[Federal Register Volume 79, Number 85 (Friday, May 2, 2014)]
[Rules and Regulations]
[Pages 25025-25031]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-10135]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2012-0546; FRL-9910-18-OAR]
RIN 2060-AS21


Regulation of Fuels and Fuel Additives: 2013 Cellulosic Biofuel 
Standard

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is taking direct 
final action to revise the 2013 cellulosic biofuel standard published 
on August 15, 2013. This action follows from EPA having granted two 
petitioners' requests for reconsideration of the 2013 cellulosic 
biofuel standard. EPA granted reconsideration because one of the two 
companies that EPA expected to produce cellulosic biofuel in 2013 
announced soon after EPA signed its final rule that it intended to 
produce substantially lower volumes of cellulosic biofuel in 2013 than 
it had earlier reported to EPA. Since the cellulosic biofuel standard 
was based on EPA's projection of cellulosic biofuel production in 2013, 
EPA deemed this new information to be of central relevance to the rule, 
warranting reconsideration. On reconsideration, EPA is directed to base 
the standard on the lower of ``projected'' production of cellulosic 
fuel in 2013 or the cellulosic biofuel applicable volume set forth in 
the statute. Since data are available to show actual production volumes 
for 2013, EPA's ``projection'' and final rule are based on actual 
cellulosic biofuel production in 2013. This action only affects the 
2013 cellulosic biofuel standard; all other RFS standards remain 
unchanged. EPA is finalizing a revised cellulosic biofuel standard of 
0.0005% for 2013.

DATES: This rule is effective on July 1, 2014 without further notice, 
unless EPA receives relevant adverse comment by June 2, 2014. If EPA 
receives relevant adverse comment, we will publish a timely withdrawal 
of this direct final rule in the Federal Register informing the public 
that this rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2012-00546, by one of the following methods:
     www.regulations.gov: Follow the on-line instructions for 
submitting comments.
     Email: a-and-r-docket@epa.gov.
     Mail: Air and Radiation Docket and Information Center, 
Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania 
Ave. NW., Washington, DC 20460.
     Hand Delivery: EPA Docket Center, EPA West Building, Room 
3334, 1301 Constitution Ave. NW., Washington, DC 20460. Such deliveries 
are only accepted during the Docket's normal hours of operation, and 
special arrangements should be made for deliveries of boxed 
information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2012-0546. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through www.regulations.gov or email. The 
www.regulations.gov Web site is an ``anonymous access'' system, which 
means EPA will not know your identity or contact information unless you 
provide it in the body of your comment. If you send an email comment 
directly to EPA without going through www.regulations.gov your email 
address will be automatically captured and included as part of the 
comment that is placed in the public docket and made available on the 
Internet. If you submit an electronic comment, EPA recommends that you 
include your name and other contact information in the body of your 
comment and with any disk or CD-ROM you submit. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses. For additional 
information about EPA's public docket visit the EPA Docket Center 
homepage at http://www.epa.gov/epahome/dockets.htm. For additional 
instructions on submitting comments, go to Section I.B of the 
SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in www.regulations.gov or in hard copy at the Air and Radiation Docket 
and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution 
Ave. NW., Washington, DC. The Public Reading Room is open from 8:30 
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The 
telephone number for the Public Reading Room is (202) 566-1744, and the 
telephone number for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Julia MacAllister, Office of 
Transportation and Air Quality, Assessment and Standards Division, 
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 
48105; Telephone number: 734-214-4131; Fax number: 734-214-4816; Email 
address: macallister.julia@epa.gov, or the public information line for 
the Office of Transportation and Air Quality; telephone number (734) 
214-4333; Email address OTAQ@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. Why is EPA using a direct final rule?

