Renewable Fuel Standard Program
   (RFS2) Summary and Analysis of
   Comments
United States
Environmental Protection
Agency

-------
                 Renewable Fuel Standard Program

                 (RFS2)  Summary and Analysis of

                               Comments
                           Assessment and Standards Division
                          Office of Transportation and Air Quality
                          U.S. Environmental Protection Agency
v>EPA
United States                                  EPA-420-R-10-003
Environmental Protection                            r ,   „„.„
Agency                                     February 2010

-------
Index of RFS2
Proposal Commenters
Commenter
Abengoa Bioenergy Corporation
Aberdeen Development Corp.
Ad-Hoc Coalition of Small Business
Refiners
Advanced Biofuels Association
AE Biofuels, Inc.
Ag Partners
Ag Processing Inc.
Alliance for a Safe Alternative Fuels
Environment
Alliance of Automobile Manufacturers
Aloha Petroleum, Ltd.
Altrius Group
American Bakers Association
American Council for Ethanol
American Farm Bureau Federation
American Forest and Paper Association
American Frozen Food Institute
American Meat Institute
American Petroleum Institute
American Snack Food Association
American Soybean Association
Abbreviation


SBR




All SAFE
Alliance



ACE
AFBF



API

ASA
Docket ID Number
EPA-HQ-OAR-2005-
0161-2487
EPA-HQ-OAR-2005-
0161-1051
EPA-HQ-OAR-2005-
0161-2135,2307,2399
EPA-HQ-OAR-2005-
0161-2346, 2408
EPA-HQ-OAR-2005-
0161-2079,2318
EPA-HQ-OAR-2005-
0161-2087
EPA-HQ-OAR-2005-
0161-2363
EPA-HQ-OAR-2005-
0161-2241
EPA-HQ-OAR-2005-
0161-2132
EPA-HQ-OAR-2005-
0161-2017
EPA-HQ-OAR-2005-
0161-0911,2244
EPA-HQ-OAR-2005-
0161-2303
EPA-HQ-OAR-2005-
0161-1050,2101
EPA-HQ-OAR-2005-
0161-2150
EPA-HQ-OAR-2005-
0161-2493
EPA-HQ-OAR-2005-
0161-2504
EPA-HQ-OAR-2005-
0161-2138,2402
EPA-HQ-OAR-2005-
0161-2393,2523
EPA-HQ-OAR-2005-
0161-2246
EPA-HQ-OAR-2005-
0161-2100

-------
American Trucking Association
Amyris Biotechnologies, Inc.
Arcadia Biosciences
Archer Daniels Midland Company
Association of American Railroads
Association of International Automobile
Manufacturers
Atlantic Biofuels1
Beckley Ag Products
Beta Analytic, Inc.
Beveridge & Diamond, PC
BioPure Fuels
BioEnergy Producers Association
Biomass Rules, LLC
Biotechnology Industry Organization
(Industrial and Environmental Section)
BlueFire Ethanol
Blue Flint Ethanol, LLC
Boeing Company
BP America
Brazilian Sugarcane Industry
Association (UNICA)
Brazilian Biodiesel Union
Brazilian Vegetable Oil Industry
Association
Burack Environmental Law Offices
Butterball, LLC
ATA


ADM
AAR
AIAM







BIO



BP
UNICA
URABIO
ABIOVE


EPA-HQ-OAR-2005-
0161-2141
EPA-HQ-OAR-2005-
0161-2374
EPA-HQ-OAR-2005-
0161-2111
EPA-HQ-OAR-2005-
0161-2360
EPA-HQ-OAR-2005-
0161-2103
EPA-HQ-OAR-2005-
0161-2128
EPA-HQ-OAR-2005-
0161-1011
EPA-HQ-OAR-2005-
0161-2165,2584
EPA-HQ-OAR-2005-
0161-0998, 1027
EPA-HQ-OAR-2005-
0161-2096
EPA-HQ-OAR-2005-
0161-2048
EPA-HQ-OAR-2005-
0161-2350,2532,2539
EPA-HQ-OAR-2005-
0161-2112
EPA-HQ-OAR-2005-
0161-2385
EPA-HQ-OAR-2005-
0161-2389
EPA-HQ-OAR-2005-
0161-0993
EPA-HQ-OAR-2005-
0161-2392
EPA-HQ-OAR-2005-
0161-2384
EPA-HQ-OAR-2005-
0161-1761,2137,2476
EPA-HQ-OAR-2005-
0161-2133
EPA-HQ-OAR-2005-
0161-2133
EPA-HQ-OAR-2005-
0161-2342
EPA-HQ-OAR-2005-
0161-2506, 2627
11

-------
California Air Resources Board
Canada, Foreign Affairs and
International Trade
Canadian Bioenergy Corporation
Canopy Prospecting and Trinidad
Dehydration Company, Limited
Cargill Incorporated
Caribbean Basin Ethanol Producers
Group
Caterpillar
CC Gas Systems
Chris Gould Farms
Central Iowa Energy
Chevron
Chesapeake Bay Commission
Chesapeake Bay Foundation
Clean Air Task Force
Clean Energy
Clean Fuels Clearinghouse
ConocoPhillips
Conservation International
Conservis Corporation
Corn Plus
Cornell University
Coskata
CARS












CATF








EPA-HQ-OAR-2005-
0161-2337
EPA-HQ-OAR-2005-
0161-2519
EPA-HQ-OAR-2005-
0161-1975
EPA-HQ-OAR-2005-
0161-2362
EPA-HQ-OAR-2005-
0161-2419,2511
EPA-HQ-OAR-2005-
0161-2012
EPA-HQ-OAR-2005-
0161-2127,2518
EPA-HQ-OAR-2005-
0161-1010
EPA-HQ-OAR-2005
EPA-HQ-OAR-2005-
0161-1987-0161-2212
EPA-HQ-OAR-2005-
0161-2013
EPA-HQ-OAR-2005-
0161-2110
EPA-HQ-OAR-2005-
0161-2080,2113
EPA-HQ-OAR-2005-
0161-2334
EPA-HQ-OAR-2005-
0161-2129,2414,2538,
2414,2538
EPA-HQ-OAR-2005-
0161-2401
EPA-HQ-OAR-2005-
0161-2018,2019,2083,
2243,2319
EPA-HQ-OAR-2005-
0161-2154
EPA-HQ-OAR-2005-
0161-2512
EPA-HQ-OAR-2005-
0161-2521
EPA-HQ-OAR-2005-
0161-2115
EPA-HQ-OAR-2005-
0161-1987
EPA-HQ-OAR-2005-
111

-------

Cotner Consulting Services
Council of Western State Foresters
CountryMark Cooperative
County Sanitation Districts of Los
Angeles County
Covanta Energy
CVR Energy
Darling International Inc.
Dial Corporation (Henkel Company)
Dolphin Land Co.
Dow AgroSciences
DuPont Applied BioSciences
DSI Fabrication, Inc.
Dynamic Fuels, LLC
e-biofuels, LLC
Edison Electric Institute
Embassy of Brazil
Endicott Biofuels II, LLC
Enerkem
EnerTech Environmental, Inc.
Engine Manufacturers Association
Ensus Ltd.
Environmental Consultant
Environmental Defense Fund




















EMA



0161-2526,2389
EPA-HQ-OAR-2005-
0161-1005
EPA-HQ-OAR-2005-
0161-2494
EPA-HQ-OAR-2005-
0161-2118
EPA-HQ-OAR-2005-
0161-2376, 2540
EPA-HQ-OAR-2005-
0161-2395
EPA-HQ-OAR-2005-
0161-2396
EPA-HQ-OAR-2005-
0161-0999,2151,2546
EPA-HQ-OAR-2005-
0161-2499
EPA-HQ-OAR-2005-
0161-1040
EPA-HQ-OAR-2005-
0161-2300
EPA-HQ-OAR-2005-
0161-2146
EPA-HQ-OAR-2005-
0161-1041
EPA-HQ-OAR-2005-
0161-2149,2386
EPA-HQ-OAR-2005-
0161-2210
EPA-HQ-OAR-2005-
0161-2335
EPA-HQ-OAR-2005-
0161-2525
EPA-HQ-OAR-2005-
0161-2106
EPA-HQ-OAR-2005-
0161-2416
EPA-HQ-OAR-2005-
0161-2085,2139
EPA-HQ-OAR-2005-
0161-2147
EPA-HQ-OAR-2005-
0161-1871, 1990,2387
EPA-HQ-OAR-2005-
0161-1000
EPA-HQ-OAR-2005-
IV

-------

Environmental Working Group
Environmental Intelligence, Inc.
Enzyme Development Corporation and
Genencor International (Technical
Consultant for)
EthylChem, Ltd.
European Commission
ExxonMobil Refining & Supply Co.
Farbest Foods, Inc.
Farm Econ LLC
First United Ethanol
Flint Hills Resources
Ford Motor Company
Forest Landowners Association
Friends of the Earth
Fuel Marketing Corporation
Fulcrum BioEnergy
Galva Hoi stein Ag, LLC
Gen-X Energy Group, Inc.
Georgia Forestry Commission
Gevo Inc.
Glenwood Farms
Goldsboro Milling Company
Governors' Biofuels Coalition










FHR

FLA










0161-2308
EPA-HQ-OAR-2005-
0161-2129,2414,2508,
2538
EPA-HQ-OAR-2005-
0161-1669
EPA-HQ-OAR-2005-
0161-2189
EPA-HQ-OAR-2005-
0161-2426, 2637
EPA-HQ-OAR-2005-
0161-2020
EPA-HQ-OAR-2005-
0161-2130,2427
EPA-HQ-OAR-2005-
0161-2527
EPA-HQ-OAR-2005-
0161-2138,2402
EPA-HQ-OAR-2005-
0161-2168
EPA-HQ-OAR-2005-
0161-2145
EPA-HQ-OAR-2005-
0161-2465
EPA-HQ-OAR-2005-
0161-2417,2507
EPA-HQ-OAR-2005-
0161-2129,2414,2538
EPA-HQ-OAR-2005-
0161-1002
EPA-HQ-OAR-2005-
0161-2021,2073,2389
EPA-HQ-OAR-2005-
0161-2000
EPA-HQ-OAR-2005-
0161-1044
EPA-HQ-OAR-2005-
0161-2156,2535
EPA-HQ-OAR-2005-
0161-2304
EPA-HQ-OAR-2005-
0161-1012
EPA-HQ-OAR-2005-
0161-2107
EPA-HQ-OAR-2005-

-------

Gradek Energy
Great River Energy
Green Earth Fuels, LLC
GreenShift Corporation
Griffin Industries, Inc.
Grocery Manufacturers Association
Growmark, Inc.
Growth Energy
Highlands EnviroFuels, LLC
Hillside Ag
Holliday Environmental Services, Inc.
Honeywell International, Inc.
Hornbeck Agricultural
ICM, Inc.
Illinois Corn Growers Association
Illinois Corn Growers Association, et. al.
Illinois Farm Bureau
Illinois Petroleum Marketers Association
Illinois River Energy, LLC
Illinois Soybean Association
Imperium Renewables, Inc.





















