel obligation in the 2022 annual 
compliance report.\135\ Obligated parties would also only need to 
submit a single annual attest engagement report for the 2022 compliance 
period that covers both the 2022 annual standards and 2022 supplemental 
standard.\136\ If we set a 2023 supplemental standard as intended, we 
would intend to use the same approach for annual compliance 
demonstrations for both the 2022 and 2023 compliance periods.
---------------------------------------------------------------------------

    \134\ We note that we are not proposing to change the reporting 
regulations at 40 CFR 80.1451(a) as we do not believe that 
regulatory changes are needed to accommodate annual compliance 
demonstration for the proposed 2022 supplemental standard. Any 
comments suggesting changes to such reporting regulations will be 
considered outside the scope of this rulemaking.
    \135\ Obligated parties demonstrate annual compliance by 
following the reporting instructions entitled, ``Instructions for 
RFS0304: RFS Annual Compliance Report'' (RFS0304 report). A copy of 
these reporting instructions is available in the docket of this 
action. Under our intended approach, obligated parties would combine 
the 2022 total renewable fuel standard with the 2022 supplemental 
standard in ``Field 18'' of the RFS0304 report. This combined value 
would then be multiplied by the obligated gasoline and diesel fuel 
volume reported as specified in reporting instructions for ``Field 
20'' of the RFS0304 report.
    \136\ The deadline for the attest engagement reports for the 
2022 compliance period is June 1, 2023, and we are not proposing to 
modify that deadline in this action.
---------------------------------------------------------------------------

    To assist obligated parties with this unique compliance situation, 
we intend to issue guidance with instructions on how to calculate and 
report the values to be submitted in the 2022 compliance reports.

D. Authority and Consideration of the Benefits and Burdens

    In establishing the 2016 total renewable fuel standard, EPA waived 
the required volume of total renewable fuel by 500 million gallons 
using the inadequate domestic supply general waiver authority. The use 
of that waiver authority was vacated by the court in ACE and the rule 
was remanded to the EPA. In order to remedy our improper use of the 
inadequate domestic supply general waiver authority, we find that it is 
appropriate to treat our authority to

[[Page 72461]]

propose a supplemental volume requirement at this time as the same 
authority used to establish the 2016 total renewable fuel volume 
requirement--CAA section 211(o)(3)(B)(i), which requires EPA to 
establish percentage standard requirements by November 30 of the year 
prior to which the standards will apply and to ``ensure'' that the 
volume requirements ``are met.'' EPA exercised this authority for the 
2016 standards once already. However, the effect of the ACE vacatur is 
that there remain 500 million gallons of total renewable fuel from the 
2016 statutory volumes that were not included under the original 
exercise of EPA's authority under CAA section 211(o)(3)(B)(i). 
Therefore, EPA has retained authority for the remaining 500 million 
gallons. EPA also has authority under CAA section 211(o)(2)(A)(i). The 
D.C. Circuit in NPRA noted Congress granted EPA authority to `` 
`ensure' that `at least' the set volumes were used each year.'' \137\
---------------------------------------------------------------------------

    \137\ NPRA, 630 F.3d at 157.
---------------------------------------------------------------------------

    We have sought to mitigate the burdens of a late or retroactive 
standard in part by proposing a supplemental standard that applies for 
the 2022 compliance year. Although we established a total renewable 
fuel standard in 2016, we did so while erroneously waiving 500 million 
gallons of total renewable fuel through the use of our general waiver 
authority. In this action, we are proposing to begin to remedy that 
error by requiring an additional 250 million gallon total renewable 
fuel volume requirement in the 2022 compliance year.\138\
---------------------------------------------------------------------------

    \138\ As noted earlier, we intend to propose an additional 
supplemental volume of 250 million gallon for 2023 in a subsequent 
action.
---------------------------------------------------------------------------

    As noted in Section II.C, in ACE and two prior cases, the court 
upheld EPA's authority to issue late renewable fuel standards, even 
those applied retroactively, so long as EPA's approach is 
reasonable.\139\ EPA must consider and mitigate the burdens on 
obligated parties associated with a delayed rulemaking.\140\ When 
imposing a late or retroactive standard, we must balance the burden on 
obligated parties of a retroactive standard with the broader goal of 
the RFS program to increase renewable fuel use.\141\ The approach we 
are proposing in this action would implement a late standard as 
described in these cases. Obligated parties made their RIN acquisition 
decisions in 2016 based on the standards as established in 2016 and 
they may have made different decisions had we not reduced the 2016 
total renewable fuel standard by 500 million gallons using the general 
waiver authority. Were EPA to create a supplemental standard for 2016 
designed to address the use of the general waiver authority in 2016, we 
would be imposing a wholly retroactive standard on obligated parties, 
but because the proposed supplemental standard will be complied with in 
the 2022 compliance year, it will instead be a late standard. Pursuant 
to the court's direction, we have carefully considered the benefits and 
burdens of our approach and considered and mitigated the burdens to 
obligated parties caused by the lateness.
---------------------------------------------------------------------------

    \139\ See ACE, 864 F.3d at 718; Monroe Energy, LLC v. EPA, 750 
F.3d at 920; NPRA, 630 F.3d at 154-58.
    \140\ ACE, 864 F.3d at 718.
    \141\ NPRA, 630 F.3d at 154-58.
---------------------------------------------------------------------------

    We acknowledge that in the 2020 proposal, we stated that a 
supplemental standard would ``impose a significant burden on obligated 
parties'' that would ``be unduly burdensome and inappropriate'' and 
lack ``any corresponding benefit as any additional standard cannot 
result in additional renewable fuel use in 2016.'' \142\ We seek 
comment on whether the approach described in this document mitigates 
the associated burdens or even entirely avoids most of the burdens we 
described in the 2020 proposal (such as those associated with allowing 
only 2015 and 2016 RINs to be used for compliance). We seek comment on 
whether the current size of the carryover RIN bank is sufficient to 
mitigate the burden on obligated parties from a supplemental standard 
as well as whether the proposal to spread the 500 million gallon volume 
over two compliance years also mitigates the burdens on the carryover 
RIN bank. In short, we seek comment on whether this approach would 
reasonably balance the benefits and burdens and whether it would 
provide appropriate and meaningful relief in response to the ACE 
remand.
---------------------------------------------------------------------------

    \142\ 84 FR 36788 (July 29, 2019).
---------------------------------------------------------------------------

    We believe that the approach proposed in this action, if finalized, 
could provide benefits that outweigh potential burdens. Consistent with 
the 2016 renewable fuel volume established by Congress, our proposed 
and intended supplemental standards for 2022 and 2023, respectively, 
are in total equivalent to the volume of total renewable fuel that we 
inappropriately waived for the 2016 total renewable fuel standard. The 
use of these supplemental standards phased across two compliance years 
would provide a meaningful remedy to the D.C. Circuit's vacatur of 
EPA's use of the general waiver authority and remand of the 2016 rule 
in ACE.
    We have carefully considered and designed this approach to mitigate 
any burdens on obligated parties. We have considered the availability 
of RINs to satisfy this additional requirement. We are soliciting 
comment on the feasibility of the proposed 250-million-gallon 
supplemental standard in 2022. As explained earlier, there are 
insufficient 2015 and 2016 RINs available to satisfy the proposed 250-
million-gallon standard.\143\ Instead, we are proposing a supplemental 
volume requirement to the 2022 standards that will apply in the 2022 
compliance year. Doing so would allow 2021 and 2022 RINs to be used for 
compliance with the 2022 supplemental standard, in keeping with 
existing RFS regulations. We believe there would be a sufficient number 
of 2021 and 2022 RINs to satisfy the 2022 supplemental standard. 
Although it is possible that the supplemental standard could be met 
through additional renewable fuel production, we generally believe that 
requiring volumes for the 2022 annual standards beyond those we are 
proposing in this action results in increasing difficulty in the 
standards being met through additional renewable fuel production. We 
believe that potential drawdown of the carryover RIN bank as a result 
of compliance with the proposed supplemental standard would be 
appropriate in light of the projected size of the carryover RIN bank in 
2022 and the desire to provide a meaningful remedy to the court's 
remand and the Congressional intent evidenced by the statutory 2016 
total renewable fuel standard.
---------------------------------------------------------------------------

    \143\ As also described above, it is likely that some amount of 
the existing carryover RIN bank represents RINs generated but not 
used for compliance in 2016, as the market over complied with the 
total renewable fuel standard that year.
---------------------------------------------------------------------------

    Second, we provide significant lead-time for obligated parties by 
proposing this standard as supplemental to the 2022 standard: More than 
one year prior to the 2022 compliance deadline.
    Third, we are proposing multiple mechanisms to mitigate the 
potential compliance burden. One step is to designate that the response 
to the ACE remand will be a supplement to the 2022 standards. This 
approach would not only allow the use of 2021 and 2022 RINs for 
compliance with the 2022 standard, as described earlier, but it would 
also avoid the need for obligated parties to revise their 2016 (and 
potentially 2017, 2018, 2019, etc.) compliance demonstrations, which 
would be a burdensome and time-consuming process. In addition, our 
proposal allows obligated parties to

[[Page 72462]]

satisfy both the 2022 standards and the supplement in a single set of 
compliance and attest engagement demonstrations. We are also proposing 
to extend the same compliance flexibility options already available for 
the 2022 standards to the 2022 supplemental standard, including 
allowing the use of carryover RINs and deficit carry forward subject to 
the conditions of 40 CFR 80.1427(b)(1). We also intend to spread out 
the 500-million-gallon obligation over two compliance years as 
described above. This will allow obligated parties and renewable fuel 
producers additional lead time to meet the standard because the RFS 
program will phase in the requirement, thus providing about a year of 
lead time for the second 250 million gallon requirement.
    Lastly, we have carefully considered alternatives, including 
retaining the 2016 total renewable fuel volume as described in the 2020 
proposal. We seek comment on this alternative, as well as on any other 
alternative approaches for addressing the ACE remand.
    On balance, we find that requiring an additional 500 million 
gallons of total renewable fuel to be complied with through two 
supplemental standards spread over two years would be an appropriate 
response to the court's vacatur and remand of our use of the general 
waiver authority to waive the 2016 total renewable fuel standard by 500 
million gallons. We seek comment on this approach.

E. Calculating a Supplemental Percentage Standard for 2022

    The formulas in 40 CFR 80.1405(c) for calculating the applicable 
percentage standards were designed explicitly to associate a percentage 
standard for a particular year with the volume requirement for that 
same year. The formulas are not designed to address the approach that 
we are proposing in this action, namely the use of a 2016 volume 
requirement to calculate a 2022 percentage standard. Nonetheless, we 
can apply the same general approach to calculating a supplemental 
percentage standard for 2022.
    If this proposed approach to the ACE remand in finalized, the 
numerator in the formula in 40 CFR 80.1405(c) would be the supplemental 
volume of 250 million gallons of total renewable fuel. The values in 
the denominator would remain the same as those used to calculate the 
proposed 2022 percentage standards in Section VI.C, which can be found 
in Table VI.C-1.\144\ As described in Section VI.C, the resulting 
supplemental renewable fuel standard percentage standard for a 250 
million gallon volume requirement in 2022 would be 0.14-0.15 percent, 
depending on the projection of exempt volume of gasoline and diesel.
---------------------------------------------------------------------------

    \144\ We intend to update the values in the denominator, such as 
the projected gasoline and diesel volumes, based on updated 
information available at the time of the final rule.
---------------------------------------------------------------------------

    The proposed supplemental standard for 2022 would be a requirement 
for obligated parties separate from and in addition to the 2022 
standard for total renewable fuel. The two percentage standards would 
be listed separately in the regulations at 40 CFR 80.1405(a), but in 
practice obligated parties would demonstrate compliance with both at 
the same time. Thus, the two percentage standards would effectively be 
additive (e.g., 11.76% + 0.14% = 11.90%, using the low end of the 
proposed percentage standards in Section VI.C).

VI. Percentage Standards

    EPA implements the nationally applicable volume requirements by 
establishing percent standards that apply to obligated parties. The 
obligated parties are producers and importers of gasoline and diesel, 
as defined by 40 CFR 80.1406(a). The standards are expressed as volume 
percentages. Each obligated party multiplies the percentage standards 
by sum of all non-renewable gasoline and diesel they produce or import 
to determine their Renewable Volume Obligations (RVOs).\145\ The RVOs 
are the number of RINs that the obligated party is responsible for 
procuring to demonstrate compliance with the RFS rule for that year. 
Since there are four separate standards under the RFS program, there 
are likewise four separate RVOs applicable to each obligated party for 
each year.
---------------------------------------------------------------------------

    \145\ 40 CFR 80.1407.
---------------------------------------------------------------------------

    The volumes used to determine the proposed 2020, 2021, and 2022 
percentage standards are described in Section III and are shown in 
Table VI-1.

             Table VI-1--Volumes for Use in Determining the Proposed Applicable Percentage Standards
                                                 (billion RINs)
----------------------------------------------------------------------------------------------------------------
                            Standard                                   2020            2021            2022
----------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel..............................................            0.51            0.62            0.77
Biomass-Based Diesel \a\........................................        \b\ 2.43        \c\ 2.43            2.76
Advanced Biofuel................................................            4.63            5.20            5.77
Total Renewable Fuel............................................           17.13           18.52           20.77
Supplemental Standard...........................................             n/a             n/a            0.25
----------------------------------------------------------------------------------------------------------------
\a\ The BBD volumes are in physical gallons (rather than RINs).
\b\ The BBD volume requirement for 2020 was established in the 2019 standards rulemaking (83 FR 63704, December
  11, 2018).
\c\ The BBD volume requirement for 2021 was established in the 2020 standards rulemaking (85 FR 7016, February
  6, 2020).

A. Calculation of Percentage Standards

    The formulas used to calculate the percentage standards applicable 
to obligated parties are provided in 40 CFR 80.1405(c). The formulas 
apply to the estimates of the volumes of non-renewable gasoline and 
diesel fuel, for both highway and nonroad uses, which are projected to 
be used in the year in which the standards will apply. EIA provides 
projected gasoline and diesel volumes, but these include projections of 
ethanol and biomass-based diesel used in transportation fuel. Since the 
percentage standards apply only to the non-renewable gasoline and 
diesel, the volumes of renewable fuel are subtracted out of the EIA 
projections of gasoline and diesel. In addition, transportation fuels 
other than gasoline or diesel, such as natural gas, propane, and 
electricity from fossil fuels, are not currently subject to the 
standards, and volumes of such fuels are not used in calculating the 
annual percentage standards or obligated parties' RVOs.
    As specified in the 2010 RFS2 final rule,\146\ the percentage 
standards are based on energy-equivalent gallons of renewable fuel, 
with the cellulosic biofuel, advanced biofuel, and total renewable fuel 
standards based on ethanol equivalence and the BBD

[[Page 72463]]

standard based on biodiesel equivalence. However, all RIN generation is 
based on ethanol-equivalence. To effectuate this difference between BBD 
and the other three standards, the formula used to calculate the 
percent standard for BBD in 40 CFR 80.1405 includes a factor of 1.5 to 
convert physical volumes of BBD into ethanol-equivalent volumes. 
However, as discussed more fully in Section VII.A, based on updated 
data regarding BBD use, we are proposing to change this factor from 1.5 
to 1.55.
---------------------------------------------------------------------------

    \146\ See 75 FR 14670 (March 26, 2010).
---------------------------------------------------------------------------

B. Small Refineries and Small Refiners

    In CAA section 211(o)(9), Congress exempted small refineries from 
RFS compliance temporarily through December 31, 2010. Congress also 
provided that small refineries could receive an extension of the 
exemption beyond 2010 based either on the results of a required 
Department of Energy (DOE) study or in response to individual small 
refinery petitions demonstrating ``disproportionate economic 
hardship.'' CAA section 211(o)(9)(B)(i).
    In the 2020 final rule, EPA revised certain definitions in the 
percentage standards formulae at 40 CFR 80.1405(c) to account for a 
projection of the total exempted volume of gasoline and diesel produced 
at small refineries, including for those exemptions granted after the 
final rule. In this proposed action, we are applying these revised 
definitions to calculate the projected exemptions for 2020, 2021, and 
2022 and proposing a range of values. On the low end, we are proposing 
that the exempted volume is zero; on the high end, we are proposing to 
project the volume using the same methodology used in the 2020 final 
rule and updating values with more recent data.
    The low end of the range of applicable percentage standards would 
be based on the fact that on January 24, 2020, the United States Court 
of Appeals for the Tenth Circuit ruled in RFA that EPA's grant of three 
individual SREs exceeded our statutory authority.\147\ The court 
vacated EPA's actions under multiple bases. First, under the Tenth 
Circuit's reading of the CAA, a small refinery is eligible for relief 
only if it has received a continuous exemption from the RFS program 
since the initial blanket exemption through 2010.\148\ The Supreme 
Court subsequently reversed the Tenth Circuit's decision in part on 
this basis.
---------------------------------------------------------------------------

    \147\ Renewable Fuels Ass'n v. EPA, 948 F.3d 1206 (10th Cir. 
2020), rev'd in part sub nom., HollyFrontier Cheyenne Refining, LLC, 
v. Renewable Fuels Ass'n, 114 S. Ct. 2172 (2021).
    \148\ RFA at 1244-49.
---------------------------------------------------------------------------

    However, the Tenth Circuit also vacated EPA's actions for two other 
reasons: EPA may grant relief only when it finds that the small 
refinery would suffer disproportionate economic hardship due to 
compliance with the RFS program, not due to other factors, and EPA had 
failed to discuss how granting the exemptions was consistent with our 
findings on RIN cost pass-through.\149\ Were EPA to follow these 
aspects of the RFA decision nationwide, we would not anticipate 
granting any SREs for 2020, 2021, or 2022.
---------------------------------------------------------------------------

    \149\ RFA at 1253-54.
---------------------------------------------------------------------------

    As described in previous actions, our assessment indicates that 
small refineries fully recover the costs of RFS compliance through 
higher prices on sales of gasoline and diesel, and that as a result 
they do not suffer economic hardship due to the RFS.\150\ EPA has 
stated that refineries, including small refineries, are generally able 
to recover the costs of the RIN in the revenues received for their 
petroleum products, and that the cost of the RIN is passed through to 
consumers in the marketplace and does not represent a net cost to 
obligated parties.\151\ While some small refineries have contested RIN 
cost pass-through in their exemption petitions, we have not credited 
such arguments in the past. Even when we granted relief in past years, 
we did so for other reasons.
---------------------------------------------------------------------------

    \150\ ``A Preliminary Assessment of RIN Market Dynamics, RIN 
Prices, and Their Effects,'' Dallas Burkholder, Office of 
Transportation and Air Quality, US EPA. May 14, 2015.
    \151\ ``Denial of Petitions for Rulemaking to Change the RFS 
Point of Obligation,'' EPA-420-R-17-008, EPA-HQ-OAR-2016-0544-0525, 
(November 22, 2017).
---------------------------------------------------------------------------

    In addition, because the applicable standards are expressed as a 
percentage of production basis, the cost of RFS compliance (prior to 
being recovered in the marketplace through higher sales prices on 
gasoline and diesel) is proportional to the amount of gasoline and 
diesel the obligated party produces. In other words, the cost of RFS 
compliance, per gallon of gasoline and diesel production, is the same 
for all obligated parties. This same cost applies to all obligated 
parties and is not disproportionate.
    The high end of the proposed range of applicable percentage 
standards is based on the fact that small refineries subsequently 
sought review of RFA from the U.S. Supreme Court in HollyFrontier and 
received a favorable ruling.\152\ At this time we do not yet know how 
the court's ruling will affect SRE decisions currently before EPA or in 
the future. The high end of the proposed range therefore reflects a 
continuation of the intent described in the 2020 final rule to project 
the volumes of gasoline and diesel associated with future SREs.\153\ 
Specifically, we are proposing to project the SRE volume for 2020, 
2021, and 2022 using the same methodology used in the 2020 final rule, 
but updating the values using more recent data for 2016-2018 SRE 
petitions.\154\
---------------------------------------------------------------------------

    \152\ 114 S. Ct. 2172 (2021).
    \153\ 85 FR 7049 (February 6, 2020).
    \154\ We are not adjudicating any SREs in this action, and this 
action does not prejudge any SRE petition. Rather, this proposal 
simply reflects our best estimate at this time of the potential 
range of exempt volumes in 2020, 2021, and 2022.
---------------------------------------------------------------------------

    EPA is also soliciting comment on the revisions we made in the 2020 
final rule to the definitions in the percentage standards formulae at 
40 CFR 80.1405(c) to account for a projection of the exempted small 
refinery volume, including for exemptions granted after the final rule. 
In the 2020 final rule, we justified the revised formulae based in part 
on our then-prospective SRE policy of following DOE's recommendations. 
As noted above, EPA does not know at this time how RFA and Holly 
Frontier will affect our SRE policy going forward, so we are co-
proposing a range of exempted small refinery volumes. Since the 
revisions to the formulae were based in part on our SRE policy, we are 
also soliciting comment on the revisions, specifically with regard to 
our decision to account for a projection of exemptions granted after 
the final rule.

C. Modification of the 2020 Biomass-Based Diesel Percentage Standard

    As noted above, the percentage standards implement the nationally 
applicable volume requirements. Since EPA is proposing to revise the 
nationally applicable volume requirements for 2020 in this action under 
our reset authorities, we are proposing to also establish revised 
percentage standards corresponding to those volumes. With regard to the 
2020 and 2021 BBD volumes, EPA is not proposing to revise such volumes, 
which were established in the 2019 and 2020 final rules, 
respectively.\155\ Nonetheless, EPA is proposing to revise the percent 
standards for the 2020 volume. We are also proposing to establish the 
volume requirement and associated percentage standard for 2022 for the 
nationally applicable volume requirement for BBD using our set 
authority as described in Section III.E.
---------------------------------------------------------------------------

    \155\ 83 FR 63704 (December 11, 2018); 85 FR 7016 (February 6, 
2020). In this action, we are not reopening nor seeking comment on 
the 2020 or 2021 BBD volume requirements.
---------------------------------------------------------------------------

    With regard to 2021 BBD, EPA did not previously promulgate 
percentage

[[Page 72464]]

standards, and thus we do so now for the first time.\156\ With regard 
to 2020 BBD, EPA previously promulgated percentage standards in the 
2020 final rule.\157\ In this action, EPA is proposing to modify the 
2020 BBD percentage standard, even though we are not modifying the 2020 
BBD volume requirement that we previously established. Specifically, we 
are proposing to use the same volume requirement previously promulgated 
(2.43 billion gallons) but to update the other inputs for calculating 
the standard (such as the projections of gasoline and diesel 
consumption and exempted small refinery volumes in 2020), which we term 
``inputs'' in the remainder of this section. We are also proposing to 
apply the new BBD multiplier of 1.55, which we discuss further in 
Section VIII.A.
---------------------------------------------------------------------------

    \156\ This action is consistent with past annual rules, which 
have generally promulgated the BBD percentage standard for the BBD 
volume set in the prior year's annual rule. This is due to the 
unique statutory timing applicable to BBD, where EPA must set the 
volume 14 months in advance but promulgate percentage standards by 
November 30 of the immediately preceding year. See CAA section 
211(o)(2)(B)(ii), (o)(3)(B)(i).
    \157\ 85 FR 7049 (February 6, 2020).
---------------------------------------------------------------------------

    We are proposing to update the inputs because it is logical for all 
of the 2020 percentage standards to be calculated using the same 
inputs. This is consistent with EPA's policy since the beginning of the 
RFS program, where we have generally calculated all the percentage 
standards for a given year based on the same inputs. Here, because we 
are updating the inputs for the other 2020 percentage standards, we 
also propose to modify the inputs for the 2020 BBD percentage standard. 
This approach is supported by the nested nature of the standards, where 
BBD is a subset of the advanced biofuel and total renewable fuel 
standards, and compliance with all three is accomplished in part by 
using the same RIN credits. We think it would not be appropriate to use 
updated inputs for the other standards, while simultaneously using what 
is now outdated data for the BBD standard alone.
    Additionally, the inputs we are proposing to use in this action are 
quite different from the inputs used in the 2020 final rule. As 
discussed in Section II.D. and III.B., the projections for gasoline and 
diesel consumption in 2020 final rule, which were used to establish the 
BBD standard, are significantly different than the actual gasoline and 
diesel consumed in 2020. Relative to the 2020 final rule, we are also 
co-proposing different projections of SREs, as discussed in the prior 
section.
    Finally, we note that our proposed modification to the 2020 BBD 
percentage standard is not anticipated to have any significant real-
world impacts. As set forth in the next section, the proposed 
modification results in an increase in the BBD percentage standard, 
which will increase the number of RINs required for compliance with 
this standard. However, even were we to retain the original, lower 
standard, we would nonetheless expect the same number of BBD RINs to be 
used for 2020 compliance given that BBD is nested within the advanced 
biofuel category and we are proposing to set the advanced biofuel 
percentage standard based on actual use of renewable fuels.

D. Proposed Standards

    The formulas in 40 CFR 80.1405 for the calculation of the 
percentage standards require the specification of a total of 14 
variables comprising the renewable fuel volume requirements, projected 
gasoline and diesel demand for all states and territories where the RFS 
program applies, renewable fuels projected by EIA to be included in the 
gasoline and diesel demand, and projected gasoline and diesel volumes 
from exempt small refineries. The values of all the variables used for 
this proposed rule are shown in Table VI.C-1 for the applicable 2020, 
2021, and 2022 standards.\158\
---------------------------------------------------------------------------

    \158\ See the technical memoranda, ``Calculation of proposed % 
standards for 2020,'' ``Calculation of proposed % standards for 
2021,'' and ``Calculation of proposed % standards for 2022,'' 
available in the docket for this action.

                                   Table VI.C-1--Volumes for Terms in Calculation of the Proposed Percentage Standards
                                                                     [Billion RINs]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               2022
                      Term                                     Description                     2020            2021            2022        supplemental
--------------------------------------------------------------------------------------------------------------------------------------------------------
RFVCB..........................................  Required volume of cellulosic biofuel..            0.51            0.62            0.77               0
RFVBBD.........................................  Required volume of biomass-based diesel            2.43            2.43            2.76               0
                                                  \a\.
RFVAB..........................................  Required volume of advanced biofuel....            4.63            5.20            5.77               0
RFVRF..........................................  Required volume of renewable fuel......           17.13           18.52           20.77            0.25
G..............................................  Projected volume of gasoline...........          123.25          133.06          136.49          136.49
D..............................................  Projected volume of diesel.............           50.49           54.52           56.81           56.81
RG.............................................  Projected volume of renewables in                 12.63           13.64           13.98           13.98
                                                  gasoline.
RD.............................................  Projected volume of renewables in                  2.15            2.23            2.66            2.66
                                                  diesel.
GS.............................................  Projected volume of gasoline for opt-in               0               0               0               0
                                                  areas.
RGS............................................  Projected volume of renewables in                     0               0               0               0
                                                  gasoline for opt-in areas.
DS.............................................  Projected volume of diesel for opt-in                 0               0               0               0
                                                  areas.
RDS............................................  Projected volume of renewables in                     0               0               0               0
                                                  diesel for opt-in areas.
GE.............................................  Projected volume of gasoline for exempt            0.00            0.00            0.00            0.00
                                                  small refineries (low).
                                                 Projected volume of gasoline for exempt            4.80            4.80            4.80            4.80
                                                  small refineries (high).
DE.............................................  Projected volume of diesel for exempt              0.00            0.00            0.00            0.00
                                                  small refineries (low).
                                                 Projected volume of diesel for exempt              3.39            3.39            3.39            3.39
                                                  small refineries (high).
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ The BBD volume used in the formula represents physical gallons. The formula contains a proposed 1.55 multiplier to convert this physical volume to
  ethanol-equivalent volume.

[[Page 72465]]

    Projected volumes of gasoline and diesel, and the renewable fuels 
contained within them, were derived from EIA's May 2021 STEO. For the 
final rule, the 2022 gasoline and diesel projections will be provided 
by EIA in a letter to EPA that is required under the statute, while the 
projections for 2020 and 2021 will be derived from the latest version 
of the STEO, which we anticipate being the October 2021 STEO.\159\
---------------------------------------------------------------------------

    \159\ To determine the 49-state values for gasoline and diesel, 
the amount of these fuels used in Alaska is subtracted from the 
totals provided by EIA because petroleum-based fuels used in Alaska 
do not incur RFS obligations. The Alaska fractions are determined 
from the June 26, 2020 EIA State Energy Data System (SEDS), Energy 
Consumption Estimates. In addition, fuel used in ocean-going vessels 
is also subtracted from the total because it is excluded from the 
definition of transportation fuel by the statute. This volume is 
provided directly by EIA.
---------------------------------------------------------------------------

    Using the volumes shown in Table VI.C-1, we have calculated the 
proposed percentage standards for 2020, 2021, and 2022 as shown in 
Table VI.C-2.

                                                       Table VI.C-2--Proposed Percentage Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2020                                    2021                            2022
                Standard                 ---------------------------------------------------------------------------------------------------------------
                                             Original       Revised low    Revised high         Low            High             Low            High
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel......................           0.34%           0.32%           0.34%           0.36%           0.38%           0.44%           0.46%
Biomass-Based Diesel....................            2.10            2.37            2.50            2.19            2.30            2.42            2.54
Advanced Biofuel........................            2.93            2.91            3.07            3.03            3.18            3.27            3.42
Renewable Fuel..........................           11.56           10.78           11.36           10.79           11.33           11.76           12.33
Supplemental Standard...................             n/a             n/a             n/a             n/a             n/a            0.14            0.15
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The proposed regulations at 40 CFR 80.1405 can only contain one set 
of percentage standards. Given this constraint, the proposed 
regulations contain only the percentage standards representing the low 
end of the range shown in the table above. However, we do not intend 
this approach to indicate a preference for the low end of the range of 
proposed percentage standards.