    EPA is publishing this rule without a prior proposed rule because 
we view this as a noncontroversial action. This action amends the 2013 
cellulosic biofuel standard that was finalized in ``Regulation of Fuels 
and Fuel Additives: 2013 Renewable Fuel Standards; Final Rule,'' 
(August 15, 2013; 78 FR 49794). Finalizing this adjusted 2013 
cellulosic biofuel standard expeditiously will reduce regulatory 
uncertainty and avoid unnecessary cost or burden for obligated parties. 
Until this adjusted cellulosic biofuel standard is finalized, obligated 
parties will have to comply with the current and significantly higher 
2013 cellulosic biofuel standard. This would likely involve a 
substantial purchase of cellulosic waiver credits, which EPA would 
subsequently need to reimburse. This action follows from EPA having 
granted, on January 23, 2014, requests for reconsideration of the 2013 
cellulosic biofuel standard submitted by the American Petroleum 
Institute and the American Fuel & Petrochemical Manufacturers. In 
granting reconsideration, EPA determined that petitioners had met the 
statutory criteria of section 307(d)(7)(B) of the Clean Air Act, since 
petitioners had identified

[[Page 25026]]

new information of central relevance that became available after the 
comment period closed but within the time period specified for parties 
to seek judicial review.
    In the ``Proposed Rules'' section of today's Federal Register, we 
are publishing a separate document that will serve as the proposed rule 
to revise the 2013 cellulosic standard if adverse comments are received 
on this direct final rule. We will not institute a second comment 
period on this action. Any parties interested in commenting must do so 
at this time. For further information about commenting on this rule, 
see the ADDRESSES section of this document.
    If EPA receives relevant adverse comment or a request for a public 
hearing, we will publish a timely withdrawal in the Federal Register 
informing the public that this direct final rule will not take effect. 
We would address all public comments in any subsequent final rule based 
on the proposed rule.

II. Does this action apply to me?

    Entities potentially affected by this direct final rule are those 
involved with the production, distribution, and sale of transportation 
fuels, including gasoline and diesel fuel or renewable fuels such as 
ethanol and biodiesel. Potentially regulated categories include:

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                                                NAICS \1\                     Examples of potentially regulated
                  Category                        codes      SIC \2\  codes                entities
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Industry...................................          324110            2911  Petroleum Refineries.
Industry...................................          325193            2869  Ethyl alcohol manufacturing.
Industry...................................          325199            2869  Other basic organic chemical
                                                                              manufacturing.
Industry...................................          424690            5169  Chemical and allied products
                                                                              merchant wholesalers.
Industry...................................          424710            5171  Petroleum bulk stations and
                                                                              terminals.
Industry...................................          424720            5172  Petroleum and petroleum products
                                                                              merchant wholesalers.
Industry...................................          454319            5989  Other fuel dealers.
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\1\ North American Industry Classification System (NAICS).
\2\ Standard Industrial Classification (SIC) system code

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

Outline of This Preamble

I. Executive Summary
II. Assessment of the Petitions for Reconsideration of the 
Cellulosic Biofuel Standard
III. Cellulosic Biofuel Volume for 2013
IV. Percentage Standards for 2013
    A. Background
    B. Calculation of the Cellulosic Biofuel Standard
    1. How is the standard calculated?
    2. Small Refineries and Small Refiners
    3. Cellulosic Standard
V. 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
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    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
    J. Executive Order 12898: Federal Action To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act
VI. Statutory Authority

I. Executive Summary

    On October 10, 2013, and October 11, 2013, the U.S. Environmental 
Protection Agency (EPA) received petitions from the American Fuel & 
Petrochemical Manufacturers and the American Petroleum Institute 
requesting that EPA reconsider portions of the final rule entitled 
Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel 
Standards\1\. Petitioners noted the substantial reduction (from 3-5 
million gallons to 1-2 million gallons) in anticipated cellulosic 
biofuel production in 2013 that was announced shortly after EPA signed 
its final rule by one of two companies expected to produce cellulosic 
biofuel in 2013. After review, EPA determined that the petitions for 
reconsideration with regard to the 2013 cellulosic biofuel standard had 
demonstrated the statutory criteria specified in Section 307(d)(7)(B) 
of the Clean Air Act for the reconsideration. On January 23, 2014, the 
Administrator notified petitioners that their petitions, with regard to 
the 2013 cellulosic biofuel standard, had been granted and that EPA 
would initiate a notice and comment rulemaking to reconsider the 
standard.\2\
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    \1\ 78 FR 49794 (August 15, 2013).
    \2\ EPA has not yet taken action on aspects of these petitions 
that relate to matters other than the 2013 cellulosic biofuel 
standard.
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    In this rulemaking, EPA is revising the 2013 cellulosic biofuel 
standard. In reconsidering the earlier cellulosic standard, EPA is 
directed to base the standard on the lower of the ``projected'' 
production volume of cellulosic fuel in 2013 or the cellulosic biofuel 
volume target set forth in the statute. At this time, since data are 
available to show actual production volumes of cellulosic for 2013, our 
``projection'' is based on actual cellulosic production in 2013. 
Specifically, we are calculating the volume of cellulosic biofuel to be 
used in 2013 by reference to the actual number of cellulosic biofuel 
renewable identification numbers (RINs) generated and reported through 
the EPA Monitored Transaction System (EMTS) in 2013.
    In 2013 a total of 818,517 cellulosic biofuel RINs were 
generated.\3\ Of this total, 8,332 RINs were invalidly generated and 
were retired.\4\ This leaves a total of 810,185 cellulosic biofuel RINs 
that are available for use by obligated parties. EPA believes that the 
EMTS data best represent the number of cellulosic RINs actually 
produced in 2013 and are therefore an appropriate volume on which to 
base the required volume of cellulosic biofuel for 2013.
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    \3\ Sum of D3 RINs (422,740) and D7 RINs (395,777) generated in 
2013. Data from the EMTS (last accessed February 25, 2014).
    \4\ Data from the EMTS (last accessed March 19, 2014).