IRI
0161-2390
EPA-HQ-OAR-2005-
0161-1026
EPA-HQ-OAR-2005-
0161-0953
EPA-HQ-OAR-2005-
0161-2423
EPA-HQ-OAR-2005-
0161-2074, 2094
EPA-HQ-OAR-2005-
0161-0994
EPA-HQ-OAR-2005-
0161-2309
EPA-HQ-OAR-2005-
0161-2495
EPA-HQ-OAR-2005-
0161-1959,2320,2330,
2332, 2359, 2378, 2379,
2380,2381,2382,2383,
2415,2635
EPA-HQ-OAR-2005-
0161-2445
EPA-HQ-OAR-2005-
0161-2366
EPA-HQ-OAR-2005-
0161-0982, 0983, 0986
EPA-HQ-OAR-2005-
0161-2099
EPA-HQ-OAR-2005-
0161-2148
EPA-HQ-OAR-2005-
0161-2638
EPA-HQ-OAR-2005-
0161-2339,2372
EPA-HQ-OAR-2005-
0161-2245
EPA-HQ-OAR-2005-
0161-2347
EPA-HQ-OAR-2005-
0161-2322
EPA-HQ-OAR-2005-
0161-2190
EPA-HQ-OAR-2005-
0161-2174
EPA-HQ-OAR-2005-
0161-2516
VI

-------
Independent Fuel Terminal Operators
Association
Indonesian Palm Oil Commission
INEOS Bio
Institute for Agriculture and Trade
Policy
Institute for International Trade
Negotiations, the Brazilian Institute for
International Negotiations
International Council on Clean
Transportation
logen Corporation
Iowa Biodiesel Board
Iowa Corn Growers Association
Iowa Farm Bureau Federation
Iowa Renewable Energy, LLC
Iowa Renewable Fuels Association
Iowa Soybean Association
John Deere Agriculture & Turf Division
Kansas Corn Growers Association
Kauai Westside Watershed Council
Kentucky Division of Forestry, Energy
and Environment Cabinet
Kurzman Clean Tech Research &
Kurzman Capital, LLC1
LanzaTech, Inc.
Lenahan
Lignol Innovations, Inc.
Low Carbon Synthetic Fuels Association
LyondellBasell Industries
IFTOA



ICONE
ICCT





IRFA









LCSFA

EPA-HQ-OAR-2005-
0161-2345
EPA-HQ-OAR-2005-
0161-2361
EPA-HQ-OAR-2005-
0161-2389
EPA-HQ-OAR-2005-
0161-2513
EPA-HQ-OAR-2005-
0161-1958
EPA-HQ-OAR-2005-
0161-2491
EPA-HQ-OAR-2005-
0161-2248, 2492, 2533
EPA-HQ-OAR-2005-
0161-2357
EPA-HQ-OAR-2005-
0161-2372
EPA-HQ-OAR-2005-
0161-1989
EPA-HQ-OAR-2005-
0161-2510
EPA-HQ-OAR-2005-
0161-0921,2136,2247,
2321,2372
EPA-HQ-OAR-2005-
0161-2078,2353,2530
EPA-HQ-OAR-2005-
0161-2344
EPA-HQ-OAR-2005-
0161-2488
EPA-HQ-OAR-2005-
0161-1616
EPA-HQ-OAR-2005-
0161-2005, 2349
EPA-HQ-OAR-2005-
0161-1001
EPA-HQ-OAR-2005-
0161-2131,2475
EPA-HQ-OAR-2005-
0161-2551

EPA-HQ-OAR-2005-
0161-2310
EPA-HQ-OAR-2005-
Vll

-------

Macquarie University (Australia)
Graduate School of Management
Magellan Midstream Partners
MAIZAR, Argentine Corn and Sorghum
Association
Malaysian Palm Oil Board
Manufacturers of Emission Controls
Association
Marathon Petroleum Company
Mascoma Corporation
Massachusetts Department of
Environmental Protection
Mercedes Benz
Methanol Institute
Metropolitan Washington Air Quality
Committee
Midwestern Legislative Conference of
the Council of State Governments
Minnesota Coalition for Ethanol
Minnesota Corn Growers Association
Minnesota Farm Bureau Federation
Minnesota Petroleum Retailers
Association
Minnesota Pollution Control Agency
Minnesota Soybean Processors
Missouri Corn Growers Association
Missouri Department of Natural
Resources
Murphy Oil USA, Inc.
Musket Corporation
National Alliance of Forest Owners




MPOB
MECA
MFC



MI





MPRA

MnSP

MnDNR



0161-2312
EPA-HQ-OAR-2005-
0161-1048
EPA-HQ-OAR-2005-
0161-2025, 2420
EPA-HQ-OAR-2005-
0161-1719
EPA-HQ-OAR-2005-
0161-2356
EPA-HQ-OAR-2005-
0161-2412
EPA-HQ-OAR-2005-
0161-2233
EPA-HQ-OAR-2005-
0161-2171
EPA-HQ-OAR-2005-
0161-2354
EPA-HQ-OAR-2005-
0161-2125,2398
EPA-HQ-OAR-2005-
0161-2397, 2482
EPA-HQ-OAR-2005-
0161-2375
EPA-HQ-OAR-2005-
0161-2008
EPA-HQ-OAR-2005-
0161-2152
EPA-HQ-OAR-2005-
0161-2372
EPA-HQ-OAR-2005-
0161-2446
EPA-HQ-OAR-2005-
0161-2301
EPA-HQ-OAR-2005-
0161-2534
EPA-HQ-OAR-2005-
0161-2172
EPA-HQ-OAR-2005-
0161-2372
EPA-HQ-OAR-2005-
0161-2515
EPA-HQ-OAR-2005-
0161-2400
EPA-HQ-OAR-2005-
0161-2464, 2537
EPA-HQ-OAR-2005-
Vlll

-------

National Association of Clean Air
Agencies
National Association of Convenience
Stores
National Association of State Foresters
National Biodiesel Board
National Chicken Council
National Corn Growers Association
National Council for Air and Stream
Improvement, Inc.
National Council of Chain Restaurants
National Farmers Union
National Grain and Feed Association
National Marine Manufacturers
Association
National Petrochemical and Refiners
Association
National Renderers Association
National Solid Waste Management
Association
National Sorghum Producers
National Turkey Federation
National Wildlife Federation
Natural Resources Defense Council
NGV America
Nebraska Corn Board
New England Fuel Institute
New Fuels Alliance
New Generation Biofuels

NACAA
NACS

NBB

NCGA
NCASI

NFU

NMMA
NPRA




NWF
NRDC


NEFI
NFA
NGBF
0161-2173
EPA-HQ-OAR-2005-
0161-2089
EPA-HQ-OAR-2005-
0161-2358
EPA-HQ-OAR-2005-
0161-2517
EPA-HQ-OAR-2005-
0161-2232, 2249, 2299
EPA-HQ-OAR-2005-
0161-2138,2402
EPA-HQ-OAR-2005-
0161-2122,23172331
EPA-HQ-OAR-2005-
0161-1045
EPA-HQ-OAR-2005-
0161-2309
EPA-HQ-OAR-2005-
0161-2368, 2463 (dup)
EPA-HQ-OAR-2005-
0161-2529
EPA-HQ-OAR-2005-
0161-2394
EPA-HQ-OAR-2005-
0161-2124
EPA-HQ-OAR-2005-
0161-0988
EPA-HQ-OAR-2005-
0161-2377
EPA-HQ-OAR-2005-
0161-2119
EPA-HQ-OAR-2005-
0161-2138,2402
EPA-HQ-OAR-2005-
0161-2129,2414,2538
EPA-HQ-OAR-2005-
0161-2129,2414,2538
EPA-HQ-OAR-2005-
0161-2370
EPA-HQ-OAR-2005-
0161-2098
EPA-HQ-OAR-2005-
0161-2314,2327
EPA-HQ-OAR-2005-
0161-2367
EPA-HQ-OAR-2005-
IX

-------

New Planet Energy
New York Biomass Energy Alliance
New York State Department of
Agriculture and Markets
New York State Department of
Environmental Conservation
New York University School of Law
Neste Oil Holding Inc.
Noble Americas
North American Affairs Committee of
the International DME Association
North American Carbon Capture and
Storage Association
North Atlantic Refining Ltd.
North Carolina Department of
Transportation
Northeast States for Coordinated Air Use
Management
Novogy, Inc.
Novozymes North America, Inc.
NxENRG
Oglethorpe Power
Osage Bio Energy
Outdoor Power Equipment Institute
The Pacific Forest Trust
Pennsylvania Department of Agriculture
Pennsylvania Energy Resources Group
Pennsylvania State Senate
Pennsylvania State University






Neste


NACCSA
NARL

NESCAUM





OPEI


ERG


0161-2355,2369
EPA-HQ-OAR-2005-
0161-2095
EPA-HQ-OAR-2005-
0161-2023,2352
EPA-HQ-OAR-2005-
0161-2144,2531
EPA-HQ-OAR-2005-
0161-2143
EPA-HQ-OAR-2005-
0161-2117
EPA-HQ-OAR-2005-
0161-2365,2391
EPA-HQ-OAR-2005-
0161-2341
EPA-HQ-OAR-2005-
0161-2422
EPA-HQ-OAR-2005-
0161-2097
EPA-HQ-OAR-2005-
0161-2498
EPA-HQ-OAR-2005-
0161-2474
EPA-HQ-OAR-2005-
0161-2466
EPA-HQ-OAR-2005-
0161-2081
EPA-HQ-OAR-2005-
0161-2002
EPA-HQ-OAR-2005-
0161-2004
EPA-HQ-OAR-2005-
0161-2388
EPA-HQ-OAR-2005-
0161-2343
EPA-HQ-OAR-2005-
0161-2241
EPA-HQ-OAR-2005-
0161-2424
EPA-HQ-OAR-2005-
0161-2547
EPA-HQ-OAR-2005-
0161-1052, 1977
EPA-HQ-OAR-2005-
0161-2333
EPA-HQ-OAR-2005-

-------

PetroAlgae
Petro-Diamond Incorporated
Petroleum Marketers Association of
America
Petroleum Marketers and Convenience
Stores of Iowa
Pew Center on Global Climate Change
Poet Ethanol Products
Prairie Pride, Inc.
Primafuel, Inc.
The ProExporter Network
Renewable Energy Group
Renewable Fuels Association
RENTECH, Inc.
R.W. Heiden Associates LLC
Sapphire Energy
SeQuential Pacific Biodiesel
SGBiofuels
Shell Oil Products US
Sierra Club
Sierra Research, Inc.
Small Business Association, Office of
Advocacy
Snack Food Association
The Soap and Detergent Association