VII. Biointermediates

A. Background

    The RFS regulations were designed with the general expectation that 
renewable biomass would be converted into renewable fuel at a single 
facility (e.g., a renewable fuel producer purchases corn directly from 
several farmers in a region, crushes the corn in a mill, and then 
ferments the corn into ethanol, all at the same facility). The 
regulations therefore impose requirements on renewable fuel producers 
to provide EPA with information necessary to verify that their fuel was 
made with qualifying renewable biomass, through production processes 
corresponding with approved pathways, and in volumes corresponding to 
feedstocks used. Such information submissions are necessary for 
oversight and enforcement, leading to increased integrity and 
confidence in the program.
    Since the RFS2 regulatory program was promulgated in 2010, however, 
EPA has received a number of inquiries from companies regarding the 
possible use of renewable biomass that has been substantially pre-
processed at one facility to produce a proto-renewable fuel (referred 
to as a biointermediate) that is subsequently used at a different 
facility to produce renewable fuel for which RINs would be generated. 
For example, a number of companies have approached us with the proposed 
use of woody biomass or separated MSW to produce a biocrude (a pre-
processed feedstock that could then be processed into renewable fuel at 
a crude oil refinery). In response to these requests, EPA has stated 
that the existing RFS regulations are insufficient to generally allow 
RINs to be generated in situations wherein multiple facilities are 
involved in the conversion of renewable biomass feedstocks into 
renewable fuel.
    On November 16, 2016, EPA issued the proposed Renewables 
Enhancement and Growth Support (REGS) rule that outlined proposed 
provisions to allow the use of biointermediates to produce qualifying 
renewable fuels under the RFS program.\160\ The proposed REGS rule 
outlined a comprehensive set of compliance provisions, enforcement 
provisions, and oversight mechanisms for biointermediates that would 
have allowed biointermediates into the RFS program while maintaining 
effective oversight of the production, transfer, and use of 
biointermediates to make renewable fuels. A public hearing was held in 
Chicago, IL, on December 16, 2016, and the public comment period ended 
on January 17, 2017.
---------------------------------------------------------------------------

    \160\ See 81 FR 80828 (November 16, 2016).
---------------------------------------------------------------------------

    Since the proposed REGS rule was issued, EPA has continued to 
review public comments and other information and to carefully consider 
how best to develop and implement a program that would allow for the 
production, transfer, and use of biointermediates to produce renewable 
fuel under RFS. We continue to believe that the use of biointermediates 
to produce renewable fuels would be a reasonable and positive 
development for the future growth in production particularly of 
cellulosic and advanced biofuels. However, we also continue to believe 
that the existing regulations are insufficient to allow the use of 
biointermediates because we are unable to verify the validity of RINs 
generated in situations where feedstocks are allowed to be processed at 
multiple facilities, and where partially processed feedstocks, which 
may appear very similar to renewable fuels themselves, are transferred 
between parties. The value of these RINs provides considerable 
incentive for fraudulent activity, and therefore it is important for 
the integrity of the program that mechanisms be in place to verify 
their validity.\161\
---------------------------------------------------------------------------

    \161\ We note that there has been a long history of RIN fraud in 
the RFS program. We detail several of the major RIN fraud civil 
enforcement cases on our website, available at https://www.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program.
---------------------------------------------------------------------------

    After careful consideration of public comments received in response 
to the proposed biointermediates provisions in the proposed REGS rule 
and further thought on how best to design and implement a potential 
biointermediates program, we are proposing biointermediates provisions 
anew. This proposal re-proposes many aspects of the biointermediate 
provisions in the proposed REGS rule but also updates several key 
aspects of that proposal reflecting what we have learned since the 
original proposal. We discuss what biointermediate provisions we are 
re-proposing without significant changes from the proposed REGS rule in 
Section VII.B and the updated revisions in Section VII.C. We also 
specifically seek comment on a number of issues related

[[Page 72466]]

to including biointermediates in the RFS program in Section VII.D.
    We are reproposing (i.e., proposing anew) the biointermediates 
provisions here for two main reasons. First, since the publication of 
the proposed REGS rule, we have reviewed comments received on that 
proposed rulemaking and have engaged in numerous discussions with 
parties interested in bringing biointermediates into the RFS program. 
After almost five years of further consideration, we have identified 
several areas that we would like to modify or enhance. These changes 
impact what biointermediates would be allowed under the program and 
what parties that produce, transfer, and use biointermediates would 
need to do to demonstrate compliance.
    Second, we believe it would be useful to provide an additional 
opportunity for stakeholders interested in biointermediates to comment 
on the proposed biointermediates provisions more generally. Due to the 
amount of time that has passed since we proposed the REGS rule, the 
nature and number of the parties interested in bringing 
biointermediates into the program has changed. We believe that by 
providing an additional opportunity for public comment on all aspects 
of the proposed biointermediates provisions, we would receive 
additional comments with reasonable suggestions to modify and enhance 
the proposed biointermediates provision in addition to those we 
received during the proposed REGS rule comment period. Furthermore, we 
believe there are specific provisions that we proposed in the REGS rule 
that would benefit from additional public comment (these are discussed 
in Section VII.D).
    For these reasons, we are proposing all the biointermediates 
provisions anew and broadly seek comment on these reproposed 
biointermediate provisions. Commenters that submitted comments on the 
proposed biointermediates provisions in the REGS rule must resubmit any 
relevant comments in order for those comments to be considered. As this 
is a new proposal, we do not intend to respond to comments that were 
submitted only on the previously proposed biointermediates provisions 
in the REGS rule. Such comments are outside the scope of this action.
    We also seek comment from potential producers of biointermediates 
on the current status of operations, potential production volumes, 
timelines for production, and any other information that may help 
inform EPA as to the expected use of biointermediates to produce 
renewable fuel both during 2022 and out into the future.

B. Re-Proposal of Biointermediates Provisions Previously Proposed in 
REGS

    In this action, we are reproposing certain biointermediate 
provisions that we previously proposed in the REGS rule. Many of the 
program design elements for proposed biointermediate provisions remain 
unchanged from the REGS proposal and are being reproposed here with no 
modifications other than ministerial changes. The provisions we are 
reproposing without substantive changes are the following:
     The calculation of lifecycle GHG emissions where 
biointermediates are used to make renewable fuels and the treatment of 
pathways for RIN generation where biointermediates are converted into 
renewable fuels;
     Limiting the production of biointermediates to a single 
facility;
     The potential liability of biointermediate and renewable 
fuel producers for violations of the proposed biointermediate 
provisions;
     Registration, reporting, and recordkeeping requirements 
for biointermediate producers as well as additional registration, 
reporting, and recordkeeping requirements for renewable fuel producers 
that use biointermediates;
     Annual attest engagements for biointermediate producers;
     RFS quality assurance program (QAP) provisions for 
biointermediate producers and renewable fuel producers that use 
biointermediates; and
     The treatment of biointermediates produced at foreign 
facilities.
    This preamble incorporates the discussions of each of these 
elements that are contained in the referenced memo to the docket.\162\ 
We note that because the RFS regulations have undergone several 
revisions since these elements were previously proposed, we have 
updated the proposed regulatory language to accommodate these revisions 
to help ensure consistency between the proposed biointermediate 
provisions and the rest of the RFS regulations. Additionally, while 
each of these individual provisions is substantively unchanged from the 
REGS proposal, how they fit into and function within the larger 
biointermediates program may be different under our proposed revised 
program. We discuss broader, substantive changes to the proposed 
biointermediate provisions in Section VII.C.
---------------------------------------------------------------------------

    \162\ Each of these elements are described in greater detail in 
the memorandum to the docket, ``Proposed Biointermediate Provisions 
in the proposed Renewables Enhancement Growth Support Rule,'' 
available in the docket for this action.
---------------------------------------------------------------------------

    As explained above, we are requesting comment on these re-proposed 
provisions. Comments on these provisions previously submitted to the 
REGS rulemaking docket will not be considered unless they are 
resubmitted to the docket for this action (i.e., EPA-HQ-OAR-2021-0324).

C. Changes to the Biointermediates Provisions Previously Proposed in 
the REGS Rule

    In this action, we are also proposing some additions and updates to 
the biointermediate provisions previously proposed in the REGS rule. 
Specifically, we are proposing changes to the definition of 
biointermediate, limits on biointermediate transfers, and mandatory 
participation in the RFS QAP. We are also proposing changes to the 
compliance and enforcement provisions, including: New product transfer 
document requirements for RINs generated from renewable fuels produced 
from biointermediates; changes to the registration, reporting, 
recordkeeping, and attest engagement requirements; and provisions for 
the treatment of invalid RINs generated from biointermediates. These 
changes are discussed in more detail below.
1. Implementation Dates
    We are proposing that the biointermediates provisions will be 
implemented starting 60 days after the publication of the final rule in 
the Federal Register. In recognition of the time that has passed since 
EPA first identified the need to revise the regulations to allow the 
use of biointermediates, we now intend to put a biointermediates 
program in place as soon as possible. We believe this proposed 
implementation date is achievable based on the scope of 
biointermediates provisions as proposed here. However, we note that 
depending on the complexity of the final biointermediate provisions, we 
may need to finalize a later implementation date to provide us enough 
time to put in place the compliance and oversight mechanisms necessary 
to effectively oversee the program.
    We are seeking specific comments on when biointermediate producers 
expect to be able to begin production so we can consider the potential 
impacts of a later implementation date.
2. Definition of Biointermediate
    We are proposing a definition of biointermediate that differs from 
what we proposed in the REGS rule. Previously, we proposed to define a

[[Page 72467]]

biointermediate as any renewable fuel feedstock material that meets all 
of the following criteria:
     It was derived from renewable biomass.
     It did not meet the definition of renewable fuel and RINs 
were not generated for it.
     It was produced at a facility that is registered with EPA, 
but which is different than the facility at which it is used to produce 
renewable fuel.
     It was made from the feedstock and would be used to 
produce the renewable fuel in accordance with the process(es) listed in 
the approved pathway.
     It was processed in such a way that it is substantially 
altered from the feedstock listed in the approved pathway.
    We pointed out in the proposed REGS rule that our intent was that 
feedstocks currently listed in an approved pathway or that underwent 
form changes would not be considered biointermediates \163\ and 
excluded form changes from the definition included in the proposed REGS 
rule. Such form changes included, but were not limited to the 
following:
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    \163\ See 81 FR 80834 (November 16, 2016).
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     Chopping biomass into small pieces, pressing it, or 
grinding it into powder.
     Filtering out suspended solids from recycled cooking and 
trap grease.
     Degumming vegetable oils.
     Drying wet biomass.
     Adding water to biomass to produce a slurry.
    We received several public comments suggesting that the proposed 
definition was too broad and would include existing feedstocks that are 
currently used in approved pathways. These commenters argued that the 
additional registration, reporting, and recordkeeping requirements 
would be unnecessarily burdensome on the production of renewable fuels 
that already can generate RINs under the current RFS program. 
Commenters pointed to EPA's stated intent in the proposed REGS rule to 
avoid inclusion of almost all feedstocks covered by existing pathways 
either in Table 1 to 40 CFR 80.1426 or an EPA-approved pathway under 40 
CFR 80.1416.
    Additionally, since the proposed REGS rule, we have developed a 
better understanding of the potential implementation oversight 
challenges surrounding the inclusion of certain types of 
biointermediates. We now believe that the general, one-size-fits-all 
regulatory framework proposed in the REGS rule would not work in many 
of the biointermediates situations anticipated now and in the future 
and that it would be difficult for us to implement appropriately. In 
some cases it would treat situations as biointermediates when it was 
not necessary to do so, in other cases it would not treat situations as 
biointermediates that should be in order to provide proper oversight, 
and in still other cases it might treat situations as biointermediates 
but not in the way that our regulations were intended to address. Our 
additional consideration of biointermediates since REGS has emphasized 
that some potential biointermediates require unique provisions for 
ensuring that qualifying renewable biomass was used to make the 
biointermediate, ensuring that the biointermediate and the resultant 
renewable fuel processed at separate facilities continues to fall under 
an approved pathway, and ensuring that the renewable fuel gets used as 
transportation fuel, heating oil, or jet fuel. In other cases, we have 
concerns with the potential generation of invalid or fraudulent RINs 
especially when a biointermediate either is itself or is similar to a 
renewable fuel. Historically, when we have brought renewable fuels into 
the program that required unique considerations or had concerns over 
the generation of valid RINs, we have either promulgated specific 
regulatory requirements to address any concerns (e.g., renewable fuel 
oil) or imposed certain terms and conditions on approved pathways as 
described at 40 CFR 80.1460(a)(7).
    Based on the concerns highlighted in comments and what we have 
learned about individual biointermediates over the last several years, 
we no longer believe a broad approach to defining biointermediates 
would allow us to have sufficient oversight of the program (i.e., to 
ensure that renewable fuels that generate RINs meet the applicable 
statutory and regulatory requirements). Each biointermediate has 
particular compliance and enforcement considerations, including how to 
track the biointermediate back to renewable biomass, how a 
biointermediate may be processed with other feedstocks to produce 
renewable fuel, how a biointermediate fits within existing pathways, 
and how to demonstrate the cellulosic content of the biointermediate. 
As such, we now believe it is necessary to design a program that allows 
us to consider and, if necessary, address these challenges on a 
biointermediate-by-biointermediate basis. We are thus proposing to 
specifically define the scope of which biointermediates would be 
covered by a biointermediates program. In other words, under this 
proposal we are defining the specific situations in which it would be 
permitted to process feedstocks into renewable fuels at multiple 
facilities. Under this proposal, if we do not list a 
``biointermediate'' explicitly in the definition of biointermediate, 
the ``biointermediate'' would not be lawful for use in making renewable 
fuels under the RFS program. In order for a new biointermediate to be 
brought into the program, under this proposal, we would amend the 
regulations again in the future to add the new biointermediate to the 
list and make any other necessary regulatory changes needed to provide 
proper oversight for its potentially unique circumstances.
    In this action, we are proposing to initially include the following 
biointermediates: Biocrude, free fatty acid (FFA) feedstock, and 
undenatured ethanol (including ethanol solutions containing less than 
95% ethanol). We are also seeking comment on a longer list of 
additional potential biointermediates that we may choose to include in 
the final rulemaking depending upon the comments we receive on this 
proposal. We believe that the three proposed types of biointermediates 
we are proposing could effectively be accommodated by the updated 
provisions described in this action. We believe these biointermediates 
are likely to be available in measurable quantities in the near future 
and that our proposed biointermediate regulations can ensure proper 
compliance oversight and enforcement. We have had discussions with a 
variety of parties interested in producing and using biointermediates 
since the proposed REGS rule. Some parties making fuels from biocrude, 
FFA feedstocks, and undenatured ethanol could begin producing volumes 
as early as 2022. Since these parties are relatively close or already 
capable of producing renewable fuels from biocrude, FFA feedstock, and 
undenatured ethanol, and it is relatively clear to us how they will do 
so and what the compliance oversight issues might be with these 
biointermediates, we believe that it would be appropriate to allow the 
use of these biointermediates to produce renewable fuel after we 
finalize a biointermediates program.
    To clearly establish what would be allowed under this proposed 
biointermediates program, we are also proposing definitions for the 
specific biointermediates that would initially be included in the 
program. We are proposing to define undenatured ethanol as ethanol that 
has not been denatured per Department of Treasury

[[Page 72468]]

requirements.\164\ We are also proposing specific definitions for 
biocrude and FFA feedstock. In the future as we revise the regulations 
to allow new biointermediate into the program, we would then also 
define those biointermediates. We also note that if we finalize 
additional biointermediates as part of the biointermediate definition 
in the final rule, we will also include specific definitions for those 
additional biointermediates.
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    \164\ See 27 CFR parts 19 through 21. Ethanol does not become a 
``renewable fuel'' under the RFS regulations until it is denatured. 
The preamble to the RFS2 regulations explains that ``ethanol that is 
valid under RFS2 must be denatured.'' See 75 FR 14670, 14713 (March 
26, 2010).
---------------------------------------------------------------------------

    The inclusion of FFA feedstock in the proposed definition of 
biointermediates implies that the existing pathways in Table 1 to 40 
CFR 80.1426 satisfy the applicable GHG reduction thresholds in cases 
where FFA is produced from a feedstock and used to produce a renewable 
fuel in accordance with a process(es) listed in an approved pathway. We 
believe this conclusion is supported for the feedstocks listed in Table 
1 that FFA biointermediates may be produced from, including biogenic 
waste fats, oils, and greases (FOG), distillers corn oil and sorghum 
oil, food wastes, oil crops, and algal oil. As discussed in the 2020 
proposed rule, our original approval of pathways that use these 
feedstocks was based on lifecycle GHG assessments; our basis for 
potentially allowing FFAs produced from those feedstocks as 
biointermediates is that we believe the potential additional processing 
and transport associated with the additional FFA production step would 
add a limited amount of GHG emissions to the fuel's lifecycle.\165\ 
However, where EPA has not conducted a lifecycle GHG assessment and 
determined that the original renewable biomass feedstock meets the GHG 
emission reduction requirements of the CAA, we cannot say that FFAs 
produced from that feedstock fit within existing pathways. Therefore, 
as explained further below, the proposed definition of FFA feedstock 
includes the following restriction: ``FFA feedstock must not include 
any free fatty acids from the refining of crude palm oil.''
---------------------------------------------------------------------------

    \165\ 84 FR 36801-36803 (July 29, 2019).
---------------------------------------------------------------------------

    The existing pathways using waste FOG feedstocks were approved 
based on our lifecycle GHG analysis of yellow grease (also known as 
used cooking oil or ``UCO'') for the RFS2 rule, which found, for 
example, that biodiesel produced from UCO results in a greater than 80% 
GHG reduction compared to baseline conventional diesel. In addition to 
UCO, the waste FOG feedstock category includes inedible animal tallow, 
the FOG components of food wastes and other similar materials that 
``would otherwise normally be discarded or used for another secondary 
purpose because they are no longer suitable for their original intended 
use.'' \166\ EPA has not determined whether FFA from the refining of 
crude palm oil (hereafter referred to as palm fatty-acid distillate or 
``PFAD'') is consistent with and covered by our existing analyses and 
pathways. In particular, we have not investigated potential existing 
markets for PFAD and the potential market effects associated with using 
it as a biofuel feedstock. Although PFAD is a secondary product from 
crude palm oil refining, we believe that additional analysis is needed 
to determine whether fuel produced from PFAD would qualify for the 
applicable GHG reduction thresholds. Our lifecycle analysis of palm oil 
biodiesel, which has not been finalized through rulemaking, estimated 
that palm oil-based biodiesel and renewable diesel do not satisfy the 
20% GHG reduction for renewable fuel.\167\ Those estimates underscore 
the need to further evaluate the GHG emissions associated with using 
PFAD as a biofuel feedstock. For these reasons, we are specifying at 
this time that FFA feedstock does not include FFA from the refining of 
crude palm oil.
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    \166\ 75 FR 14794 (March 26, 2010).
    \167\ 77 FR 4300 (January 27, 2012).
---------------------------------------------------------------------------

    Our proposed approach to defining biointermediates is not intended 
to affect pre-processing steps for feedstocks in Table 1 that are 
limited to form changes. We recognize that it has been common practice 
for some feedstocks listed in Table 1 to 40 CFR 80.1426 or in an 
approved pathway pursuant to 40 CFR 80.1416 to be physically pre-
processed at separate facilities before they are delivered to a 
renewable fuel production facility and used to produce renewable fuel. 
We do not intend to disrupt this practice. However, in order to assure 
that EPA can verify that renewable fuel was made with qualifying 
renewable biomass, through production processes corresponding with 
approved pathways, we need to impose limits on the type of pre-
processing of qualifying feedstocks that will be allowed without 
complying with the biointermediate requirements. We intend to balance 
these interests by allowing the pre-processing of feedstocks listed in 
approved pathways at facilities other than the renewable fuel 
production facility, but only if the pre-processing results only in a 
form change such as chopping, crushing, grinding, pelletizing, 
filtering, compacting/compression, centrifuging, degumming, dewatering/
drying, melting, or the addition of water to produce a slurry.
    To implement this approach, we are proposing to prohibit any person 
from producing a renewable fuel at more than one facility unless the 
person uses a biointermediate as defined in 40 CFR 80.1401 or uses 
feedstocks identified in Table 1 to 40 CFR 80.1426 or in an approved 
pathway pursuant to 40 CFR 80.1416, which were pre-processed at a 
different facility, and the pre-processing results only in a form 
change such as chopping, crushing, grinding, pelletizing, filtering, 
compacting, compression, centrifuging, degumming, dewatering/drying, 
melting, or the addition of water to produce a slurry. We seek comment 
on whether we should expand or narrow the types of pre-processing that 
should be allowed for feedstocks that are not biointermediates at 
facilities other than the renewable fuel production facilities. Our 
intent with this proposed addition is to make clear the specific 
situations where feedstocks will be allowed to be processed at multiple 
facilities without being subject to the proposed biointermediates 
provisions. We believe this change would address comments received in 
the proposed REGS rule that we were overly inclusive of feedstocks 
already in use in current pathways.
    We recognize that the proposed definition of biointermediates does 
not reflect the full range of potential biointermediates identified to 
the Agency over the years. As such, we seek comment on whether we 
should include other potential biointermediates in the proposed 
definition for the final rulemaking. We will consider adding these 
additional biointermediates in the definition in the final rulemaking 
if the potential biointermediate could appropriately be produced, 
transferred, and used to make renewable fuel within the proposed 
provisions for biointermediates in this action. Specifically, we intend 
to base our consideration of including a potential biointermediate on 
whether there are adequate controls to limit opportunities to generate 
fraudulent RINs, whether feedstocks used to produce the biointermediate 
qualify as renewable biomass, and whether there are any unique 
considerations for the potential biointermediate that would require 
further regulatory requirements to ensure that generated RINs are 
valid. Commenters suggesting that we include a potential 
biointermediate in the final rulemaking should specifically address

[[Page 72469]]

these issues in their comments. Furthermore, commenters should provide 
information describing the type of potential biointermediate, the 
potential volume of renewable fuel(s) that could be produced from it, 
and the timeline for its development and ultimate production. Based on 
consideration of information submitted from commenters on potential 
biointermediates, we would only intend to finalize those potential 
biointermediates for which we believe that proposed compliance and 
oversight provisions can be effectively overseen, have a low likelihood 
of being susceptible to generation of fraudulent RINs, can be verified 
as being renewable biomass, and would not require further regulatory 
provisions.
    To aid commenters as to some of the potential biointermediates we 
will consider including in the final rulemaking, we are providing a 
memorandum to the docket that lists potential biointermediates that 
have come to our attention over the past 5 years.\168\ The list of 
potential biointermediates described in the memorandum to the docket is 
not intended to be exhaustive, and we will consider potential 
biointermediates not included in the memorandum in the final rule.
---------------------------------------------------------------------------

    \168\ See memorandum to the docket entitled, ``Potential 
Biointermediates,'' available in the docket for this action.
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3. Limits on Biointermediate Transfers
    We are proposing that renewable fuel production facilities would be 
able to receive biointermediates from multiple biointermediate 
production facilities. However, unlike under the proposed REGS rule 
provisions, under this new proposal biointermediate production 
facilities would not be able to send biointermediates to multiple 
renewable fuel production facilities.\169\ We believe this limitation 
will significantly simplify and improve oversight of RIN generation for 
renewable fuels produced from biointermediates without unreasonably 
limiting the production and use of biointermediates. Since the proposed 
REGS rule, we have become increasingly concerned that, were we to allow 
biointermediate production facilities to transfer product to multiple 
renewable fuel production facilities and renewable fuel production 
facilities to also receive product from multiple biointermediate 
producers, some parties could take advantage of the increased 
complexity in tracking relationships and batches to use non-qualifying 
feedstocks to make renewable fuel or generate fraudulent RINs through 
double-counting. We believe that without this restriction on 
biointermediates transfers the use of non-qualifying feedstocks would 
be more likely to occur and more difficult to detect. In order to 
effectively audit whether the correct type(s) and volumes of 
biointermediates were used, all facilities that produced and used 
biointermediates would need to be audited, which could be a large 
number of facilities if there were no limits on biointermediate 
transfers. Such oversight would be unrealistic for EPA or independent 
third parties to oversee, which would increase opportunities for the 
generation of invalid or fraudulent RINs and undermine the intent of 
the program. Since we expect most biointermediate situations will 
involve relatively small biointermediate production facilities and 
relatively large renewable fuel production facilities, we have 
structured the program to provide flexibility where it is most needed 
and most beneficial for enabling increased renewable fuel production. 
Namely this new proposal continues to allow multiple biointermediate 
producers to provide their product to a single renewable fuel 
production facility to be converted into renewable fuel. We seek 
comment on our proposal to limit biointermediate transfers such that 
renewable fuel production facilities can receive biointermediates from 
multiple biointermediate producers but each biointermediate producer 
can transfer its product to only one renewable fuel producer.
---------------------------------------------------------------------------

    \169\ Informally, this type of relationship is called a ``many-
to-one'' relationship in that under this approach many 
biointermediate production facilities could only transfer 
biointermediates to a single renewable fuel production facility. In 
contrast, the proposed REGS rule would have allowed biointermediate 
production facilities to transfer a biointermediate to more than one 
renewable fuel production facility and for renewable fuel production 
facilities to receive biointermediates from multiple biointermediate 
production facilities. Informally, this type of relationship is 
called a ``many-to-many'' relationship in that biointermediate 
production facilities could transfer biointermediates to many 
renewable fuel production facilities, and renewable fuel production 
facilities could receive biointermediates from many biointermediate 
production facilities.
---------------------------------------------------------------------------

    Under this proposal, the biointermediate and renewable fuel 
producer would need to designate through registration the receiving 
renewable fuel production facility to which biointermediate would be 
transferred. As explained in Section VII.B and docket memo, we are 
proposing anew the REGS provisions that require tracking of the volumes 
of biointermediate, and associated properties of the biointermediate, 
through periodic reporting requirements.\170\ Recognizing that 
biointermediate producers may need to periodically change the receiving 
renewable fuel production facility, we are proposing that 
biointermediate producers would be allowed to change their designated 
renewable fuel production facility no more than one time per calendar 
year unless, in its sole discretion, EPA determined that it was 
appropriate to allow the biointermediate producer to change its 
designated renewable fuel production facility more than once in a year. 
An example of a situation where EPA would consider it appropriate is 
the closure of the receiving renewable fuel production facility.
---------------------------------------------------------------------------

    \170\ These provisions are described in greater detail in the 
memorandum to the docket, ``Proposed Biointermediate Provisions in 
the proposed Renewables Enhancement Growth Support Rule,'' available 
in the docket for this action.
---------------------------------------------------------------------------

    We do not believe this restriction would impose much practical 
burden on transfers of biointermediate producers. We note that under 
the proposed biointermediates program, the newly designated receiving 
renewable fuel production facility would need to be registered to use 
the biointermediate, which would in turn require an engineering review 
by a professional engineer. This process can take several months to 
arrange for a PE to conduct the engineering review, submit the 
registration update to EPA, and have it ultimately accepted by EPA. 
Also, as discussed in Section VII.C.4, under this proposal both the 
biointermediate and renewable fuel producers would need their 
respective facilities audited under the QAP program, which would also 
increase the amount of time needed to change the designated receiving 
renewable fuel production facility. Consequently, because of the time 
to conduct new engineering reviews and have new quality assurance plans 
approved by EPA, we believe that biointermediate producers would be 
practically limited to only being able to change their receiving 
renewable fuel production facility once per calendar year. Despite 
these practical limitations, we seek comment on whether and in which 
narrow circumstances we should allow biointermediate producers to 
change their designated receiving renewable fuel production facility 
more than once a calendar year.
    We believe that the proposed biointermediate transfer provisions 
will enable both the production and use of biointermediates and enhance 
our ability to provide compliance and enforcement oversight. In most 
cases, we believe that a single renewable fuel production facility 
would receive all

[[Page 72470]]

biointermediate produced from a biointermediate production facility. 
This approach is primarily based on discussions with parties interested 
in the production and use of biointermediates, and on our understanding 
of how we believe that biointermediate transfers would be contracted by 
biointermediate and renewable fuel productions and how renewable fuel 
production facilities would be designed to accommodate the use of 
biointermediates.
    We seek comment on the proposed provisions for biointermediate 
transfers. We specifically seek comment on specific examples of where 
the proposed provisions may encourage or restrict the use of 
biointermediates to generate renewable fuel volumes and the likely 
volumes that may be affected, as well as on any examples of how the 
proposed provisions may or may not provide for sufficient oversight or 
RIN fraud prevention. We also ask that commenters describe any 
additional or alternative provisions that might allow the use of 
biointermediates from multiple facilities to be used to produce fuel at 
multiple renewable fuel producers while still allowing effective 
oversight.
4. Mandatory QAP
    We are proposing anew the revisions to the RFS QAP to cover 
biointermediate production and use.\171\ The RFS QAP provides for 
auditing of renewable fuel production facilities by independent third-
party auditors who review feedstock elements, process elements, and RIN 
generation elements to determine if renewable fuel production is 
consistent with EPA requirements. These independent third-party 
auditors verify the RINs generated from these renewable fuel production 
facilities. Under this proposal, independent third-party auditors would 
review feedstock and process elements for biointermediate production 
facilities like those currently reviewed for renewable fuel production 
facilities. In turn, these independent third-party auditors would 
verify that the biointermediate was properly produced.
---------------------------------------------------------------------------

    \171\ As explained in Section VII.B, we are reproposing the 
biointermediates provisions of the REGS rule. We discuss the 
proposed QAP requirements in more detail in the memorandum to the 
docket, ``Proposed Biointermediate Provisions in the proposed 
Renewables Enhancement Growth Support Rule,'' available in the 
docket for this action.
---------------------------------------------------------------------------

    We are also proposing to require QAP participation for 
biointermediate producers and renewable fuel producers that use 
biointermediates. Due to the need to balance the competing priorities 
of allowing the timely use of biointermediates for the production of 
renewable fuel in the near term and establishing a program that EPA can 
effectively oversee for the long term, we are proposing that 
biointermediate producers and renewable fuel producers that use 
biointermediates must participate in the RFS QAP. Mandating QAP 
participation for biointermediate producers and renewable fuel 
producers that use biointermediates will help ensure that RINs 
generated from biointermediates are valid.
    Under the REGS proposal, we had proposed that participation in the 
QAP could have become voluntary after the end of the proposed interim 
period.\172\ However, since the time of the proposed REGS rule, we have 
developed a better understanding of the potential complexity of 
overseeing the transfers of biointermediates and renewable fuels under 
the RFS program. Based on this understanding, we believe that allowing 
the production and use of biointermediates to go unverified would 
provide increased opportunity for the use of unapproved feedstocks and 
the generation of fraudulent RINs through double-counting. We believe 
having an independent third-party auditor verify the production of both 
the biointermediate and the renewable fuel is necessary to help oversee 
the added complexity that results from having renewable fuel processing 
occur at two different facilities. Further, we are proposing that the 
biointermediate producer and renewable fuel producer must use the same 
QAP vendor to ensure consistent oversight of the two facilities.
---------------------------------------------------------------------------

    \172\ In the proposed REGS rule, the interim period was a period 
of approximately 12 months where a more limited set of regulatory 
provisions would have applied to parties that produced, transferred, 
and used biointermediates. This action does not include a proposed 
interim period.
---------------------------------------------------------------------------

    We do not believe that mandatory QAP participation would be overly 
burdensome. Many of the parties that have encouraged EPA to adopt 
biointermediate regulations have indicated they intend to participate 
in the QAP program. We also expect that obligated parties that obtain 
and use RINs generated for renewable fuels made from biointermediates 
for compliance would request that biointermediate and renewable fuel 
producers participate in the QAP as obligated parties would continue to 
be liable for the replacement of any invalid RINs generated on such 
renewable fuels.
    We seek comment on making QAP participation mandatory for both the 
biointermediate producer and the renewable fuel producer where 
renewable fuel is produced from biointermediates.
5. Product Transfer Documents (PTD)
    Consistent with the REGS proposal, we are proposing anew PTD 
requirements for the transfers of biointermediates from biointermediate 
producers to renewable fuel producers.\173\ These PTD requirements 
include information about the biointermediates type, volume, renewable 
content, cellulosic content (if applicable), and the transfer of 
records needed for the renewable fuel producer to demonstrate that the 
biointermediate was produced using qualifying renewable biomass and 
that other aspects needed to ensure that the RFS regulations were met.
---------------------------------------------------------------------------

    \173\ As explained in Section VII.B, we are reproposing the 
biointermediates provisions of the REGS rule. We discuss the 
proposed PTD requirements in more detail in the memorandum to the 
docket, ``Proposed Biointermediate Provisions in the proposed 
Renewables Enhancement Growth Support Rule,'' available in the 
docket for this action.
---------------------------------------------------------------------------