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[[Page 25027]]

    The percentage standard for cellulosic biofuel for 2013 is shown 
below in Table I-1. The specific formula we used in calculating the 
cellulosic renewable fuel percentage standard is contained in the 
regulations at 40 CFR 80.1405 and described in Section V of this 
preamble. The percentage standard for cellulosic biofuel represents the 
ratio of the renewable fuel volume we have determined should be 
required for 2013 to the non-renewable gasoline and diesel volume used 
in 2013, with appropriate corrections. Detailed calculations can be 
found in Section IV, including a description of the 2013 gasoline and 
diesel volumes used.

                Table I-1--Percentage Standards for 2013
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Cellulosic biofuel.....................................         0.0005%
------------------------------------------------------------------------

    Since EPA's revised cellulosic biofuel standard for 2013 is lower 
than the pre-existing standard, it is possible that some obligated 
parties may have purchased more cellulosic waiver credits than will 
ultimately be needed for 2013 compliance. EPA will issue a refund for 
all such excess cellulosic waiver credits.

II. Assessment of the Petitions for Reconsideration of the Cellulosic 
Biofuel Standard

    On August 6, 2013, EPA finalized the annual standard for cellulosic 
biofuel as required under the Clean Air Act Section 211(o).\5\ EPA set 
the 2013 cellulosic biofuel percentage standard using the volume of 
cellulosic biofuel (6 million ethanol-equivalent gallons) that EPA 
expected to be produced and used in the United States in 2013. This 
projection was based on expected production from two companies: INEOS 
Bio (0-1 million actual gallons, 0-1 million ethanol-equivalent 
gallons) and KiOR (3-4 million actual gallons, 5-6 million ethanol-
equivalent gallons. KiOR's facility is located in Columbus, 
Mississippi, while INEOS Bio's facility is located in Vero Beach, 
Florida.
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    \5\ 78 FR 49794, August 15, 2013.
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    EPA subsequently received petitions from the American Fuel & 
Petrochemical Manufacturers and American Petroleum Institute, dated 
October 10 and October 11, 2013, respectively, requesting that EPA 
reconsider the 2013 cellulosic biofuel standard and other parts of the 
rule entitled Regulation of Fuels and Fuel Additives: 2013 Renewable 
Fuel Standards.
    Both the American Petroleum Institute and the American Fuel & 
Petrochemical Manufacturers in their petitions for reconsideration 
cited a conference call held by KiOR on August 8, 2013, two days after 
EPA finalized the 2013 rule, as providing new information that required 
EPA to reconsider its 2013 cellulosic biofuel standard. In this 
conference call, KiOR issued updated guidance on their expected volume 
of cellulosic biofuel production in 2013 and KiOR lowered its 
projection to 1-2 million actual gallons in 2013. This represented a 
significant reduction from KiOR's previous projection of 3-5 million 
actual gallons in a May 9, 2013, conference call. This updated KiOR 
guidance was also lower than EPA's projected cellulosic biofuel 
production from KiOR's facility of 3-4 million actual gallons, which 
had been based in part on information from the earlier May 9, 2013, 
conference call. KiOR's announcement on August 8, 2013, therefore 
clearly represents new information that was not available during the 
comment period, and which became available after the comment period had 
closed but within the period for parties to seek judicial review.
    EPA next considered whether the objection was of central relevance 
to the outcome of the rule. EPA interprets the phrase ``of central 