PMAA
PMCI





REG
RFA





SOPUS


SB A- Advocacy


0161-2086
EPA-HQ-OAR-2005-
0161-2425
EPA-HQ-OAR-2005-
0161-2217
EPA-HQ-OAR-2005-
0161-2328
EPA-HQ-OAR-2005-
0161-2155,2328
EPA-HQ-OAR-2005-
0161-2114
EPA-HQ-OAR-2005-
0161-1033,2477,2639
EPA-HQ-OAR-2005-
0161-1049,2616
EPA-HQ-OAR-2005-
0161-2486, 2520
EPA-HQ-OAR-2005-
0161-2116
EPA-HQ-OAR-2005-
0161-1015, 1750,2123
EPA-HQ-OAR-2005-
0161-0952, 0970, 1042,
2329,2315,2329,2489
EPA-HQ-OAR-2005-
0161-2102
EPA-HQ-OAR-2005-
0161-2435
EPA-HQ-OAR-2005-
0161-2490
EPA-HQ-OAR-2005-
0161-1969,2027
EPA-HQ-OAR-2005-
0161-2336
EPA-HQ-OAR-2005-
0161-2505
EPA-HQ-OAR-2005-
0161-2129,2414,2538
EPA-HQ-OAR-2005-
0161-2204
EPA-HQ-OAR-2005-
0161-2105
EPA-HQ-OAR-2005-
0161-2309
EPA-HQ-OAR-2005-
0161-2305
XI

-------
Society of Independent Gasoline
Marketers of America
Society for Range Management
South Dakota State University
SoyMor Biodiesel, LLC (NBB)
StateLine Cooperative
Sustainable Oils, LLC
Sutherland Asbill & Brennan LLP
Syngenta Biotechnology, Inc.
Syntroleum
Targeted Growth, Inc.
Tennessee Department of Agriculture
Terrabon
Texas Commission on Environmental
Quality
Triton Energy LLC
Tyson Foods, Inc.
Union of Concerned Scientists
United Refining Company
US Canola Association
U.S. Congress, House of Representatives
United States EnviroFuels, LLC
University of California- Berkeley,
Energy and Resources Group
University of California- Berkeley,
Energy Biosciences Institute
University of Georgia Engineering
SIGMA











TCEQ


UCS







EPA-HQ-OAR-2005-
0161-2358,2632
EPA-HQ-OAR-2005-
0161-2120
EPA-HQ-OAR-2005-
0161-2524
EPA-HQ-OAR-2005-
0161-1966,2010
EPA-HQ-OAR-2005-
0161-2348
EPA-HQ-OAR-2005-
0161-2075
EPA-HQ-OAR-2005-
0161-2471
EPA-HQ-OAR-2005-
0161-2153
EPA-HQ-OAR-2005-
0161-2324
EPA-HQ-OAR-2005-
0161-2071,2093
EPA-HQ-OAR-2005-
0161-2409
EPA-HQ-OAR-2005-
0161-2047, 2084
EPA-HQ-OAR-2005-
0161-1032, 1035
EPA-HQ-OAR-2005-
0161-2549
EPA-HQ-OAR-2005-
0161-2364,2410
EPA-HQ-OAR-2005-
0161-1338,2091,2129,
2414,2501,2538,2134
EPA-HQ-OAR-2005-
0161-1397
EPA-HQ-OAR-2005-
0161-2104
EPA-HQ-OAR-2005-
0161-2528
EPA-HQ-OAR-2005-
0161-2445
EPA-HQ-OAR-2005-
0161-0904,2234,2313
EPA-HQ-OAR-2005-
0161-2302
EPA-HQ-OAR-2005-
Xll

-------
Outreach Service1
University of Illinois at Chicago
University of Minnesota- Institute on the
Environment
University of Nebraska-Lincoln,
Nebraska Center for Energy Sciences
Research, Department of Agronomy and
Horticulture
Valero Energy
Verenium Corporation
Vermont Fuel Dealers Association
Virginia Poultry Federation
Vision FL I, LLC
Waste Management
Western Dubuque Biodiesel (NBE)
Weyerhauser
The Wilderness Society
Wisconsin Department of Natural
Resources
World Energy Alternatives, LLC
World Organization of Resource
Councils
World Resources Institute
Wyoming Refining
Xebec Adsorption Inc.
Xyleco, Inc. (submitted by Mercator
XXI, LLC)
Zeachem Inc.






VFDA


WA





WORC





0161-1043
EPA-HQ-OAR-2005-
0161-2003, 2203
EPA-HQ-OAR-2005-
0161-2316,2371
EPA-HQ-OAR-2005-
0161-0981
EPA-HQ-OAR-2005-
0161-2072, 2472
EPA-HQ-OAR-2005-
0161-2502
EPA-HQ-OAR-2005-
0161-1952
EPA-HQ-OAR-2005-
0161-2522
EPA-HQ-OAR-2005-
0161-1036, 1404
EPA-HQ-OAR-2005-
0161-1995
EPA-HQ-OAR-2005-
0161-1976,2011
EPA-HQ-OAR-2005-
0161-2109,2418
EPA-HQ-OAR-2005-
0161-2129,2414,2538
EPA-HQ-OAR-2005-
0161-2497
EPA-HQ-OAR-2005-
0161-2157,2159,2170,
2226, 2227, 2293, 2295,
2296, 2297, 2298, 2340
EPA-HQ-OAR-2005-
0161-2088,2514
EPA-HQ-OAR-2005-
0161-2129,2414,2538,
2414,2538
EPA-HQ-OAR-2005-
0161-2311,2411
EPA-HQ-OAR-2005-
0161-2412
EPA-HQ-OAR-2005-
0161-2548
EPA-HQ-OAR-2005-
0161-2478
Xlll

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ZeroPoint Clean Tech, Inc.

EPA-HQ-OAR-2005-
0161-2413
1- Note the same standardized comment was submitted by multiple commenters, including those comments
denoted in this index. See the rulemaking docket, EPA-HQ-OAR-2005-0161, for these comments.	
                                             xiv

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Acronyms and Abbreviations
AEO
AFOLU
AFV
ARMS
ASTM
B
BESS
BG,Bg
Bgal
BLUM
BOB
BTL
Btu
bpcd
CAA
CBOB
CAFE
CAMx
CARS (or ARE)
CARD
CASAC
CBE
CBI
CBI
CCS
CDX
CET
CFR
CG
CGE
CHP
CMAQ
CO
C02
CRC
CRP
CWPPs
DDG
DG
DoE, DOE
DME
DRIA
Annual Energy Outlook
(2006 IPCC) Agricultural Forest and Other Land Use Guidelines
Alternative Fuel Vehicle
(USD A) Agricultural Resource Management Survey
American Society for Testing Materials
Billion
Biofuel Energy Systems Simulator
Billion Gallon
Billion Gallon
Brazil Land Use Model
Blendstock for Oxygenate Blending
Biomass-to-Liquid
British Thermal Unit
Barrels per Calendar Day
Clean Air Act
California Blendstock for Oxygenate Blending
Corporate Average Fuel Economy
Comprehensive Air Quality Model with Extensions
California Air Resources Board
Center for Agricultural and Rural Development (at Iowa State
University)
Clean Air Science Advisory Committee
Cellulosic Biomass Ethanol
Confidential Business Information
Caribbean Basin Initiative
Carbon Capture and Sequestration
Central Data Exchange
Constant Elasticity of Transformation
Code of Federal Regulations
Conventional Gasoline
Computable General Equilibrium
Combined Heat Processes
Community Multi-scale Air Quality Model
Carbon Monoxide
Carbon Dioxide
Coordinating Research Council
Conservation Reserve Program
Community Wildfire Protection Plans
Dried Distiller Grain
Distiller Grain
U.S. Department of Energy
Dimethyl Ether
Draft Regulatory Impact Analysis
           XV

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E10
E15
E85
EBAMM
EGA
EIA
EISA
EMTS
EO
EPA
EPAct
ERG
ETBE
ETRAE1
EU
EV
FADS
FAME
FAO
FAPRI
FASOM
FFV
FR
FRAR
FRM
FT
FWP
GATT
GE
GHG
GREET
GTAB
GTAP
GWP
HAP
HC
HWP
HR
ILUC
IPCC
ISO
ISO
IT
LCA
10%Ethanol
15%Ethanol
85% Ethanol
ERG Biofuel Analysis Meta-Model
Emission Control Area
Energy Information Administration
Energy Independence and Security Act of 2007
EPA Moderated Trading System
Executive Order
Environmental Protection Agency
Energy Policy Act of 2005
Energy Resources Group (at the University of California Berkeley)
Ethyl Tertiary Butyl Ether
Elasticity of Transformation
European Union
Equivalence Value
Fatty Acid Distillate Streams
Fatty Acid Methyl Ester
(United Nations) Food and Agricultural Organization
Food and Agricultural Policy Research Institute (Model)
Forest and Agricultural Sector Optimization Model
Flex-Fuel Vehicle
Federal Register
Fuel Registration and Reporting
Final Rulemaking
Fischer-Tropsch
Fuel Warming Potential
General Agreement on Tariffs and Trade
General Equilibrium
Greenhouse Gas
Greenhouse gases, Regulated Emissions, and Energy use in
Transportation (Model)
Gasoline Treated as Blendstock
Global Trade Analysis Project (Model)
Global Warming Potential
Hazardous Air Pollutant
Hydrocarbon
Harvested Wood Products
House Report
Indirect Land Use Change
Intergovernmental Panel on Climate Change
Independent System Operator
International Standards Organization
Information Technology
Lifecycle Analysis
XVI

-------
LCFS
LEM
LEV
LHV
LNG
MCF
MM5
MODIS
MPG
MSAT
MSW
MTBE
MY
N
N2O
NAAQS
NASA
NATA
NETL
NGV
NHTSA
NLEV
NMHC
NMIM
NMOG
NOx
NPRM
NREL
OEM
OMB
OPEC
OPIS
ORNL
OTAQ
PADD
PE
P.E.
PET, PETE
PM
ppb
ppm
psi
PSD
PTD
Low Carbon Fuel Standard
Lifecycle Emissions Model
Low Emission Vehicle
Lower Heating Value
Liquefied Natural Gas
Methane Correction Factor
(Pennsylvania State University /National Center for Atmospheric
Research) Fifth-generation Mesoscale Model
(NASA's) Moderate-resolution Imaging Spectroradiometer
Miles Per Gallon
EPA's Mobile Source Air Toxics Rule
Municipal Solid Waste
Methyl Tertiary Butyl Ether
Model Year
Nitrogen
Nitrous Oxide
National Ambient Air Quality Standard
National Aeronautics and Space Administration
National Air Toxics Assessment
National Energy Technology Laboratory
Natural Gas Vehicle
National Highway Transportation Safety Administration
National Low Emission Vehicle
Non-methane Hydrocarbon
National Mobile Inventory Model
Non-methane Organic Gas
Oxides of Nitrogen
Notice of Proposed Rulemaking
National Renewable Energy Laboratory
Original Equipment Manufacturer
Office of Management and Budget
Organization of the Petroleum Exporting Countries
Oil Price Information Service
Oak Ridge National Laboratory
Office of Transportation and Air Quality
Petroleum Administration District for Defense
Partial Equilibrium
Professional Engineer
Polyethylene Terephthalate
Parti cul ate Matter
Parts Per Billion
Parts Per Million
Pound-force per Square Inch
Prevention of Significant Deterioration
Product Transfer Document
XVll

