The EPA Proposes New Rule to Revise 2023 through 2025 Calendar Year Renewable Fuel Standard Program (40 CFR Part 80 and Part 1090)
The Environmental Protection Agency (EPA) issued proposed rulemaking in the December 30, 2022 Federal Register (F.R. Vol. 87 No. 250) - EPA 40 CFR Part 80 and Part 1090 (EPA-HQ-OAR-2021-0427; FRL 8514-01-OAR; Renewable Identification Number [RIN] 2060-AV14), Renewable Fuel Standard (RFS), and other changes.
The Clean Air Act requires the EPA to determine the applicable volume RFS requirements for years after those specified in the statute. This EPA action proposes the applicable volumes and percentage standards for 2023 through 2025 for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel; proposes the second supplemental standard addressing the remand of the 2016 standard-setting rulemaking; and proposes changes that prescribe how RINs from renewable electricity (eRINs) would be implemented and managed under the RFS program. The RIN revisions are intended to address many of the outstanding issues which to date have prevented EPA from registering parties to allow them to generate eRINs produced from qualifying renewable biomass and used as transportation fuel. Additionally, this proposal advocates several changes to the RFS program including regulations governing the generation of qualifying renewable electricity and other modifications intended to improve the program's implementation, including:
- Enhancements to the third-party oversight provisions including engineering reviews, the RFS quality assurance program, and annual attest engagements
- Establishing a deadline for third-party engineering reviews for three-year registration updates
- Updating procedures for the apportionment of RINs when feedstocks qualifying for multiple D-codes (e.g., D3 and D5) are converted to biogas simultaneously in an anaerobic digester
- Revising the conversion factor in the formula for calculating the percentage standard for BBD to reflect increasing production volumes of renewable diesel
- Amending the provisions for the generation of RINs for straight vegetable oil to ensure that RINs are valid
- Clarifying the definition of fuel used in ocean-going vessels
- Other minor changes and technical corrections
For yearly volume targets beyond those covered in the statute, the statute directs EPA to determine the targets in coordination with the Secretary of Energy and the Secretary of Agriculture based on review of implementation of the program for prior years and an analysis of specified factors:
- 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
- Impact of renewable fuels on the energy security of the U.S
- Expected annual rate of future commercial production of renewable fuels, including advanced biofuels in each category (cellulosic biofuel and biomass-based diesel)
- 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
- Impact of the use of renewable fuels on the cost to consumers of transportation fuel and on the cost to transport goods
- 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
Other statutory requirements and conditions considered include environmental justice, comparison of costs to impact, policy considerations and endangered species.
The RFS program is entering a new phase by introducing a new regulatory program governing renewable electricity. Comments are welcome not only on the volumes being proposed, but also on the analyses EPA conducted and the proposed regulatory changes. Some items in this proposal for requested comments include, but are not limited to:
- Various alternative approaches that we could take with respect to volumes as well as certain other policy parameters
- Whether EPA should establish volume requirements for one or two years instead of three years
- Whether the implied conventional renewable fuel volume requirement should be 15.00 billion gallons rather than 15.25 billion gallons in 2024 and 2025, or whether the implied conventional renewable fuel volume requirement should be reduced by some other amount, such as below the E10 blendwall, while keeping the total renewable fuel volume requirement unchanged
EPA plans continued engagement with stakeholders on this rule through the formal public comment process, public hearings and through meetings with program participants and others.
The revision of the RFS program to include new regulations governing the generation of eRINs will result in many first-time parties registering and participating. The process of registering these parties, and of them becoming familiar with and complying with the RFS program, will require significant time and resources, both for participants and the EPA. EPA does not believe that it is realistically feasible for the generation of eRINs to be permitted in 2023. As a result, EPA is proposing to permit eRIN generation beginning on January 1, 2024.
Comments for this EPA proposal are required by February 10, 2023.
The EPA proposal (Part 80) is available on InterRegs.NET for our US Federal subscribers and is also available at www.selectregs.com.