relevance to the outcome of the rule'' to mean that the objection 
provides substantial support for the argument that the regulation 
should be revised. Because we projected that only two firms would 
contribute to the cellulosic biofuel volume in 2013, and because KiOR's 
anticipated production reflected more than 80% of our volume 
projection, KiOR's reduced production estimate for 2013 from 3-5 
million actual gallons of cellulosic biofuel to 1-2 million actual 
gallons of cellulosic biofuel, announced in their public conference 
call on August 8, 2013, strongly indicated that the production of 
cellulosic biofuel in 2013 was likely to be significantly lower than 
EPA's projection.
    Even if both companies produced cellulosic biofuel at the high end 
of their projected production ranges after the KiOR revision (1 million 
ethanol-equivalent gallons for INEOS Bio, 3 million ethanol-equivalent 
gallons for KiOR) the total availability of cellulosic biofuel RINs 
generated in 2013 would still be 33% lower than the EPA projection in 
the final rule. Had the updated production estimate from KiOR's 
conference call on August 8, 2013, been available to EPA at the time 
the 2013 cellulosic biofuel standard was finalized, it is highly 
probable that it would have impacted the outcome of that standard. On 
these grounds, EPA determined that KiOR's updated production estimate 
is of central relevance to the 2013 cellulosic biofuel standard, as it 
provides substantial support for the argument that the regulation 
should be revised.
    Although not relevant to EPA's action on the 2013 cellulosic 
standard, it should be noted that EPA does not anticipate that future 
modifications to company cellulosic biofuel production estimates that 
are received after the close of the comment period but within the 
period for parties to seek judicial review, will necessarily be grounds 
for the reconsideration of the cellulosic biofuel standard in future 
years. Here, reconsideration was granted due to the substantially 
reduced production estimates (from 3-5 million gallons to 1-2 million 
gallons) by one of only two companies expected to produce cellulosic 
biofuel in 2013. Any similar situation will be evaluated on a case-by-
case basis. As the number of facilities from which cellulosic biofuel 
production increases, and as the potential production volume from each 
facility increases, it becomes increasingly less likely that changes in 
the production estimate from any single company will be of central 
relevance to the overall cellulosic biofuel standard. The greater the 
number of companies expected to produce cellulosic biofuel, the more 
likely it is that a reduction in the expected volume from any single 
company would either be insignificant in the context of the total 
standard, or can be made up with higher production volumes from 
another, or more likely several other companies.
    Our decision to grant reconsideration of the 2013 cellulosic 
biofuel standard has no impact on other 2013 RFS standards.

III. Cellulosic Biofuel Volume for 2013

    EPA is directed by Section 211(o)(7)(D)(i) of the Clean Air Act to 
base the 2013 cellulosic biofuel standard on the lower of the 
``projected'' production volume of cellulosic fuel in 2013 or the 1.0 
billion gallon 2013 cellulosic biofuel ``applicable volume'' set forth 
in Section 211(o)(2)(B)(III) of the statute. In projecting biofuel 
production for a given year, EPA must consider an estimate provided by 
the Energy Information Administration (EIA), and may also consider 
additional available and relevant information. API v. EPA, 706 F.3d 474 
(D.C. Cir. 2013) Since EPA is now tasked with making a ``projection'' 
after the year has ended, we believe the most appropriate information 
and data in this instance is

[[Page 25028]]