    In addition to reproposing the PTD requirements for transfers of 
biointermediates, we are also proposing for the first time PTD 
requirements for RINs generated from renewable fuel produced from 
biointermediates. In the REGS proposal, we did not propose any changes 
to the PTD requirements for RINs generated from renewable fuels 
produced from biointermediates. Since the REGS proposal, due to the way 
that RINs are transacted in EMTS,\174\ we have realized that parties 
that transfer and use RINs generated from renewable fuels made from 
biointermediates may not be aware that the RINs came from 
biointermediates. Such parties may wish to have identified such RINs 
because 40 CFR 80.1460 prohibits any party from transferring invalid 
RINs. These parties may wish to have information related to whether the 
RIN was produced from a renewable fuel made from a biointermediate 
prior to transacting the RINs. Therefore, we are also proposing 
additional elements for PTDs related to RINs under 40 CFR 80.1453(a). 
Under this proposal, RINs PTDs would need to identify that the RINs 
were generated from renewable fuels produced from biointermediates as 
well as the EPA-issued company and

[[Page 72471]]

facility numbers of the biointermediate producer. We believe that by 
requiring such information on the RIN PTDs, parties that transfer or 
use such RINs would better understand whether they were transferring 
and using RINs generated from renewable fuels produced from 
biointermediates. This would allow parties that transact RINs generated 
from renewable fuels made with biointermediates to make decisions on 
whether to transact the RIN. We seek comment on both the proposed PTD 
requirements for transfers of biointermediates and on the newly 
proposed RIN PTD requirements.
---------------------------------------------------------------------------

    \174\ In EMTS, parties can specify to transact RINs from 
specific renewable fuel producers by facility and D-code. Current 
EMTS functionality would not allow parties to transact RINs based on 
a whether the RINs were generated from renewable fuel made from a 
specific feedstock (or biointermediate if the proposed 
biointermediate provisions are finalized). Furthermore, EMTS would 
not indicate to parties transacting the RINs in any way whether such 
RINs came from a renewable fuel made from a biointermediate.
---------------------------------------------------------------------------

6. Registration, EMTS and Reporting Requirements
    As in the REGS proposal, we are proposing here the registration, 
reporting, and EMTS requirements for biointermediates that are needed 
in order to implement the program.\175\ Some of these proposed elements 
have already been discussed in conjunction with the proposed 
biointermediates provisions addressed in this section. Others are 
additional elements reflecting our current implementation of related 
provisions under the RFS program that have changed since we proposed 
the REGS rule. Registration elements include proposed requirements for 
renewable fuel producers that intend to produce or utilize 
biointermediates as part of their production process to register these 
processes and related information similar to other feedstock 
registration requirements. Biointermediate producers must also register 
production capacities, information on the feedstocks intended for 
processing, co-products produced and, similar to renewable fuel 
producers, complete an initial engineering review followed by an update 
every three years. For EMTS, the renewable fuel producer utilizing 
biointermediates in the production of renewable fuel would report the 
type and quantity of biointermediates used for the batch and the EPA 
facility registration number for each production facility. Renewable 
fuel producers utilizing biointermediates would report total co-
products and the process(es), feedstock(s), and biointermediate(s) used 
and proportion of renewable volume attributable to each process and 
feedstock. Biointermediate producers or importers would report for each 
batch the volume, identifying information for the entity receiving 
title to the batch and other characteristics of the batch and 
associated production processes and characteristics of the batch.
---------------------------------------------------------------------------

    \175\ We discuss the proposed registration, EMTS, and reporting 
requirements for biointermediates in more detail in the memorandum 
to the docket, ``Proposed Biointermediate Provisions in the proposed 
Renewables Enhancement Growth Support Rule,'' available in the 
docket for this action.
---------------------------------------------------------------------------

    We seek comment on the proposed registration, reporting, and EMTS 
requirements for biointermediates. We are also seeking comment on 
potential improvements regarding the functionality of EMTS or other 
information systems related to the production, transfer, and use of 
biointermediates. While not part of the proposed regulations 
themselves, we believe it is important to identify areas where 
functional improvement is desired by the users of our information 
systems. Such feedback as part of this proposal would help us identify 
areas for improvement and prioritize development. For example, as 
discussed in Section VII.C.5, we believe parties that transfer and use 
RINs generated from renewable fuel produced from biointermediates may 
want the ability to tie the RINs back to specific biointermediates or 
biointermediate producers. We believe some parties may want to track 
whether RINs were generated from a specific biointermediate producer in 
EMTS. However, such a change would involve significant modification to 
EMTS, and therefore is not something that EPA would undertake unless 
desired and resources permitted. However, knowing what additional 
functionality is desired may allow us to include such features into our 
upcoming development plans.
7. Attest Engagement and Recordkeeping Requirements
    We are proposing anew the attest engagement and recordkeeping 
requirements for biointermediates discussed in the proposed REGS rule, 
as well as some updating some of these requirements for 
biointermediates since that proposal.\176\ Updated proposed 
requirements for attest engagement audits include validating the list 
of renewable fuel producers receiving any transfer of biointermediate 
batches and calculating the total volume received. We believe these 
updated requirements for attest engagement audit are appropriate to 
help ensure that the limits on biointermediate transfers discussed in 
Section VII.C.3 are followed.
---------------------------------------------------------------------------

    \176\ We discuss the proposed attest engagement and 
recordkeeping requirements for biointermediates in more detail in 
the memorandum to the docket, ``Proposed Biointermediate Provisions 
in the proposed Renewables Enhancement Growth Support Rule,'' 
available in the docket for this action.
---------------------------------------------------------------------------

    We are proposing updated recordkeeping requirements to reflect the 
other changes discussed in this section. These updates are needed to 
help independent third parties and EPA conduct audits.
    We seek comment on the proposed attest engagement and recordkeeping 
requirements for biointermediates. Specifically, we request comment on 
whether the attest engagement and recordkeeping requirements are 
adequate and whether any additional requirements are needed to enable 
implementation of the program.
8. Invalid RINs From Biointermediates
    We are proposing anew the provisions that address the treatment of 
invalid RINs generated on renewable fuels produced from 
biointermediates.\177\ Due to the potential complexity involved in 
determining the validity of RINs generated for renewable fuel produced 
from a biointermediate, we proposed in the REGS rule and are proposing 
anew that if any of the RINs in any batch of renewable fuel produced 
from a biointermediate are deemed invalid, then all RINs generated for 
that batch of renewable fuel would be considered invalid except to the 
extent that EPA, in its sole discretion, determines that some portions 
of these RINs would be valid. Since the proposed REGS rule, we have 
further considered how invalid RINs generated on renewable fuels 
produced from biointermediates could potentially be treated in 
complicated circumstances: Where multiple biointermediate and/or non-
biointermediates are simultaneously processed to make renewable fuel 
with the same D-code, where biointermediate and/or non-biointermediates 
are simultaneously processed that result in multiple D-codes, and where 
biointermediates are co-processed with non-renewable biomass (e.g., 
crude oil). Given the range of biointermediates that would be permitted 
under this proposal and based on discussions with parties that have 
expressed interest in using various types of biointermediates in the 
future, we believe it is important to address this situation clearly in 
the regulations as apportioning which RINs were tied to which gallons 
of renewable fuel made in these situations is complicated.
---------------------------------------------------------------------------

    \177\ We discuss the proposed liability provisions for 
biointermediates in more detail in the memorandum to the docket, 
``Proposed Biointermediate Provisions in the proposed Renewables 
Enhancement Growth Support Rule,'' available in the docket for this 
action.
---------------------------------------------------------------------------

    In all cases, where a biointermediate is processed simultaneously 
with other feedstocks or co-processed with non-

[[Page 72472]]

renewable biomass, we are proposing that all RINs generated from the 
renewable fuel would be invalid. This means that even if multiple 
different RIN batches would be generated in EMTS for apportioned 
volumes of the batch of renewable fuel, all RIN batches in their 
entirety would be invalid if any amount of non-qualifying 
biointermediate was used to generate any RIN on any volume of the 
renewable fuel. This would also include situations where the multiple 
RIN batches were for different D-codes or where multiple different 
biointermediates were used. We proposed this approach in the REGS rule, 
and we are now proposing additional regulatory provisions to better 
effectuate the intended outcome. We believe this provision is 
appropriate to avoid having to determine specifically which RINs are 
invalid in situations where biointermediates are processed 
simultaneously with other feedstocks or co-processed with non-renewable 
biomass, which may be difficult to ascertain. We also believe that this 
proposed provision would provide a strong incentive for renewable fuel 
producers to conduct due diligence oversight procedures on the 
biointermediate producer to avoid the invalidation of an entire batch 
of RINs.
    We are also proposing that in cases where the renewable fuel is a 
renewable diesel, renewable gasoline, renewable diesel blendstock, or 
renewable gasoline blendstock, if a RIN is invalid under 40 CFR 
80.1431(a)(1), the gallon of gasoline or diesel fuel for which the RIN 
was generated would incur an RVO. The regulations at 40 CFR 
80.1407(f)(1) already exclude ``[a]ny renewable fuel as defined in 
Sec.  80.1401'' from the volume of gasoline or diesel fuel produced or 
imported used to calculate an obligated party's annual RVO. In many 
cases, RINs are determined to be invalid because the renewable fuel was 
not made from renewable biomass, the RINs were double-counted, or were 
otherwise invalidly generated. In such cases, any volume of renewable 
gasoline or renewable diesel fuel would no longer be considered 
renewable fuel and therefore could not be excluded from an obligated 
party's RVO. We believe the situation in which a volume of renewable 
fuel (e.g., a renewable diesel or gasoline) that was excluded from an 
obligated party's RVO but is no longer considered a renewable fuel will 
become more common if we allow the use of biocrude processed through 
crude refineries as a way to produce more advanced and cellulosic 
biofuels. We are proposing changes to the regulations at 40 CFR 
80.1407(f)(1) to reiterate the requirement that renewable fuel for 
which a RIN is determined to be invalidly generated may not be excluded 
from a party's RVOs.
    Finally, as a result of the proposed changes described above, we 
are proposing corresponding prohibited activities to address situations 
where biointermediates are produced, transferred, and used.\178\ 
Specifically, we are proposing the following prohibited activities:
---------------------------------------------------------------------------

    \178\ For a discussion of the proposed REGS rule liability and 
prohibited act provisions that we are reproposing see 81 FR 80839 
(November 16, 2016).
---------------------------------------------------------------------------

     Use of a feedstock to produce a biointermediate not 
covered by an existing pathway or in the proposed definition of a 
biointermediate discussed in Section VII.C.1;
     Illegal transfers of biointermediates consistent with the 
newly proposed provisions described in Section VII.C.2; and
     Generation of RINs from renewable fuels produced from 
biointermediates that have not been verified under the QAP as described 
in Section VII.C.3.
    We believe these additional proposed prohibited activities are 
needed to help us enforce violations and ensure compliance of the 
proposed biointermediate provisions. We seek comments on these proposed 
prohibited activities and whether any additional prohibited activities 
related to the production, transfer, and use of biointermediates are 
necessary to ensure the integrity of RINs generated from 
biointermediates.
    We believe that these additional elements coupled with the 
reproposed REGS rule provisions concerning liability and the treatment 
of invalid biointermediates would provide strong incentives on the part 
of renewable fuel producers to diligently be involved in overseeing the 
production, transfer, and use of biointermediates. We believe these 
provisions are necessary to address the increased complexity of 
allowing renewable fuels to be processed at more than one production 
facility. We seek comment on our proposed liability provisions for the 
production, transfer, and use of biointermediates and the treatment of 
invalid RINs generated from renewable fuels produced from 
biointermediates.

D. Other Considerations Related to Biointermediates

1. C-14 Testing and Mass Balance for RIN Generation
    We are reproposing the requirement that C-14 testing, specifically 
Method B (accelerator mass spectrometry) of ASTM International (ASTM) 
D6866, be used in cases where biointermediates are co-processed with 
petroleum feedstocks at a renewable fuel production facility.\179\ We 
are also seeking comment on potential alternatives to direct C-14 
measurement of renewable content of co-processed fuels. In the proposed 
REGS rule, we proposed to require C-14 testing for co-processed fuels 
because we believe that the volume of biointermediate co-processed with 
petroleum at a crude refinery would likely be a small fraction of the 
refinery's throughput and would make it difficult to rely on a mass 
balance approach for RIN generation. Our primary concern was, and is, 
that the co-processed fuel would contain little or no renewable content 
from the biointermediate and that using the mass balance approach could 
result in the generation of RINs for the nonrenewable portion of the 
co-processed fuel. Additionally, as noted in the REGS proposal Method B 
of ASTM D6866 has greater precision compared with Method C.\180\
---------------------------------------------------------------------------

    \179\ In the 2010 RFS2 final rule (see 75 FR 14876, March 26, 
2010), EPA promulgated requirements for the generation of RINs for 
renewable fuel co-processed with petroleum-based fuels, and provided 
two methods for determining the renewable content of co-processed 
fuels: (1) Mass balance; or (2) Using Methods B or C of ASTM D6866 
C-14 testing. See 40 CFR 80.1426(f)(4). These provisions from the 
proposed REGS rule are described in greater detail in the memorandum 
to the docket, ``Proposed Biointermediate Provisions in the proposed 
Renewables Enhancement Growth Support Rule,'' available in the 
docket for this action.
    \180\ See Martin R. Haverly et al., Biobased Carbon Content 
Quantification through AMS Radiocarbon Analysis of Liquid Fuels, 237 
Fuel, 1108, (2019).
---------------------------------------------------------------------------

    In the proposed REGS rule we sought comment on whether our proposed 
approach was appropriate, whether there are other methods that could 
produce similarly accurate and precise renewable content measurement to 
Method B of ASTM D6866 in co-processed fuels, and whether EPA should 
allow parties to petition for the use of a company-specific method to 
determine the renewable content of co-processed, partially renewable 
fuel produced from a biointermediate. We received a number of comments 
suggesting that EPA allow for the use of mass balance instead of 
requiring direct testing of renewable content using C-14 analysis in 
co-processed fuels. While many commenters highlighted the practical and 
financial benefits of using mass balance instead of direct C-14 
measurements, commenters on the REGS proposal did not substantially 
address the concerns we raised regarding the accuracy and precision of 
a mass balance approach especially

[[Page 72473]]

where the biointermediate constitutes a relatively small portion of the 
co-processed feedstock. Specifically, commenters noted how difficult it 
is to collect samples for direct C-14 measurement from a crude 
refinery, the added expense and time to conduct the testing, and issues 
related to the validity of C-14 testing when there is only a small 
amount of renewable content in the co-processed fuel. We also received 
comments in support of a facility specific approach, but commenters did 
not provide information on how such a process would work or how such a 
process could result in sufficiently accurate and precise measurements 
of renewable content in co-processed fuels.
    We continue to believe that direct C-14 measurement is the most 
accurate and precise way to determine the renewable content of co-
processed fuels and that it is necessary to ensure whether a co-
processed fuel actually contains renewable content. We also note that 
in Section VIII.F, we are proposing to define what it means for a 
renewable fuel to be ``produced from renewable biomass.'' Under this 
proposed definition, only energy in the renewable content of the 
finished fuel that was produced from renewable biomass would qualify as 
renewable fuel for RIN generation. As discussed in Section VIII.F, this 
proposed regulatory definition of ``produced from renewable biomass'' 
is consistent with the statutory requirements that renewable fuels be 
transportation fuel, heating oil, or jet fuel. Our proposal for direct 
measurement of renewable content in co-processed fuels is consistent 
with and necessary to effectuate this proposed definition of ``produced 
from renewable biomass.'' That is, because we do not believe a mass 
balance approach is capable of accurately determining the renewable 
content of fuels produced through co-processing of biointermediates, 
allowing renewable fuel production facilities to rely on this approach 
for RIN generation would be inconsistent with the definition of 
``produced from renewable biomass.''
    We seek comment on whether we should provide alternatives to 
requiring direct C-14 measurement of renewable content in co-processed 
fuels where biointermediates are used. While we are proposing to remove 
the allowance for use of mass balance for renewable fuel production 
facilities that co-process biointermediates with petroleum feedstocks, 
we also seek comment on whether and under what conditions it might be 
appropriate to allow for the use of mass balance when there is a 
sufficient amount of co-processed biointermediate to ensure that mass 
balance calculations actually represent renewable content in the co-
processed fuel. For example, we could allow the use of mass balance if 
the biointermediate represented at least 10 percent of the total 
feedstock processed to produce the batch. If a sufficient amount of a 
biointermediate was used to make the co-processed fuel, we might have 
assurance that some of the biointermediate was converted into renewable 
fuel.
    We also seek comment on whether we could allow the parties that co-
process renewable fuels to develop a facility specific statistical 
model for use in estimating low levels of renewable content in co-
processed fuel. Through such a process, renewable fuel producers could 
conduct a rigorous test program on a range of biointermediate levels 
processed through a specific facility to develop a statistical model to 
estimate renewable content of co-processed fuels at that specific 
facility for RIN generation. Similar to a mass balance approach, we 
acknowledge that a poorly-designed statistical model may inaccurately 
estimate the amount of renewable content in a co-processed fuel or 
indicate that renewable content was present in a co-processed fuel when 
there was none, especially at low levels.
    Finally, we seek comment on whether there are any circumstances 
where we could rely upon results from Method C of ASTM D6866 (``Method 
C'') to measure renewable content of co-processed fuels made from 
biointermediates. As mentioned above, we continue to have concerns with 
Method C when measuring relatively small amounts of renewable content 
in co-processed fuels due to Method C's lower precision. However, we 
would consider the use of Method C if its accuracy and precision were 
improved and codified in an updated ASTM method or if Method C was 
restricted to measuring higher levels of renewable content (e.g., above 
10 percent) where we could be assured that measurement represented 
valid renewable content in co-processed fuels.
    When commenting on the proposed requirement for direct C-14 
testing, we specifically ask that commenters provide any relevant 
information or data on any demonstrating that an alternative is as 
accurate or precise in measuring the renewable content of co-processed 
fuels as the proposed C-14 method.
2. Standalone Esterification Pathway
    In the proposed 2020 RVO rule, we proposed to add a standalone 
esterification pathway to rows F and H of Table 1 of 40 CFR 
80.1426.\181\ This would have allowed parties who have processing units 
that can take feedstocks listed in rows F and H of Table 1 of 40 CFR 
80.1426 that have high-FFA content to separate the FFAs and 
triglycerides for chemical processing in separate standalone 
esterification and transesterification units, and generate RINs for the 
biodiesel produced.\182\ We also noted in the proposed 2020 RVO rule 
that while this proposal would allow the separation of FFAs and 
triglycerides in qualified high-FFA feedstocks at the facility 
producing the biodiesel through these processes, regulatory amendments 
were needed to address situations where this separation took place at a 
facility other than the ultimate renewable fuel production 
facility.\183\ We stated that the biointermediates provisions of the 
REGS rule would need to be finalized for parties to use FFAs separated 
from triglycerides in a feedstock at a location other than the 
biodiesel production facility.\184\
---------------------------------------------------------------------------

    \181\ See 84 FR 36801-36802 (July 29, 2019).
    \182\ See 84 FR 36801-36803 (July 29, 2019).
    \183\ See 84 FR 36802 (July 29, 2019).
    \184\ Id.
---------------------------------------------------------------------------

    In the final 2020 RVO rule, we did not finalize the standalone 
esterification pathway, but noted that we may finalize the standalone 
esterification pathway in a future action.\185\ We are proposing to 
include FFA feedstocks as one of the biointermediates specifically 
included in the proposed definition of biointermediate. We note that we 
would also need to finalize the previously proposed standalone 
esterification pathway for parties to process FFA feedstocks to 
biodiesel through direct esterification, which is one of the primary 
methods for producing renewable fuel from FFA feedstocks. If the 
proposed biointermediates provisions in this action are finalized and 
FFA feedstocks are included in the definition of biointermediates, we 
intend to also finalize the previously proposed standalone 
esterification pathway. In this case, we would respond to the public 
comments received previously on the proposed standalone esterification 
pathway in the 2020 RVO rule proposal and any additional public 
comments related to the standalone esterification pathway received on 
this proposal in such a final action. Unlike the biointermediates 
provisions from the REGS rule that are being re-proposed in this 
action, we are not re-proposing the standalone esterification pathway 
here and commenters do not have to resubmit

[[Page 72474]]

previously submitted comments to this docket in order for them to be 
considered.
---------------------------------------------------------------------------

    \185\ See 85 FR 7058 (February 6, 2019).
---------------------------------------------------------------------------

3. Intracompany Transfers of Biointermediates
    We are seeking comment on whether we should provide flexibility for 
intracompany transfers of biointermediates (i.e., cases where the same 
company owns both the biointermediate production facility and the 
renewable fuel production facility). In the proposed REGS rule, we did 
not propose any flexibilities for companies that transferred 
biointermediates between their biointermediate production facility and 
renewable fuel production facility. Under the proposed REGS rule, such 
companies would have to comply with all of the requirements regardless 
of whether they owned both the biointermediate production facility and 
the renewable fuel production facility.
    During the public comment period for the REGS proposal, we received 
comments suggesting that we should not impose the new requirements for 
biointermediates when the party produces both the biointermediate and 
the renewable fuel. These commenters argued that they would be able to 
effectively track the production and use of biointermediates so 
additional compliance and enforcement provisions would not be needed. 
However, we believe that all parties should have consistent 
requirements on biointermediates. We believe that there could still be 
concerns with intracompany transfers of biointermediates as this lack 
of transparency could incent the generation of fraudulent RINs. In 
fact, we believe that the issues could be worse because if we exempted 
intracompany transfers from the proposed biointermediates provisions, 
there would be no required records, reports, or oversight on whether 
that company appropriately produced, transferred, or used the 
biointermediate. This would allow ample opportunities for parties to 
use non-qualifying feedstocks or generate fraudulent RINs and provide 
EPA no oversight mechanisms. The main purpose of the proposed 
biointermediate provisions is to ensure that EPA and third parties such 
as QAP and attest auditors have records and reports to verify the 
production, transfer, and use of biointermediates. These provisions 
help ensure that RINs generated from renewable fuels produced from 
biointermediates are valid.
    We continue to believe that the proposed regulatory requirements 
are needed in this case, and, as such, we are not proposing to provide 
any flexibilities for intracompany transfers of biointermediates at 
this time. Nevertheless, we seek comment on whether such flexibilities 
are appropriate. Commenters should articulate in their public comments 
specifically what provisions they believe EPA could provide flexibility 
and how effective oversight of the program would be maintained.

VIII. Amendments to Fuel Quality and RFS Regulations

    This section describes the regulatory changes we are proposing for 
fuel quality and RFS regulations.

A. BBD Conversion Factor for Percentage Standard

    In the 2010 RFS2 rule, we determined that because the BBD standard 
was a ``diesel'' standard, its volume must be met on a biodiesel-
equivalent energy basis.\186\ In contrast, the other three standards 
(cellulosic biofuel, advanced biofuel, and total renewable fuel) must 
be met on an ethanol-equivalent energy basis. At that time, biodiesel 
was the only advanced renewable fuel that could be blended into diesel 
fuel, qualified as an advanced biofuel, and was available at greater 
than de minimis quantities.
---------------------------------------------------------------------------

    \186\ See 75 FR 14670, 14682 (March 26, 2010).
---------------------------------------------------------------------------

    The formula for calculating the applicable percentage standards for 
BBD needed to accommodate the fact that the volume requirement for BBD 
would be based on biodiesel equivalence while the other three volume 
requirements would be based on ethanol equivalence. Given the nested 
nature of the standards, however, RINs representing BBD would also need 
to be valid for complying with the advanced biofuel and total renewable 
fuel standards. To this end, we designed the formula for calculating 
the percentage standard for BBD to include a factor that would convert 
biodiesel volumes into their ethanol equivalent. This factor was the 
same as the Equivalence Value for biodiesel, 1.5, as discussed in the 
2007 RFS1 final rule.\187\ The resulting formula \188\ (incorporating 
the recent modification to the definitions of GEi and 
DEi) \189\ is shown below:
---------------------------------------------------------------------------

    \187\ See 72 FR 23900, 23921 at Table III.B.4-1 (May 1, 2007).
    \188\ See 40 CFR 80.1405(c).
    \189\ See 85 FR 7016 (February 6, 2020).
    [GRAPHIC] [TIFF OMITTED] TP21DE21.015
    
---------------------------------------------------------------------------
    Where:

    StdBBD,i = The biomass-based diesel standard for year 
i, in percent.
    RFVBBD,i = Annual volume of biomass-based diesel 
required by 42 U.S.C. 7545(o)(2)(B) for year i, in gallons.
    Gi = Amount of gasoline projected to be used in the 
48 contiguous states and Hawaii, in year i, in gallons.
    Di = Amount of diesel projected to be used in the 48 
contiguous states and Hawaii, in year i, in gallons.
    RGi = Amount of renewable fuel blended into gasoline 
that is projected to be consumed in the 48 contiguous states and 
Hawaii, in year i, in gallons.
    RDi = Amount of renewable fuel blended into diesel 
that is projected to be consumed in the 48 contiguous states and 
Hawaii, in year i, in gallons.
    GSi = Amount of gasoline projected to be used in 
Alaska or a U.S. territory, in year i, if the state or territory has 
opted-in or opts-in, in gallons.
    RGSi = Amount of renewable fuel blended into gasoline that is 
projected to be consumed in Alaska or a U.S. territory, in year i, 
if the state or territory opts-in, in gallons.
    DSi = Amount of diesel projected to be used in Alaska 
or a U.S. territory, in year i, if the state or territory has opted-
in or opts-in, in gallons.
    RDSi = Amount of renewable fuel blended into diesel 
that is projected to be consumed in Alaska or a U.S. territory, in 
year i, if the state or territory opts-in, in gallons.
    GEi = The total amount of gasoline projected to be 
exempt in year i, in gallons, per Sec. Sec.  80.1441 and 80.1442.
    DEi = The total amount of diesel projected to be 
exempt in year i, in gallons, per Sec. Sec.  80.1441 and 80.1442.

    In the years following 2010 when the percent standard formula 
for BBD was first promulgated, advanced renewable diesel production 
has grown. Most renewable diesel has an Equivalence Value of 1.7, 
and its growing presence in the BBD pool means that

[[Page 72475]]

the average Equivalence Value of BBD has also grown.\190\
---------------------------------------------------------------------------

    \190\ Under 40 CFR 80.1415(b)(4), renewable diesel with a lower 
heating value of at least 123,500 Btu/gallon is assigned an 
Equivalence Value of 1.7. A minority of renewable diesel has a lower 
heating value below 123,500 BTU/gallon and is therefore assigned an 
Equivalence Value of 1.5 or 1.6 based on applications submitted 
under 40 CFR 80.1415(c)(2).
[GRAPHIC] [TIFF OMITTED] TP21DE21.016

    Because the formula currently specified in the regulations for 
calculation of the BBD percentage standard assumes that all BBD used to 
satisfy the BBD standard is biodiesel, it biases the resulting 
percentage standard low, given that in reality there is some renewable 
diesel in BBD. The bias is small, on the order of 2 percent, and has 
not impacted the supply of BBD since it is the higher advanced biofuel 
standard rather than the BBD standard that has driven the demand for 
BBD. Nevertheless, we believe that it would be appropriate to modify 
the factor used in the formula to more accurately reflect the amount of 
renewable diesel in the BBD pool. The average Equivalence Value of BBD 
appears to have grown over time without stabilizing. Given the growth 
in facilities producing renewable diesel as discussed in Chapter 5.2 of 
the DRIA, it is possible that the average Equivalence Value for BBD 
could continue to grow after 2020. As a result, we believe that the 
average Equivalence Value for BBD is likely to be at least 1.55. We 
therefore propose and seek comment on replacing the factor of 1.5 in 
the percentage standard formula for BBD with a factor of 1.55.\191\ We 
are not proposing to change any other aspect of the percentage standard 
formula for BBD.
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    \191\ While we are proposing to only revise the factor of 1.5 in 
the percentage standard formula for BBD, we are including all four 
of the percentage standard formulas in our proposed amendatory text 
for 40 CFR 80.1405(c). This is due to the manner in which the 
original formulas were published in the CFR, which does not allow 
for revisions to a single formula without republishing all of the 
formulas. We are not reexamining any aspect of these formulas beyond 
the change to the factor of 1.5 in the BBD formula, and any comments 
on other aspects of the formulas are beyond the scope of this 
rulemaking.
---------------------------------------------------------------------------

    The proposed change would have a small impact on the calculation of 
the applicable percentage standard for BBD. For instance, for the 2021 
BBD volume of 2.43 billion gallons finalized in the 2020 final rule, 
the applicable percentage standard would be 2.20 percent using the 
factor of 1.55, as compared to 2.13 percent using the factor of 1.5. 
However, this proposed change would have no impact on the generation of 
RINs. All biodiesel has generated and would continue to generate 1.5 
RINs per gallon, and most renewable diesel has generated and would 
continue to generate 1.7 RINs per gallon. Similarly, compliance with 
the applicable percentage standards would not change, in that all D4 
RINs would continue to count toward meeting the RVO for BBD.
    Finally, the volume requirement for BBD (RFVBBD,i in the 
formula above) would be unaffected by the change to the formula for 
calculating the percentage standard.