-------
R&D
RBOB
RD
REC
REDD
RFA
RFG
RFS
RFS1
RFS2
RIA
RIN
RSM
RSPO
RVO
RVP
SBA
SB AR Panel
SBREFA
sec
SEC
SIP
STEO
THC
TRS
ULSD
use
USDA
USGS
VMT
VOC
Research and Development
Reformulated Blendstock for Oxygenate Blending
Renewable Diesel
Renewable Electricity Credits
(United Nations Collaborative Programme on Reducing Emissions
from) Deforestation and Forest Degradation in Developing Countries
Regulatory Flexibility Analysis
Reformulated Gasoline
Renewable Fuel Standard
First Renewable Fuel Standard Program (finalized on May
1, 2007}
New Renewable Fuel Standard Program
Regulatory Impact Analysis
Renewable Identification Number
Response Surface Model
Roundtable for Sustainable Palm Oil
Renewable Volume Obligation
Reid Vapor Pressure
Small Business Administration
Small Business Advocacy Review Panel
Small Business Regulatory Enforcement Fairness Act
Social Cost of Carbon
U.S. Securities and Exchange Commission
State Implementation Plan
Short-term Energy Outlook
Total Hydrocarbon
Total Recoverable Sugars
Ultra-low Sulfur Diesel
United States Code
United States Department of Agriculture
U.S. Geological Survey
Vehicle Miles Traveled
Volatile Organic Compound
XVlll

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                               Table of Contents

Chapter 1     General
Chapter 2     Effective Date of the RF S2 Program
Chapter 3     Maj or Elements of the Program Required Under EISA
Chapter 4     Compliance (Registration, Recordkeeping, Reporting)
Chapter 5     Program Changes and Flexibilities
Chapter 6     Assessment of Renewable Fuel Production Capacity and Use
Chapter 7     Impacts of the Program on Greenhouse Gas (GHG) Emissions
Chapter 8     Impacts on Criteria (NAAQS) and Toxic Pollutants
Chapter 9     Costs
Chapter 10    Economic Impacts and Benefits of the Rule
Chapter 11    Impacts on Water
Chapter 12    Administrative Requirements and Legal Authority
Chapter 13    Other
                                     xix

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                Renewable Fuel Standard Program
                 (RFS2) Summary and Analysis of
                              Comments

                              Chapter 1
                               General
                          Assessment and Standards Division
                         Office of Transportation and Air Quality
                         U.S. Environmental Protection Agency
v>EPA
United States                                EPA-420-R-10-003
Environmental Protection                           r ,   „„.„
Agency                                   February 2010

-------
RFS2 Summary and Analysis of Comments
1   GENERAL

  1.1    Supports Rule                                                   1-1
  1.2    Opposes Rule                                                   1-2

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RFS2 Summary and Analysis of Comments
1   GENERAL

What We Proposed:

       The following comments relate in general to the Notice of Proposed Rulemaking
(NPRM). The comments in this chapter are not on any specific aspect of the proposed
rule; rather, they are directed to the general substance of the proposal. More detailed
comments on specific provisions of the proposal can be found in later chapters of this
Summary and Analysis of Comments.

       For more information on the proposed rule, see the Federal Register at 74 FR
24904, published on May 26, 2009. The public comments submitted on this rule can be
viewed online at www.regulations.gov (the public docket for this rulemaking is docket
number EPA-HQ-OAR-2005-0161).
1.1  Supports Rule

What Commenters Said:

       We received many comments supporting the proposed rule, which generally
stated that they support the rule itself and/or efforts to reduce dependence on non-
renewable resources and foreign petroleum supplies to reduce carbon dioxide (CO 2) and
greenhouse gas (GHG) emissions. Commenters additionally expressed support for
various potential positive aspects on the development and use of biofuels, including:
technology and economic growth, job development, support of the agricultural sector,
and energy security.

       However, many of these commenters also stated that, although they support the
rule, they believe that additional work should be done before the rule is finalized.
Commenters offered various suggestions on how they believe that the rule could be
improved, and those specific comments can be found throughout this Summary and
Analysis of Comments document.

Our Response:

     We appreciate the support we have received from  these commenters and well as
many other parties during the development of the final rule to implement the RFS2
standards as mandated by EISA.  As our analysis in support of the rulemaking
demonstrates, we believe that the increase  use of renewable fuels in place of petroleum
fuels will provide both greenhouse gas and energy benefits to our nation, as well as
significant economic benefits to our agricultural sector.
                                      1-1

-------
                                                              Chapter 1: General
       We have conducted extensive analysis in support of the rulemaking on the
greenhouse gas, air quality and water quality impacts of increased use of renewable fuels
as summarized in the preamble and detailed in the Final Regulatory Impact Analysis
(RIA). In addition, EPA is required by section 204 of EISA to assess the environmental
and resource conservation impacts on an ongoing basis.
1.2  Opposes Rule

What Commenters Said:

       We also received comments expressing opposition to the proposed rule.  These
comments listed various aspects such as flawed analyses with respect to land use and fuel
use assumptions, negative experiences with ethanol and other biofuels, regulatory and
compliance requirements, inadequate peer review, and emissions impacts of renewable
fuels.

       More specifically, one commenter stated that it believes that EPA policy should
advance the intent of the Congress in workable ways; accordingly, this proposed rule
should be revisited and made practical. As written, the proposed rule suffers from suspect
methodology in the science; flawed assumptions regarding land use, petroleum and
biodiesel use; and complex regulatory burdens which inhibit rather than facilitate
desperately needed innovation.

       Another commenter stated that the congressional intent clearly aims to encourage
an environmentally sound, innovative, and an economically viable renewable fuels
industry, but the proposed rule will stifle innovation. The proposed rules would
effectively deny important economic incentives to their energy crop innovations.

       Some commenters stated that they are opposed to the EPA  changes in RFS2.
They noted that the very intent of the original legislation, growing the US renewable
fuels industry, will be irreparably harmed if the EPA proposal is allowed to stand. Some
of these commenters further stated that there  is more than sufficient testimony and sound
science refuting many of the EPA interpretations of the 2007 Energy Bill. The
commenters believe that the negative economic impact of the EPA proposal to America's
farmers, consumers, and businesses is further cause for discussion  and revision to
develop fair and sensible rules.

Our Response:

       We have in fact taken the comments we received on the proposal into account and
made significant changes in the lifecycle and other analyses for the rulemaking, as well
as to modify some of the programmatic requirements which should ease implementation
(e.g., new  renewable biomass provisions and EMTS system). We  believe that the final
rule faithfully implements the requirements of EISA in a manner consistent with our legal
                                       1-2

-------
RFS2 Summary and Analysis of Comments
obligations, with sound science, and with sound environmental, energy, and economic
policy.
                                     1-3

-------
               Renewable Fuel Standard Program
                (RFS2) Summary and Analysis of
                             Comments

                             Chapter 2
               Effective Date of the RFS2 Program
                         Assessment and Standards Division
                        Office of Transportation and Air Quality
                        U.S. Environmental Protection Agency
v>EPA
United States                               EPA-420-R-10-003
Environmental Protection                          r ,    „„.„
Agency                                  February 2010

-------
RFS2 Summary and Analysis of Comments
2.     EFFECTIVE DATE

What We Proposed:

       The comments in this section correspond to Section II.A.5 of the preamble to the
proposed rule and pertain to the  date when the RFS2 requirements start to apply to refiners and
importers of gasoline and diesel and producers and importers of renewable fuel, as well as the
volumes of renewable fuel that are required during calendar year 2010.  The comments we
received and our response to those comments are summarized below.


What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2110
Organization:       Chevron
Comment:
The commenter (2110.1) believes that reporting of RIN transactions should shift from RFS1
formats to RFS2 formats only once. The commenter believes that EPA should not begin RFS2
reporting until EMTS is ready to accept RIN transactions. (2110.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2548
Organization:       Xyleco, Inc.
Comment:
EPA should ensure sufficient time for the entry-into-force of RFS2, and that transitional
regulatory arrangements support the overarching legislative objective of promoting development
of renewable fuels. That is, RFS2 should enter into force on January 1, 2011, with RFS1
continuing to apply in the meantime. This delayed implementation date would have the added
advantage that the  EPA would have another year to analyze historical data on renewable fuels
production before determining whether to grant waivers, and, if so, to what level mandates
should be adjusted.

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) supports implementing the RFS2 amendments quickly, but believes
that EPA's revised lifecycle analysis is not likely to be completed in time for a January 1, 2010
effective date. The commenter believes much work still needs to be done with respect to EPA's
lifecycle analysis, particularly with respect to the sensitivity and uncertainty analysis. (2329.1,
p. 15)

The commenter believes that EPA can rely on the current RFS program to meet the revised
requirements pending issuance of final regulations. The commenter noted that the RFS1

                                         2-1

-------
                                                              Chapter 2: Effective Date
regulations currently in place are sufficient to implement the EISA requirements. (2329.1, p. 16)
[[See Docket Number 2329.1 pp.16-19 for a detailed discussion of this issue]].