the actual cellulosic biofuel production (in ethanol-equivalent gallons 
\6\) in 2013.
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    \6\ More than one RIN is generated for each physical gallon of 
renewable fuel that has a higher energy content than ethanol. For 
example, 1.7 RINs are generated for one physical gallon of 
cellulosic diesel fuel. Ethanol-equivalent gallons are used to 
project cellulosic biofuel production when setting the cellulosic 
biofuel standard, and RINs, generated on an ethanol-equivalent 
basis, are used to comply with the standard.
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    EPA tracks and publically reports the number of RINs generated in 
the RFS program through the EPA Moderated Transaction System (EMTS).\7\ 
There are two types of RINs that may be used to satisfy a company's 
cellulosic biofuel RVO: Cellulosic biofuel RINs (D3) and cellulosic 
diesel RINs (D7). The total number of 2013 RINs available to satisfy 
the cellulosic biofuel RVO can be calculated by adding the number of D3 
and D7 RINs generated in 2013 and subtracting the number of RINs 
generated in error.\8\ Using this method, the total number of valid 
RINs generated and which can be used towards the cellulosic biofuel 
obligation in 2013 is 810,185. This calculation for cellulosic biofuel 
RINs is shown in Figure III-1 below.
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    \7\ RFS2 EMTS Informational Data. See http://www.epa.gov/otaq/fuels/rfsdata/2013emts.htm (last accessed March 19, 2014).
    \8\ RINs may be generated in error for reasons such as 
improperly functioning flow meters, temperature volume correction 
errors, clerical errors, or fraud.

        Figure III-1--Valid Cellulosic RINs Generated in 2013 \9\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
D3 RINs Generated..........................................      422,740
D7 RINs Generated..........................................      395,777
Total Cellulosic RINs Generated............................      818,517
D3 RINs Generated in Error.................................            0
D7 RINs Generated in Error.................................        8,332
Total Valid Cellulosic RINs Generated in 2013..............      810,185
------------------------------------------------------------------------

IV. Percentage Standards for 2013

A. Background

    The renewable fuel standards are expressed as volume percentages 
and are used by each refiner or importer to determine their Renewable 
Volume Obligation (RVO). Each standard applies to the sum of all 
gasoline and diesel produced or imported by an obligated party. The 
applicable percentage standard is set so that if every obligated party 
meets the percentages, then the amount of cellulosic biofuel used will 
meet the volumes required on a nationwide basis. As discussed in 
Section III, the required volume of cellulosic biofuel for 2013 is 
810,185 ethanol-equivalent gallons.
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    \9\ RIN numbers are from the EMTS (last accessed March 19, 
2014).

    Table IV.A-1--Volume for Use in Setting the Applicable Percentage
                         Standards for 2013 \a\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Cellulosic biofuel.....................................         810,185
------------------------------------------------------------------------
\a\ Due to the manner in which the percentage standards are calculated,
  the volume is given in terms of ethanol-equivalent gallons

    The formulas used in deriving the annual standards are typically 
based in part on estimates of the volumes of gasoline and diesel fuel, 
for both highway and nonroad uses, that are projected to be used in the 
year in which the standard will apply. However, as discussed below, for 
this rule we will use the most recent EIA estimate, published in March 
2014. Producers of other transportation fuels, such as natural gas, 
propane, and electricity from fossil fuels, are not subject to the 
standards, and volumes of such fuels are not used in calculating the 
annual standards. Since the standards apply to producers and importers 
of gasoline and diesel, these are the transportation fuels used to set 
the standards, and then again to determine the annual volume 
obligations of an individual gasoline or diesel producer or importer.

B. Calculation of the Cellulosic Biofuel Standard

1. How is the standard calculated?
    The following formula is used to calculate the four percentage 
standards applicable to producers and importers of gasoline and diesel 
(see Sec.  80.1405):
[GRAPHIC] [TIFF OMITTED] TR02MY14.073


Where
StdCB,i = The cellulosic biofuel standard for year i, in 
percent.
RFVCB,i = Annual volume of cellulosic biofuel required by 
section 211(o) of the Clean Air Act 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. This value 
excludes diesel used in ocean-going vessels.
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 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 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 = Amount of gasoline projected to be produced by 
exempt small refineries and small refiners in year i, in gallons, in 
any year they are exempt per Sec. Sec.  80.1441 and 80.1442, 
respectively. For 2013, this value is 0.12 billion gallons. See 
further discussion in Section IV.B.2 below.
DEi = Amount of diesel projected to be produced by exempt 
small refineries and small refiners in year i, in gallons, in any 
year they are exempt per Sec. Sec.  80.1441 and 80.1442, 
respectively. For 2013, this value is 0.14 billion gallons. See 
further discussion in Section IV.B.2 below.