B. Changes To Registration for Baseline Volume

    We are proposing to revise the registration requirements at 40 CFR 
80.1450(b)(1)(v) as well as the definition of ``baseline volume'' at 40 
CFR 80.1401 to allow non-exempt (i.e., non-grandfathered) renewable 
fuel producers to use either nameplate capacity or actual peak capacity 
for their facility's baseline volume if permitted capacity cannot be 
determined. We are not proposing to change the requirements for 
establishing the baseline volume of grandfathered facilities.\192\ 
\193\ All non-grandfathered facilities with an applicable permitted 
capacity would continue to be required to register using the permitted 
capacity pursuant to 40 CFR 80.1450(b)(1)(v)(A). Under the existing 
requirement, these facilities

[[Page 72476]]

must use their actual peak capacity \194\ as their baseline volume if 
the air permits do not specify the maximum rated annual output of 
renewable fuel and can only use nameplate capacity \195\ to establish 
baseline volume if insufficient production records existed to establish 
actual peak capacity. The proposed regulatory revision would give non-
grandfathered facilities that do not have an applicable permitted 
capacity the flexibility to establish baseline volume using either 
actual peak capacity or nameplate capacity.
---------------------------------------------------------------------------

    \192\ For purposes of this preamble, a ``grandfathered 
facility'' is a renewable fuel production facility that has volumes 
that are exempt from the renewable fuel lifecycle GHG reduction 
threshold under 40 CFR 80.1403(c). This provision exempts (i.e., 
``grandfathers'') facilities that commenced construction on or 
before December 19, 2007, did not discontinue construction for a 
period of 18 months after commencement of construction, and 
completed construction by December 19, 2010.
    \193\ For grandfathered facilities, baseline volume is the 
maximum volume of grandfathered fuel for which the facility is 
allowed to generate RINs. For non-grandfathered facilities, baseline 
volume is intended to indicate the maximum amount of renewable fuel 
that the facility is capable of producing. Actual peak capacity, 
however, may not be a good indicator of maximum capacity.
    \194\ Actual peak capacity is based on either the five years 
prior to registration or, if there was no production prior to 
registration, the first three years after start-up.
    \195\ Nameplate capacity is the peak designed capacity of the 
facility.
---------------------------------------------------------------------------

    We are proposing this revision in order to allow for more up-to-
date information to be used in establishing the baseline volumes of 
non-grandfathered facilities. Actual peak capacity is based on actual 
production tied to when EISA was enacted (i.e., December 2007), which 
is now more than a decade in the past. This historical peak capacity is 
not necessarily an accurate reflection of the facility's current 
production capacity. Since the passage of EISA, facilities may have 
improved efficiency, expanded the facility, or experienced an increase 
in production due to increased demand, resulting in larger production 
than the year used to calculate actual peak capacity. Having accurate 
capacity information for registered renewable fuel facilities is 
important for EPA in helping to identify whether facilities are 
generating an appropriate number of RINs.\196\ This proposed change 
would allow a non-exempt facility to choose whether to use actual peak 
capacity or nameplate capacity if permitted capacity cannot be 
determined. Non-exempt facilities already registered using actual peak 
capacity would have the option to switch to nameplate capacity at any 
time.\197\ This change would have no impact on facilities who choose 
not to use this option. We seek comment on this proposed change.
---------------------------------------------------------------------------

    \196\ Because the baseline volume of an exempt (i.e., 
grandfathered) facility is by definition tied to either December 19, 
2007, or December 31, 2009 (see 40 CFR 80.1403(c) and (d) and 
80.1450(b)(1)(v)(B)), current production capacity is not relevant 
for such a facility.
    \197\ Facilities could also choose to keep their baseline volume 
as actual peak capacity.
---------------------------------------------------------------------------

C. Changes To Attest Engagements for Parties Owning RINs (``RIN Owner 
Only'')

    We are proposing to exempt parties that transact a relatively small 
number of RINs from the annual attest engagement requirements. In order 
to qualify for the proposed exemption, parties would need to be 
registered as a ``RIN Owner Only'' and not registered or engaged in any 
other role (e.g., obligated party, exporter of renewable fuel, 
renewable fuel producer, renewable fuel importer, etc.). Such parties 
are currently required to submit an annual attest engagement under 40 
CFR 80.1464(c), regardless of the number of RINs they transact or hold 
in a compliance year. Under the existing regulations, for example, a 
party whose only activity was to buy and sell a single RIN in any given 
compliance year would be required to complete an attest engagement for 
that year. Additionally, some parties that own a small number of RINs 
have difficulty selling such small denominations of RINs (e.g., 
hundreds of separated D6 RINs) and can hold such RINs until they 
expire. These parties must then arrange for an annual attest engagement 
performed by a certified professional accountant (CPA) for those RINs, 
which can be quite costly especially when compared to the relatively 
low value of the small number of RINs owned.
    We believe that parties who, in a given compliance year, are 
registered as a ``RIN Owner Only,'' who transact 10,000 or fewer RINs, 
and who do not exceed a RIN holding threshold under 40 CFR 80.1435, 
should not be required to complete an attest engagement for that 
compliance year. A party who is registered as a ``RIN Owner Only'' does 
not generate RINs and does not have an RVO. We believe that the 
information contained in EMTS and RIN activity reports for a RIN Owner 
Only who transacts a relatively small number of RINs and who does not 
exceed a RIN holding threshold conveys the necessary compliance 
information, and that the attest engagements for these parties do not 
add much value relative to their expense. Many of the affected parties 
are smaller businesses that are required to arrange the services of a 
CPA to perform their annual attest engagement. Making this change to 
the attest engagement requirements may result in a cost savings to 
these typically smaller businesses, without adversely affecting RFS 
program oversight.
    We intend that the total number of RINs transacted in the year be 
counted toward the 10,000 RIN limit. RINs ``transacted'' includes RINs 
retired for reasons other than compliance retirements, such as the 
reason code ``voluntary RIN retirement.'' This means that if a party 
buys 5,000 RINs and sells 6,000 RINs in a year, the party will have 
transacted 11,000 RINs and would be required to complete the attest 
engagement for that year. We are proposing the 10,000 RIN limit based 
upon programmatic experience--specifically, we believe it reflects a 
reasonable level of activity below which the utility of the attest 
engagement is reduced. We seek comment on establishing this proposed 
attest engagement exemption for parties that transact fewer than 10,000 
RINs in a compliance year and what the appropriate level of RIN 
transactions for this exemption should be.

D. Public Access to Information

    Exemption 4 of the Freedom of Information Act (FOIA) exempts from 
disclosure ``trade secrets and commercial or financial information 
obtained from a person [that is] privileged or confidential.'' \198\ In 
order for information to meet the requirements of Exemption 4, EPA must 
find that the information is either: (1) A trade secret, or (2) 
commercial or financial information that is: (a) Obtained from a 
person, and (b) privileged or confidential. Information meeting these 
criteria is commonly referred to as ``confidential business 
information'' or ``CBI.'' \199\
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    \198\ 5 U.S.C. 552(b)(4).
    \199\ We note that CAA section 114(c) explicitly excludes 
emissions data from treatment as confidential information.
---------------------------------------------------------------------------

    In June 2019, the U.S. Supreme Court issued its decision in Food 
Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019) 
(Argus Leader). Argus Leader addressed the meaning of ``confidential'' 
within the context of FOIA Exemption 4. The Court held that ``[a]t 
least where commercial or financial information is both customarily and 
actually treated as private by its owner and provided to the government 
under an assurance of privacy, the information is `confidential' within 
the meaning of Exemption 4.'' \200\ The Court identified two conditions 
``that might be required for information communicated to another to be 
considered confidential.'' \201\ Under the first condition, 
``information communicated to another remains confidential whenever it 
is customarily kept private, or at least closely held, by the person 
imparting it.'' \202\ The second condition provides that ``information 
might be considered confidential only if the party receiving it 
provides some assurance that it will remain secret.'' \203\ The Court 
found the first condition necessary for information to be considered 
confidential within the

[[Page 72477]]

meaning of Exemption 4, but did not address whether the second 
condition must also be met.
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    \200\ Argus Leader, 139 S. Ct. at 2366.
    \201\ Id. at 2363.
    \202\ Id. (internal citations omitted).
    \203\ Id. (internal citations omitted).
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    Following the issuance of the Court's opinion, the U.S. Department 
of Justice (DOJ) issued guidance concerning the confidentiality prong 
of Exemption 4, articulating ``the newly defined contours of Exemption 
4'' post-Argus Leader.\204\ Where the Government provides an express or 
implied indication to the submitter prior to or at the time the 
information is submitted to the Government that the Government would 
publicly disclose the information, then the submitter generally cannot 
reasonably expect confidentiality of the information upon submission, 
and the information is not entitled to confidential treatment under 
Exemption 4.\205\
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    \204\ ``Exemption 4 After the Supreme Court's Ruling in Food 
Marketing Institute v. Argus Leader Media and Accompanying Step-by-
Step Guide,'' Office of Information Policy, U.S. DOJ, (October 4, 
2019), available at https://www.justice.gov/oip/exemption-4-after-supreme-courts-ruling-food-marketing-institute-v-argus-leader-media.
    \205\ See id.; see also ``Step-by-Step Guide for Determining if 
Commercial or Financial Information Obtained from a Person is 
Confidential under Exemption 4 of the FOIA,'' Office of Information 
Policy, U.S. DOJ, (updated October 7, 2019), available at https://www.justice.gov/oip/step-step-guide-determining-if-commercial-or-financial-information-obtained-person-confidential.
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1. Treatment of Information Contained in Enforcement Actions and 
Invalid RIN Determinations
    EPA has a longstanding practice of posting on its website or 
otherwise publicly releasing information describing fuels violations 
and invalid RIN determinations.\206\ Accordingly, we are proposing 
regulations to codify the types of information contained in fuels-
related enforcement actions and invalid RIN determinations that are not 
entitled to confidential treatment pursuant to Exemption 4 of FOIA. 
This proposal covers notices of violation, settlement agreements, 
administrative complaints, civil complaints, criminal information, and 
criminal indictments related to EPA's fuel quality and RFS regulations 
in 40 CFR parts 80 and 1090 and invalid RIN determinations related to 
EPA's RFS regulations in 40 CFR part 80.
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    \206\ See, e.g., ``Clean Air Act Fuels Settlement Information,'' 
U.S. EPA, available at https://www.epa.gov/enforcement/clean-air-act-fuels-settlement-information; ``Civil Enforcement of the 
Renewable Fuel Standard Program,'' U.S. EPA, available at https://www.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program.
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    Since at least 2013,\207\ EPA has posted on its website or 
otherwise publicly released information relating to violations of the 
fuel quality and RFS regulations. This information includes the company 
name and identification number, the total quantity of fuel and 
parameter, information relating to the generation, transfer, or use of 
credits or RINs, and the total quantity of RINs in question. Therefore, 
EPA has already provided an implied indication to any submitters of 
such information after at least 2013 that EPA may publicly disclose 
such information. Accordingly, the information is not entitled to 
confidential treatment, and EPA intends to continue to release such 
information without further notice.
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    \207\ EPA began posting RFS enforcement-related determinations 
and actions in 2013. See ``Civil Enforcement of the Renewable Fuel 
Standard Program,'' U.S. EPA, available at https://www.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program. EPA 
has been posting gasoline and diesel enforcement actions for much 
longer. See ``Clean Air Act Fuels Settlement Information,'' U.S. 
EPA, available at https://www.epa.gov/enforcement/clean-air-act-fuels-settlement-information.
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    Through this proposal, we are also providing an express indication 
that such information is not entitled to confidential treatment and 
will be affirmatively disclosed to the public without providing further 
notice or process to the affected businesses. Once finalized, this rule 
will effectively serve as an advance confidentiality determination 
through rulemaking and will cover the information identified below. 
Except as otherwise provided, 40 CFR 2.201 through 2.215 and 2.301 do 
not apply to the specified information submitted under this part and 40 
CFR part 1090 that is determined through this rulemaking to not qualify 
for confidential treatment. In particular, this proposal will impact 
certain information contained in EPA determinations that RINs are 
invalid under 40 CFR 80.1474(b)(4)(i)(C)(2) and (b)(4)(ii)(C)(2), 
notices of violation, settlement agreements, administrative complaints, 
civil complaints, criminal information, and criminal indictments. The 
information that EPA intends to continue release in the context of 
these determinations and actions includes the company name and company 
identification number, the facility name and facility identification 
number, the total quantity of fuel and parameter, information relating 
to the generation, transfer, or use of credits or RINs, the total 
quantity of RINs in question, the batch number(s) and the D codes of 
the RINs in question, the time period when the RINs in question were 
generated or when the violation occurred, and any other information 
relevant to describing the violation at issue. We are proposing to 
codify this determination at 40 CFR 80.11 and 80.1402(b) as well as 40 
CFR 1090.15.
    Publicly disclosing this information is important in providing 
transparency to stakeholders and the public with respect to violations 
of EPA's fuel quality and RFS programs and the relief EPA is seeking to 
remedy those violations through its enforcement actions. Public 
disclosure is also important to the successful operation and integrity 
of the RFS program as it may prevent parties from unwittingly 
transferring or attempting to use invalid RINs for compliance, in 
contravention of the RFS regulations, or from buying invalid RINs that 
they will be unable to use for compliance. We seek comment on whether 
any additional EPA enforcement-related determinations and actions, or 
additional factual information relating to such determinations and 
actions described above should be identified as not entitled to 
confidential treatment. Therefore, although the public release of such 
information since at least 2013 constitutes an implied indication that 
such information is not entitled to confidential treatment, EPA is also 
providing an express indication that such information is not entitled 
to confidential treatment through this proposal.
2. Treatment of Information Contained in Requests Submitted Under the 
RFS Program
    We are proposing regulations that would help facilitate our 
processing of claims that RFS-related information should be withheld 
from public disclosure under FOIA, 5 U.S.C. 552(b)(4), as CBI. If 
finalized, the proposed regulations would identify certain types of RFS 
information collected by EPA under 40 CFR part 80, subpart M, that EPA 
would consider as not entitled to confidential treatment pursuant to 
Exemption 4 of the FOIA and that EPA will release without further 
notice.
    We are proposing regulations that would facilitate our processing 
of claims that requests for information submitted under 40 CFR part 80, 
subpart M, should be withheld from the public under Exemption (b)(4) of 
the FOIA, 5 U.S.C. 552(b)(4), as CBI. If finalized, this rule would 
provide an express indication that we would not consider certain basic 
information incorporated into EPA actions on petitions and submissions, 
as well as that same information as it appears in the submissions to 
EPA under 40 CFR part 80, subpart M, to be entitled to treatment as CBI 
under Exemption 4 of the FOIA. In particular, this proposal would apply 
to all submissions to EPA under 40 CFR part 80, subpart M,

[[Page 72478]]

including, but not limited to: SREs submitted under 40 CFR 80.1441, 
small refiner exemptions under 40 CFR 80.1442, pathway petitions under 
40 CFR 80.1416, and compliance demonstration reports. Accordingly, if 
finalized, such information will be released without further notice to 
the submitter and without following EPA's procedures set forth in 40 
CFR part 2, subpart B. We are proposing to codify this determination at 
40 CFR 80.1402(c) and (d).
    Through this proposal, we are providing an express indication that, 
after finalization of this rule, such information is not entitled to 
confidential treatment and will be affirmatively disclosed to the 
public without providing further notice to affected businesses. Once 
finalized, this rule will effectively serve as an advance 
confidentiality determination through rulemaking covering the 
information identified below. Except as otherwise provided, 40 CFR 
2.201 through 2.215 and 2.301 do not apply to the specified information 
submitted under this part that is determined through this rulemaking 
not to qualify for confidential treatment. In particular, the 
information affected by this proposal is the submitter's name, the name 
and location of the facility, the date the submission was transmitted 
to EPA, any EPA-issued company or facility identification numbers 
associated with the submission, the general nature or purpose of the 
submission, and the relevant time period for the request. Additionally, 
for submissions making requests that EPA must adjudicate, under this 
proposal, once we have adjudicated the request, we will release the 
following information: The submitter's name; the name and location of 
the facility; the date the request was transmitted to EPA; any EPA-
issued company or facility identification numbers associated with the 
request, the general nature or purpose of the request, the relevant 
time period for the request, the extent to which EPA either granted or 
denied the request, and any relevant terms and conditions. For 
information submitted under 40 CFR part 80, subpart M, and not 
specified in the proposed regulations at 40 CFR 80.1402, EPA would 
continue to evaluate such CBI claims in accordance with 40 CFR part 2, 
subpart B.
    It is appropriate to release the information described above in the 
interest of transparency and to provide the public with information 
about entities seeking exemptions or requests under part 80, subpart M. 
If finalized, this proposed approach would also provide certainty to 
submitters regarding the release of information under 40 CFR part 80, 
subpart M. With this advance notice, each submitter would have 
certainty regarding how EPA would treat the information specified 
above, and, as applicable, have the discretion to decide whether to 
make such a request with the understanding that EPA may release certain 
information about the request without further notice.
    We seek comment on our proposal to release the aforementioned basic 
information about submissions and EPA's adjudication of those 
submissions under the RFS program.

E. Clarifying the Definition of ``Agricultural Digester''

    Row Q in Table 1 to 40 CFR 80.1426 makes renewable compressed 
natural gas, renewable liquefied natural gas, and renewable electricity 
eligible to generate cellulosic biofuel (D-code 3) RINs if the fuel is 
produced from, among other feedstocks, biogas from agricultural 
digesters and if the producer meets all of the other regulatory 
requirements under the RFS program. An agricultural digester is 
currently defined at 40 CFR 80.1401 as ``an anaerobic digester that 
processes predominantly cellulosic materials, including animal manure, 
crop residues, and/or separated yard waste.'' In the preamble to the 
Pathways II final rule, we explained that predominantly cellulosic 
materials are materials that are at least 75 percent cellulose, hemi-
cellulose or lignin by mass.\208\ We received multiple questions from 
stakeholders asking if they could generate D3 RINs for biogas produced 
in a digester if materials that are not predominantly cellulosic are 
used in the digester. We are proposing revisions to the definition of 
agricultural digester to clarify that each and every material processed 
must be predominantly cellulosic in order for the digester to qualify 
as an agricultural digester under the RFS regulations. This revision 
does not change the existing requirements but will make it easier for 
the regulated community to understand the limitations on generating D3 
RINs for biogas produced in anerobic digesters.
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    \208\ The Pathways II final rule contained a list of feedstocks 
EPA determined are ``predominately cellulosic feedstocks'': ``Crop 
residue, slash, pre-commercial thinnings and tree residue, 
switchgrass, miscanthus, Arundo donax, Pennisetum purpureum, and 
biogas from landfills, municipal wastewater treatment facility 
digesters, agricultural digesters, and separated MSW digesters'' (79 
FR 42130-31, July 18, 2014). EPA further determined that feedstocks 
with minimum average adjusted cellulosic content of 75 percent, 
measured on a dry mass basis, were ``predominantly cellulosic,'' 
meaning fuel produced from these feedstocks would be eligible to 
generate 100 percent cellulosic RINs.
---------------------------------------------------------------------------

    The existing definition of agricultural digester states that the 
digester must processes ``predominantly cellulosic materials,'' 
including animal manure, crop residues, and/or separated yard waste. 
The preamble to the Pathways II rule makes it clear that the term 
``predominantly cellulosic'' means that eligible feedstocks must 
contain a cellulosic content of at least 75%, and that this term does 
not authorize renewable fuel producers to introduce non-cellulosic 
materials into an agricultural digester. Allowing other materials into 
the digester or any materials that are not at least 75 percent 
cellulosic would be inconsistent with the analysis underlying the rule 
and the definition of agricultural digester. The Pathways II rule 
identified agricultural digesters as a type of digester that will 
process wastes that are predominantly cellulosic. For the Pathways II 
rule we defined agricultural digesters narrowly based on the feedstocks 
we understood to be the most common inputs and assessed in that 
rulemaking, all of which we determined to be predominantly cellulosic. 
Thus, the ability to generate cellulosic RINs for 100 percent of the 
fuel produced under the pathway in row Q is predicated on the 
assumption and associated requirement that all the inputs to an 
agricultural digester are predominantly cellulosic. However, EPA does 
allow renewable fuel to be produced by ``other waste digesters'' and in 
some cases this fuel may qualify as cellulosic or partly cellulosic. A 
digester processing at least one type of material that is not at least 
75 percent cellulosic content cannot be an agricultural digester and is 
instead an ``other waste digester'' under row T of Table 1 to 40 CFR 
80.1426. If cellulosic material is used in an ``other waste digester,'' 
the renewable compressed natural gas would either be eligible for 100 
percent D5 RINs or may be eligible to generate D3 RINs for the portion 
of the fuel that was demonstrated to be produced from cellulosic 
biomass through proper testing and D5 RINs for the rest of the fuel 
produced as specified at 40 CFR 80.1426(f)(15)(i)(B).
    In order to clarify the materials that may be processed in an 
agricultural digester, we are proposing to revise the definition of 
agricultural digester to specify that such digesters may process 
``only'' predominantly cellulosic materials and that ``each and every 
material processed in an agricultural digester must be predominantly 
cellulosic.'' These revisions are consistent with the current 
regulations, and the analyses undertaken for the

[[Page 72479]]

Pathway II rule that formed the basis for the agricultural digester 
pathways. They are a clarification of the regulatory text, but not a 
change in our interpretation of our existing regulations or practice in 
implementing them. The revisions are meant to clarify that a digester 
that processes multiple feedstocks, including a material that is less 
than 75 percent cellulosic content is not an agricultural digester, 
even if the total cellulosic content of all the processed materials 
taken together exceeds the 75 percent threshold.

F. Definition of ``Produced From Renewable Biomass''

    CAA section 211(o)(1)(J) defines renewable fuel as ``fuel that is 
produced from renewable biomass and that is used to replace or reduce 
the quantity of fossil fuel present in a transportation fuel.'' In 
order to satisfy the definition of renewable fuel under the RFS 
regulations, the fuel must: (1) Be ``produced from renewable biomass''; 
(2) be ``used to replace or reduce the quantity of fossil fuel present 
in a transportation fuel, heating oil, or jet fuel''; and (3) have 
``lifecycle [GHG] emissions that are at least 20 percent less than 
baseline lifecycle [GHG] emissions'' (unless exempted under 40 CFR 
80.1403). We are proposing to define in 40 CFR 80.1401 that ``produced 
from renewable biomass'' means the energy in the finished fuel comes 
from renewable biomass. This definition would align the regulatory 
definition with our existing interpretation of the statute and 
regulations. We believe this definition is needed because we have 
received multiple questions from stakeholders on this aspect of the 
renewable fuel definition.
    The statutory requirement that renewable fuel be produced from 
renewable biomass is fairly straightforward for the vast majority of 
renewable fuel produced under the RFS program. For example, corn starch 
ethanol is clearly produced from renewable biomass \209\ because 
essentially all of the mass, volume, and energy contained in the 
undenatured fuel ethanol comes from fermented corn starch. However, the 
application of this requirement is less clear for some fuels that are 
produced by co-processing multiple feedstocks. For example, some 
relatively new process technologies seek to produce transportation fuel 
by bonding carbon atoms obtained from biogenic carbon dioxide with 
hydrogen atoms obtained from fossil fuels. In this case, some of the 
mass and volume in the finished fuel may come from renewable 
biomass,\210\ but, since carbon dioxide is not an energy carrier, all 
of the energy in the finished fuel would come from the fossil-based 
hydrogen. In these cases, we look at the existing RFS regulations to 
determine whether or how much of this fuel qualifies as renewable fuel.
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    \209\ Provided the corn starch qualifies as renewable biomass 
(e.g., it must come from qualifying land).
    \210\ Provided the biogenic carbon dioxide was produced from 
renewable biomass (e.g., carbon dioxide from fermented corn starch).
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    The RFS regulations at 40 CFR 80.1426(f)(4) determine the number of 
gallon-RINs generated for fuel that is produced by co-processing 
renewable biomass and non-renewable feedstocks simultaneously to 
produce a fuel. The formula in the regulations states that the share of 
the fuel that is renewable is calculated as the feedstock energy from 
renewable biomass divided by the total feedstock energy. In the example 
given above, the carbon dioxide provides zero feedstock energy, so the 
regulations stipulate that zero RINs would be generated for the fuel. 
In other words, no portion of the fuel would qualify as renewable fuel. 
We believe this outcome is appropriate given that the fundamental 
purpose of transportation fuel is to provide energy, thus the source of 
the energy in the finished fuel should be the criterion for determining 
from what the fuel was produced, as opposed to the source of the mass 
or volume of the fuel. It is also consistent with statutory definition 
that renewable fuel must ``be used to replace or reduce the quantity of 
fossil fuel present in a transportation fuel.'' Fuel that derives its 
energy from fossil fuel (a subset of non-renewable feedstocks) is 
replacing one form of fossil fuel for another, not reducing the 
quantity of fossil fuel present in a transportation fuel.
    As stated above, we have received multiple questions related to 
fuels that derive their energy from non-renewable feedstocks, and 
whether such fuels qualify as renewable fuel under the RFS program. We 
believe that adding this definition would reduce future confusion on 
this issue. In particular, we want to avoid a situation where resources 
may be allocated to researching or developing a new fuel technology 
with the hopes of generating RINs only to later find out that the fuel 
does not qualify because its energy does not come from renewable 
biomass. Thus, we propose to add a definition of ``produced from 
renewable biomass'' at 40 CFR 80.1401 that defines it as the energy in 
the finished fuel comes from renewable biomass. As explained above, 
this proposed definition is consistent with our existing interpretation 
of the statute and implementing regulations. We seek comment on this 
proposed regulatory definition.

G. Estimating Landfill Emissions for Lifecycle GHG Analysis of Fuels 
Produced From Separated Municipal Solid Waste

    EPA has previously approved fuel pathways that use the biogenic 
components of separated municipal solid waste (MSW), as defined at 40 
CFR 80.1426(f)(5)(i)(C), as satisfying the 60 percent lifecycle GHG 
reduction for qualification as cellulosic biofuel under the RFS program 
(see Table 1 to 40 CFR 80.1426). Through the petition process at 40 CFR 
80.1416 and engagement with stakeholders, we are aware of growing 
interest in the use of biogenic components of separated MSW to produce 
diesel, gasoline, and jet fuel. The existing separated MSW pathways 
were based on engineering assessments and other projections about the 
processes, process efficiencies and types of process energy that would 
be used to convert separated MSW to fuels. In some cases, there are 
separated MSW-to-fuel projects under consideration that likely do not 
fit the assumptions underlying our previous assessments. For example, 
our previous assessments \211\ were based on engineering and cost 
projections that separated MSW would be used as both the feedstock and 
the predominant source of fuel to heat the conversion process.\212\ 
However, some of the projects being developed intend to use natural gas 
for process heat fuel instead of the separated MSW itself. In such 
cases, the fuels produced would be unlikely to meet the 60 percent GHG 
reduction threshold using our existing assessment methodology. However, 
stakeholders have suggested that our past assessment methodology does 
not fully capture the full lifecycle GHG impacts of using the biogenic 
components of separated MSW as biofuel feedstock because it does not 
account for the future reductions in methane emissions from the 
landfills and improved recycling that may occur by diverting separated 
MSW from the landfill. Inclusion of change in landfill emissions could 
allow fuels produced from separated MSW to satisfy the 60 percent GHG 
reduction threshold even if the process heat comes from fossil

[[Page 72480]]

sources. We have not estimated the GHG emissions effects of using the 
biogenic components of separated MSW as feedstock instead of its 
current fate (e.g., landfill, landfill with flaring, landfill with 
power generation, composting, waste to energy). Thus, we are seeking 
comment on the appropriateness of doing so and on the appropriate 
methodologies, models, and data to estimate the potential effects of 
diverting separated MSW from landfills. Seeking comment on this topic 
is particularly relevant in this rulemaking because some of the 
projects under consideration intend to use separated MSW to produce a 
biocrude, which we are proposing to consider a biointermediate (see 
Section VII).
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    \211\ 78 FR 14190 (March 5, 2013).
    \212\ Kinchin, Christopher. Catalytic Fast Pyrolysis with 
Upgrading to Gasoline and Diesel Blendstocks. National Renewable 
Energy Laboratory (NREL). 2011. Docket Item No. EPA-HQ-OAR-2011-
0542-0007.
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    The concept of avoided landfill emissions is that diverting 
separated MSW from a landfill would reduce the subsequent GHG emissions 
associated with landfilling that material. When landfilled, biogenic 
materials decompose under anaerobic conditions and produce landfill gas 
composed of methane, carbon dioxide, and other gases. Landfills in the 
United States typically capture the landfill gas and flare it or use it 
to produce electricity or CNG or for other purposes. However, a share 
of the landfill gas evades capture or is not fully combusted by the 
flares and is emitted from the landfill. Since landfill gas generation 
is a function of the amount and biogenic content of MSW landfilled, 
diverting separated MSW from a landfill can reduce the overall amount 
of landfill GHG emissions. On the other hand, some of the biogenic MSW 
decomposes slowly and remains in the landfill when the landfill cell is 
capped, resulting in long-term carbon storage at the landfill. 
Combusting carbon that would otherwise be stored, in the form of 
transportation fuel, increases GHG emissions. The net result of all of 
these processes in a landfill requires modelling to estimate the effect 
of diverting the separated MSW on landfill emissions.
    In addition to avoided methane emissions, there may be emissions 
reductions from enhanced recycling associated with the use of MSW as a 
biofuel feedstock. Using MSW as a biofuel feedstock may entail 
additional separation and recycling than would otherwise occur, 
enhancing the effectiveness of recycling efforts for metals, plastics, 
and potentially other materials. The reduced GHG emissions associated 
with recycling these additional materials as opposed to producing new 
metals, plastics and other materials could then provide additional GHG 
reduction that could be estimated and allocated to the finished fuel 
for purposes of lifecycle GHG analysis.
    A number of models and data sources are available to estimate 
landfill emissions--we briefly describe a few here but this is not 
intended as a comprehensive list. The GREET-2020 fuel cycle model 
includes data and formulas to estimate the lifecycle GHG emissions 
associated with ethanol and CNG produced from MSW feedstock, and these 
data and formulas could be adapted for analysis of other MSW to fuel 
pathways.\213\ The EPA Waste Reduction Model (WARM) is a tool to help 
solid waste planners estimate GHG emissions reductions, energy savings, 
and economic impacts from several different waste management 
practices.\214\ WARM estimates avoided landfill emissions based on user 
inputs on MSW composition and landfill characteristics. WARM does not 
model pathways for manufacturing fuel from MSW. Municipal solid waste 
landfills report annually under EPA's GHG reporting program based on 
protocols and formulas specified at 40 CFR part 98, subpart HH. Subpart 
HH includes formulas to estimate landfill emissions each year but does 
not address carbon storage at landfills or metal and plastic recycling. 
In 2019, the International Civil Aviation Organization (ICAO) published 
a methodology for calculating landfill emissions for aviation fuels 
produced from MSW.\215\ These models and methodologies have many 
similarities but they differ in their intended purposes and the default 
assumptions they recommend for certain key inputs, such as the decay 
rates for certain types of biogenic MSW components and the oxidation 
rates for uncaptured landfill methane. Based on our review of these 
models, formulas and estimates we observe that the landfill emissions 
estimates are sensitive to inputs for key assumptions.
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    \213\ The Greenhouse gases, Regulated Emissions, and Energy use 
in Technologies (GREET) Model is developed and maintained by Argonne 
National Laboratory. https://greet.es.anl.gov.
    \214\ EPA. (2019). Waste Reduction Model (WARM) Tool User's 
Guide. May 2019. EPA530-R-19-002. https://www.epa.gov/sites/production/files/2020-12/documents/warm-users-guide_v15_10-29-2020.pdf.
    \215\ ICAO. (2019). Carbon Offsetting and Reduction Scheme for 
International Aviation (CORSIA) Methodology for Calculating Actual 
Life Cycle Emissions Values. November 2019. 19 pages. https://www.icao.int/environmental-protection/CORSIA/Documents/ICAO%20document%2007%20-%20Methodology%20for%20Actual%20Life%20Cycle%20Emissions.pdf.
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    We seek comment on the appropriateness of accounting for changes in 
landfill emissions and, if appropriate, on the best available models, 
data, and methodologies to estimate changes in landfill emissions 
associated with the use of biogenic components of separated MSW as a 
feedstock for the production of biofuel for purposes of lifecycle GHG 
analysis for the RFS program. Specifically, we seek comment on the 
extent to which we should account for net emissions associated with 
changes in landfill methane emissions, landfill carbon storage, metal 
and plastic recycling, or other activities. In our previous assessments 
of landfill biogas, we used landfill gas flaring as the alternative 
baseline scenario (Pathways II rule, 79 FR 42141-2); in this 
rulemaking, we seek comment on whether there are any new data that 
would support using a different baseline for evaluation of using 
biogenic components of separate MSW as feedstock for biofuel 
production. Given the fact that landfill emissions can occur for 
decades after material is disposed, we also seek comment on the most 
appropriate methodology for addressing the temporal aspects of landfill 
emissions. In other parts of EPA's lifecycle analysis, we consider 
emissions over a 30-year period. We seek comment on whether a 30-year 
period is also appropriate for the purposes of quantifying changes in 
landfill emissions.
    The composition of separated MSW used as biofuel feedstock has a 
significant impact on the potential emissions from the landfill. We 
seek comment on whether and how EPA should track and verify the 
feedstock composition if accounting for net avoided landfill emissions 
under the RFS program as well as changes in stored carbon. In addition, 
landfill emissions can differ significantly from one landfill to 
another based on differences in climate, management practices and other 
characteristics; however, evaluating individual landfills requires 
additional collection, tracking, and verification of data. We seek 
comment on whether to consider landfill emissions from individual 
landfills or take a more aggregated approach whereby landfills are 
evaluated nationally, regionally or based on a limited set of other 
characteristics (e.g., temperature, moisture, gas collection 
technology). We intend to consider the comments received on this topic 
as we evaluate new fuel pathway petitions, submitted pursuant to 40 CFR 
80.1416, that include the use of separated MSW feedstock.