The commenter agrees that January 1, 2011 is the "most straightforward" alternative effective
date and EPA should not implement the program in the middle of the year. (2329.1, p.18)

Document No.:      EPA-HQ-OAR-2005-0161-0988
Organization:       National Renderers Association
Comment:
The commenter requests that EPA not delay implementation of the proposed RFS2 beyond 2009
so that the RFS2 program applies to "all renewable fuel produced on or after January 1, 2010..."
as set forth in proposed 40 CFR 80.1400.  (P.I)

The commenter believes that a January 1, 2010 start date for RFS2 implementation is essential to
meet the Congressional mandate to reduce U.S. dependence on foreign sources of petroleum by
increasing domestic sources of renewable fuels. The commenter also believes the final rule must
be promulgated in 2009  to encourage the production and use of renewable fuels, especially
biomass based diesel, which will significantly reduce greenhouse gas emissions associated with
petroleum fuels. (P.I)

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) noted that the Biodiesel industry needs to have the RFS2 program
launched as soon as practical in  order to preserve its current infrastructure. Due to current
economic conditions, the Biodiesel industry needs this defined market to survive and continue
producing the proposed volume  of biomass-based diesel products. (0994.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-0999
Organization:       Darling International Inc.
Comment:
The commenter (0999) urges EPA to promulgate the RFS2 final rule in 2009 so that the RFS2
program applies to "all renewable fuel produced on or after January 1,  2010..." as set forth in
proposed 40 CFR 80.1400. The commenter believes that a January 1, 2010 start date for RFS2
implementation is essential to meet the Congressional mandate to reduce U.S. dependence on
foreign sources of petroleum by increasing domestic sources of renewable fuels. The commenter
also believes the final rule must be promulgated in 2009 to encourage the production and use of
renewable fuels, especially biomass based diesel, which will significantly reduce greenhouse gas
emissions associated with petroleum fuels. (P.I)

Document No.:      EPA-HQ-OAR-2005-0161-1015
Organization:       Renewable Energy Group
Comment:

                                         2-2

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RFS2 Summary and Analysis of Comments
The commenter (1015) believes the U.S. biodiesel industry is ready today to meet the volumetric
demands required by the RFS2. The industry will suffer if the program is delayed. EPA should
enact a January 1, 2010 implementation date for the RFS2. (1015, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:      GEN-X Energy Group Inc.
Comment:
The commenter (1044) believes that efforts should be made to implement the non-contentious
elements of the proposed rule as fast as possible and further work regarding the LCA and GHG
should be developed. [[Docket number 1044.1, p.  10]]

Document No.:      EPA-HQ-OAR-2005-0161-1050
Organization:      American Council for Ethanol (ACE)
Comment:
The commenter (2101.1) recommends that EPA move forward to enforce the volumetric
requirements as soon as practicable but do so in a way that does not rush the premature
application of the controversial ILUC. (2101.1, p.16)

Document No.:      EPA-HQ-OAR-2005-0161-1969
Organization:      SeQuential-Pacific Biodiesel
Comment:
The commenter states that they have weathered the turbulent markets by utilizing every resource
available including capitalizing on the value of our RINs.  This revenue stream has been vital the
past year. The commenter urges EPA to consider the effect a delay in implementing RFS2 will
have on the renewable fuel industry.  The commenter strongly supports the RFS2 regulatory
program beginning on January 1, 2010.  Postponing implementation will continue to devalue
RINs currently being traded and delay the  recovery for renewable fuel producers. [[Docket
number 2027, p. 1]]

Document No.:      EPA-HQ-OAR-2005-0161-1975
Organization:      Canadian Bioenergy Corporation
Comment:
The commenter believes that EPA should implement RFS2 volume requirements for Jan. 1,
2010.  Delaying the effective date is not consistent to the stated goal to reduce U.S. dependence
of foreign sources of petroleum by increasing domestic sources of energy.  Recognizing the
complexity of this task and that never before has a regulatory program assessed greenhouse gas
emissions of fuels, the industry stands ready to bring low carbon fuel to market. [[Docket
number 1975, p. 1]]

Document No.:      EPA-HQ-OAR-2005-0161-2017
Organization:      Aloha Petroleum, Ltd.
Comment:
                                        2-3

-------
                                                              Chapter 2: Effective Date
The commenter (2017.1) believes that the start date should be January 1, 2011.  A start date any
time during calendar year 2010 would create a great deal of confusion in the marketplace
because not all participants in the program would have adequate time to fully prepare. (2017.1,
p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2102
Organization:       RENTECH, INC
Comment:
The commenter (2102.1) strongly supports EPA's proposed effectiveness date of January 1,
2010, as opposed to an alternative date of January 1, 2011. Any delay in implementation of the
RFS2 program will negatively affect the ability of fuel producers to deliver volumes in future
years by complicating their pathway to financing.  (2102.1, p.6)

Document No.:      EPA-HQ-OAR-2005-0161-2106
Organization:       Endicott Biofuels II, LLC
Comment:
The commenter (2106) suggests that EPA begin implementation of the RFS2 regulatory program
on January 1, 2010 or as soon as possible thereafter but much sooner than January 1, 2011. The
mechanisms for RIN generation and compliance are already in place for a substantial portion of
the transportation fuels marketplace.  While there have been some inevitable challenges, the
system is up and operating and therefore these refinements are incremental  to a working system
to achieve the EISA goals. Any further delay has the effect of sending the wrong signals to the
renewable fuels marketplace where investments are necessary to achieve the EISA goals.
Additional, EPA has confirmed in this NPRM that it will be revisiting these rules on an annual
basis to correct any deficiencies in the rules that may occur with an aggressive implementation
date. [[Docket number 2106.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2110
Organization:       Chevron
Comment:
The commenter supports the comments of API and NPRA.

The commenter (2110.1) thinks a year after final rule promulgation should be reasonable but
EPA should survey producers, including foreign, to confirm this view. Part of the year needs to
be devoted to logistics (purchase, transport, deployment) so that qualifying  renewable fuels can
be available for compliance purposes on the program start date.  Given the complex and unique
nature of the issues associated with this rulemaking, there will not be  enough time for EPA to
promulgate final rules and for affected industries to make adequate preparations to comply with a
January 1, 2010 implementation date. The commenter believes that the earliest feasible option is
a January 1, 2011 start date, assuming that the final rule can be promulgated by the end of this
year. (2110.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2118

                                          2-4

-------
RFS2 Summary and Analysis of Comments
Organization:      CountryMark Cooperative, LLP
Comment:
The commenter (2118.1) believes that the RFS2 program should begin on January 1, 2011.  The
January 1, 2010 implementation date would be infeasible. Due to the delay in promulgating the
RFS2 proposed changes, implementation of the program should be delayed to January 2011.
This would provide time to address record keeping requirements and other issues in the proposed
changes. (2118.1, p.2)

Document No.:     EPA-HQ-OAR-2005-0161-2124
Organization:      National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that the RFS2 program should begin on January 1, 2011.  A
January 1, 2010 implementation date is infeasible. The commenter believes that the affected
industries need adequate lead time to implement these complicated new rules. There simply is
not time between now and January 1, 2010  to implement these rules. (2124.1, p.8)

The commenter believes that the only option is for implementation of the program is January 1,
201 lor later. (2124.1, p. 9).

Document No.:     EPA-HQ-OAR-2005-0161-2130
Organization:      ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) states that the delay in OMB approval of the draft RFS2 proposal make it
highly unlikely that EPA can respond to comment and finalize the RFS2 rulemaking by the end
of October 2009 so that it can take effect on January 1, 2010. If EPA is unable to complete the
rulemaking on that schedule, the commenter urges EPA to delay implementation until January 1,
2011 and rely on the current RFS1 regulation for 2010. [[Docket number 2130.1, pp. 3 and  16]]

The commenter does not support a partial year 2010 implementation due to the complexity  for
those who transact RINs, nor does the commenter believe EPA has the authority to impose  EISA
total renewable volume until RFS2 rules are implemented.[[Docket number 2130.1, pp. 8 and
16]]

The commenter urges EPA to avoid the use of "advisories" regarding how it intends to
promulgate RFS2 requirements, particularly if EPA cannot meet its own schedule for
promulgating such requirements. [[Docket number 2130.1, pp. 8-9]]

Document No.:     EPA-HQ-OAR-2005-0161-2132
Organization:      Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) noted that there are concerns regarding the rulemaking delay and
questioned the availability of cellulosic ethanol volumes next year. However, the commenter has
concluded that EPA should continue with the January 1, 2010, start date as proposed. If EPA

                                        2-5

-------
                                                              Chapter 2: Effective Date
does delay the start date, however, it will need to provide clear direction to obligated parties
regarding the continuation of RFS1, and the commenter recommends applying a single standard
for the total renewable fuel under RFS1 regulations. (2132.1, p. 17)

Document No.:      EPA-HQ-OAR-2005-0161-2136
Organization:       Iowa Renewable Fuels Association (IRFS)
Comment:
The commenter (2136) urges the Agency to put in place interim rules for the RFS2 schedule
while taking more time to develop a strong scientific consensus on international ILUC, its
models and its assumptions.  In addition,  the commenter urges the Agency to finalize an interim
rule, and especially the biomass based diesel carve-out within the overall RFS2 schedule,
beginning on or before January 1, 2010.  Such a rule needs to make clear that obligated parties
must meet the combined 2009 and 2010 biomass based diesel requirement in 2010. [[Docket
number  2136.1, p. 4]] [[See docket number 2136.1, p. 4 for additional discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2137
Organization:       Brazilian Sugarcane Industry Association (UNICA)
Comment:
The commenter (2137.1) urges EPA  to complete the RFS2 rulemaking at the earliest
opportunity, specifically so that the RFS2 mandate may be implemented starting on January 1,
2011. The commenter notes that the deadline by which Congress ordered EPA to revise the RFS
regulations already has passed. [[Docket number 2137.1, p. 10]]

While the commenter has some specific concerns, they believe that it is imperative to avoid any
further delay. The thoroughness of the analysis and conclusions in the proposed rule
demonstrate the extent to which the RFS2 can be finalized without delay. The commenter states
that EPA must reject requests for further  delay and comply with the nondiscretionary mandate
specified in the EISA. [[Docket number 2137.1, pp. 11-12, 17]]

Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The commenter (2145.1) supports implementation of the RFS2 program on January 1, 2011.
The January 1, 2010 start date is unrealistic because it does not provide affected parties with
enough time to prepare for implementation of the new requirements. The commenter agrees
with EPA that the second option considered, starting the program sometime during the 2010
calendar year, carries the many disadvantages described in the preamble. (2145.1, p.5)

The commenter also believes the requirements for the additional categories (advanced biofuels,
cellulosic biofuels and biomass-based diesel) should start contemporaneously with the rule in
2011. Prior requirements for 2009 and 2010 (which would likely have been  modified) should
not be included. (2145.1, p.5)
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RFS2 Summary and Analysis of Comments
Document No.:      EPA-HQ-OAR-2005-0161-2146
Organization:       DuPont Applied BioSciences
Comment:
The commenter (2146.1) suggests that the RFS2 program effective date be delayed until January
1, 2011, to allow additional time for refinement and to give regulated parties an opportunity to
prepare adequately. The commenter would expect the current RFS1 program rules to remain in
effect in the interim. (2146.1, p.7)