    The statute requires that EIA provide EPA in October of each year 
an estimate of the projected gasoline and diesel consumption in the 
forthcoming calendar year (as well as additional information on 
projected cellulosic biofuel and biomass diesel consumption), and EPA 
is to ``determine'' the annual percentage standards ``based on'' the 
information provided by EIA. This structure envisions standards enacted 
prior to the compliance year. The United States Court of Appeals for 
the District of Columbia Circuit recently interpreted this provision in 
the context of a challenge to the 2012 cellulosic biofuel standard. API 
v. EPA, 706 F.3d 474 (D.C. Cir. 2013). The Court held that the Act 
``[p]lainly . . . [does not] contemplate

[[Page 25029]]

slavish adherence by EPA to the EIA estimate''; had Congress so 
intended, ``it could have skipped the EPA `determination' altogether.'' 
Id. Instead, ``EPA [i]s entitled . . . to read the phrase `based on' as 
requiring great respect but allowing deviation consistent with that 
respect.'' Id. Accordingly, the Court upheld EPA's supplementation of 
EIA's estimate with information EPA received from prospective biofuel 
producers--including information submitted after EPA had received EIA's 
estimate--for the purpose of ``determin[ing]'' the 2012 cellulosic 
biofuel standard. Id.
    For purposes of this rulemaking, we believe it is appropriate to 
rely on EIA's most recent reports of actual gasoline and diesel 
consumption in the United States in 2013 rather than previous 
projections, such as their October 2012 projection. Doing so allows a 
more accurate assessment of a percentage standard that will help to 
ensure that the volume of cellulosic biofuel we have determined should 
be used for compliance in 2013 will in fact be required. This approach 
is also consistent with our use of actual cellulosic biofuel production 
data for 2013, rather than projections, in deriving the cellulosic 
biofuel standard. We have used EIA's March 2014 Short-Term Energy 
Outlook (STEO) \10\ for the gasoline and diesel statistics. Gasoline 
and diesel volumes are adjusted to account for renewable fuel contained 
in the EIA projections. To estimate the ethanol and biodiesel projected 
volumes for the purposes of this rule, we have used the values \11\ for 
ethanol and biodiesel used in 2013 that is provided in the March 2014 
STEO.
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    \10\ Energy Information Administration/Short-Term Energy 
Outlook--March 2014. (See http://www.eia.gov/forecasts/steo/outlook.cfm; last accessed March 14, 2014).
    \11\ Energy Information Administration/Short-Term Energy 
Outlook--March 2014, (See http://www.eia.gov/forecasts/steo/outlook.cfm; last accessed March 14, 2014).
---------------------------------------------------------------------------

2. Small Refineries and Small Refiners
    In CAA section 211(o)(9), enacted as part of the Energy Policy Act 
of 2005, Congress provided a temporary exemption to small refineries 
(those refineries with a crude throughput of no more than 75,000 
barrels of crude per day) through December 31, 2010. In our initial 
rulemaking to implement the new RFS program,\12\ we exercised our 
discretion under section 211(o)(3)(B) and extended this temporary 
exemption to the few remaining small refiners that met the Small 
Business Administration's (SBA) definition of a small business (1,500 
employees or less company-wide) but did not meet the statutory small 
refinery definition as noted above.\13\ Because the Energy Independence 
and Security Act of 2007 did not alter the small refinery exemption in 
any way, the RFS2 program regulations maintained the exemptions for 
gasoline and diesel produced by small refineries and small refiners 
through 2010 (unless the exemption was waived).\14\
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    \12\ 72 FR 23900, May 1, 2007.
    \13\ 40 CFR 80.1141, 80.1142.
    \14\ See 40 CFR 80.1441, 80.1442.
---------------------------------------------------------------------------

    Congress provided two ways that small refineries could receive a 
temporary extension of the exemption beyond 2010. One was based on the 
results of a study conducted by the Department of Energy (DOE) to 
determine whether small refineries would face a disproportionate 
economic hardship under the RFS program. In March of 2011, DOE 
evaluated the impacts of the RFS program on small entities and 
concluded that some small refineries would suffer a disproportionate 
hardship.\15\ The other way that small refineries could receive a 
temporary extension is based on EPA determination of disproportionate 
economic hardship on a case-by-case basis in response to refiner 
petitions.\16\
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    \15\ ``Small Refinery Exemption Study: An Investigation into 
Disproportionate Economic Hardship,'' U.S. Department of Energy, 
March 2011.
    \16\ 40 CFR 80.1441(e)(2), 80.1442(h).
---------------------------------------------------------------------------