H. Technical Corrections and Clarifications

    We are proposing to make numerous technical corrections to the RFS

[[Page 72481]]

regulations. These amendments are being made to correct minor 
inaccuracies and updates in the current regulations. These changes are 
described in Table VIII.H-1 below.

 Table VIII.H-1--Miscellaneous Technical Corrections and Clarifications
                           to RFS Regulations
------------------------------------------------------------------------
 Part and section of title 40           Description of revision
------------------------------------------------------------------------
80.1401......................  Amended by revising the definition of
                                ``Renewable fuel'' to reiterate that
                                undenatured ethanol is not renewable
                                fuel.
80.1401, 80.1426(f)(5)(i)-     Amended by moving the definitions of
 (iii), (f)(5)(iv)(A) and       ``Separated yard waste,'' ``Separated
 (B), and (f)(5)(v),            food waste,'' and ``Separated municipal
 80.1450(b)(1)(vii)(A) and      solid waste'' from Sec.   80.1426(f)(5)
 (B) and (b)(1)(viii),          to the RFS definitions section (Sec.
 80.1451(b)(1)(ii)(R), and      80.1401) and updating associated cross-
 80.1454(j).                    references.
80.1401, 80.1426(f)(17)(i),    Amended by updating the incorporation by
 80.1450(b)(1)(xii),            reference (IBR) for ``Standard
 80.1451(b)(1)(ii)(T),          Specification for Diesel Fuel,'' ASTM
 80.1454(l), and 80.1468(b).    D975-13a, to now be ASTM D975-21, which
                                is the most recent ASTM version.
80.1401 and 80.1468(b).......  Amended by updating the IBR for
                                ``Standard Specification for Biodiesel
                                Fuel Blend Stock (B100) for Middle
                                Distillate Fuels,'' ASTM D6751-09, to
                                now be ASTM D6751-20a, which is the most
                                recent ASTM version.
80.1426(f)(7)(v)(A) and        Amended by updating the IBR for
 80.1468(b).                    ``Standard Test Methods for Analysis of
                                Wood Fuels,'' ASTM E870-82(2006), to now
                                be ASTM E870-82(2019), which is the most
                                recent ASTM version.
80.1426(f)(7)(v)(B) and        Amended by updating the IBR for
 80.1468(b).                    ``Standard Test Methods for Direct
                                Moisture Content Measurement of Wood and
                                Wood-Based Materials,'' ASTM D4442-07,
                                to now be ASTM D4442-20, which is the
                                most recent ASTM version.
80.1426(f)(7)(v)(B) and        Amended by updating the IBR for
 80.1468(b).                    ``Standard Test Method for Laboratory
                                Standardization and Calibration of Hand-
                                Held Moisture Meters,'' ASTM D4444-08,
                                to now be ASTM D4444-13 (2018), which is
                                the most recent ASTM version.
80.1426(f)(8)(ii)(B) and       Amended by updating the IBR for
 80.1468(b).                    ``Standard Guide for the Use of the
                                Joint American Petroleum Institute (API)
                                and ASTM Adjunct for Temperature and
                                Pressure Volume Correction Factors for
                                Generalized Crude Oils, Refined
                                Products, and Lubricating Oils: API
                                Manual of Petroleum Measurement
                                Standards (MPMS) Chapter 11.1,'' ASTM
                                D1250-08, to now be ASTM D1250-19e1,
                                which is the most recent ASTM version.
80.1426(f)(9)(ii),             Amended by updating the IBR for
 80.1430(e)(2), and             ``Standard Test Methods for Determining
 80.1468(b).                    the Biobased Content of Solid, Liquid,
                                and Gaseous Samples Using Radiocarbon
                                Analysis,'' ASTM D6866-08, to now be
                                ASTM D6866-21, which is the most recent
                                ASTM version.
80.1426(f)(17)(i)............  Amended by adding ``renewable gasoline,''
                                consistent with other related sections.
80.1426(f)(17)(i)(B)(1) and    Amended by replacing ``diesel'' with
 (2), 80.1450(b)(1)(xii)(B)     ``distillate'' to clarify that parties
 and (C),                       that blend renewable jet fuel with
 80.1451(b)(1)(ii)(T)(1), and   conventional jet fuel must currently
 80.1454(1)(1).                 comply with these requirements. This
                                would remove perceived ambiguity over
                                whether these provisions apply to
                                producers of blended renewable jet fuel
                                (jet fuel is not diesel fuel per the
                                definition of ``diesel fuel'' at 40 CFR
                                80.2 but rather distillate fuel).
80.1428(b)(2)................  Amended to be consistent with the
                                restriction that independent third-party
                                auditors may not own RINs under Sec.
                                80.1471(a)(3).
80.1429(b)(9)................  Amended to limit the number of RINs that
                                a party can separate when they incur an
                                RVO due to redesignating certified-NTDF
                                under Sec.   80.1408. This is consistent
                                with similar situations involving
                                exporters of renewable fuel or importers
                                of gasoline and diesel fuel.
80.1450(g)(11)(ii),            Amended by updating the email address for
 80.1473(f), 80.1474(b)(2),     EPA's EMTS help desk to
 (b)(3), (b)(4)(i)(C), and      [email protected].
 (b)(4)(ii)(C).
80.1450(h)(2)(i).............  Amended by changing the time for
                                responding to EPA's notice of intent to
                                deactivate a company's registration from
                                14 to 30 calendar days to allow
                                additional time for company action.
80.1451(b)(1)(ii)(T)(2) and    Amended to clarify reporting instructions
 80.1454(l)(3).                 and move the affidavit requirement from
                                the reporting section (Sec.   80.1451)
                                to the recordkeeping section (Sec.
                                80.1454).
80.1460(b)(6)................  Amended to clarify that generating a RIN
                                for fuel for which RINs have previously
                                been generated is not a prohibited act
                                if those RINs were generated pursuant to
                                Sec.   80.1426(c)(6).
80.1464(a)(3)(ii),             Amended to modify the attest engagements
 (b)(3)(ii), and (c)(2)(ii).    requirements to be consistent with the
                                RIN activity report requirements in Sec.
                                  80.1451(c)(2).
80.1464(a)(4)(ii),             Amended by updating outdated references
 (b)(5)(ii), and (c)(3)(ii)     to expired provisions of part 80 to part
 and 80.1475(a)(2) and (d)(4).  1090.
80.1464(a)(7), (b)(8),         Amended to add the requirement that the
 (c)(7), (i)(1)(i), and         attest auditor verifies the submission
 (i)(2)(i).                     of required compliance reports and
                                states as a finding any compliance
                                reports missing.
80.1464(b)(4)(i) and (iii)...  Amended to modify the requirements to
                                include verification of last date of
                                independent third-party engineering
                                review as occurring within the three-
                                year cycle under Sec.   80.1450(d)(3).
80.1469(c)(1)(vii)...........  Amended to modify the requirements for
                                Quality Assurance Plans to allow for a
                                renewable fuel for which RINs were
                                previously generated to be used as a
                                feedstock if done in accordance with
                                Sec.   80.1426(c)(6).
80.1471(c)...................  Amended to correct an erroneous reference
                                to 31 CFR 50.5(q) to now be 31 CFR
                                50.4(t), and to allow comparable
                                financial strength ratings if acceptable
                                to EPA.
80.1475(d)(1) and (3)........  Amended by correcting erroneous
                                references to paragraph (b) to now be to
                                paragraph (c).
------------------------------------------------------------------------

[[Page 72482]]

IX. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive orders 
can be found at http://www.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is an economically significant regulatory action that 
was submitted to the Office of Management and Budget (OMB) for review. 
Any changes made in response to OMB recommendations have been 
documented in the docket. EPA prepared an analysis of potential costs 
and benefits associated with this action. This analysis is presented in 
the DRIA, available in the docket for this action.

B. Paperwork Reduction Act (PRA)

    The information collection activities in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the PRA. The Information Collection Request (ICR) document 
that EPA prepared has been assigned EPA ICR number 2691.01. You can 
find a copy of the ICR in the docket for this rule, and it is briefly 
summarized here.
    The information to be collected is necessary to implement the 
proposed inclusion of biointermediates to the RFS program. As part of 
this proposal, biointermediate producers and importers would be added 
as respondents and certain existing respondents (e.g., renewable fuel 
producers) may have additional reporting and recordkeeping requirements 
related to their use of biointermediates. Recordkeeping and reporting 
requirements include the registration of biointermediate producers and 
their facilities; product transfer documentation; records retention 
related to the production, transfer, and use of biointermediates; 
annual attest engagements; quality assurance plans for 
biointermediates; and the submission of information related to 
renewable fuels produced using biointermediates. These items are 
discussed in detail in the supporting statement in the docket.
    Respondents/affected entities: Biointermediate producers, renewable 
fuel producers, biointermediate importers, and third parties who submit 
reports for these parties.
    Respondent's obligation to respond: Mandatory, under 40 CFR parts 
80 and 1090.
    Estimated number of respondents: 1,670.
    Frequency of response: On occasion, daily, quarterly, or annually.
    Total estimated burden: 47,988 hours (per year). Burden is defined 
at 5 CFR 1320.3(b).
    Total estimated cost: $2,828,180 (per year), all of which is 
purchased services, and which includes $0 annualized capital or 
operation & maintenance costs.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.
    Submit your comments on the Agency's need for this information, the 
accuracy of the provided burden estimates and any suggested methods for 
minimizing respondent burden to EPA using the docket identified at the 
beginning of this rule. You may also send your ICR-related comments to 
OMB's Office of Information and Regulatory Affairs via email to 
[email protected], Attention: Desk Officer for EPA. Since OMB 
is required to make a decision concerning the ICR between 30 and 60 
days after receipt, OMB must receive comments no later than January 20, 
2022. EPA will respond to any ICR-related comments in the final rule.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. In 
making this determination, the impact of concern is any significant 
adverse economic impact on small entities. 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, has no 
net burden, or otherwise has a positive economic effect on the small 
entities subject to the rule.
    With respect to the proposed biointermediates provisions, we do not 
believe that a small biointermediate producer or renewable fuel 
producer would choose to take advantage of the proposed program for 
biointermediates unless there was sufficient economic incentive for 
them to do so. Current small renewable fuel producers would not be 
compelled to use biointermediates, and as such, any costs associated 
with these provisions are purely voluntary. With respect to the other 
proposed amendments to the RFS regulations, this action makes 
relatively minor corrections and modifications to those regulations. As 
such, we do not anticipate that there will be any significant adverse 
economic impact on directly regulated small entities as a result of 
these provisions.
    The small entities directly regulated by the annual percentage 
standards associated with the RFS volumes are small refiners, which are 
defined at 13 CFR 121.201. With respect to the 2020, 2021, and 2022 
percentage standards and 2022 supplemental standard, we have evaluated 
the impacts on small entities from two perspectives: As if the 
standards were a standalone action or if they are a part of the overall 
impacts of the RFS program as a whole.
    To evaluate the impacts of the volume requirements on small 
entities, we have conducted a screening analysis \216\ to assess 
whether we should make a finding that this action will not have a 
significant economic impact on a substantial number of small entities. 
Currently available information shows that the impact on small entities 
from implementation of this rule will not be significant. We have 
reviewed and assessed the available information, which shows that 
obligated parties, including small entities, are generally able to 
recover the cost of acquiring the RINs necessary for compliance with 
the RFS standards through higher sales prices of the petroleum products 
they sell than would be expected in the absence of the RFS 
program.\217\ This is true whether they acquire RINs by purchasing 
renewable fuels with attached RINs or purchase separated RINs. The 
costs of the RFS program are thus generally being passed on to 
consumers in the highly competitive marketplace. Even if we were to 
assume that the cost of acquiring RINs was not recovered by obligated 
parties, a cost-to-sales ratio test shows that the costs to small 
entities of the proposed RFS standards are far less than 1 percent of 
the value of their sales.
---------------------------------------------------------------------------

    \216\ See Chapter 11 of the DRIA.
    \217\ For a further discussion of the ability of obligated 
parties to recover the cost of RINs see ``Denial of Petitions for 
Rulemaking to Change the RFS Point of Obligation,'' EPA-420-R-17-
008, November 2017.
---------------------------------------------------------------------------

    While the screening analysis described above supports a 
certification that this rule will not have a significant economic 
impact on small refiners, we continue to believe that it is more 
appropriate to consider the standards as a part of our ongoing 
implementation of the overall RFS program. When considered this way, 
the impacts of the RFS program as a whole on small entities were 
addressed in the RFS2 final rule, which was the rule that implemented 
the entire program as required by EISA 2007.\218\ As such, the

[[Page 72483]]

Small Business Regulatory Enforcement Fairness Act (SBREFA) panel 
process that took place prior to the 2010 rule was also for the entire 
RFS program and looked at impacts on small refiners through 2022.
---------------------------------------------------------------------------

    \218\ 75 FR 14670 (March 26, 2010).
---------------------------------------------------------------------------

    For the SBREFA process for the RFS2 final rule, we conducted 
outreach, fact-finding, and analysis of the potential impacts of the 
program on small refiners, which are all described in the Final 
Regulatory Flexibility Analysis, located in the rulemaking docket (EPA-
HQ-OAR-2005-0161). This analysis looked at impacts to all refiners, 
including small refiners, through the year 2022 and found that the 
program would not have a significant economic impact on a substantial 
number of small entities, and that this impact was expected to decrease 
over time, even as the standards increased. For gasoline and/or diesel 
small refiners subject to the standards, the analysis included a cost-
to-sales ratio test, a ratio of the estimated annualized compliance 
costs to the value of sales per company. From this test, we estimated 
that all directly regulated small entities would have compliance costs 
that are less than one percent of their sales over the life of the 
program (75 FR 14862, March 26, 2010).
    We have determined that this proposed rule will not impose any 
additional requirements on small entities beyond those already 
analyzed, since the impacts of this rule are not greater or 
fundamentally different than those already considered in the analysis 
for the RFS2 final rule assuming full implementation of the RFS 
program. The proposed cellulosic biofuel, advanced biofuel, and total 
renewable fuel volumes remain significantly below the statutory volume 
targets analyzed in the RFS2 final rule. Compared to the burden that 
would be imposed under the volumes that we assessed in the screening 
analysis for the RFS2 final rule (i.e., the volumes specified in the 
Clean Air Act), the proposed volume requirements in this rule reduce 
burden on small entities. Regarding the BBD standard, it is a nested 
standard within the advanced biofuel category, and as discussed in 
Section III.D, the proposed 2022 BBD volume requirement is below the 
volume of BBD that is anticipated to be produced and used to satisfy 
the advanced biofuel requirement. In other words, the volume of BBD 
actually used in 2022 will be driven not by the proposed 2022 BBD 
standard, but rather by the proposed 2022 advanced biofuel standard, 
and potentially also by the total renewable fuel standard. The net 
result of the standards being proposed in this action is a reduction in 
burden as compared to implementation of the statutory volume targets 
assumed in the RFS2 final rule analysis.
    While the rule will not have a significant economic impact on a 
substantial number of small entities, there are compliance 
flexibilities in the program that can help to reduce impacts on small 
entities. These flexibilities include being able to comply through RIN 
trading rather than renewable fuel blending, 20 percent RIN rollover 
allowance (up to 20 percent of an obligated party's RVO can be met 
using previous-year RINs), and deficit carry-forward (the ability to 
carry over a deficit from a given year into the following year, 
provided that the deficit is satisfied together with the next year's 
RVO). In the RFS2 final rule, we discussed other potential small entity 
flexibilities that had been suggested by the SBREFA panel or through 
comments, but we did not adopt them, in part because we had serious 
concerns regarding our authority to do so.
    In sum, this proposed rule will not change the compliance 
flexibilities currently offered to small entities under the RFS program 
and available information shows that the impact on small entities from 
implementation of this rule will not be significant when viewed either 
from the perspective of it being a standalone action or a part of the 
overall RFS program. We have therefore concluded that this action will 
have no net regulatory burden for all directly regulated small 
entities.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain an unfunded mandate of $100 million or 
more as described in UMRA, 2 U.S.C. 1531-1538, and does not 
significantly or uniquely affect small governments. This action 
implements mandates specifically and explicitly set forth in CAA 
section 211(o), and we believe that this action represents the least 
costly, most cost-effective approach to achieve the statutory 
requirements.

E. Executive Order 13132: Federalism

    This action 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.

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

    This action does not have tribal implications as specified in 
Executive Order 13175. This action will be implemented at the Federal 
level and affects transportation fuel refiners, blenders, marketers, 
distributors, importers, exporters, and renewable fuel producers and 
importers. Tribal governments will be affected only to the extent they 
produce, purchase, or use regulated fuels. 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 as applying only to those 
regulatory actions that concern environmental health or safety risks 
that EPA has reason to believe may disproportionately affect children, 
per the definition of ``covered regulatory action'' in section 2-202 of 
the Executive order. This action is not subject to Executive Order 
13045 because it implements specific standards established by Congress 
in statutes (CAA section 211(o)). While this action is not covered by 
Executive Order 13045, a discussion of environmental health impacts is 
included in Chapter 3 of the DRIA.

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

    This action is not a ``significant energy action'' because it is 
not likely to have a significant adverse effect on the supply, 
distribution, or use of energy. This action proposes the required 
renewable fuel content of the transportation fuel supply for 2020, 
2021, and 2022 pursuant to the CAA. The RFS program and this rule are 
designed to achieve positive effects on the nation's transportation 
fuel supply by increasing energy independence and security.

I. National Technology Transfer and Advancement Act (NTTAA) and 1 CFR 
Part 51

    This proposed action involves technical standards. We are proposing 
to update the existing test methods and standards in the RFS 
regulations to more recent versions. In accordance with the 
requirements of 1 CFR 51.5, we are proposing to incorporate by 
reference the use of test methods and standards from American Society 
for Testing and Materials International (ASTM International). A 
detailed discussion of these test methods and standards can be found in 
Section VIII.H. The standards and test methods may be obtained through 
the ASTM International website (www.astm.org) or by calling ASTM at 
(877) 909-2786.

[[Page 72484]]

(ASTM E711 is referenced in the regulatory text of this proposed rule. 
It was approved for IBR as of July 1, 2010 and no changes are being 
proposed.)
    ASTM International routinely updates many of its reference 
documents. If ASTM International publishes an updated version of any of 
reference documents included in this proposal, we will consider 
referencing that updated version in the final rule.

 Table IX.I-1--Proposed Standards and Test Methods to be Incorporated by
                                Reference
------------------------------------------------------------------------
   Organization and standard or test
                 method                            Description
------------------------------------------------------------------------
ASTM D975-21, Standard Specification     Diesel fuel specifications that
 for Diesel Fuel, approved August 1,      must be met to qualify for
 2021.                                    RINs for renewable fuels.
ASTM D1250-19e1, Standard Guide for the  Standard guide used by industry
 Use of the Joint API and ASTM Adjunct    for determining temperature
 for Temperature and Pressure Volume      corrected standardized volumes
 Correction Factors for Generalized       under the RFS program.
 Crude Oils, Refined Products, and
 Lubricating Oils: API MPMS Chapter
 11.1, approved May 1, 2019.
ASTM D4442-20, Standard Test Methods     Test method used for
 for Direct Moisture Content              determining moisture content
 Measurement of Wood and Wood-Based       of wood samples that must be
 Materials, approved March 1, 2020.       met when qualifying for RINs
                                          for renewable fuels.
ASTM D4444-13 (2018), Standard Test      Test method used for
 Method for Laboratory Standardization    determining moisture content
 and Calibration of Hand-Held Moisture    of wood samples that must be
 Meters, reapproved July 1, 2018.         met when qualifying for RINs
                                          for renewable fuels.
ASTM D6751-20a, Standard Specification   Biodiesel fuel specifications
 for Biodiesel Fuel Blend Stock (B100)    that must be met to qualify
 for Middle Distillate Fuels, approved    for RINs for renewable fuels.
 August 1, 2020.
ASTM D6866-21, Standard Test Methods     Radiocarbon dating test method
 for Determining the Biobased Content     to determine the renewable
 of Solid, Liquid, and Gaseous Samples    content of transportation
 Using Radiocarbon Analysis, approved     fuel.
 January 15, 2021.
ASTM E870-82 (2019), Standard Test       Test method that covers the
 Methods for Analysis of Wood Fuels,      proximate and ultimate
 reapproved April 1, 2019.                analysis of wood fuels, as
                                          well as the determination of
                                          the gross caloric value of
                                          wood sampled and prepared by
                                          prescribed test methods and
                                          analyzed according to ASTM
                                          established procedures that
                                          must be met when qualifying
                                          for RINs for renewable fuels.
------------------------------------------------------------------------

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

    Due to time constraints and uncertainty about where impacts are 
likely to occur, EPA is able to evaluate only qualitatively the extent 
to which this action may result in disproportionately high and adverse 
human health or environmental effects on minority populations, low-
income populations, and/or indigenous peoples, as specified in 
Executive Order 12898 (59 FR 7629, February 16, 1994). While there is 
the potential for significant GHG emission reductions as a result of 
this action, changes in air and water quality could occur due to 
increases in ethanol or biodiesel production. Land use change to bring 
more corn, soy, or other crops into production in response to the 
action could also affect air, water, and soil quality in specific 
locations. The extent to which such changes--as well as future climate 
change impacts--may be unevenly distributed spatially in ways that 
coincide with patterns of pre-existing exposure and vulnerabilities for 
minority populations, low-income populations, and/or indigenous peoples 
is uncertain and would require predicting where these changes would 
occur on a fine spatial scale. A summary of our approach for 
considering potential EJ concerns as a result of this action can be 
found in Section I.I, and our EJ analysis (including a discussion of 
this action's potential impacts on GHGs, air quality, water quality, 
and fuel and food prices) can be found in Chapter 8 of the DRIA, 
available in the docket for this action.

X. Statutory Authority

    Statutory authority for this action comes from sections 114, 203-
05, 208, 211, and 301 of the Clean Air Act, 42 U.S.C. 7414, 7522-24, 
7542, 7545, and 7601.

List of Subjects

40 CFR Part 80

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Diesel fuel, Fuel additives, Gasoline, Imports, 
Incorporation by reference, Oil imports, Petroleum, Renewable fuel.

40 CFR Part 1090

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Diesel fuel, Fuel additives, Gasoline, Imports, 
Oil imports, Petroleum, Renewable fuel.

Michael S. Regan,
Administrator.

    For the reasons set forth in the preamble, EPA proposes to amend 40 
CFR parts 80 and 1090 as follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

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

    Authority: 42 U.S.C. 7414, 7521, 7542, 7545, and 7601(a).

Subpart A--General Provisions

0
2. Add Sec.  80.11 to read as follows:

Sec.  80.11  Confidentiality of information.

    (a) Except as specified in paragraph (b) of this section, 
information obtained by the Administrator or his representatives 
pursuant to this part shall be treated, in so far as its 
confidentiality is concerned, in accordance with the provisions of 40 
CFR part 2, subpart B.
    (b) Information contained in EPA notices of violation, settlement 
agreements, administrative complaints, civil complaints, criminal 
information, and criminal indictments is not entitled to confidential 
treatment and therefore EPA may publicly disclose such information. 
Such information includes the company name and EPA-issued company 
identification number, the facility name and EPA-issued facility 
identification number, the total quantity of fuel and parameter, the 
time or time period when the violation occurred, information relating 
to the generation, transfer, or use of credits, and any other

[[Page 72485]]

information relevant to describing the violation.

Subpart M--Renewable Fuel Standard

0
3. Amend Sec.  80.1401 by:
0
a. Revising the definitions of ``Agricultural digester'' and ``Baseline 
volume'';
0
b. Adding in alphabetical order the definition of ``Biocrude'';
0
c. Revising the definition of ``Biodiesel'';
0
d. Adding in alphabetical order the definitions of ``Biointermediate,'' 
``Biointermediate import facility,'' ``Biointermediate importer,'' 
``Biointermediate producer,'' and ``Biointermediate production 
facility'';
0
e. Revising the definitions of ``Combined heat and power (CHP),'' ``Co-
processed,'' ``Facility,'' and ``Foreign renewable fuel producer'';
0
f. Adding in alphabetical order the definition of ``Free fatty acid 
(FFA) feedstock'';
0
g. Revising paragraph (1) in the definition of ``Non-ester renewable 
diesel'' and the definition of ``Non-renewable feedstock'';
0
h. Adding in alphabetical order the definition of ``Produced from 
renewable biomass'';
0
i. Revising the definitions of ``Quality assurance audit,'' ``Quality 
assurance plan,'' paragraph (7) in the definition of ``Renewable 
biomass,'' the introductory text and paragraph (1)(i) in the definition 
of ``Renewable fuel''; and
0
j. Adding in alphabetical order the definitions of ``Separated food 
waste,'' ``Separated municipal solid waste (MSW),'' ``Separated yard 
waste,'' and ``Undenatured ethanol''.
    The revisions and additions read as follows:

Sec.  80.1401  Definitions.

* * * * *
    Agricultural digester means an anaerobic digester that processes 
only animal manure, crop residues, or separated yard waste with an 
adjusted cellulosic content of at least 75%. Each and every material 
processed in an agricultural digester must have an adjusted cellulosic 
content of at least 75%.
* * * * *
    Baseline volume means the permitted capacity or, if permitted 
capacity cannot be determined, the actual peak capacity or nameplate 
capacity as applicable pursuant to Sec.  80.1450(b)(1)(v)(A) through 
(C), of a specific renewable fuel production facility on a calendar 
year basis.
    Biocrude means a liquid biointermediate produced from renewable 
biomass through gasification or pyrolysis at a biointermediate 
production facility to be used to produce renewable fuel at a refinery 
as defined in 40 CFR 1090.80.
    Biodiesel means a mono-alkyl ester that meets ASTM D6751 
(incorporated by reference, see Sec.  80.1468).
* * * * *
    Biointermediate means any feedstock material that is used to 
produce renewable fuel and meets all of the following requirements:
    (1) It is derived from renewable biomass.
    (2) It does not meet the definition of renewable fuel in this 
section and RINs were not generated for it as a renewable fuel in its 
own right.
    (3) It is produced at a facility registered with EPA that is 
different than the facility at which it is used to produce renewable 
fuel.
    (4) It is made from the feedstock and will be used to produce the 
renewable fuel in accordance with the process(es) listed in the 
approved pathway (as described in table 1 to Sec.  80.1426 or a pathway 
approval pursuant to Sec.  80.1416) that the biointermediate producer 
and renewable fuel producer are using to convert renewable biomass to 
renewable fuel.
    (5) Is one of the following:
    (i) Biocrude.
    (ii) Free fatty acid (FFA) feedstock.
    (iii) Undenatured ethanol feedstock.
    (6) A feedstock listed in a pathway in Table 1 to Sec.  80.1426, or 
in an approved pathway petition under Sec.  80.1416, and used to 
produce the renewable fuel specified in that pathway or approved 
petition using the specified process requirements, as applicable, is 
not a biointermediate.
    Biointermediate import facility means any facility as defined in 40 
CFR 1090.80 where a biointermediate is imported from outside the 
covered location into the covered location.
    Biointermediate importer means any person who owns, leases, 
operates, controls, or supervises a biointermediate import facility.
    Biointermediate producer means any person who owns, leases, 
operates, controls, or supervises a biointermediate production 
facility.
    Biointermediate production facility means all of the activities and 
equipment associated with the production of a biointermediate starting 
from the point of delivery of feedstock material to the point of final 
storage of the end biointermediate product, which are located on one 
property, and are under the control of the same person (or persons 
under common control).
* * * * *
    Combined heat and power (CHP), also known as cogeneration, refers 
to industrial processes in which waste heat from the production of 
electricity is used for process energy in a biointermediate or 
renewable fuel production facility.
* * * * *
    Co-processed means that renewable biomass or a biointermediate was 
simultaneously processed with fossil fuels or other non-renewable 
feedstock in the same unit or units to produce a fuel that is partially 
derived from renewable biomass or a biointermediate.
* * * * *
    Facility means all of the activities and equipment associated with 
the production of renewable fuel or a biointermediate starting from the 
point of delivery of feedstock material to the point of final storage 
of the end product, which are located on one property, and are under 
the control of the same person (or persons under common control).
* * * * *
    Foreign renewable fuel producer means a person from a foreign 
country or from an area outside the covered locations who produces 
renewable fuel for use in transportation fuel, heating oil, or jet 
fuel. Foreign ethanol producers are considered foreign renewable fuel 
producers.
* * * * *
    Free fatty acid (FFA) feedstock means a biointermediate that is 
composed of at least 80 percent free fatty acids that are separated 
from renewable biomass. FFA feedstock must not include any free fatty 
acids from the refining of crude palm oil.
* * * * *
    Non-ester renewable diesel * * *
    (1) A fuel or fuel additive that meets the ASTM D975 (incorporated 
by reference, see Sec.  80.1468) Grade No. 1-D or No. 2-D 
specifications and can be used in an engine designed to operate on 
conventional diesel fuel; or
* * * * *
    Non-renewable feedstock means a feedstock (or any portion thereof) 
that does not meet the definition of renewable biomass or 
biointermediate in this section.
* * * * *
    Produced from renewable biomass means that the energy in the 
finished fuel or biointermediate comes from renewable biomass.
* * * * *
    Quality assurance audit means an audit of a renewable fuel 
production facility or biointermediate production facility conducted by 
an independent third-party auditor in accordance with a

[[Page 72486]]

QAP that meets the requirements of Sec. Sec.  80.1469, 80.1472, and 
80.1477.
    Quality assurance plan, or QAP, means the list of elements that an 
independent third-party auditor will check to verify that the RINs 
generated by a renewable fuel producer or importer are valid or to 
verify the appropriate production of a biointermediate. A QAP includes 
both general and pathway specific elements.
* * * * *
    Renewable biomass * * *
    (7) Separated yard waste or food waste, including recycled cooking 
and trap grease.
* * * * *
    Renewable fuel means a fuel that meets all of the requirements of 
paragraph (1) and (2) of this definition:
    (1)(i) Fuel that is produced from renewable biomass or a 
biointermediate produced from renewable biomass.
* * * * *
    Separated food waste means a feedstock stream consisting of food 
waste kept separate since generation from other waste materials, and 
which includes food and beverage production waste and post-consumer 
food and beverage waste.
    Separated municipal solid waste (MSW) means material remaining 
after separation actions have been taken to remove recyclable paper, 
cardboard, plastics, rubber, textiles, metals, and glass from municipal 
solid waste, and which is composed of both cellulosic and non-
cellulosic materials.
    Separated yard waste means a feedstock stream consisting of yard 
waste kept separate since generation from other waste materials.
* * * * *
    Undenatured ethanol means ethanol that has not been denatured as 
required in 27 CFR parts 19 through 21. Undenatured ethanol is not 
renewable fuel.
* * * * *
0
4. Amend Sec.  80.1402 by removing the second sentence in paragraph (a) 
and adding paragraphs (b) through (f) to read as follows:

Sec.  80.1402  Availability of information; confidentiality of 
information.