Document No.:      EPA-HQ-OAR-2005-0161-2148
Organization:       Hornbeck Agricultural
Comment:
The commenter (2148) encourages EPA to defer the proposed regulations until such time as they
can be reformulated by applying the results of long-term research, accepted scientific principles,
and to be made consistent with the statutory mandates. (2148, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2149
Organization:       Dynamic Fuels, LLC
Comment:
The commenter (2149.1) supports EPA's proposal that the RFS2 regulatory program start on
January 1, 2010. Holding firm on a January 1, 2010, start date would help to ensure that
renewable fuel producers and obligated parties are progressing on a timeline consistent with
EISA's intent.  (2149.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:       ConocoPhillips
Comment:
The commenter (2154.1) believes that there is not sufficient time to accomplish implementation
by January 1, 2010. It is possible that EPA will not even have the rule finalized and issued by
January 1, 2010. The commenter believes  that the only feasible option is an implementation date
of January 1, 2011. This timeframe would allow the necessary time for the renewable  fuel
producers to register and verify their processes and associated "D"  codes for RIN generation. It
would also provide alignment with the projected availability of the EMTS, a significant tool that
will aid in facilitating the implementation of the program. (2154.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers and Convenience Stores of Iowa (PMCI)
Comment:
The commenter (2155.1) believes that the effective date for  the RFS2 should remain as January
1, 2010. If reasonable arguments can be made for the further assessment of indirect land use
formulas, then EPA should proceed with RFS2 without that  component if for no other  reason
than to preserve and better facilitate our renewable fuels production industry.  (2155.1,  p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2233

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                                                             Chapter 2: Effective Date
Organization:      Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) believes the RFS2 programs should begin on January 1, 2011 because it
is extremely complex and the first of its kind. The commenter also believes that creating two
partial year compliance programs would create a degree of complexity and uncertainty that
might prevent the RFS2 from delivering its intended benefits. [[Docket number 2233.2, p.  1]]

Document No.:     EPA-HQ-OAR-2005-0161-2249
Organization:      National Biodiesel Board (NBB)
Comment:
The commenter (2249) urges EPA  to implement a workable program by January 1, 2010, which
should include volume requirements from both 2009 and 2010 in calendar year 2010.  To ensure
continued investment and realization of the environmental and economic benefits derived from a
vibrant biodiesel industry, the commenter supports timely implementation. [[Docket number
2249.1, pp. 1-2]]

The commenter states that until EPA can finalize the RFS2 regulations, the current RFS
regulation  can be used to implement the volume requirements for advanced biofuels and
biomass-based Diesel. Even if portions of the RFS2 program must be delayed as EPA continues
to work on the final rule, EPA must ensure an interim program is in place so that the annual
mandated volumes are met for 2009 and 2010, as required by the statute—this is a non-
discretionary duty of EPA. [[Docket number 2249.1, p. 3]]

[[Also see  docket number 2249.2, pp. iv-v and pp. 3-9 for additional discussion of program
implementation and an interim program.]]

Document No.:     EPA-HQ-OAR-2005-0161-2310
Organization:      Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter (2310) supports EPA's proposed effective date of January 1, 2010, as opposed to
an alternative date of January 1, 2011. We believe that any delay in implementation of the  RFS-
II program could affect the ability of fuel producers to deliver volumes in future years by
negatively impacting their ability to obtain financing. [[Docket number 2310.1, p. 4]]  [[See
docket number 2310.1, pp. 4-5 for  further discussion of the effective date.]]

Document No.:     EPA-HQ-OAR-2005-0161-2317
Organization:      National Corn Growers Association (NCGA)
Comment:
The commenter (2317) believes that EPA should apply the renewable fuel volumes of EISA in
2010 and defer the remainder of the program to  at least 2011, so as to ensure a new calendar
year, rather than a mid-year start date in 2010. [[Docket number 2317.1, p. 43]]

Document No.:     EPA-HQ-OAR-2005-0161-2345

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RFS2 Summary and Analysis of Comments
Organization:      Independent Fuel Terminal Operators Association (IFTOA)
Comment:
The commenter (2345) believes that a January 1, 2010 implementation date is unworkable and
does not support an implementation date in the middle of 2010.  The commenter suggests
January 1, 2011 as this date will allow EPA sufficient time to formulate a workable rule and
provide the regulated community time to comply with the programs complex rules. [[Docket
number 2345.1, pp. 7-8]]

Document No.:     EPA-HQ-OAR-2005-0161-2358
Organization:      Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
The commenter (2358) does not support a January 1, 2010 implementation date and believes the
effective date should coincide with the start of the EMTS so that parties will not have to develop
and abandon procedures, and then develop new requirements mandated by EMTS. [[Docket
number 2358.1, p. 3]]

Document No.:     EPA-HQ-OAR-2005-0161-2364
Organization:      Tyson Foods, Inc.
Comment:
The commenter (2364.1) supports EPA's proposal that the RFS2 regulatory program start on
January 1, 2010. Holding firm on a January 1, 2010, start date would help to ensure that
renewable fuel producers and obligated parties are progressing on a timeline consistent with
EISA's intent. In  addition, while there will of course be uncertainties associated with any
program, it is unclear that the benefits of delaying the start beyond January 1, 2010, outweigh the
costs. (2364.1, p.2)

Document No.:     EPA-HQ-OAR-2005-0161-2383
Organization:      Growth Energy
Comment:
The commenter (2383) believes EPA should publish regulations to implement the basic
volumetric requirements for renewable fuels established by Congress without further delay. This
is critical to the continued viability of the current ethanol industry. [[Docket number 2383.1, p.
ES-1]]

The commenter adds that EPA should implement EISA's volume requirements beginning
January 1, 2010, but should defer implementation of the LCA GHG performance standard until
such standard is appropriately developed. [[Docket number 2383.1, p. ES-3, docket number
1959.1, p.  3, and docket number 2380, p. 3]]

The commenter urges EPA to immediately implement the RFS2 volume requirements while
continuing to examine the proper approaches to implementing other features of the 2007 Energy
Act.  [[Docket number 2383.1, pp. 57-58]]

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                                                             Chapter 2: Effective Date
Document No.:      EPA-HQ-OAR-2005-0161-2384
Organization:       BP America (BP)
Comment:
The commenter (2384) recommends that the RFS2 commence on January 1, 2011. Compliance
with the final RFS2 requirements will take considerable time for biofuel producers and obligated
parties to implement. In addition the systems needed for the industry to comply are complex and
will take time for programming. The commenter believes the most workable solution would be
to continue the RFS1 program through 2010 and then transition into RFS2 in 2011. [[Docket
number  2384.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter (2393) states that the extremely complex and first-of-a-kind nature of the issues
associated with this rulemaking, the length of time needed by EPA to promulgate final
regulations, and for impacted industries to prepare to comply, rule out a 1/1/2010 program start
date. It is critically important that obligated parties and all other parties involved in the RFS,
such as biofuel producers and distributors, have adequate time to prepare for implementation of
the complex four-tier RFS2 mandate. Also, the complexity of the compliance issues associated
with a partial year program should rule-out that possibility as essentially infeasible. The
commenter supports a 1/1/2011 start date, but adds that companies that followed EPA advice to
acquire bio-based diesel renewable identification numbers (RINs) in 2009 should not be
penalized. [[Docket number 2393.1, p. 2 and 2523.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil USA, Inc.
Comment:
The commenter (2400.1) supports the effective date of 1/1/2011 for the RFS2 program. The later
start date will ensure more accurate positions for Refiners, Feedstock Producers, and even
Obligated Parties. Starting the program mid-year may affect its success. (2400.1, p.l and
2400.2, p.9)

Document No.:      EPA-HQ-OAR-2005-0161-2408
Organization:       Advanced Biofuels Association
Comment: The commenter (2408.1) supports EPA's proposed effectiveness date of January 1,
2010 as  opposed to the alternative date of January 1, 2011. Further delay in the implementation
of the RFS2  program will continue to negatively affect the ability of fuel producers to seek
funding  and  develop many of the new technologies which arc now in the pilot and demonstration
phases of development. (2408.1, pp.5-6)

Document No.:      EPA-HQ-OAR-2005-0161-2419
Organization:       Cargill Incorporated

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RFS2 Summary and Analysis of Comments
Comment:
The commenter (2511.1) noted that if the agency is unable to complete the necessary refinements
to the rule due to the massive amount of review required and complexity of the proposed rule for
the industry, the commenter would not oppose a start date of 1/1/2011. The commenter does not
agree with a mid-year start date of the program. (2511.1, p.7)

Document No.:      EPA-HQ-OAR-2005-0161-2423
Organization:       Green Earth Fuels, LLC
Comment:
While regulators debate how to calculate complex new sciences such as international indirect
land use, the commenter (2423) states that countless biodiesel producers are going out of
business. People are losing their jobs, their savings, and their investments. Experienced
alternative fuels entrepreneurs are being driven from the industry. The commenter believes EPA
has the authority to stop this loss and proposes that EPA issue an immediate emergency rule for
obligated parties to meet the 2009 and 2010 obligations in the RFS2. This would qualify any
biodiesel purchases in 2009 and 2010, regardless of pending GHG calculation, until such time as
final rules are completed and published. This emergency rule is consistent with what EPA has
wisely included in its proposed rules; however, it would eliminate the regulatory uncertainty of
this obligation by making the obligation final, not "proposed." This strategy would also give the
agency time to adequately debate complex issues such as indirect land use change without
jeopardizing the industry the RFS  is design to develop. [[Docket number 2423, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2465
Organization:       Ford Motor Company
Comment:
The commenter (2465.1) supports the proposed implementation date of January 1, 2010 for the
Renewable Fuel Standard and the  36 billion gallons scheduled for 2022. The deadline of January
1, 2010 to initiate the RFS2 program should be maintained in support of the renewable fuel
industry. (2465.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) urges EPA to allow for adequate lead-up time prior to implementation
after the final rule is issued.  The issues involved in RFS2 are considerably more complex and
many key areas require additional time and effort to resolve.  EPA should also provide notice as
early as possible, but at least by November 30, 2009, to clearly explain how the 2010 mandates
will be implemented both before and after the RFS2 effective date (assuming a mid-year 2010
start date). Stakeholders, including Obligated Parties and renewable fuel producers, need to
prepare accordingly; thus, EPA should take advantage of its statutory duty to set the 2010
renewable fuel standard in November to notify parties about the entirety of 2010 compliance.
The commenter also recommends that EPA set the RFS2 start date at the beginning of a new
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                                                             Chapter 2: Effective Date
compliance quarter. This will ease the reporting process and allow for a "clean break" between
RFS1 and RFS2 compliance. (2471.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter (2472) believes the only workable option for implementation of the program is
January 1, 2011 or later. Even if EPA is able to promulgate a final rule before January 2010, it
will take until 2011 to accomplish the registrations that are required and to put in place the
systems and plans that are necessary for compliance. [[Docket number 2472.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2474
Organization:       North Carolina Department of Transportation
Comment:
The commenter (2474) believes that EPA must act now with an interim final rule to ensure that
2009 and 2010 volumes are met as required by law. (2474, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2486
Organization:       Primafuel, Inc.
Comment:
The commenter (2486) strongly supports expeditious implementation of RFS2. Any further
delay in implementation of the policies is unacceptable from a political, economic, and
environmental perspective. The commenter views the  RFS2 as  a dynamic regulation which, with
proper implementation, should generate clear and actionable price signals through RIN trading,
to motivate  the development and uptake of lower carbon fuels and the technologies that produce
them. The commenter urges EPA to act immediately with an interim final rule to ensure that
2009 and 2010 volumetric mandates are met as required by law. "Congressional risk" threatens
sufficient levels of investment in low-carbon renewable fuels R&D and commercialization.
[[Docket number 2486.1, p. 1]]