    The regulations in 80.1405 that specify formulas for calculating 
the annual renewable fuel standards require that EPA subtract from the 
total volume of gasoline and diesel estimated to be produced and 
imported in the compliance year the volume attributed to small 
refineries and small refiners that have received exemptions from RFS 
requirements for that year. Depending on the size of the exempt volume, 
and rounding, this may or may not have the effect of increasing the 
standard. The purpose of this aspect of the computation is to make it 
more likely that the appropriate volume of renewable fuel is used by 
obligated parties notwithstanding the small refinery/small refiner 
exemptions. At the time the 2013 cellulosic biofuel standard was 
originally promulgated on August 6, 2013, only one small refinery 
exemption had been granted for the 2013 compliance year. At this time, 
EPA has approved three small refinery exemptions for 2013. These three 
refineries produced a combined total of approximately 820 million 
gallons of gasoline and 660 million gallons of diesel fuel in 2013. 
These volumes have been used in the calculations below in Section 
IV.B.3.\17\
---------------------------------------------------------------------------

    \17\ EPA's consideration of updated EIA data on 2013 gasoline 
and diesel use in the rule establishing the 2013 annual standards, 
and EPA's adjustment of that value to account for small refinery 
exemptions, are currently being reviewed in Monroe v. EPA, Nos. 13-
1265, 13-1267, 13-1268 (D.C. Cir.). EPA notes that the cellulosic 
biofuel standard in this rule would remain unchanged if EPA used 
data provided in EIA's October 2012 letter to EPA for total gasoline 
and diesel in 2013 and assumed no small refinery exemptions in 
calculating the standard.
---------------------------------------------------------------------------

3. Cellulosic Standard
    The values of the variables used to derive the 2013 cellulosic 
biofuel standard are shown in Table IV.B.3-1.\18\ Terms not included in 
this table have a value of zero.
---------------------------------------------------------------------------

    \18\ To determine the 49-state values for gasoline and diesel, 
the amounts of these fuels used in Alaska are subtracted from the 
totals provided by the Department of Energy. The Alaska fractions 
are determined from the EIA State Energy Data System (SEDS) 2012 
Updates. (U.S. Gasoline Consumption (March 2014 STEO)=8.78 MMbbl/
day; U.S. Ethanol Consumption (March 2014 STEO)=0.859 MMBD; U.S. 
Diesel Fuel Consumption (March 2014 STEO)=3.49 MMBD; U.S. Biodiesel 
Consumption (March 2014 STEO)=0.086 MMBD; U.S. Diesel Ocean-going 
vessels (AEO2013)=52.429TBtu.) Alaska Gasoline (2012SEDS)=6.499 
MMbbl: Alaska Ethanol (2012 SEDS)=0.728 MMbbl; Alaska Diesel (2012 
SEDS)=6.375 MMbbl: Alaska Biodiesel (Estimate based on biodiesel 
production capacity per EIA)=0; Alaska Ocean-going vessels estimated 
at 4.5% of U.S. vessel bunkering and applied to the U.S. ocean-going 
vessel volume (information provided by EIA).

     Table IV.B.3-1--Values for Terms in Calculation of the Standard
                            [Billion gallons]
------------------------------------------------------------------------
                          Term                                 Value
------------------------------------------------------------------------
RFVCB,2014..............................................          0.0008
G2013...................................................          134.17
D2013...................................................           53.14
RG2013..................................................           13.14
RD2013..................................................            1.61
GS2013..................................................               0
RGS2013.................................................               0
DS2013..................................................               0
RDS2013.................................................               0
GE2013..................................................            0.82
DE2013..................................................            0.66
------------------------------------------------------------------------

    Using the volumes shown in Table IV.B.3-1, we have calculated the 
percentage cellulosic biofuel standard for 2013 as shown in Table 
IV.B.3-2.

              Table IV.B.3-2--Percentage Standards for 2013
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Cellulosic biofuel......................................         0.0005%
------------------------------------------------------------------------


[[Page 25030]]

V. Statutory and Executive Order Reviews

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

    This action is not a ``significant regulatory action'' under the 
terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is 
therefore not subject to review under Executive Orders 12866 and 13563 
(76 FR 3821, January 21, 2011).