* * * * *
    (b) Information contained in EPA determinations that RINs are 
invalid under Sec.  80.1474(b)(4)(i)(C)(2) and (b)(4)(ii)(C)(2), 
notices of violation, settlement agreements, administrative complaints, 
civil complaints, criminal information, and criminal indictments under 
the Renewable Fuel Standard (RFS) program is not entitled to 
confidential treatment and therefore EPA may publicly disclose such 
information. Such information includes the company name and company 
identification number of the party that produced the fuel or generated 
the RINs in question, the facility name and facility identification 
number of the facility at which the fuel associated with the RINs in 
question was allegedly produced or imported, the total quantity of fuel 
and RINs in question, the time period when the fuel was allegedly 
produced, the time period when the RINs in question were generated, the 
batch number(s) and the D code(s) of the RINs in question, information 
relating to the generation, transfer, or use of RINs, and any other 
information relevant to describing the violation.
    (c) The following information contained in submissions under this 
subpart is not entitled to confidential treatment and, except as 
otherwise provided, the provisions of 40 CFR part 2, subpart B, do not 
apply:
    (1) Submitter's name.
    (2) The name and location of the facility, if applicable.
    (3) The date the submission was transmitted to EPA.
    (4) Any EPA-issued company or facility identification numbers 
associated with the request.
    (5) The purpose of the submission.
    (6) The relevant time period for the request, if applicable.
    (d) The following information incorporated into EPA determinations 
on submissions under this subpart is not entitled to confidential 
treatment and, except as otherwise provided, the provisions of 40 CFR 
part 2, subpart B, do not apply:
    (1) Submitter's name.
    (2) The name and location of the facility, if applicable.
    (3) The date the submission was transmitted to EPA.
    (4) Any EPA-issued company or facility identification numbers 
associated with the request.
    (5) The purpose of the submission.
    (6) The relevant time period of the request, if applicable.
    (7) The extent to which EPA either granted or denied the request 
and any relevant terms and conditions.
    (e) Except as otherwise specified in this section, any information 
submitted under this part claimed as confidential remains subject to 
evaluation by EPA under 40 CFR part 2, subpart B.
    (f) EPA may disclose the information specified in paragraphs (a) 
through (d) of this section on its website, or otherwise make it 
available to interested parties, without additional notice or process, 
notwithstanding any claims that the information is entitled to 
confidential treatment under 40 CFR part 2, subpart B.
0
5. Amend Sec.  80.1405 by revising paragraph (a)(11), adding paragraphs 
(a)(12) and (13), and revising the equations in paragraph (c) to read 
as follows:

Sec.  80.1405  What are the Renewable Fuel Standards?

    (a) * * *
    (11) Renewable Fuel Standards for 2020. (i) The value of the 
cellulosic biofuel standard for 2021 shall be 0.32 percent.
    (ii) The value of the biomass-based diesel standard for 2021 shall 
be 2.37 percent.
    (iii) The value of the advanced biofuel standard for 2021 shall be 
2.91 percent.
    (iv) The value of the renewable fuel standard for 2021 shall be 
10.78 percent.
    (12) Renewable Fuel Standards for 2021. (i) The value of the 
cellulosic biofuel standard for 2021 shall be 0.36 percent.
    (ii) The value of the biomass-based diesel standard for 2021 shall 
be 2.19 percent.
    (iii) The value of the advanced biofuel standard for 2021 shall be 
3.03 percent.
    (iv) The value of the renewable fuel standard for 2021 shall be 
10.79 percent.
    (13) Renewable Fuel Standards for 2022. (i) The value of the 
cellulosic biofuel standard for 2022 shall be 0.44 percent.
    (ii) The value of the biomass-based diesel standard for 2022 shall 
be 2.42 percent.
    (iii) The value of the advanced biofuel standard for 2022 shall be 
3.27 percent.
    (iv) The value of the renewable fuel standard for 2022 shall be 
11.76 percent.
    (v) The value of the supplemental renewable fuel standard for 2022 
shall be 0.14 percent.
* * * * *
    (c) * * *
    [GRAPHIC] [TIFF OMITTED] TP21DE21.017
    

[[Page 72487]]

[GRAPHIC] [TIFF OMITTED] TP21DE21.018

[GRAPHIC] [TIFF OMITTED] TP21DE21.019

[GRAPHIC] [TIFF OMITTED] TP21DE21.020

* * * * *
0
6. Amend Sec.  80.1407 by revising paragraph (f)(1) to read as follows:

Sec.  80.1407  How are the Renewable Volume Obligations calculated?

* * * * *
    (f) * * *
    (1) Any renewable fuel as defined in Sec.  80.1401. Renewable fuel 
for which a RIN is determined to be invalidly generated under Sec.  
80.1431 may not be excluded from a party's Renewable Volume 
Obligations.
* * * * *

Sec.  80.1408  [Amended]

0
7. Amend Sec.  80.1408 by, in paragraphs (a)(2)(i)(B) and 
(a)(2)(ii)(B), removing ``Sec.  80.1454(t)'' and adding ``Sec.  
80.1454(o)'' in its place.
0
8. Amend Sec.  80.1415 by revising paragraphs (c)(2)(ii) and (iii) to 
read as follows:

Sec.  80.1415  How are equivalence values assigned to renewable fuel?

* * * * *
    (c) * * *
    (2) * * *
    (ii) For each feedstock, biointermediate, component, or additive 
that is used to make the renewable fuel, provide a description, the 
percent input, and identify whether or not it is renewable biomass or 
is derived from renewable biomass.
    (iii) For each feedstock or biointermediate that also qualifies as 
a renewable fuel, state whether or not RINs have been previously 
generated for such feedstock.
* * * * *
0
9. Amend Sec.  80.1416 by revising paragraphs (b)(1)(ii) and (iii) to 
read as follows:

Sec.  80.1416  Petition process for evaluation of new renewable fuels 
pathways.

* * * * *
    (b)(1) * * *
    (ii) A technical justification that includes a description of the 
renewable fuel, feedstock(s), and biointermediate(s) used to make it, 
and the production process. The justification must include process 
modeling flow charts.
    (iii) A mass balance for the pathway, including feedstocks and 
biointermediates, fuels produced, co-products, and waste materials 
production.
* * * * *
0
10. Amend Sec.  80.1426 by:
0
a. Adding paragraphs (a)(4);
0
b. Removing the headings from paragraphs (c)(2) and (3);
0
c. Adding paragraph (c)(8);
0
d. Removing paragraph (f)(1) introductory text;
0
e. Adding paragraph (f)(1) heading and paragraphs (f)(1)(i) through 
(vi) prior to Table 1 to Sec.  80.1426;
0
f. Redesignating paragraph (f)(3)(vi) as paragraph (f)(3)(vi)(A);
0
g. In newly redesignated paragraph (f)(3)(vi)(A):
0
i. Revising the introductory text and the definitions of 
``FE3,'' ``FE4,'' ``FE5,'' 
``FE6,'' and ``FE7'' following Table 4 to Sec.  
80.1426; and
0
ii. Designating the undesignated text following the definition of 
``FE7'' as paragraph (f)(3)(vi)(B);
0
h. In newly designated paragraph (f)(3)(vi)(B), revising the 
definitions of ``FE,'' ``M,'' ``m,'' ``CF,'' and ``E'';
0
i. Revising the paragraph (f)(4) heading;
0
j. Revising the definitions of ``FER'' and 
``FENR'' in paragraph (f)(4)(i)(A)(1);
0
k. Adding paragraph (f)(4)(iv);
0
l. Revising paragraphs (f)(5) heading, (f)(5)(i) and (ii), (f)(5)(iii) 
introductory text, (f)(5)(iv)(A) introductory text, (f)(5)(iv)(B) 
introductory text, (f)(5)(v) introductory text, (f)(7)(v)(A) and (B), 
(f)(8)(ii)(B), (f)(9)(ii), (f)(15)(i) introductory text, (f)(16)(iii);
0
m. Adding paragraph (f)(17) heading; and
0
n. Revising paragraphs (f)(17)(i) introductory text and 
(f)(17)(i)(B)(1) and (2).
    The additions and revisions read as follows:

Sec.  80.1426  How are RINs generated and assigned to batches of 
renewable fuel?

    (a) * * *
    (4) Where a feedstock or biointermediate is used to produce 
renewable fuel and is not entirely renewable biomass, RINs may only be 
generated for the portion of fuel that is derived from renewable 
biomass, as calculated under paragraph (f)(4) of this section.
* * * * *
    (c) * * *
    (8) RINs must not be generated for a biointermediate.
* * * * *
    (f) * * *
    (1) Applicable pathways. (i) D codes shall be used in RINs 
generated by producers or importers of renewable fuel according to the 
pathways listed in Table 1 to this section, paragraph (f)(6) of this 
section, or as approved by the Administrator.
    (ii) In choosing an appropriate D code, producers and importers may 
disregard any incidental, de minimis feedstock contaminants that are 
impractical to remove and are related to customary feedstock production 
and transport.
    (iii) Tables 1 and 2 to this section do not apply to, and impose no 
requirements with respect to, volumes of fuel for which RINs are 
generated pursuant to paragraph (f)(6) of this section.
    (iv) Pathways in Table 1 to this section and advanced technologies 
in Table 2 to this section also apply in cases where the renewable fuel 
producer is using a biointermediate.
    (v) For the purposes of identifying the appropriate pathway in 
Table 1 to this section, biointermediates used for the production of 
renewable fuel are considered to be equivalent to the renewable biomass 
from which they were derived, with the following exceptions:
    (A) Oil that is physically separated from any woody or herbaceous 
biomass and used to produce renewable fuel shall not generate D-code 3 
or 7 RINs.

[[Page 72488]]

    (B) Sugar or starch that is physically separated from cellulosic 
biomass and used to produce renewable fuel shall not generate D-code 3 
or 7 RINs.
    (vi) If a renewable fuel producer uses a biointermediate for the 
production of renewable fuel, additional requirements apply to both the 
renewable fuel producer and the biointermediate producer as described 
in Sec.  80.1476.
* * * * *
    (3) * * *
    (vi)(A) If a producer produces a single type of renewable fuel 
using two or more different feedstocks or biointermediates which are 
processed simultaneously, and each batch is comprised of a single type 
of fuel, then the number of gallon-RINs that shall be generated for a 
batch of renewable fuel and assigned a particular D code shall be 
determined according to the formulas in Table 4 to this section.
* * * * *
    FE3 = Feedstock energy from all feedstocks or 
biointermediates whose pathways have been assigned a D code of 3 under 
Table 1 to this section, or a D code of 3 as approved by the 
Administrator, in Btu.
    FE4 = Feedstock energy from all feedstocks or 
biointermediates whose pathways have been assigned a D code of 4 under 
Table 1 to this section, or a D code of 4 as approved by the 
Administrator, in Btu.
    FE5 = Feedstock energy from all feedstocks or 
biointermediates whose pathways have been assigned a D code of 5 under 
Table 1 to this section, or a D code of 5 as approved by the 
Administrator, in Btu.
    FE6 = Feedstock energy from all feedstocks or 
biointermediates whose pathways have been assigned a D code of 6 under 
Table 1 to this section, or a D code of 6 as approved by the 
Administrator, in Btu.
    FE7 = Feedstock energy from all feedstocks or 
biointermediates whose pathways have been assigned a D code of 7 under 
Table 1 to this section, or a D code of 7 as approved by the 
Administrator, in Btu.
    (B) * * *
    FE = Feedstock or biointermediate energy, in Btu.
    M = Mass of feedstock or biointermediate, in pounds, measured on a 
daily or per-batch basis.
    m = Average moisture content of the feedstock or biointermediate, 
in mass percent.
    CF = Converted Fraction in annual average mass percent, except as 
otherwise provided by Sec.  80.1451(b)(1)(ii)(U), representing that 
portion of the feedstock or biointermediate that is converted into 
renewable fuel by the producer.
    E = Energy content of the components of the feedstock or 
biointermediate that are converted to renewable fuel, in annual average 
Btu/lb, determined according to paragraph (f)(7) of this section.
    (4) Renewable fuel that is produced by co-processing renewable 
biomass (including a biointermediate) and non-renewable feedstocks 
simultaneously to produce a fuel that is partially renewable. (i) * * *
    (A) * * *
    (1) * * *
    FER = Feedstock energy from renewable biomass (including 
the renewable portion of a biointermediate) used to make the 
transportation fuel, in Btu.
    FENR = Feedstock energy from non-renewable feedstocks 
(including the non-renewable portion of a biointermediate) used to make 
the transportation fuel, heating oil, or jet fuel, in Btu.
* * * * *
    (iv) In determining the RIN volume VRIN for co-processed 
fuels produced from a biointermediate, RIN-generating parties must use 
Method B as described in paragraph (f)(4)(i)(B) of this section and 
calculate the renewable fraction of a fuel R using Method B of ASTM 
D6866 (incorporated by reference, see Sec.  80.1468) as described in 
paragraph (f)(9)(ii) of this section.
    (5) Renewable fuel produced from separated yard waste, separated 
food waste, and separated MSW. (i)(A) Separated yard waste is deemed to 
be composed entirely of cellulosic materials.
    (B) Separated food waste is deemed to be composed entirely of non-
cellulosic materials, unless a party demonstrates that a portion of the 
feedstock is cellulosic through approval of their facility 
registration.
    (ii)(A) A feedstock qualifies as separated yard waste or separated 
food waste only if it is collected according to a plan submitted to and 
accepted by EPA under the registration procedures specified in Sec.  
80.1450(b)(1)(vii).
    (B) A feedstock qualifies as separated MSW only if it is collected 
according to a plan submitted to and approved by EPA.
    (iii) Separation and recycling actions for separated MSW are 
considered to occur if:
* * * * *
    (iv)(A) The number of gallon-RINs that shall be generated for a 
batch of renewable fuel derived from separated yard waste shall be 
equal to a volume VRIN and is calculated according to the 
following formula:
* * * * *
    (B) The number of gallon-RINs that shall be generated for a batch 
of renewable fuel derived from separated food waste shall be equal to a 
volume VRIN and is calculated according to the following 
formula:
* * * * *
    (v) The number of cellulosic biofuel gallon-RINs that shall be 
generated for the cellulosic portion of a batch of renewable fuel 
derived from separated MSW shall be determined according to the 
following formula:
* * * * *
    (7) * * *
    (v) * * *
    (A) ASTM E870 or ASTM E711 for gross calorific value (both 
incorporated by reference, see Sec.  80.1468).
    (B) ASTM D4442 or ASTM D4444 for moisture content (both 
incorporated by reference, see Sec.  80.1468).
* * * * *
    (8) * * *
    (ii) * * *
    (B) The standardized volume of biodiesel at 60 [deg]F, in gallons, 
as calculated from the use of the American Petroleum Institute Refined 
Products Table 6B, as referenced in ASTM D1250 (incorporated by 
reference, see Sec.  80.1468).
* * * * *
    (9) * * *
    (ii) Parties must use Method B or Method C of ASTM D6866 
(incorporated by reference, see Sec.  80.1468), or an alternative test 
method as approved by EPA.
* * * * *
    (15) * * *
    (i) If a producer seeking to generate D code 3 or D code 7 RINs 
produces a single type of renewable fuel using two or more feedstocks 
or biointermediates converted simultaneously, and at least one of the 
feedstocks or biointermediates does not have a minimum 75% average 
adjusted cellulosic content, one of the following additional 
requirements apply:
* * * * *
    (16) * * *
    (iii) Recordkeeping requirements under Sec.  80.1454(n).
    (17) Qualifying use demonstration for certain renewable fuels. (i) 
For purposes of this section, any renewable fuel other than ethanol, 
biodiesel, renewable gasoline, or renewable diesel that meets the ASTM 
D975 Grade No. 1-D or No. 2-D specifications (incorporated by 
reference, see Sec.  80.1468) is considered renewable fuel and the 
producer or

[[Page 72489]]

importer may generate RINs for such fuel only if all of the following 
apply:
* * * * *
    (B) * * *
    (1) Blending the renewable fuel into gasoline or distillate fuel to 
produce a transportation fuel, heating oil, or jet fuel that meets all 
applicable standards under this part and 40 CFR part 1090.
    (2) Entering into a written contract for the sale of the renewable 
fuel, which specifies the purchasing party must blend the fuel into 
gasoline or distillate fuel to produce a transportation fuel, heating 
oil, or jet fuel that meets all applicable standards under this part 
and 40 CFR part 1090.
* * * * *
0
11. Amend Sec.  80.1428 by revising paragraph (b)(2) to read as 
follows:

Sec.  80.1428  General requirements for RIN distribution.

* * * * *
    (b) * * *
    (2) Unless otherwise specified, any person that has registered 
pursuant to Sec.  80.1450 can own a separated RIN.
* * * * *
0
12. Amend Sec.  80.1429 by revising paragraph (b)(9) introductory text 
to read as follows:

Sec.  80.1429  Requirements for separating RINs from volumes of 
renewable fuel.

* * * * *
    (b) * * *
    (9) Except as provided in paragraphs (b)(2) through (5) and (8) of 
this section, parties whose non-export renewable volume obligations are 
solely related to the importation of products listed in Sec.  
80.1407(c) or (e), the addition of blendstocks into a volume of 
finished gasoline, finished diesel fuel, or BOB, or that incur a 
renewable volume obligation (RVO) under Sec.  80.1408, can only 
separate RINs from volumes of renewable fuel if the number of gallon-
RINs separated in a calendar year is less than or equal to a limit set 
as follows:
* * * * *
0
13. Amend Sec.  80.1430 by revising paragraph (e)(2) to read as 
follows:

Sec.  80.1430  Requirements for exporters of renewable fuels.

* * * * *
    (e) * * *
    (2) Determination of the renewable portion of the blend using 
Method B or Method C of ASTM D6866 (incorporated by reference, see 
Sec.  80.1468), or an alternative test method as approved by the EPA.
* * * * *
0
14. Amend Sec.  80.1431 by adding paragraph (a)(3) to read as follows:

Sec.  80.1431  Treatment of invalid RINs.

    (a) * * *
    (3) In the event that EPA determines that any RIN generated for a 
batch of renewable fuel produced using a biointermediate is invalid, 
then all RINs generated for that batch of renewable fuel are deemed 
invalid, unless EPA in its sole discretion determines that some portion 
of those RINs are valid.
* * * * *

Sec.  80.1435  [Amended]

0
15. Amend Sec.  80.1435 by, in paragraph (a)(4), removing ``Sec.  
80.1454(u)'' and adding ``Sec.  80.1454(p)'' in its place.
0
16. Amend Sec.  80.1449 by revising paragraph (a)(4)(iii) to read as 
follows:

Sec.  80.1449  What are the Production Outlook Report requirements?

    (a) * * *
    (4) * * *
    (iii) Feedstocks, biointermediates, and production processes to be 
used at each production facility.
* * * * *
0
17. Amend Sec.  80.1450 by:
0
a. Revising paragraphs (b) introductory text, (b)(1) introductory text, 
(b)(1)(i), and (b)(1)(ii) introductory text;
0
b. Adding paragraph (b)(1)(ii)(B); and
0
c. Revising paragraphs (b)(1)(iii), (b)(1)(iv)(A)(1) and (2), 
(b)(1)(iv)(B)(3), (b)(1)(v)(B) and (C), (b)(1)(vii)(A) introductory 
text, (b)(1)(vii)(B) introductory text, (b)(1)(viii) introductory text, 
(b)(1)(viii)(B)(1) through (3), (b)(1)(xii) introductory text, 
(b)(1)(xii)(B), (b)(1)(xii)(C) introductory text, (b)(1)(xiii)(A), 
(b)(1)(xiii)(B) introductory text, (b)(1)(xiii)(B)(1) and (5), 
(b)(1)(xv) introductory text, (b)(2)(i)(A) and (B), (b)(2)(ii)(A) 
through (C), (b)(2)(iv), and (d);
0
d. Adding paragraph (g) heading; and
0
e. Revising the second sentence of paragraph (g) introductory text, 
paragraphs (g)(5) through (7) and (9) and (g)(10)(ii), the second 
sentence of paragraph (g)(11)(ii), (h)(1)(i), and the last sentence of 
paragraph (h)(2)(i).
    The revisions and additions read as follows:

Sec.  80.1450  What are the registration requirements under the RFS 
program?

* * * * *
    (b) Producers. Any RIN-generating foreign producer, any non-RIN-
generating foreign producer, any domestic renewable fuel producer that 
generates RINs, or any biointermediate producer that transfers any 
biointermediate for the production of a renewable fuel for RIN 
generation, must provide EPA the information specified under 40 CFR 
1090.805 if such information has not already been provided under the 
provisions of this part, and must receive EPA-issued company and 
facility identification numbers prior to the generation of any RINs for 
their fuel or for fuel made with their ethanol, or prior to the 
transfer of any biointermediate to be used in the production of a 
renewable fuel for which RINs may be generated. Unless otherwise 
specifically indicated, all the following registration information must 
be submitted and accepted by EPA 60 days prior to the generation of 
RINs or the transfer of any biointermediate to be used in the 
production of a renewable fuel for which RINs may be generated.
    (1) A description of the types of renewable fuels, ethanol, or 
biointermediates that the producer intends to produce at the facility 
and that the facility is capable of producing without significant 
modifications to the existing facility. For each type of renewable 
fuel, ethanol, or biointermediate the renewable fuel producer or 
foreign ethanol producer must also provide all the following:
    (i)(A) A list of all the feedstocks and biointermediates the 
facility intends to utilize without significant modification to the 
existing facility.
    (B) A description of the type(s) of renewable biomass that will be 
used as feedstock material to produce the biointermediate, if 
applicable.
    (C) A list of the EPA-issued company and facility registration 
numbers of all biointermediate producers and biointermediate production 
facilities that will supply biointermediates for renewable fuel 
production.
    (ii) A description of the facility's renewable fuel, ethanol, or 
biointermediate production processes, including:
* * * * *
    (B) For registrations indicating the production of any 
biointermediate, the biointermediate producer must provide all of the 
following:
    (1) For each biointermediate production facility, the company name, 
EPA company registration number, and EPA facility registration number 
of the renewable fuel producer and renewable fuel production facility 
at which the biointermediate produced from the biointermediate 
production facility will be transferred and used.
    (2) Copies of documents and corresponding calculations 
demonstrating production capacity of each biointermediate produced at 
the biointermediate production facility.
    (3) For each type of feedstock that the biointermediate producer 
intends to process the biointermediate producer must provide all the 
following:

[[Page 72490]]

    (i) A list of all the feedstocks the facility intends to utilize 
without significant modification to the existing facility.
    (ii) A description of the type(s) of renewable biomass that will be 
used as feedstock material to produce the biointermediate.
    (4) The pathway(s) in Table 1 to Sec.  80.1426 or the approved 
pathway under Sec.  80.1416 that the biointermediate could be used in 
to produce renewable fuel.
    (iii) The type(s) of co-products produced with each type of 
renewable fuel, ethanol, or biointermediate.
    (iv) * * *
    (A) * * *
    (1) Each type of process heat fuel used at the facility to produce 
the renewable fuel, ethanol, or biointermediate.
    (2) The name and address of the company supplying each process heat 
fuel to the renewable fuel facility, foreign ethanol facility, or 
biointermediate production facility.
    (B) * * *
    (3) An affidavit from the biogas supplier stating its intent to 
supply biogas to the renewable fuel producer, foreign ethanol producer, 
or biointermediate producer, and the quantity and energy content of the 
biogas that it intends to provide to the renewable fuel producer or 
foreign ethanol producer.
    (v) * * *
    (B) For facilities claiming the exemption described in Sec.  
80.1403(c) or (d):
    (1) Applicable air permits issued by EPA, state, local air 
pollution control agencies, or foreign governmental agencies that 
govern the construction and/or operation of the renewable fuel facility 
that were:
    (i) Issued or revised no later than December 19, 2007, for 
facilities described in Sec.  80.1403(c); or
    (ii) Issued or revised no later than December 31, 2009, for 
facilities described in Sec.  80.1403(d).
    (2) If the air permits specified in paragraph (b)(1)(v)(B)(1) of 
this section do not specify the maximum rated annual volume output of 
renewable fuel, copies of documents demonstrating the facility's actual 
peak capacity.
    (C) For facilities not claiming the exemption described in Sec.  
80.1403(c) or (d) and that are exempt from air permit requirements or 
for which the maximum rated annual volume output of renewable fuel is 
not specified in their air permits, appropriate documentation 
demonstrating the facility's actual peak capacity or nameplate 
capacity.
* * * * *
    (vii)(A) For a renewable fuel producer, foreign ethanol producer, 
or biointermediate producer using separated yard waste:
* * * * *
    (B) For a renewable fuel producer, foreign ethanol producer, or 
biointermediate producer using separated food waste:
* * * * *
    (viii) For a renewable fuel producer, foreign ethanol producer, or 
biointermediate producer using separated municipal solid waste:
* * * * *
    (B) * * *
    (1) Extent and nature of recycling that occurred prior to receipt 
of the waste material by the renewable fuel producer, foreign ethanol 
producer, or biointermediate producer;
    (2) Identification of available recycling technology and practices 
that are appropriate for removing recycling materials from the waste 
stream by the fuel producer, foreign ethanol producer, or 
biointermediate producer; and
    (3) Identification of the technology or practices selected for 
implementation by the fuel producer, foreign ethanol producer, or 
biointermediate producer including an explanation for such selection, 
and reasons why other technologies or practices were not.
* * * * *
    (xii) For a producer or importer of any renewable fuel other than 
ethanol, biodiesel, renewable gasoline, renewable diesel that meets the 
ASTM D975 Grade No. 1-D or No. 2-D specifications (incorporated by 
reference, see Sec.  80.1468), biogas, or renewable electricity, all 
the following:
* * * * *
    (B) A statement regarding whether the renewable fuel producer or 
importer will blend the renewable fuel into gasoline or diesel fuel or 
enter into a written contract for the sale and use of a specific 
quantity of the renewable fuel with a party who blends the fuel into 
gasoline or distillate fuel to produce a transportation fuel, heating 
oil, or jet fuel that meets all applicable standards under this part 
and 40 CFR part 1090.
    (C) If the renewable fuel producer or importer enters into a 
written contract for the sale and use of a specific quantity of the 
renewable fuel with a party who blends the fuel into gasoline or 
distillate fuel to produce a transportation fuel, heating oil, or jet 
fuel, provide all the following:
* * * * *
    (xiii)(A) A renewable fuel producer seeking to generate D code 3 or 
D code 7 RINs, a foreign ethanol producer seeking to have its product 
sold as cellulosic biofuel after it is denatured, or a biointermediate 
producer seeking to have its biointermediate made into cellulosic 
biofuel, who intends to produce a single type of fuel using two or more 
feedstocks converted simultaneously, where at least one of the 
feedstocks does not have a minimum 75% average adjusted cellulosic 
content, and who uses only a thermochemical process to convert 
feedstock into renewable fuel, must provide all the following:
    (1) Data showing the average adjusted cellulosic content of the 
feedstock(s) to be used to produce fuel or biointermediate, based on 
the average of at least three representative samples. Cellulosic 
content data must come from an analytical method certified by a 
voluntary consensus standards body or using a method that would produce 
reasonably accurate results as demonstrated through peer reviewed 
references provided to the third party engineer performing the 
engineering review at registration. Samples must be of representative 
feedstock from the primary feedstock supplier that will provide the 
renewable fuel or biointermediate producer with feedstock subsequent to 
registration.
    (2) For renewable fuel and biointermediate producers who want to 
use a new feedstock(s) after initial registration, updates to their 
registration under paragraph (d) of this section indicating the average 
adjusted cellulosic content of the new feedstock.
    (3) For renewable fuel producers already registered as of August 
18, 2014, to produce a single type of fuel that qualifies for D code 3 
or D code 7 RINs (or would do so after denaturing) using two or more 
feedstocks converted simultaneously using only a thermochemical 
process, the information specified in this paragraph (b)(1)(xiii)(A) 
shall be provided at the next required registration update under 
paragraph (d) of this section.
    (B) A renewable fuel producer seeking to generate D code 3 or D 
code 7 RINs, a foreign ethanol producer seeking to have its product 
sold as cellulosic biofuel after it is denatured, or a biointermediate 
producer seeking to have its biointermediate made into cellulosic 
biofuel, who intends to produce a single type of fuel using two or more 
feedstocks converted simultaneously, where at least one of the 
feedstocks does not have a minimum 75% adjusted cellulosic content, and 
who uses a process other than a thermochemical process or a combination 
of processes to convert feedstock into renewable fuel or