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) believes that EPA should provide the affected industries adequate lead
time to implement these complicated new rules. There  simply is not enough time between now
and January 1, 2010 for implementation. The commenter also believes that EPA should delay the
start of the program to January 1,  2012 if the rules cannot be promulgated by the end of 2010. If
EPA delays the implementation of RFS2 but is intent on increasing the required renewable fuel
volumes to implement EISA during 2010, EPA should use the existing RFS rules with the EISA
renewable fuel volumes (adjusted down for biomass-based diesel and cellulosic), similar to the
way that EPA implemented the RFS2 requirements in 2009. (2505.2, pp. 1-3)  (See Docket
Number 2505.2, pp.1-3 for a detailed discussion of this issue)
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RFS2 Summary and Analysis of Comments
Document No.:      EPA-HQ-OAR-2005-0161-2508
Organization:       Environmental Working Group (EWG)
Comment:
The commenter (2508) strongly urges EPA, in the case that the rule is not approved in time to set
the mandate for 2010, to freeze the mandate at current levels until the rule is approved. (2508,
P-4)

Document No.:      EPA-HQ-OAR-2005-0161-2537
Organization:       Musket Corporation
Comment:
The commenter (2537) requests EPA issue an interim version of RFS2 in time to enforce the
2009 volumes in the EISA no later than January 1, 2010 unless a final version can be issued at
that time. [[Docket number 2537, p. 2]]

The commenter notes that EPA is proposing to combine the mandated 2009 volume of biomass-
based diesel with the 2010 volume, enforcing a two year total beginning no earlier than January
1,  2010. The commenter states that many investments in biomass-based diesel are currently
standing idle in the frustrated anticipation of supporting the congressionally-mandated 2009
volumes. Despite the recommendations that EPA published in  11/08 recommending that
obligated parties should behave in 2009 as if the final rule had been enacted, EPA in May 2009
is requesting ideas on how to delay even further adding doubt as to the value of 2009 efforts.
This has the effect of penalizing forward-thinking companies who invested in 2009 compliance.
[[Docket number 2537, pp. 1-2]]

EPA requests comment on the challenges that will be faced by the fuel distribution system and
the steps that will be necessary to facilitate the volumes  of renewable fuels required under EISA.
The renewable fuel distribution system stepped up to the challenge in 2007 and 2008, led
completely by market forces, and far exceeded Congress' expanded renewable fuel targets for
those years. For the new 2009 requirement for biomass-based diesel we believe that the biggest
challenge that the distribution system currently faces is the uncertainty caused by the ongoing
delay in the issuance of final RFS2 rules. The distribution system for biomass-based diesel is, in
many cases, independent of the feedstock used to produce the renewable fuel.  The investment in
these important distribution facilities, therefore, should not be confounded with the also
important debate surrounding virgin versus waste biomass feedstocks which may take
considerably more time to complete. [[Docket number 2537, p. 2]]

Our Response:

       Under CAA section 211 (o) (2) (A) as modified by EISA, EPA was required to adopt
regulations to implement the new requirements of EISA within one year of enactment, or
December 19, 2008, with the expectation by Congress that all of the RFS2 program requirements
and applicable volumes would apply starting with calendar year 2009. However, as described in
the NPRM, we were not able to promulgate final RFS2 program requirements by December 19,

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                                                               Chapter 2: Effective Date
2008. EPA published the proposed rulemaking on May 26, 2009. Since the NPRM was not
published until after 2009 had started, EPA sought comment on various options for  starting the
requirements of the RFS2 program (e.g., 1/1/2010, 1/1/2011, or a mid-2010 start date) depending
on the timing of the final rule. This includes inviting comment on what volumes of renewable
fuels should be required for calendar year 2010.

       As evidenced above, we received a wide range of comments on these issues from a broad
array of stakeholders expressing either their support for and/or concerns with these various
options. A number of commenters also suggested that EPA should issue interim standards
particularly for biomass-based diesel applicable until such time as the final rulemaking could be
promulgated. Our response to the comments regarding an interim rulemaking can be found in
Section 3.6.2.

       Some of the concerns expressed with regard to starting the RFS2 program on January 1,
2010 related to the time needed to complete the lifecycle analyses, including the analysis of
uncertainty.  As described more fully in Section 7, we have completed the revised lifecycle
analyses for this final rule and used them as the basis for assigning various renewable fuel
production pathways to the four categories defined by EISA.  The time needed to finish our
lifecycle analysis is therefore not a reason to delay implementation of the RFS2 requirements any
further.

       EPA is issuing this final rule in January 2010.  The issue regarding the effective date that
is before the agency is twofold: (1) what date should regulated parties - refiners and importers
of gasoline and diesel, and producers and importers of renewable fuel - have to start complying
with the new requirements in the RFS2 regulations, and (2) for refiners and importers of gasoline
and diesel (obligated parties), what volumes of renewable fuel should they have to meet during
calendar year 2010.  In addressing  these two issues, EPA was guided by two goals.  One goal
was to  maximize compliance with the requirements Congress set out for calendar year 2010.
That means implementing as expeditiously as practicable the transition to the requirements of the
RFS2 regulations, such as the implementation of the new definitions of renewable fuel and the
renewable biomass from which they are produced. It also means requiring the use of the four
renewable fuel volumes expected by Congress for calendar year 2010. In effect this goal calls
for transitioning as expeditiously as practicable to the RFS2 program, and doing it in a way that
maximizes the ability to meet the volume requirements Congress set for calendar year 2010.
EPA also had another goal - to provide the regulated parties with adequate lead-time to
transition to the new requirements of the RFS2 regulations and to establish renewable fuel
volume requirements that provide adequate lead-time for the obligated parties. In considering
the lead time needed by the regulated parties, EPA recognized that the RFS2 program and the
required volumes would require parties to make changes in their behavior, however in most if
not all cases, the changes build on a preexisting program and call for updating and revising
current practices, as discussed in more detail below.
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RFS2 Summary and Analysis of Comments
       As discussed in Section LA.2. of the preamble, EPA has determined that the appropriate
balance of these two goals calls for the transition from using the RFS1 regulatory provisions
regarding registration, RIN generation, reporting, and recordkeeping to using comparable
provisions in this RFS2 rule to occur on July 1, 2010.  This is the start of the 1st quarter
following completion of the statutorily required 60-day Congressional Review period for such a
rulemaking as this. This will provide adequate lead time for all parties to transition to the new
regulatory requirements, including additional time to prepare for RFS2 implementation for those
entities who may find it helpful, especially those covered by the RFS program for the first time.
In addition, making the transition at the end of the quarter will help simplify the recordkeeping
and reporting transition to RFS 2.

       In addition, we are applying the RFS2 renewable fuel volume obligations on a calendar
year basis for 2010. That is, EPA used a full year's volume of the four renewable fuel categories
to establish the volume obligation for refiners and importers. In determining the applicable
percentages used by obligated parties, EPA used the entire 2010 calendar year projected volumes
for gasoline and diesel, and the entire 2010  calendar year volumes for renewable fuel given in
section 211 (o), with certain exceptions. EPA set the applicable percentages using a volume of
12.95 B gallons of renewable fuel, and 0.95 B gallons  of advanced biofuel.  EPA used less than
the entire 0.1 B gallons of cellulosic biofuel, based on  our projection of the total volume of
cellulosic biofuel for 2010, under section 211 (o) (7) (D). For biomass-based diesel, EPA used a
combined volume of 1.15 B gallons covering both the  2009  and 2010 volumes of 0.5  B gallons
and 0.65 B gallons.  Using these volumes, EPA determined the applicable percentages that
obligated parties will use to determine their renewable volume obligations (RVOs) at the end of
a calendar year. Obligated parties are required to apply the annual percentages to the volume of
gasoline or diesel fuel they produce during the full calendar year.  Obligated parties must
demonstrate compliance with their RVOs in an annual report that is due two months after the end
of the calendar year. For 2010, the four RFS2 RVOs for each obligated party will be  calculated
on the basis of all gasoline and diesel produced or imported  on and after January 1,  2010,
through December 31, 2010.   Obligated parties will be required to demonstrate by February 28
of 2011 that they obtained sufficient RINs to satisfy their four 2010 RVOs.

       As discussed below, regulated parties have adequate lead-time to comply with these
requirements. The transition described above will ensure that the regulations will comply in
large part with the results Congress intended for 2010, even if the time needed for this
rulemaking means the results Congress desired for 2010 cannot be fully achieved.

       In discussing the adequacy of the lead time to meet these requirements, there are two
distinct groups of regulated parties that should be considered separately, as the regulatory
requirements and related lead time concerns differ. These two groups are obligated parties and
renewable fuel producers and importers.

Obligated parties - refiners and importers of gasoline and diesel.


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                                                               Chapter 2: Effective Date
       These parties are required to register with EPA and satisfy various record keeping and
reporting requirements. In general all of these parties are already registered with EPA for
various fuel programs, and gasoline refiners and importers are already registered under the RFS1
regulations. Any new or updated registrations must be submitted by July 1, 2010, but the
information required is straightforward to develop and submit. Obligated parties already
registered under RFS1 need not re-register under RFS2. Parties who are not already registered
under RFS1, such as the limited number of parties who refine or import diesel but not gasoline,
will need to submit initial registrations.  In most if not all cases these parties are already
registered with EPA under other fuel programs.  The time provided for registration is adequate to
meet this straightforward requirement.

       Recordkeeping will call for ensuring that adequate records are kept, which in most cases
will mean updating the current RFS1 record systems. For diesel only refiners or importers not
already covered by RFS1, there is a need to ensure an adequate record keeping system is in
place, however the information called for is the kind of information that will normally be
generated in producing or importing diesel fuel and in obtaining and tracking the purchase of
RINs to demonstrate compliance. These parties have been on notice since EISA was passed and
since the proposal was issued of the need to develop such recordkeeping systems. The lead-time
provided by this rule should be adequate for what is a relatively straightforward recordkeeping
requirement.  The first reports to EPA are not required until several months  after the rule is
issued, providing adequate time to comply with the reporting requirements

       Obligated parties will need to satisfy their volume obligation by the end of February
2011, which is when they submit their annual report to EPA.  In that annual report they will need
to demonstrate that they have adequate RINs to satisfy their renewable volume obligations.
These volume obligations are calculated as a percentage of the entire volume of gasoline and
diesel produced or imported during colander year 2010, so it is expected that obligated parties
will obtain  RINs from renewable  fuel producers throughout the year. In  determining the
adequacy of lead time to meet this 2010 volume obligation, one needs to consider whether there
will be an adequate supply of RINs generated by renewable fuel producers for obligated parties
to comply,  and whether there is adequate lead time for the obligated parties  to implement
commercial relationships to obtain these RINs.