B. Paperwork Reduction Act

    There are no new information collection requirements associated 
with the standards in this rulemaking. The standards impose no new or 
different reporting requirements on regulated parties. The existing 
information collection requests (ICR) that apply to the RFS program are 
sufficient to address the reporting requirements in the regulations.
    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.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedures Act or any other statute unless the agency certifies that 
the rule will not have a significant economic impact on a substantial 
number of small entities. Small entities include small businesses, 
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of this rule on small 
entities, small entity is defined as: (1) A small business as defined 
by the Small Business Administration's (SBA) regulations at 13 CFR 
121.201; (2) a small governmental jurisdiction that is a government of 
a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field.
    After considering the economic impacts of today's rule on small 
entities, I certify that this rule will not have a significant economic 
impact on a substantial number of small entities. This rule reconsiders 
the annual volume requirement for cellulosic biofuel for 2013 which is 
being reduced from the total of 6 million ethanol-equivalent gallons 
finalized in the 2013 RFS annual rule and published on August 15, 2013 
to 810,185 ethanol-equivalent gallons. The impacts of the RFS2 program 
on small entities were already addressed in the RFS2 final rule 
promulgated on March 26, 2010 (75 FR 14670), and this rule will not 
impose any additional requirements on small entities beyond those 
already analyzed.

D. Unfunded Mandates Reform Act

    This action contains no Federal mandates under the provisions of 
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 
1531-1538 for State, local, or tribal governments or the private 
sector. This action implements mandate(s) specifically and explicitly 
set forth by the Congress in Clean Air Act section 211(o) without the 
exercise of any policy discretion by EPA. Therefore, this action is not 
subject to the requirements of sections 202 or 205 of the UMRA.
    This action is also not subject to the requirements of section 203 
of UMRA because it contains no regulatory requirements that might 
significantly or uniquely affect small governments. This rule only 
applies to gasoline, diesel, and renewable fuel producers, importers, 
distributors and marketers and merely revises the 2013 cellulosic 
biofuel standard to reflect actual production in 2013 for the RFS 
program.

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, as 
specified in Executive Order 13132. This action revises the 2013 annual 
cellulosic biofuel standard for the RFS program and only applies to 
gasoline, diesel, and renewable fuel producers, importers, distributors 
and marketers. Thus, Executive Order 13132 does not apply to this rule.

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

    This action does not have tribal implications, as specified in 
Executive Order 13175 (65 FR 67249, November 9, 2000). This rule 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 would be 
affected only to the extent they purchase and 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 EO 13045 (62 FR 19885, April 23, 1997) as applying 
only to those regulatory actions that concern health or safety risks, 
such that the analysis required under section 5-501 of the EO has the 
potential to influence the regulation. This action is not subject to EO 
13045 because it does not establish an environmental standard intended 
to mitigate health or safety risks and because it implements specific 
standards established by Congress in statutes (section 211(o) of the 
Clean Air Act).

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

    This action is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355 
(May 22, 2001)) because it is not likely to have a significant adverse 
effect on the supply, distribution, or use of energy. This action 
simply revises the 2013 annual cellulosic standard for renewable fuel 
under the RFS program.

I. National Technology Transfer and Advancement Act

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

[[Page 25031]]

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

    Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this rule will not have disproportionately 
high and adverse human health or environmental effects on minority or 
low-income populations because it does not affect the level of 
protection provided to human health or the environment. This action 
does not relax the control measures on sources regulated by the RFS 
regulations and therefore will not cause emissions increases from these 
sources.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2).

VI. Statutory Authority

    Statutory authority for this action comes from section 211 of the 
Clean Air Act, 42 U.S.C. 7545.

List of Subjects in 40 CFR Part 80

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

    Dated: April 22, 2014.
Gina McCarthy,
Administrator.
    For the reasons set forth in the preamble, 40 CFR part 80 is 
amended 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).


0
2. Section 80.1405 is amended by revising paragraph (a)(4)(i) to read 
as follows:


Sec.  80.1405  What are the Renewable Fuel Standards?

    (a) * * *
    (4) * * *
    (i) The value of the cellulosic biofuel standard for 2013 shall be 
0.0005 percent.
* * * * *
[FR Doc. 2014-10135 Filed 5-1-14; 8:45 am]
BILLING CODE 6560-50-P