[[Page 72491]]

biointermediate, must provide all the following:
    (1) The expected overall fuel or biointermediate yield, calculated 
as the total volume of fuel produced per batch (e.g., cellulosic 
biofuel plus all other fuel) divided by the total feedstock mass per 
batch on a dry weight basis (e.g., cellulosic feedstock plus all other 
feedstocks).
* * * * *
    (5) For renewable fuel producers already registered as of August 
18, 2014, to produce a single type of fuel that qualifies for D code 3 
or D code 7 RINs (or would do so after denaturing) using two or more 
feedstocks converted simultaneously using a combination of processes or 
a process other than a thermochemical process, the information 
specified in this paragraph (b)(1)(xiii)(B) shall be provided at the 
next required registration update under paragraph (d) of this section.
* * * * *
    (xv) For a producer of cellulosic biofuel made from crop residue, a 
foreign ethanol producer making ethanol from crop residue and seeking 
to have it sold after denaturing as cellulosic biofuel, or a 
biointermediate producer producing a biointermediate for use in the 
production of a cellulosic biofuel made from crop residue, provide all 
the following information:
* * * * *
    (2) * * *
    (i) * * *
    (A) For a domestic renewable fuel production facility, a foreign 
ethanol production facility, or a biointermediate production facility, 
a professional engineer who is licensed by an appropriate state agency 
in the United States, with professional work experience in the chemical 
engineering field or related to renewable fuel production.
    (B) For a foreign renewable fuel or foreign biointermediate 
production facility, an engineer who is a foreign equivalent to a 
professional engineer licensed in the United States with professional 
work experience in the chemical engineering field or related to 
renewable fuel production.
    (ii) * * *
    (A) The third-party shall not be operated by the renewable fuel 
producer, foreign ethanol producer, or biointermediate producer, or any 
subsidiary or employee of the renewable fuel producer foreign ethanol 
producer, or biointermediate producer.
    (B) The third-party shall be free from any interest in the 
renewable fuel producer, foreign ethanol producer, or biointermediate 
producer's business.
    (C) The renewable fuel producer, foreign ethanol producer, or 
biointermediate producer shall be free from any interest in the third-
party's business.
* * * * *
    (iv) The renewable fuel producer, foreign ethanol producer, or 
biointermediate producer must retain records of the review and 
verification, as required in Sec.  80.1454(b)(6) or (i)(4), as 
applicable.
* * * * *
    (d) Registration updates. (1)(i)(A) Any renewable fuel producer or 
any foreign ethanol producer that makes changes to their facility that 
will allow them to produce renewable fuel or use a biointermediate that 
is not reflected in the producer's registration information on file 
with EPA must update their registration information and submit a copy 
of an updated independent third-party engineering review on file with 
EPA at least 60 days prior to producing the new type of renewable fuel.
    (B) Any biointermediate producer who makes changes to their 
biointermediate production facility that will allow them to produce a 
biointermediate for use in the production of a renewable fuel that is 
not reflected in the biointermediate producer's registration 
information on file with EPA must update their registration information 
and submit a copy of an updated independent third-party engineering 
review on file with EPA at least 60 days prior to producing the new 
biointermediate for use in the production of the renewable fuel.
    (ii) The renewable fuel producer, foreign ethanol producer, or 
biointermediate producer may also submit an addendum to the independent 
third-party engineering review on file with EPA provided the addendum 
meets all the requirements in paragraph (b)(2) of this section and 
verifies for EPA the most up-to-date information at the producer's 
existing facility.
    (2)(i) Any renewable fuel producer or any foreign ethanol producer 
that makes any other changes to a facility that will affect the 
producer's registration information but will not affect the renewable 
fuel category for which the producer is registered per paragraph (b) of 
this section must update their registration information 7 days prior to 
the change.
    (ii)(A) Any biointermediate producer that makes any other changes 
to a biointermediate production facility that will affect the 
biointermediate producer's registration must update their registration 
information 7 days prior to the change.
    (B)(1) Any biointermediate producer that intends to change the 
designated renewable fuel production facility under paragraph 
(b)(1)(ii)(G)(1) of this section for one of its biointermediate 
production facilities must update their registration information with 
EPA at least 30 days prior to transferring the biointermediate to the 
newly designated renewable fuel production facility.
    (2) A biointermediate producer may only change the designated 
renewable fuel production facility under paragraph (b)(1)(ii)(G)(1) of 
this section for each biointermediate production facility one time per 
calendar year unless EPA, in its sole discretion, allows the 
biointermediate producer to change the designated renewable fuel 
production facility more frequently.
    (3) All renewable fuel producers, foreign ethanol producers, and 
biointermediate producers must update registration information and 
submit an updated independent third-party engineering review according 
to the schedule in paragraph (d)(3)(i) or (ii) of this section, and 
include the information specified in paragraph (d)(3)(iii) or (iv) of 
this section, as applicable:
    (i) For all renewable fuel producers and foreign ethanol producers 
registered in calendar year 2010, the updated registration information 
and independent third-party engineering review must be submitted to EPA 
by January 31, 2013, and by January 31 of every third calendar year 
thereafter; or
    (ii) For all renewable fuel producers, foreign ethanol producers, 
and biointermediate producers registered in any calendar year after 
2010, the updated registration information and independent third-party 
engineering review must be submitted to EPA by January 31 of every 
third calendar year after the first year of registration.
    (iii) For all renewable fuel producers, in addition to conducting 
the engineering review and written report and verification required by 
paragraph (b)(2) of this section, the updated independent third-party 
engineering review must include a detailed review of the renewable fuel 
producer's calculations used to determine VRIN of a 
representative sample of batches of each type of renewable fuel 
produced since the last registration. The representative sample must be 
selected in accordance with the sample size guidelines set forth at 40 
CFR 1090.1805.
    (iv) For biointermediate producers, in addition to conducting the 
engineering review and written report and

[[Page 72492]]

verification required by paragraph (b)(2) of this section, the updated 
independent third-party engineering review must include a detailed 
review of the biointermediate producer's calculations used to determine 
the renewable biomass and cellulosic renewable biomass proportions, as 
required to be reported to EPA under Sec.  80.1451(i)(2), of a 
representative sample of batches of each type of biointermediate 
produced since the last registration. The representative sample must be 
selected in accordance with the sample size guidelines set forth at 40 
CFR 1090.1805.
* * * * *
    (g) Independent third-party auditors. * * * Registration 
information must be submitted at least 30 days prior to conducting 
audits of renewable fuel production or biointermediate production 
facilities. * * *
* * * * *
    (5) List of audited producers. Name, address, and company and 
facility identification numbers of all renewable fuel production or 
biointermediate production facilities that the independent third-party 
auditor intends to audit under Sec.  80.1472.
    (6) Audited producer associations. An affidavit, or electronic 
consent, from each renewable fuel producer, foreign renewable fuel 
producer, or biointermediate producer stating its intent to have the 
independent third-party auditor conduct a quality assurance audit of 
any of the renewable fuel producer's or foreign renewable fuel 
producer's facilities.
    (7) Independence affidavits. An affidavit stating that an 
independent third-party auditor and its contractors and subcontractors 
are independent, as described in Sec.  80.1471(b), of any renewable 
fuel producer, foreign renewable fuel producer, or biointermediate 
producer.
* * * * *
    (9) Registration updates. (i) Any independent third-party auditor 
who makes changes to its quality assurance plan(s) that will allow it 
to audit new renewable fuel production or biointermediate production 
facilities, as defined in Sec.  80.1401, that is not reflected in the 
independent third-party auditor's registration information on file with 
EPA must update its registration information and submit a copy of an 
updated QAP on file with EPA at least 60 days prior to auditing new 
renewable fuel production or biointermediate production facilities.
    (ii) Any independent third-party auditor who makes any changes 
other than those specified in paragraphs (g)(9)(i), (iii), and (iv) of 
this section that will affect the third-party auditor's registration 
information must update its registration information 7 days prior to 
the change.
    (iii) Independent third-party auditors must update their QAPs at 
least 60 days prior to verifying RINs generated or biointermediate 
produced by a renewable fuel or biointermediate production facility, 
respectively, for a pathway not covered in the independent third-party 
auditor's QAPs.
    (iv) Independent third-party auditors must update their QAPs at 
least 60 days prior to verifying RINs generated or biointermediate 
produced by any renewable fuel or biointermediate production facility 
not identified in the independent third-party auditor's existing 
registration.
    (10) * * *
    (ii) The independent third-party auditor submits an affidavit 
affirming that he or she has only verified RINs and biointermediates 
using a QAP approved under Sec.  80.1469, notified all appropriate 
parties of all potentially invalid RINs as described in Sec.  
80.1471(d), and fulfilled all of his or her RIN replacement obligations 
under Sec.  80.1474.
* * * * *
    (11) * * *
    (ii) * * * Communications should be sent to the EMTS support line 
([email protected]). * * *
* * * * *
    (h) * * *
    (1) * * *
    (i) Unless the party is a biointermediate producer, the party has 
reported no activity in EMTS for twenty-four consecutive months.
* * * * *
    (2) * * *
    (i) * * * The party will have 30 calendar days from the date of the 
notification to correct the deficiencies identified or explain why 
there is no need for corrective action.
* * * * *
0
18. Amend Sec.  80.1451 by:
0
a. Revising paragraphs (b)(1)(ii)(K) and (L), the first sentence of 
paragraph (b)(1)(ii)(R), (b)(1)(ii)(T), (b)(1)(ii)(U) introductory 
text, (g)(1)(i), (g)(1)(ii) introductory text, (g)(1)(ii)(A) through 
(C), (K), and (L), and (g)(2)(vii) and (viii);
0
b. Redesignating paragraph (g)(2)(x) as paragraph (g)(2)(xi) and adding 
new paragraph (g)(2)(x); and
0
c. Redesignating paragraphs (j) and (k) as paragraphs (k) and (l) and 
adding new paragraph (j).
    The revisions and additions read as follows:

Sec.  80.1451  What are the reporting requirements under the RFS 
program?

* * * * *
    (b) * * *
    (1) * * *
    (ii) * * *
    (K) The types and quantities of feedstocks and biointermediates 
used.
    (L) The process(es), feedstock(s), and biointermediate(s) used and 
proportion of renewable volume attributable to each process and 
feedstock.
* * * * *
    (R) Producers or importers of renewable fuel made from separated 
municipal solid waste must report the amount of paper, cardboard, 
plastics, rubber, textiles, metals, and glass separated from municipal 
solid waste for recycling. * * *
* * * * *
    (T) Producers or importers of any renewable fuel other than 
ethanol, biodiesel, renewable gasoline, renewable diesel that meets 
ASTM D975 Grade No. 1-D or No. 2-D specifications (incorporated by 
reference, see Sec.  80.1468), biogas or renewable electricity, must 
report, on a quarterly basis, all the following for each volume of 
fuel:
    (1) Total volume of renewable fuel produced or imported, total 
volume of renewable fuel blended into gasoline and distillate fuel by 
the producer or importer, and the percentage of renewable fuel in each 
batch of finished fuel.
    (2) If the producer or importer generates RINs under Sec.  
80.1426(f)(17)(i)(B)(2), report the name, location, and contract 
information for each party that purchased the renewable fuel.
    (U) Producers generating D code 3 or D code 7 RINs for fuel derived 
from feedstocks or biointermediates other than biogas (including 
through pathways listed in rows K, L, M, and N of Table 1 to Sec.  
80.1426), and that was produced from two or more feedstocks converted 
simultaneously, at least one of which has less than 75% average 
adjusted cellulosic content, and using a combination of processes or a 
process other than a thermochemical process or a combination of 
processes shall report all of the following:
* * * * *
    (g) * * *
    (1)(i) For RINs verified beginning on September 16, 2014, RIN and 
biointermediate verification reports for each renewable fuel or 
biointermediate production facility audited by the independent third-
party auditor shall be submitted according to the schedule specified in 
paragraph (f)(2) of this section.

[[Page 72493]]

    (ii) The RIN and biointermediate verification reports shall include 
all the following information for each batch of renewable fuel produced 
or imported verified per Sec.  80.1469(c), where ``batch'' means a 
discrete quantity of renewable fuel produced or imported and assigned a 
unique batch-RIN per Sec.  80.1426(d):
    (A) The RIN generator or biointermediate producer's name.
    (B) The RIN generator or biointermediate producer's EPA company 
registration number.
    (C) The renewable fuel or biointermediate producer's EPA facility 
registration number.
* * * * *
    (K) The volume and type of each feedstock and biointermediate used 
to produce the verified batch.
    (L) Whether the feedstocks and biointermediates used to produce 
each verified batch met the definition of renewable biomass.
* * * * *
    (2) * * *
    (vii) A list of all renewable fuel and biointermediate facilities 
including the EPA's company and facility registration numbers audited 
under an approved quality assurance plan under Sec.  80.1469 along with 
the date the independent third-party auditor conducted the on-site 
visit and audit.
    (viii) Mass and energy balances calculated for each renewable fuel 
and biointermediate production facility audited under an approved 
quality assurance plan under Sec.  80.1469.
* * * * *
    (x) A list of all biointermediates that were identified as 
potentially improperly produced biointermediates under Sec.  
80.1477(d).
* * * * *
    (j) Biointermediate producers. For each biointermediate production 
facility, any biointermediate producer must submit quarterly reports 
for biointermediate batch production to EPA containing all of the 
information in this paragraph (j).
    (1) Include all the following information for each batch of 
biointermediate produced:
    (i) The biointermediate producer's name.
    (ii) The biointermediate producer's EPA company registration 
number.
    (iii) The biointermediate producer's EPA facility registration 
number.
    (iv) The applicable compliance period.
    (v) The production date.
    (vi) The batch number.
    (vii) The adjusted cellulosic content of each batch, as defined in 
Sec.  80.1401, and certification that the cellulosic content of each 
batch was derived from cellulose, hemicellulose, or lignin that was 
derived from renewable biomass, as defined in Sec.  80.1401.
    (viii) The volume of each batch produced.
    (ix) The types and quantities of feedstocks used.
    (x) The renewable fuel type(s) each batch of biointermediate was 
designated to be used as a feedstock material for.
    (xi) The EPA company registration number and EPA facility 
registration number for each renewable fuel producer or foreign 
renewable fuel producer that received title to each batch.
    (xii) The percentage of each batch of biointermediate that met the 
definition of renewable feedstock and certification that this portion 
of the batch of biointermediate was derived from renewable biomass, as 
defined in Sec.  80.1401.
    (xiii) The process(es) and feedstock(s) used and proportion of 
biointermediate volume attributable to each process and feedstock.
    (xiv) The type of co-products produced with each batch.
    (xv) The quantity of co-products produced in each quarter.
    (xvi) Any additional information the Administrator may require.
    (2) Quarterly reports under this paragraph of this section must be 
submitted according to the schedule in paragraph (f)(2) of this 
section.
* * * * *
0
19. Amend Sec.  80.1452 by redesignating paragraph (b)(16) as paragraph 
(b)(18) and adding new paragraphs (b)(16) and (17) to read as follows:

Sec.  80.1452  What are the requirements related to the EPA Moderated 
Transaction System (EMTS)?

* * * * *
    (b) * * *
    (16) The type and quantity of each biointermediate used for the 
batch, if applicable.
    (17) The EPA facility registration number of each biointermediate 
production facility at which a biointermediate used for the batch was 
produced, if applicable.
* * * * *
0
20. Amend Sec.  80.1453 by adding paragraphs (a)(11)(v) and (f) to read 
as follows:

Sec.  80.1453  What are the product transfer document (PTD) 
requirements for the RFS program?

    (a) * * *
    (11) * * *
    (v) For RINs that are generated from renewable fuel produced from a 
biointermediate, the PTD must include the following:
    (A) The EPA-issued company and facility identification number of 
each biointermediate producer for which the RINs represent renewable 
fuel generated from biointermediates.
    (B) The type(s) of biointermediate used to make the renewable fuel.
    (C) The following statement: ``These RINs were generated from 
renewable fuel produced from a biointermediate.''
* * * * *
    (f) On each occasion when any party transfers title or custody of a 
biointermediate, the transferor must provide to the transferee 
documents that include all of the following information:
    (1) The name and address of the transferor and transferee.
    (2) The transferor's and transferee's EPA company registration and 
applicable facility registration numbers.
    (3) The volume of biointermediate that is being transferred.
    (4) The date of the transfer.
    (5) The location of the biointermediate at the time of the 
transfer.
    (6) The renewable fuel type the biointermediate was designated to 
be used as a feedstock material for by the biointermediate producer 
under Sec.  80.1476(i).
    (7) The composition of the biointermediate being transferred, 
including:
    (i) The type and quantity of each feedstock that was used to make 
the biointermediate.
    (ii) The percentage of each feedstock that is renewable biomass, 
rounded to two decimal places.
    (iii) For a biointermediate that contains both renewable and non-
renewable feedstocks:
    (A) The percentage of each feedstock that is not renewable biomass, 
rounded to two decimal places.
    (B) The feedstock energy from the renewable biomass used to make 
the biointermediate, in Btu.
    (C) The feedstock energy from the non-renewable biomass used to 
make the biointermediate, in Btu.
    (D) The total percentage of the biointermediate that may generate 
RINs, rounded to two decimal places.
    (E) The total percentage of the biointermediate that may not 
generate RINs, rounded to two decimal places.
    (iv) For a biointermediate that contains cellulosic material:
    (A) The percentage of each feedstock in paragraph (f)(7)(ii) of 
this section that is cellulosic, rounded to two decimal places.
    (B) The percentage of each feedstock in paragraph (f)(7)(ii) of 
this section that

[[Page 72494]]

is non-cellulosic, rounded to two decimal places, if applicable.
    (C) The total percentage of the biointermediate that may generate 
cellulosic RINs, rounded to two decimal places.
    (D) For separated municipal solid waste, the cellulosic portion of 
the biointermediate is equivalent to the biogenic portion.
    (E) For separated food waste, the non-cellulosic percentage is 
assumed to be zero percent unless it is demonstrated to be partially 
cellulosic.
    (F) For separated yard waste, 100% of separated yard waste is 
deemed to be cellulosic.
    (G) The following statement: ``I certify that the cellulosic 
content of this feedstock was derived from cellulose, hemicellulose, or 
lignin that was derived from renewable biomass.''
    (8) Copies of records specified in Sec.  80.1454(i)(3), (5), and 
(6) for the volume being transferred, as applicable.
    (9) The following statement designating the volume of 
biointermediate as feedstock for the production of a renewable fuel: 
``This volume is designated and intended for use as biointermediate in 
the production of renewable fuel as defined in 40 CFR 80.1401. Parties 
may not generate RINs on this feedstock material.''
0
21. Amend Sec.  80.1454 by:
0
a. Redesignating paragraphs (b)(3)(vii) through (xii) as paragraphs 
(b)(3)(viii) through (xiii) and adding new paragraph (b)(3)(vii);
0
b. Revising paragraphs (b)(6), the first sentence of paragraph (d)(4), 
(i), and (j) introductory text;
0
c. Adding paragraph (k) heading;
0
d. Revising paragraphs (l) introductory text and (l)(1);
0
e. Redesignating paragraph (l)(3) as paragraph (l)(4) and adding new 
paragraph (l)(3);
0
f. Revising the first sentence of paragraph (m) introductory text;
0
g. Redesignating paragraph (m)(10) as paragraph (m)(11) and adding new 
paragraph (m)(10);
0
h. Removing paragraphs (n), (o), (p), and (q);
0
i. Redesignating paragraphs (s), (t), (u), and (v) as paragraphs (n), 
(o), (p), and (q);
0
j. Revising newly redesignated paragraph (n) introductory text;
0
k. Revising paragraph (r);
0
l. Adding new paragraphs (s), (t), (u), and (v); and
0
m. Removing paragraph (w).
    The revisions and addition read as follows:

Sec.  80.1454  What are the recordkeeping requirements under the RFS 
program?

* * * * *
    (b) * * *
    (3) * * *
    (vii) Type and quantity of biointermediates used.
* * * * *
    (6) Copies of registration documents required under Sec.  80.1450, 
including information on fuels and products, feedstocks, 
biointermediates, facility production processes, process changes, and 
capacity, energy sources, and a copy of the independent third party 
engineering review report submitted to EPA per Sec.  80.1450(b)(2).
* * * * *
    (d) * * *
    (4) Domestic producers of renewable fuel or biointermediates made 
from any other type of renewable biomass must have documents from their 
feedstock supplier certifying that the feedstock qualifies as renewable 
biomass as defined in Sec.  80.1401, describing the feedstock. * * *
* * * * *
    (i) Requirements for biointermediate producers. Any biointermediate 
producer producing a biointermediate must keep all of the following 
records in addition to those required under paragraphs (a) through (m) 
of this section:
    (1) Product transfer documents consistent with Sec.  80.1453(e) and 
associated with the biointermediate producer's activities, if any, as 
transferor or transferee of biointermediates.
    (2) Copies of all reports submitted to EPA under Sec.  80.1451(i).
    (3) Records related to the production of biointermediates for each 
biointermediate production facility, including all of the following:
    (i) Batch volume.
    (ii) Batch number.
    (iii) Type and quantity of co-products produced.
    (iv) Type and quantity of feedstocks used.
    (v) Type and quantity of fuel used for process heat.
    (vi) Feedstock energy calculations per Sec.  80.1426(f)(4), as 
applicable.
    (vii) Date of production.
    (viii) Results of any laboratory analysis of batch chemical 
composition or physical properties.
    (4) Copies of registration documents required under Sec.  80.1450, 
including information on products, feedstocks, facility production 
processes, process changes, and capacity, energy sources, and a copy of 
the independent third party engineering review submitted to EPA per 
Sec.  80.1450(b)(2)(i).
    (5) Records demonstrating that feedstocks are renewable biomass, as 
required under paragraphs (d), (g), (h), and (j) of this section, as 
applicable.
    (6) For any biointermediate made from Arundo donax or Pennisetum 
purpureum per Sec.  80.1426(f)(14), all applicable records described in 
paragraph (b)(7) of this section.
    (7) Records, including contracts, related to the implementation of 
a QAP under Sec. Sec.  80.1469 and 80.1477.
    (j) Additional requirements for producers that use separated yard 
waste, separate food waste, separated municipal solid waste, or 
biogenic waste oils/fats/greases. A renewable fuel or biointermediate 
producer that produces fuel or biointermediate from separated yard 
waste, separated food waste, separated municipal solid waste, or 
biogenic waste oils/fats/greases must keep all the following additional 
records:
* * * * *
    (k) Additional requirements for producers of renewable fuel using 
biogas. * * *
    (l) Additional requirements for producers or importers of any 
renewable fuel other than ethanol, biodiesel, renewable gasoline, 
renewable diesel, biogas, or renewable electricity. A renewable fuel 
producer that generates RINs for any renewable fuel other than ethanol, 
biodiesel, renewable gasoline, renewable diesel that meets ASTM D975 
Grade No. 1-D or No. 2-D specifications (incorporated by reference, see 
Sec.  80.1468), biogas or renewable electricity shall keep all of the 
following additional records:
    (1) Documents demonstrating the total volume of renewable fuel 
produced, total volume of renewable fuel blended into gasoline and 
distillate fuel, and the percentage of renewable fuel in each batch of 
finished fuel.
* * * * *
    (3) For each batch of renewable fuel that generated RINs under 
Sec.  80.1426(f)(17)(i)(B)(2), one or more affidavits from the party 
that blended or used the renewable fuel that includes all the following 
information:
    (i) Quantity of renewable fuel received from the producer or 
importer.
    (ii) Date the renewable fuel was received from producer.
    (iii) A description of the fuel that the renewable fuel was blended 
into and the blend ratios for each batch, if applicable.
    (iv) A description of the finished fuel, and a statement that the 
fuel meets all applicable standards and was sold for use as a 
transportation fuel, heating oil or jet fuel.
    (v) Quantity of assigned RINs received with the renewable fuel, if 
applicable.

[[Page 72495]]

    (vi) Quantity of assigned RINs that the end user separated from the 
renewable fuel, if applicable.
* * * * *
    (m) Requirements for independent third-party auditors. * * *
    (10) Copies of all reports required under Sec.  80.1464.
* * * * *
    (n) Additional requirements for producers of renewable fuel using 
crop residue. Producers of renewable fuel using crop residue must keep 
records of all of the following:
* * * * *
    (r) Transaction requirement. Beginning July 1, 2010, all parties 
must keep transaction information sent to EMTS in addition to other 
records required under this section.
    (1) For buy or sell transactions of separated RINs, parties must 
retain records substantiating the price reported to EPA under Sec.  
80.1452.
    (2) For buy or sell transactions of separated RINs on or after 
January 1, 2020, parties must retain records demonstrating the 
transaction mechanism (e.g., spot market or fulfilling a term 
contract).
    (s) Record retention requirement. (1) The records required under 
paragraphs (a) through (d), (f) through (l), (n), and (r) of this 
section and under Sec.  80.1453 must be kept for five years from the 
date they were created, except that records related to transactions 
involving RINs must be kept for five years from the date of the RIN 
transaction.
    (2) The records required under paragraph (e) of this section must 
be kept through calendar year 2022.
    (t) Record availability requirement. On request by the EPA, the 
records required under this section and under Sec.  80.1453 must be 
made available to the Administrator or the Administrator's authorized 
representative. For records that are electronically generated or 
maintained, the equipment or software necessary to read the records 
shall be made available; or, if requested by the EPA, electronic 
records shall be converted to paper documents.
    (u) Record transfer requirement. The records required in paragraphs 
(b)(3) and (c)(1) of this section must be transferred with any 
renewable fuel sent to the importer of that renewable fuel by any non-
RIN-generating foreign producer.
    (v) English language records. Any document requested by the 
Administrator under this section must be submitted in English or must 
include an English translation.
0
22. Amend Sec.  80.1460 by revising paragraphs (b)(5) and (6) and 
adding paragraphs (b)(8) and (k) to read as follows:

Sec.  80.1460  What acts are prohibited under the RFS program?

* * * * *
    (b) * * *
    (5) Introduce into commerce any renewable fuel produced from a 
feedstock, biointermediate, or through a process that is not described 
in the person's registration information.
    (6) Generate a RIN for fuel for which RINs have previously been 
generated unless the RINs were generated under Sec.  80.1426(c)(6).
* * * * *
    (8) Generate a RIN for fuel that was produced from a 
biointermediate for which the fuel and biointermediate were not audited 
under an EPA-approved quality assurance plan.
* * * * *
    (k) Biointermediate-related violations. No person may do any of the 
following:
    (1) Introduce into commerce for use in the production of a 
renewable fuel any biointermediate produced from a feedstock or through 
a process that is not described in the person's registration 
information.
    (2) Produce a renewable fuel at more than one facility unless the 
person uses a biointermediate as defined under Sec.  80.1401 or the 
renewable biomass is not substantially altered. Form changes of 
renewable biomass such as chopping, crushing, grinding, pelletizing, 
filtering, compacting/compression, centrifuging, degumming, dewatering/
drying, melting, or the addition of water to produce a slurry do not 
constitute substantial alteration.
    (3) Transfer a biointermediate from a biointermediate production 
facility to a facility other than the renewable fuel production 
facility specified in the biointermediate producer's registration under 
Sec.  80.1450(b)(1)(ii)(G)(1).
    (4) Isolate or concentrate non-characteristic components of the 
feedstock to yield an intermediate product not contemplated by EPA in 
establishing an approved pathway that the biointermediate producer and 
the renewable fuel producer are using to convert renewable biomass to 
renewable fuel.
0
23. Amend Sec.  80.1461 by revising paragraphs (a)(1) and (2) and 
adding paragraph (e) to read as follows:

Sec.  80.1461  Who is liable for violations under the RFS program?

    (a) * * *
    (1) Any person who violates a prohibition under Sec.  80.1460(a) 
through (d) or (g) through (k) is liable for the violation of that 
prohibition.
    (2) Any person who causes another person to violate a prohibition 
under Sec.  80.1460(a) through (d) or (g) through (k) is liable for a 
violation of Sec.  80.1460(e).
* * * * *
    (e) Biointermediate liability. When a biointermediate contained in 
any storage tank at any facility owned, leased, operated, controlled, 
or supervised by any biointermediate producer, biointermediate 
importer, renewable fuel producer, or foreign ethanol producer is found 
in violation of a prohibition described in Sec.  80.1460(k)(1) and (3), 
the following persons shall be deemed in violation:
    (1) Each biointermediate producer, biointermediate importer, 
renewable fuel producer, renewable fuel importer, or foreign ethanol 
producer who owns, leases, operates, controls, or supervises the 
facility where the violation is found.
    (2) Each biointermediate producer, biointermediate importer, 
renewable fuel producer, renewable fuel importer, or foreign ethanol 
producer who manufactured, imported, sold, offered for sale, dispensed, 
offered for supply, stored, transported, or caused the transportation 
of any biointermediate that is in the storage tank containing the 
biointermediate found to be in violation.
    (3) Each carrier who dispensed, supplied, stored, or transported 
any biointermediate that was in the storage tank containing the 
biointermediate found to be in violation, provided that EPA 
demonstrates, by reasonably specific showings using direct or 
circumstantial evidence, that the carrier caused the violation.
0
24. Amend Sec.  80.1463 by revising paragraph (d) to read as follows:

Sec.  80.1463  What penalties apply under the RFS program?

* * * * *
    (d) Any person liable under Sec.  80.1461(a) for a violation of 
Sec.  80.1460(b)(1) through (4) or (6) through (8) is subject to a 
separate day of violation for each day that an invalid RIN remains 
available for an obligated party or exporter of renewable fuel to 
demonstrate compliance with the RFS program.
0
25. Amend Sec.  80.1464 by:
0
a. Removing ``Sec.  80.127'' everywhere it appears and adding ``40 CFR 
1090.1805'' in its place;
0
b. Revising paragraph (a)(3)(ii);
0
c. Adding paragraph (a)(7);
0
d. Revising paragraph (b)(1)(v)(A);
0
e. Adding paragraph (b)(1)(v)(C);
0
f. Revising paragraphs (b)(3)(ii) and (b)(4)(i);
0
g. Adding paragraphs (b)(4)(iii) and (b)(8);

[[Page 72496]]

0
h. Revising paragraphs (c) introductory text and (c)(2)(ii);
0
i. Adding paragraphs (c)(6) and (7) and (h); and
0
j. Revising paragraphs (i)(1) heading, (i)(1)(i) and (iii), (i)(2) 
heading, and (i)(2)(i) and (ii).
    The revisions and additions read as follows:

Sec.  80.1464  What are the attest engagement requirements under the 
RFS program?

* * * * *
    (a) * * *
    (3) * * *
    (ii) Obtain the database, spreadsheet, or other documentation used 
to generate the information in the RIN activity reports; compare the 
RIN transaction samples reviewed under paragraph (a)(2) of this section 
with the corresponding entries in the database or spreadsheet and 
report as a finding any discrepancies; compute the total number of 
current-year and prior-year RINs owned at the start and end of each 
quarter, and for parties that reported RIN activity for RINs assigned 
to a volume of renewable fuel, the volume and type of renewable fuel 
owned at the end of each quarter, as represented in these documents; 
and state whether this information agrees with the party's reports to 
EPA.
* * * * *
    (7) Compliance reports. Compare the list of compliance reports 
submitted to EPA during the compliance period to the reporting 
requirements for the entity in Sec.  80.1451. Report as a finding any 
reporting requirements that were not completed.
    (b) * * *
    (1) * * *
    (v)(A) Obtain documentation, as required under Sec.  80.1451(b), 
(d), and (e), associated with feedstock and biointermediate purchases 
for a representative sample of feedstocks and biointermediates 
separately, selected in accordance with the guidelines in 40 CFR 
1090.1805, of renewable fuel batches produced or imported during the 
year being reviewed.
* * * * *
    (C) Verify that biointermediates were properly identified in the 
reports, as applicable.
* * * * *
    (3) * * *
    (ii) Obtain the database, spreadsheet, or other documentation used 
to generate the information in the RIN activity reports; compare the 
RIN transaction samples reviewed under paragraph (b)(2) of this section 
with the corresponding entries in the database or spreadsheet and 
report as a finding any discrepancies; report the total number of each 
RIN generated during each quarter and compute and report the total 
number of current-year and prior-year RINs owned at the start and end 
of each quarter, and for parties that reported RIN activity for RINs 
assigned to a volume of renewable fuel, the volume of renewable fuel 
owned at the end of each quarter, as represented in these documents; 
and state whether this information agrees with the party's reports to 
EPA.
    (4) * * *
    (i) Obtain documentation of independent third-party engineering 
reviews required under Sec.  80.1450(b)(2). Such documentation must 
include the date of the last engineering review along with date of the 
actual site visit by the professional engineer.
* * * * *
    (iii) Verify that independent third-party engineering reviews 
conducted under Sec.  80.1450(d)(3) occurred within the three-year 
cycle. Report as a finding if the engineering review was not updated as 
part of the three-year cycle under Sec.  80.1450(d)(3).
* * * * *
    (8) Compliance reports. Compare the list of compliance reports 
submitted to EPA during the compliance period to the reporting 
requirements for the entity in Sec.  80.1451. Report as a finding any 
reporting requirements that were not completed.
    (c) Other parties owning RINs. Except as specified in paragraph 
(c)(6) of this section, the following attest procedures must be 
completed for any party other than an obligated party or renewable fuel 
producer or importer that owns any RINs during a calendar year:
* * * * *
    (2) * * *
    (ii) Obtain the database, spreadsheet, or other documentation used 
to generate the information in the RIN activity reports; compare the 
RIN transaction samples reviewed under paragraph (c)(1) of this section 
with the corresponding entries in the database or spreadsheet and 
report as a finding any discrepancies; compute the total number of 
current-year and prior-year RINs owned at the start and end of each 
quarter, and for parties that reported RIN activity for RINs assigned 
to a volume of renewable fuel, the volume of renewable fuel owned at 
the end of each quarter, as represented in these documents; and state 
whether this information agrees with the party's reports to EPA.
* * * * *
    (6) Low-volume RIN owner exemption. Any party who meets all the 
following criteria in a given compliance period is not required to 
submit an attest engagement for that compliance period:
    (i) The party must be solely registered as a party owning RINs 
(i.e., a ``RIN Owner Only'') and must not also be registered in any 
other role under Sec.  80.1450 (e.g., the party must not also be an 
obligated party, exporter of renewable fuel, renewable fuel producer, 
RIN generating importer, etc.).
    (ii) The party must have transacted (e.g., generated, bought, sold, 
separated, or retired) 10,000 or fewer RINs in the given compliance 
period.
    (iii) The party has not exceeded the RIN holding threshold(s) 
specified in Sec.  80.1435.
    (7) Compliance reports. Compare the list of compliance reports 
submitted to EPA during the compliance period to the reporting 
requirements for the entity in Sec.  80.1451. Report as a finding any 
reporting requirements that were not completed.
* * * * *
    (h) Biointermediate producers. The following attest reports must be 
completed for any biointermediate producer that produces a 
biointermediate in a compliance year:
    (1) Biointermediate production reports. (i) Obtain and read copies 
of the quarterly biointermediate production reports required under 
Sec.  80.1451(i); compare the reported information to the requirements 
under Sec.  80.1451(i); and report as a finding any missing or 
incomplete information in the reports.
    (ii) Obtain any database, spreadsheet, or other documentation used 
to generate the information in the biointermediate production reports; 
compare the corresponding entries in the database or spreadsheet and 
report as a finding any discrepancies.
    (iii) For a representative sample of biointermediate batches, 
selected in accordance with the guidelines in 40 CFR 1090.1805, obtain 
records required under Sec.  80.1454(i); compare these records to the 
corresponding batch entries in the reports procured in paragraph 
(h)(1)(i) of this section and report as a finding any discrepancies.
    (iv) Obtain the list of designated renewable fuel production 
facilities under Sec.  80.1450(b)(1)(ii)(G)(1); compare the list of 
registered designated renewable fuel production facilities to those 
identified in the biointermediate production report; and report as a 
finding any discrepancies.
    (v) Provide the list of renewable fuel producers receiving any 
transfer of biointermediate batches and calculate the total volume from 
the batches received.

