On December 7, EPA announced their proposed annual rule establishing volumes for 2021 and 2022. The proposal also sets the biomass-based diesel volume for 2022. EPA is also proposing to reopen their 2020 final rule and adjust previously finalized volumes, citing the unanticipated and exceptional impacts of COVID-19 on the fuel market.
Stakeholders have until 02/04/2022 to submit comments on this recent proposal, and a virtual public hearing via Zoom has been scheduled for 01/04/2022.
In addition to proposed volumes and percentage standards, the proposed package of actions includes sections detailing:
- EPA’s response to the ACE remand through a proposed supplemental standard
- Changes in the methodology used to calculate annual percentage standards
- Clarification of existing regulations
The Agency also proposed the extension of RFS compliance deadlines in November and announced a proposal to deny more than 60 exemption petitions for small refiners (also on December 7).
Proposed Volumes, Percentage Standards, and Supplemental Standard
For 2020 volumes, EPA has proposed to retroactively adjust these volumes and standards to reflect actual volumes of renewable fuels produced and transportation fuels consumed in 2020. EPA cites the decline in transportation fuel demand due to COVID-19, and the disproportionate decline in gasoline demand relative to diesel. EPA is also revising 2020 volumes based on their projection of exempted volumes from small refinery exemptions (SREs), as the Agency’s projections of exempted volumes were far higher than actual exempted volumes given EPA’s proposal to deny more than 60 petitions submitted between 2016 and 2021.
EPA is proposing to set 2021 volumes that equal the Agency’s projections for cellulosic, advanced, and total renewable fuel used in the U.S. in 2021. EPA used internal projections based on actual data for the year for those months where actual fuel use data was unavailable. (Since EPA delivered this proposal to the Office of Management and Budget in August, the Agency would not have had actual fuel use data for the later portion of this year.)
EPA is proposing to set 2022 volumes higher than proposed volumes for 2020 and 2021. EPA has based these volumes on statutory factors, the Agency’s assessment of the program to incentivize increased production and use of biofuels, and potential positive impacts of biofuel growth on climate change and energy security. The 2022 volumes also consider the commercial availability of cellulosic biofuel, the price of required feedstocks, and the availability of infrastructure needed to deploy biofuels nationwide.
EPA has also proposed a supplemental standard for 2022 that restores a portion of the 500MG of renewable fuel improperly exempted from the 2016 RFS volumes. This proposed supplemental standard adds in 250MG of the total 500MG in 2022, with EPA intending to restore the remaining 250MG as a supplemental standard in 2023.
Until the EPA has a policy for their approach to SRE petitions, the Agency is proposing a range of percentage standards aimed to give obligated parties an indication of their potential compliance obligations. Since the proposed regulations can only contain one set of percentage standards, EPA has elected to use standards from the low end of the range in the following table.
EPA proposed provisions related to biointermediates in their November 2016 Renewables Enhancement and Growth Support (REGS) rule and are re-proposing many of the same provisions in this annual rule. A biointermediate is a feedstock that has been partially converted at one facility but is then sent to a separate facility for final processing into renewable fuel.
The biointermediates section covers an array of provisions related to the registration, recordkeeping, and reporting requirements for both biointermediate producers and renewable fuel producers. In addition, the proposed rule also includes the following:
- Revised definition of biointermediate, including types of processing allowed
- Single offtake requirement (biointermediate producer can only sell to a single renewable fuel facility)
- Product Transfer Document requirements
- Annual attest engagement requirements and mandatory QAP for both the biointermediate and renewable fuel producer using biointermediates as feedstock
- Approval for three types of biointermedaites: biocrude, free fatty acids (FFAs), and undenatured ethanol
EPA is proposing an implementation date that is 60 days after the final annual rule is published in the Federal Register.
Amendments to Fuel Quality and Existing Regulations
EPA is also proposing changes to existing regulations to help streamline portions of the RFS program and provide clarity to program stakeholders:
- Modification of the BBD conversion factor for the annual percentage standards from 1.50 to 1.55 (increase will reflect a growing portion of renewable diesel in D4 category)
- Changes to public access to information, including information contained in enforcement actions and invalid RIN determinations
- Changes to confidential business information claims associated with SREs
Updated Definitions for “Agricultural Digester” and “Produced from Renewable Biomass”
The proposed annual rule includes an updated definition for “agricultural digester” and introduces a definition for “other waste digesters”. According to the proposed language, EPA will require that agricultural digesters process only materials that are at least 75% cellulosic. Digesters that do not process materials that are at least 75% cellulosic will fall under the “other waste digester” category. EPA also clarifies how RINs will be treated under both types of digesters.
EPA is also proposing to clarify the definition of “produced from renewable biomass” to help current and future participants of the RFS clearly understand how fuels qualify when the biogenic (biomass) portion of the gallon does not contribute any energy. The new definition will require that the energy in the finished fuel comes from renewable biomass and not a fossil source.
- Comment Period 12/07/2021 – 02/04/2022
- Virtual Public Hearing 01/04/2022
The Christianson compliance team will continue to follow developments related to EPA’s Renewable Fuel Standard and are available to help you and your team untangle these new regulations.