[[Page 72497]]

    (2) Independent third-party engineering review. (i) Obtain 
documentation of independent third-party engineering reviews required 
under Sec.  80.1450(b)(2).
    (ii) Review and verify the written verification and records 
generated as part of the independent third-party engineering review.
    (iii) Provide the date of the submission of the last engineering 
review along with the date of the actual site visit by the professional 
engineer. Report as a finding if the engineering review was not updated 
as part of the three-year cycle under Sec.  80.1450(d)(3).
    (iv) Compare and provide the total volume of produced 
biointermediate during the compliance year as compared to the 
production capacity stated in the engineering review and report as a 
finding if the volume of produced biointermediate is greater than the 
stated production capacity.
    (3) Product transfer documents. (i) Obtain contracts, invoices, or 
other documentation for each batch in the representative sample under 
paragraph (h)(1)(iii) of this section and the corresponding copies of 
product transfer documents required under Sec.  80.1453; compare the 
product transfer documents with the contracts and invoices and report 
as a finding any discrepancies.
    (ii) Verify that the product transfer documents obtained in 
paragraph (h)(3)(i) of this section contain the applicable information 
required under Sec.  80.1453 and report as a finding any product 
transfer document that does not contain the required information.
    (iii) Verify the accuracy of the information contained in the 
product transfer documents reviewed pursuant to paragraph (h)(3)(ii) of 
this section with the records obtained and reviewed under paragraph 
(h)(1)(iii) of this section and report as a finding any exceptions.
    (i) * * *
    (1) Comparing RIN and biointermediate verification reports with 
approved QAPs. (i) Obtain and read copies of reports required under 
Sec.  80.1451(g)(1). Compare the list of compliance reports submitted 
to EPA during the compliance period to the reporting requirements for 
the entity in Sec.  80.1451. Report as a finding any reporting 
requirements that were not completed.
* * * * *
    (iii) Confirm that the independent third-party auditor only 
verified RINs and biointermediates covered by approved QAPs under Sec.  
80.1469. Identify as a finding any discrepancies.
    (2) Checking third-party auditor's RIN and biointermediate 
verification. (i) Obtain and read copies of reports required under 
Sec.  80.1451(g)(2). Compare the list of compliance reports submitted 
to EPA during the compliance period to the reporting requirements for 
the entity in Sec.  80.1451. Report as a finding any reporting 
requirements that were not completed.
    (ii) Obtain all notifications of potentially invalid RINs and 
potentially improperly produced biointermediate submitted to the EPA 
under Sec. Sec.  80.1474(b)(3) and 80.1477(d)(2) respectively.
* * * * *
0
26. Revise Sec.  80.1468 to read as follows:

Sec.  80.1468  Incorporation by reference.

    (a) Certain material is incorporated by reference into this part 
with the approval of the Director of the Federal Register under 5 
U.S.C. 552(a) and 1 CFR part 51. All approved material is available for 
inspection at U.S. EPA, Air and Radiation Docket and Information 
Center, WJC West Building, Room 3334, 1301 Constitution Ave. NW, 
Washington, DC 20460, (202) 566-1742, and is available from the sources 
listed in this section. It is also available for inspection at the 
National Archives and Records Administration (NARA). For information on 
the availability of this material at NARA, email 
[email protected], or go to www.archives.gov/federal-register/cfr/ibr-locations.html.
    (b) ASTM International, 100 Barr Harbor Dr., P.O. Box C700, West 
Conshohocken, PA 19428-2959, (877) 909-2786, or www.astm.org.
    (1) ASTM D975-21, Standard Specification for Diesel Fuel, approved 
August 1, 2021 (``ASTM D975''); IBR approved for Sec. Sec.  80.1401, 
80.1426(f), 80.1450(b), 80.1451(b), and 80.1454(l).
    (2) ASTM D1250-19e1, Standard Guide for the Use of the Joint API 
and ASTM Adjunct for Temperature and Pressure Volume Correction Factors 
for Generalized Crude Oils, Refined Products, and Lubricating Oils: API 
MPMS Chapter 11.1, approved May 1, 2019 (``ASTM D1250''); IBR approved 
for Sec.  80.1426(f).
    (3) ASTM D4442-20, Standard Test Methods for Direct Moisture 
Content Measurement of Wood and Wood-Based Materials, approved March 1, 
2020 (``ASTM D4442''); IBR approved for Sec.  80.1426(f).
    (4) ASTM D4444-13 (2018), Standard Test Method for Laboratory 
Standardization and Calibration of Hand-Held Moisture Meters, 
reapproved July 1, 2018 (``ASTM D4444''); IBR approved for Sec.  
80.1426(f).
    (5) ASTM D6751-20a, Standard Specification for Biodiesel Fuel Blend 
Stock (B100) for Middle Distillate Fuels, approved August 1, 2020 
(``ASTM D6751''); IBR approved for Sec.  80.1401.
    (6) ASTM D6866-21, Standard Test Methods for Determining the 
Biobased Content of Solid, Liquid, and Gaseous Samples Using 
Radiocarbon Analysis, approved January 15, 2021 (``ASTM D6866''); IBR 
approved for Sec. Sec.  80.1426(f) and 80.1430(e).
    (7) ASTM E711-87 (2004), Standard Test Method for Gross Calorific 
Value of Refuse-Derived Fuel by the Bomb Calorimeter, reapproved 2004 
(``ASTM E711''); IBR approved for Sec.  80.1426(f).
    (8) ASTM E870-82 (2019), Standard Test Methods for Analysis of Wood 
Fuels, reapproved April 1, 2019 (``ASTM E870''); IBR approved for Sec.  
80.1426(f).
0
27. Amend Sec.  80.1469 by revising the introductory text and 
paragraphs (c)(1)(vi) and (vii), (c)(2)(i), (c)(3)(i), (c)(5), and 
(f)(1) and (2) to read as follows:

Sec.  80.1469  Requirements for Quality Assurance Plans.

    This section specifies the requirements for Quality Assurance Plans 
(QAPs) for renewable fuels and biointermediates.
* * * * *
    (c) * * *
    (1) * * *
    (vi) Feedstock(s) and biointermediate(s) are consistent with 
production process and D code being used as permitted under Table 1 to 
Sec.  80.1426 or a petition approved through Sec.  80.1416, and is 
consistent with information recorded in EMTS.
    (vii) Feedstock(s) and biointermediate(s) are not renewable fuel 
for which RINs were previously generated unless the RINs were generated 
under Sec.  80.1426(c)(6). For renewable fuels that have RINs generated 
under Sec.  80.1426(c)(6), verify that renewable fuels used as a 
feedstock meet all applicable requirements of this paragraph (c)(1).
* * * * *
    (2) * * *
    (i) Production process is consistent with the renewable fuel 
producer or biointermediate producer's registration under Sec.  
80.1450(b).
* * * * *
    (3) * * *
    (i) If applicable, renewable fuel was designated for qualifying 
uses as transportation fuel, heating oil, or jet fuel in the covered 
location pursuant to Sec.  80.1453.
* * * * *
    (5) Representative sampling. Independent third-party auditors may

[[Page 72498]]

use a representative sample of batches of renewable fuel or 
biointermediate in accordance with the procedures described in 40 CFR 
1090.1805 for all components of this paragraph (c) except for 
paragraphs (c)(1)(ii) and (iii), (c)(2)(ii), (c)(3)(vi), and (c)(4)(ii) 
and (iii) of this section. If a facility produces both a renewable fuel 
and a biointermediate, the independent third-party auditor must select 
separate representative samples for the renewable fuel and 
biointermediate.
* * * * *
    (f) * * *
    (1) A new QAP must be submitted to EPA according to paragraph (e) 
of this section and the independent third-party auditor must update 
their registration according to Sec.  80.1450(g)(9) whenever any of the 
following changes occur at a renewable fuel or biointermediate 
production facility audited by an independent third-party auditor and 
the auditor does not possess an appropriate pathway-specific QAP that 
encompasses the change:
    (i) Change in feedstock or biointermediates.
    (ii) Change in type of fuel or biointermediate produced.
    (iii) Change in facility operations or equipment that may impact 
the capability of the QAP to verify that RINs are validly generated or 
biointermediates are properly produced.
    (2) A QAP ceases to be valid as the basis for verifying RINs or a 
biointermediate under a new pathway until a new pathway-specific QAP, 
submitted to the EPA under this paragraph (f), is approved pursuant to 
paragraph (e) of this section.
0
28. Amend Sec.  80.1471 by:
0
a. Revising paragraphs (b)(1), (4), (5), and (6) and (c);
0
b. Adding paragraph (e)(5); and
0
c. Revising paragraphs (f)(1) introductory text, (f)(1)(ii), and (g).
    The revisions and addition read as follows:

Sec.  80.1471  Requirements for QAP auditors.

* * * * *
    (b) * * *
    (1) The independent third-party auditor and its contractors and 
subcontractors must not be owned or operated by the renewable fuel 
producer, foreign renewable fuel producer, or biointermediate producer 
or any subsidiary or employee of the renewable fuel producer, foreign 
ethanol producer, or biointermediate producer.
* * * * *
    (4) The independent third-party auditor and its contractors and 
subcontractors must be free from any interest or the appearance of any 
interest in the renewable fuel producer, foreign renewable fuel 
producer, or biointermediate producer's business.
    (5) The renewable fuel producer, foreign renewable fuel producer, 
or biointermediate producer must be free from any interest or the 
appearance of any interest in the third-party auditor's business and 
the businesses of third-party auditor's contractors and subcontractors.
    (6) The independent third-party auditor and its contractors and 
subcontractors must not have performed an attest engagement under Sec.  
80.1464 for the renewable fuel producer, foreign renewable fuel 
producer, or biointermediate producer in the same calendar year as a 
QAP audit conducted pursuant to Sec.  80.1472.
* * * * *
    (c) Independent third-party auditors must maintain professional 
liability insurance, as defined in 31 CFR 50.4(t). Independent third-
party auditors must use insurance providers that possess a financial 
strength rating in the top four categories from Standard & Poor's or 
Moody's (i.e., AAA, AA, A or BBB for Standard & Poor's and Aaa, Aa, A, 
or Baa for Moody's), or a comparable rating acceptable to EPA. 
Independent third-party auditors must disclose the level of 
professional liability insurance they possess when entering into 
contracts to provide RIN verification services.
* * * * *
    (e) * * *
    (5) The independent third-party auditor must not identify RINs 
generated for renewable fuel produced using a biointermediate as having 
been verified under a QAP unless the biointermediate used to produce 
the renewable fuel was verified under an approved QAP pursuant to Sec.  
80.1477.
    (f)(1) Except as specified in paragraph (f)(2) of this section, 
auditors may only verify RINs that have been generated after the audit 
required under Sec.  80.1472 has been completed. Auditors may only 
verify biointermediates that were produced after the audit required 
under Sec.  80.1472 has been completed. Auditors must only verify RINs 
generated from renewable fuels produced from biointermediates after the 
audit required under Sec.  80.1472 has been completed for both the 
biointermediate production facility and the renewable fuel production 
facility.
* * * * *
    (ii) Verification of RINs or biointermediates may continue for no 
more than 200 days following an on-site visit or 380 days after an on-
site visit if a previously the EPA-approved remote monitoring system is 
in place at the renewable fuel production facility.
* * * * *
    (g) The independent third-party auditor must permit any 
representative of the EPA to monitor at any time the implementation of 
QAPs and renewable fuel and biointermediate production facility audits.
* * * * *
0
29. Amend Sec.  80.1472 by revising paragraphs (a)(4), (b)(3)(i) 
introductory text, (b)(3)(ii)(B), and (b)(3)(iii) to read as follows:

Sec.  80.1472  Requirements for quality assurance audits.

    (a) * * *
    (4) Each audit shall include a review of documents generated by the 
renewable fuel producer or biointermediate producer.
    (b) * * *
    (3) * * *
    (i) As applicable, the independent third-party auditor shall 
conduct an on-site visit at the renewable fuel production facility, 
foreign ethanol production facility, or biointermediate production 
facility:
* * * * *
    (ii) * * *
    (B) 380 days after the previous on-site visit if a previously 
approved (by EPA) remote monitoring system is in place at the renewable 
fuel production facility, foreign ethanol production facility, or 
biointermediate production facility, as applicable. The 380-day period 
shall start the day after the previous on-site visit ends.
    (iii) An on-site visit shall include verification of all QAP 
elements that require inspection or evaluation of the physical 
attributes of the renewable fuel production facility, foreign ethanol 
production facility, or biointermediate production facility, as 
applicable.
* * * * *

Sec.  80.1473  [Amended]

0
30. Amend Sec.  80.1473 by, in the first sentence of paragraph (f), 
removing ``support.com">[email protected]support.com'' and adding 
``[email protected]'' in its place.

Sec.  80.1474  [Amended]

0
31. Amend Sec.  80.1474 by, in paragraphs (b)(2) introductory text, 
(b)(3), (b)(4)(i)(C) introductory text, and (b)(4)(ii)(C) introductory 
text, removing ``support.com">[email protected]support.com'' and adding 
``[email protected]'' in its place.
0
32. Amend Sec.  80.1475 by:
0
a. In paragraph (a)(2), removing ``Sec. Sec.  80.125 through 80.127 and

[[Page 72499]]

Sec.  80.130'' and adding ``40 CFR 1090.1800 through 1090.1850'' in its 
place;
0
b. Revising the first sentence of paragraph (d)(1) and paragraph 
(d)(3); and
0
c. In paragraph (d)(4), removing ``Sec.  80.127'' and adding ``40 CFR 
1090.1805'' in its place.
    The revisions read as follows:

Sec.  80.1475  What are the additional attest engagement requirements 
for parties that redesignate certified NTDF as MVNRLM diesel fuel?

* * * * *
    (d) * * *
    (1) For each of the volumes listed in paragraphs (c)(1)(iii) 
through (vi) of this section, obtain a separate listing of all tenders 
from the refiner or importer for the reporting period. * * *
* * * * *
    (3) Agree the volume totals on the listing to the tender volume 
total in the inventory reconciliation analysis obtained in paragraph 
(c) of this section.
* * * * *
0
33. Section 80.1476 is added to read as follows:

Sec.  80.1476  Requirements for biointermediate producers.

    Biointermediate producers must comply with the following 
requirements:
    (a) Registration. No later than 60 days prior to the transfer of 
any biointermediate to be used in the production of a renewable fuel 
for which RINs may be generated, biointermediate producers must 
register with EPA pursuant to the requirements of Sec.  80.1450(b).
    (b) Reporting. Biointermediate producers must comply with the 
reporting requirements pursuant to Sec.  80.1451(i).
    (c) Recordkeeping. Biointermediate producers must comply with the 
recordkeeping requirements pursuant to Sec.  80.1454(i).
    (d) PTDs. Biointermediate producers must comply with the PTD 
requirements pursuant to Sec.  80.1453(e).
    (e) Quality Assurance Plans. Prior to the transfer of any 
biointermediate to be used in the production of a renewable fuel for 
which RINs may be generated, biointermediate producers must have an 
approved quality assurance plan pursuant to Sec.  80.1477(b) and the 
independent third-party auditor must have conducted a site visit of the 
biointermediate production facility under Sec.  80.1472.
    (f) Attest engagements. Biointermediate producers must comply with 
the annual attest engagement requirements pursuant to Sec.  80.1464(h).
    (g) Limitations on biointermediate transfers and production. (1) A 
biointermediate producer must only transfer a biointermediate produced 
from a single biointermediate facility to a single renewable fuel 
production facility as designated under Sec.  80.1450(b)(1)(ii)(G)(1).
    (2) A batch of biointermediate must be segregated from other 
batches of biointermediate (even if it is the same type of 
biointermediate) and other feedstocks from the point that the batch of 
biointermediate is produced to the point where the batch of 
biointermediate is received at the renewable fuel production facility 
designated under Sec.  80.1450(b)(1)(ii)(G)(1).
    (3) Renewable fuel producers that receive biointermediate at a 
renewable fuel production facility may not be a biointermediate 
producer.
    (4) A biointermediate must not be used to make another 
biointermediate.
    (h) Batch numbers and volumes. (1) Each batch of biointermediate 
produced at a biointermediate production facility must be assigned a 
number (the ``batch number''), consisting of the EPA-assigned company 
registration number, the EPA-assigned facility registration number, the 
last two digits of the year in which the batch was produced, and a 
unique number for the batch, beginning with the number one for the 
first batch produced each calendar year and each subsequent batch 
during the calendar year being assigned the next sequential number 
(e.g., 4321-54321-95-000001, 4321-54321-95-000002, etc.).
    (2) The volume of each batch of biointermediate must be adjusted to 
a standard temperature of 60 [deg]F.
    (i) Designation. Each batch of biointermediate produced at a 
biointermediate production facility must be designated for use in the 
production of a renewable fuel in accordance with the biointermediate 
producer's registration under Sec.  80.1450. The designation for the 
batch of biointermediate must be clearly indicated on PTDs for the 
biointermediate as described in Sec.  80.1453(e)(6).
0
34. Section 80.1477 is added to read as follows:

Sec.  80.1477  Requirements for QAPs for biointermediate producers.

    (a) Independent third-party auditors that verify biointermediate 
production must meet the requirements of Sec.  80.1471(a) through (c) 
and (f) through (h), as applicable.
    (b) QAPs approved by EPA to verify biointermediate production must 
meet the requirements in Sec.  80.1469(c) through (f), as applicable.
    (c) Quality assurance audits, when performed, must be conducted in 
accordance with the requirements in Sec.  80.1472(a) and (b)(3).
    (d)(1) If an independent third-party auditor identifies a 
potentially improperly produced biointermediate, the independent third-
party auditor must notify EPA, the biointermediate producer, and the 
renewable fuel producer that may have been transferred the 
biointermediate within five business days of the identification, 
including an initial explanation of why the biointermediate may have 
been improperly produced.
    (2) If RINs were generated from the potentially improperly produced 
biointermediate, the RIN generator must follow the applicable 
identification and treatment of PIRs as specified in Sec.  80.1474.
    (e) For the generation of Q-RINs for renewable fuels that were 
produced from a biointermediate, the biointermediate must be verified 
under an approved QAP as described in paragraph (b) of this section and 
the RIN generating facility must be verified under an approved QAP as 
described in Sec.  80.1469.
0
35. Section 80.1478 is added to read as follows:

Sec.  80.1478  Requirements for foreign biointermediate producers and 
importers.

    (a) Foreign biointermediate producer. For purposes of this subpart, 
a foreign biointermediate producer is a person located outside the 
United States, the Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, and the Commonwealth of the Northern Mariana 
Islands (collectively referred to in this section as ``the United 
States'') that has been approved by EPA to produce biointermediate for 
use in the production of renewable fuel by a RIN-generating renewable 
fuel producer.
    (b) Foreign biointermediate producer requirements. Any foreign 
biointermediate producer must meet all requirements that apply to 
biointermediate producers under this subpart as a condition of being 
approved as a foreign biointermediate producer under this subpart.
    (c) Foreign biointermediate producer commitments. Any foreign 
biointermediate producer must commit to the following provisions as a 
condition of being approved as a foreign biointermediate producer under 
this subpart:
    (1) Any EPA inspector or auditor must be given full, complete, and 
immediate access to conduct inspections and

[[Page 72500]]

audits of the foreign biointermediate producer facility.
    (i) Inspections and audits may be either announced in advance by 
EPA, or unannounced.
    (ii) Access will be provided to any location where:
    (A) Biointermediate is produced.
    (B) Documents related to foreign biointermediate producer 
operations are kept.
    (C) Biointermediate is stored or transported between the foreign 
biointermediate producer and the renewable fuel producer, including 
storage tanks, vessels, and pipelines.
    (iii) EPA inspectors and auditors may be EPA employees or 
contractors to EPA.
    (iv) Any documents requested that are related to matters covered by 
inspections and audits must be provided to an EPA inspector or auditor 
on request.
    (v) Inspections and audits may include review and copying of any 
documents related to the following:
    (A) The volume of biointermediate produced or delivered to 
renewable fuel production facilities.
    (B) Transfers of title or custody to the biointermediate.
    (C) Work performed and reports prepared by independent third 
parties and by independent auditors under the requirements of this 
section, including work papers.
    (vi) Inspections and audits by EPA may include interviewing 
employees.
    (vii) Any employee of the foreign biointermediate producer must be 
made available for interview by the EPA inspector or auditor, on 
request, within a reasonable time period.
    (viii) English language translations of any documents must be 
provided to an EPA inspector or auditor, on request, within 10 business 
days as defined in 40 CFR 1090.80.
    (ix) English language interpreters must be provided to accompany 
EPA inspectors and auditors, on request.
    (2) An agent for service of process located in the District of 
Columbia must be named, and service on this agent constitutes service 
on the foreign biointermediate producer or any employee of the foreign 
biointermediate producer for any action by EPA or otherwise by the 
United States related to the requirements of this subpart.
    (3) The forum for any civil or criminal enforcement action related 
to the provisions of this section for violations of the Clean Air Act 
or regulations in this title promulgated thereunder must be governed by 
the Clean Air Act, including the EPA administrative forum where allowed 
under the Clean Air Act.
    (4) United States substantive and procedural laws apply to any 
civil or criminal enforcement action against the foreign 
biointermediate producer or any employee of the foreign biointermediate 
producer related to the provisions of this section.
    (5) Applying to be an approved foreign biointermediate producer 
under this section, or producing or exporting biointermediate under 
such approval, and all other actions to comply with the requirements of 
this subpart relating to such approval constitute actions or activities 
covered by and within the meaning of the provisions of 28 U.S.C. 
1605(a)(2), but solely with respect to actions instituted against the 
foreign biointermediate producer, its agents and employees in any court 
or other tribunal in the United States for conduct that violates the 
requirements applicable to the foreign biointermediate producer under 
this subpart, including conduct that violates the False Statements 
Accountability Act of 1996 (18 U.S.C. 1001) and section 113(c)(2) of 
the Clean Air Act (42 U.S.C. 7413).
    (6) The foreign biointermediate producer, or its agents or 
employees, will not seek to detain or to impose civil or criminal 
remedies against EPA inspectors or auditors for actions performed 
within the scope of EPA employment or contract related to the 
provisions of this section.
    (7) The commitment required by this paragraph (c) must be signed by 
the owner or president of the foreign biointermediate producer company.
    (8) In any case where the biointermediate produced at a foreign 
biointermediate production facility is stored or transported by another 
company between the production facility and the vessel that transports 
the biointermediate to the United States, the foreign biointermediate 
producer must obtain from each such other company a commitment that 
meets the requirements specified in paragraphs (c)(1) through (7) of 
this section, and these commitments must be included in the foreign 
biointermediate producer's application to be an approved foreign 
biointermediate producer under this subpart.
    (d) Sovereign immunity. By submitting an application to be an 
approved foreign biointermediate producer under this subpart, or by 
producing and exporting biointermediate fuel to the United States under 
such approval, the foreign biointermediate producer, and its agents and 
employees, without exception, become subject to the full operation of 
the administrative and judicial enforcement powers and provisions of 
the United States without limitation based on sovereign immunity, with 
respect to actions instituted against the foreign biointermediate 
producer, its agents and employees in any court or other tribunal in 
the United States for conduct that violates the requirements applicable 
to the foreign biointermediate producer under this subpart, including 
conduct that violates the False Statements Accountability Act of 1996 
(18 U.S.C. 1001) and section 113(c)(2) of the Clean Air Act (42 U.S.C. 
7413).
    (e) English language reports. Any document submitted to EPA by a 
foreign biointermediate producer must be in English or must include an 
English language translation.
    (f) Foreign biointermediate producer contractual relationship. Any 
foreign biointermediate producer must establish a contractual 
relationship with the RIN-generating renewable fuel producer prior to 
the sale of a biointermediate. Any foreign biointermediate producer 
must retain contracts and documents memorializing the sale of 
biointermediates for five years from the date they were created and 
must deliver such records to the Administrator upon request.
    (g) Withdrawal or suspension of foreign biointermediate producer 
approval. EPA may withdraw or suspend a foreign biointermediate 
producer's approval where any of the following occur:
    (1) A foreign biointermediate producer fails to meet any 
requirement of this section.
    (2) A foreign government fails to allow EPA inspections or audits 
as provided in paragraph (c)(1) of this section.
    (3) A foreign biointermediate producer asserts a claim of, or a 
right to claim, sovereign immunity in an action to enforce the 
requirements in this subpart.
    (h) Additional requirements for applications, reports, and 
certificates. Any application for approval as a foreign biointermediate 
producer, any report, certification, or other submission required under 
this section shall be:
    (1) Submitted in accordance with procedures specified by the 
Administrator, including use of any forms that may be specified by the 
Administrator.
    (2) Signed by the president or owner of the foreign biointermediate 
producer company, or by that person's immediate designee, and must 
contain the following declarations:
    (i) ``I hereby certify:
    (A) That I have actual authority to sign on behalf of and to bind 
[NAME OF

[[Page 72501]]

FOREIGN BIOINTERMEDIATE PRODUCER] with regard to all statements 
contained herein;
    (B) That I am aware that the information contained herein is being 
Certified, or submitted to the United States Environmental Protection 
Agency, under the requirements of 40 CFR part 80, subpart M, and that 
the information is material for determining compliance under these 
regulations; and
    (C) That I have read and understand the information being Certified 
or submitted, and this information is true, complete and correct to the 
best of my knowledge and belief after I have taken reasonable and 
appropriate steps to verify the accuracy thereof.''
    (ii) ``I affirm that I have read and understand the provisions of 
40 CFR part 80, subpart M, including 40 CFR 80.1478 apply to [NAME OF 
FOREIGN BIOINTERMEDIATE PRODUCER]. Pursuant to Clean Air Act section 
113(c) and 18 U.S.C. 1001, the penalty for furnishing false, incomplete 
or misleading information in this certification or submission is a fine 
of up to $10,000 U.S., and/or imprisonment for up to five years.''
    (i) Requirements for biointermediate importers. Any biointermediate 
importer must meet all the following requirements:
    (1) For each biointermediate batch, any biointermediate importer 
must have an independent third party do all the following:
    (i) Determine the volume of biointermediate in the truck, railcar, 
vessel, or other shipping container.
    (ii) Determine the name and EPA-assigned registration number of the 
foreign biointermediate producer that produced the biointermediate.
    (iii) Determine the name and country of registration of the truck, 
railcar, vessel, or other shipping container used to transport the 
biointermediate to the United States.
    (iv) Determine the date and time the truck, railcar, vessel, or 
other shipping container arrives at the United States port of entry.
    (2) Any biointermediate importer must submit documentation of the 
information determined under paragraph (i)(1) of this section within 30 
days following the date any truck, railcar, vessel, or other shipping 
container transporting biointermediate arrives at the United States 
port of entry to all the following:
    (i) The foreign biointermediate producer.
    (ii) The renewable fuel producer.
    (3) The biointermediate importer and the independent third party 
must keep records of the audits and reports required under paragraphs 
(h)(1) and (2) of this section for five years from the date of 
creation.

PART 1090--REGULATION OF FUELS, FUEL ADDITIVES, AND REGULATED 
BLENDSTOCKS

0
36. The authority citation for part 1090 continues to read as follows:

    Authority: 42 U.S.C. 7414, 7521, 7522-7525, 7541, 7542, 7543, 
7545, 7547, 7550, and 7601.

Subpart A--General Provisions

0
37. Amend Sec.  1090.15 by:
0
a. In paragraph (a), removing ``(b) and (c)'' and adding ``(b) through 
(d)'' in its place;
0
b. In paragraph (c) introductory text, removing ``section'' and adding 
``part'' in its place;
0
c. Redesignating paragraph (d) as paragraph (e);
0
d. Adding a new paragraph (d); and
0
e. In newly redesignated paragraph (e), removing ``(b) and (c)'' and 
adding ``(b) through (d)'' in its place.
    The addition reads as follows:

Sec.  1090.15  Confidential business information.

* * * * *
    (d)(1) The following information contained in any enforcement 
action taken under this part is not entitled to confidential treatment 
under 40 CFR part 2, subpart B:
    (i) The company's name.
    (ii) The facility's name.
    (iii) Any EPA-issued company and facility identification numbers.
    (iv) The time or time period when any violation occurred.
    (v) The quantity of fuel, fuel additive, or regulated blendstock 
affected by the violation.
    (vi) Information relating to the exceedance of the fuel standard 
associated with the violation.
    (vii) Information relating to the generation, transfer, or use of 
credits associated with the violation.
    (viii) Any other information relevant to describing the violation.
    (2) Enforcement actions within the scope of paragraph (d)(1) of 
this section include notices of violation, settlement agreements, 
administrative complaints, civil complaints, criminal information, and 
criminal indictments.
* * * * *
[FR Doc. 2021-26839 Filed 12-20-21; 8:45 am]
BILLING CODE 6560-50-P