       On the first issue, two kinds of RINs can generally be used to meet the 2010 volume
obligation - (1)  2010 RFS1 RINs, generated on January 1, 2010 through June 30 31, 2010, and
up to 20% of 2009 RFS1 RINs, to the extent there are credits from over compliance with the
2009 volume obligation, and (2)  2010 RFS2 RINs generated from July 1, 2010 through the
remainder of 2010.  (In addition, certain 2008 RINs can be used for compliance with the 2010
biomass-based diesel standard. See Section 3.6.3.) In effect the entire production of renewable
fuel for 2010 plus a certain amount of the renewable fuel production of 2009 may be used to
satisfy the parties' volume obligations. RFS1 RINs have been produced  throughout 2009 and
continue to be produced since the beginning of 2010. There has been and will be no gap or lag
in the production of RINs, as the RFS1 regulations continue in effect and require that renewable

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RFS2 Summary and Analysis of Comments
fuel producers generate RINs for the renewable fuel they produce. These 2009 and 2010 RFS1
RINs will be available and can be used towards the RFS2 volume requirements of obligated
parties for 2010.  As discussed in Section IV of the preamble EPA projects that an adequate
supply of renewable fuel will be produced or imported in 2010 with corresponding RINs to meet
the all of the volume obligations that must be met for 2010l. This projected volume of 2010
renewable fuel, combined with the ability to use a certain percentage of 2009 RFS1 RINs, means
that there will be an adequate supply of RINs for obligated parties to use in demonstrating
compliance with the 2010 volume obligation established in this rule.

       On the second issue, compliance requires obligated parties to develop a commercial
relationship with generators or owners of RINs so that the obligated party purchases or otherwise
obtains enough RINs to demonstrate compliance. Obligated parties do not need lead time for
construction or investment purposes, as they are not changing the way they produce gasoline or
diesel.  They do not need time to design or install new equipment, nor take other actions that
require longer lead time. Obtaining the appropriate amount of RINs involves contractual or
other arrangements with renewable fuel producers  or other holders of RINs. Obligated parties
now have significant experience implementing RFS1, and the actions needed to comply under
the RFS2 regulations are a continuation of these kinds of RFS1 activities.  In addition, the
renewable fuel producers have an economic incentive to sell RINs they generate, as compared to
having them expire before they are sold. It is clear that there is an incentive for RIN generators
to enter into the kind of commercial relationships that obligated parties need to enter to be able to
demonstrate compliance. Based on the significant experience already developed under RFS1,
and the ongoing generation of RINs, there is clearly adequate lead-time for obligated parties to
develop the commercial relationships needed so  they can obtain enough RINs by the end of
February 2011 to demonstrate compliance with their 2010 volume obligation.

       EPA has also considered whether the required volumes of renewable fuel can in practice
be produced or imported, transferred, transported and blended or otherwise used. This is
discussed in Section IV of the preamble and Chapter 1 of the RIA.  As discussed there, it is
feasible to produce or import, transport and blend or otherwise use the volumes of renewable
fuels called for in 2010 under the RFS2 program.

Renewable fuel  producers and importers

       As discussed in Section IV of the preamble, EPA projects that the 2010 volume
requirements for renewable fuel, biomass-based  diesel, and advanced biofuel will be met in large
part by ethanol produced from corn, ethanol produced from sugarcane, and biodiesel produced
from soybean and renewable biodiesel, and a limited volume of cellulosic biofuel that will be
produced.  There may be a limited volume of renewable fuels from other sources, but they are
not projected. For the  vast majority of this volume of projected renewable fuel, the producers  or
1  For discussion of the adequacy of the volume of biomass-based diesel from 2009 and 2010, see Section IV.B.4 of
the preamble.
                                          2-17

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                                                               Chapter 2: Effective Date
importers involved are already registered with EPA for RFS1 and have recordkeeping and
reporting systems designed to implement the RFS1 requirements.

       For RFS2 there are also new restrictions on the biomass that can be used to produce
renewable fuel, and renewable fuel producers and importers who generate RINs are subject to
new requirements designed to implement these biomass restrictions.  The biomass restrictions
are described in more detail in Section II.B.4 of the preamble. For ethanol and diesel produced
from crops and crop residue, the "aggregate" approach adopted by EPA means there should be
no lead time concerns with addressing the new requirements. For other renewable fuel producers
not covered by the aggregate approach, the producer and/or importer will need to have adequate
records to demonstrate that the renewable fuel was produced from renewable biomass that met
the requirements of the regulations.  These recordkeeping requirements are new, but they call for
the producer and/or importer to obtain information that should already be available to them in the
normal course of their business - the source of the feedstock used to produce the renewable fuel.
If not kept already, then it is information that can reasonably be obtained in the normal course of
business. The time provided to meet this requirement should be adequate, given the nature of the
information and business records that must be kept.

       Producers or importers of renewable fuel will generate RINs when they produce or
import the renewable fuel, and there are limited changes to the codes within  RINs from RFS1.
These changes have been made to implement the new categories of renewable fuels, and will call
for RIN generators to determine the fuel's specific pathway prior to generating the RINs. In
most cases this is just a variation on practices already occurring under RFS1, using basic
information that is developed in the normal course of the business. In some  cases, a party will
need to register with EPA as a fuel producer, if they have not already done so.  Only a limited
number of new entrants to the renewable fuel market will be  in this situation, and the information
required for this is generally straightforward for the current renewable fuels  and kept in the
normal course of business.

       Producers of renewable fuel in other countries may decide to be the RIN generator for the
fuel they produce that is exported to the U.S. In that case they need to follow all of the same
requirements applicable to domestic renewable fuel producers.  As noted above, the information
needed to do this is all information they have or can obtain in the normal course of their
business. In addition, there are additional compliance related provisions that must be met,
however they are also matters that are straightforward to address.

       The discussion above makes it clear that generators of RINs will have to submit
additional information to EPA and keep additional records to support that the RINs they  generate
are valid, compared to RFS1. However this information is all information that should be
available in the normal course  of business, and in many cases is similar to or an update to
information already kept under RFS1.  The vast majority of RIN generators in 2010 are expected
to be parties already implementing the RFS1 regulations, either now or in the recent past. In
                                          2-18

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RFS2 Summary and Analysis of Comments
these circumstances the lead time for the start of the RFS2 regulations for producers and
importers of renewable fuel should be adequate.

       In addition, obligated parties and other regulated parties have received adequate notice of
these obligations and generally are well on their way to preparing for compliance. Since
December of 2007 when EISA was signed, the basic obligation of both gasoline and diesel
producers to meet the EISA volume requirements has been clear. The proposed rule called for
obligated parties to meet the full volume mandates for all four volume mandates, and to base
their volume obligation on the volume of gasoline and diesel produced starting January 1,  2010.
It also provided EPA's position on other changes called for by EISA, including the new
renewable biomass definition.  The final RFS2 regulations are largely similar to the proposal as
far as the requirements that parties must meet.  Changes from the proposal to the final in many
instances reduce the burden and the lead time needed for compliance. Based on discussions
with a wide variety of stakeholders, the requirements in EISA itself and EPA's proposal have led
regulated parties to take many  actions preparatory to implementation of the RFS2 requirements.
Across the regulated industries, therefore, parties generally now need to finish those
preparations, as compared to starting from scratch upon issuance of the final rule.  This provides
additional support for EPA's view that, as discussed above, there is adequate time for regulated
parties to meet the requirements of the RFS2 regulations, including for obligated parties to meet
their 2010 volume obligations by February 28, 2011.

       This approach for volume requirements in 2010 does not impose any retroactive
requirements. The obligation that is imposed under the RFS2 regulations is forward looking - by
February 28, 2011, when compliance is determined, obligated parties must satisfy certain volume
obligations. These future requirements are calculated in part based on volumes of gasoline and
diesel produced prior to the effective date of the RFS2 regulations, but this does not make  the
RFS2 requirement retroactive in nature.  The RFS2 regulations do not change in any way the
legal obligations or requirements that apply prior to the effective date of the RFS2 regulations.
Instead, the RFS2 requirements impose new requirements that must be met in the future. There
is adequate lead time to comply with these RFS2 requirements, and they achieve a result that is
more consistent with Congress' goals in establishing four volume mandates for calendar year
2010,  and for these reasons EPA is adopting this approach for calendar year 2010.

       Some commenters expressed concern over the lead-time to develop electronic
recordkeeping and reporting programs, including the desire to transition from RFS1 to the new
EMTS program without an additional interim change. We also received numerous comments
indicating that EMTS should align with implementation of the RFS2 program,  and that other
transition options such as monthly reporting were less desirable. We appreciate commenters'
concerns over having sufficient time to implement the new systems and/or make changes to
existing systems. EPA has throughout the development of EMTS utilized an open process for
sharing information with stakeholders.  Since EMTS was first introduced in the NPRM, we have
conducted and continue to conduct workshops and webinars to inform stakeholders (providing
recordings of events on our website for on-demand replay) and to solicit stakeholder

                                          2-19

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                                                               Chapter 2: Effective Date
participation in EMTS evaluation and testing. Additionally, EPA has stressed to the regulated
community that they should prepare and make plans for changing requirements associated with
new RFS2 requirements. As a result of our interactions with stakeholders, we are providing
three options for regulated parties to implement EMTS. Parties may interact with EMTS 1) via
an interactive web interface, 2) through a batch file uploading routine where batch files are
similar to RFS1 reporting, and 3) through direct node-to-node computer connections.  Parties are
not limited to any one method and may change at anytime. All methods differ in the level of
technical sophistication required for implementation as well as time intensity for user
involvement.   For example, parties planning to implement the node-to-node method may
experience technical issues or development constraints, and may utilize one of the other methods
until such issues can be resolved. In addition, EPA has created an XML conversion tool and
various outreach materials, including step by step tutorials, which will aid and educate EMTS
users. EPA pledges to continue to work with the regulated community, as a group and
individually, to ensure EMTS is  successfully implemented. EPA anticipates that with this level
of assistance, regulated parties will not experience significant difficulties in transitioning to the
new system, and EPA believes that the many benefits of EMTS warrant its immediate use.

       EPA did consider a range of other options on the effective date. In addition to a January
1, 2011 start date, we also took comment on imposing a mid-year start to the renewable fuel
volume obligations, despite the negative comments received on such an approach. For example,
EPA considered a more complicated option - (1) determine an RFS1 applicable percentage
based on just the total renewable fuel volume mandate, using the same total volume for
renewable fuel as used in the first approach, and require obligated parties to apply that
percentage to the gasoline produced from January  1, 2010 until the effective date of the RFS2
regulations, and (2)  determine the four RFS2 applicable percentages as discussed  above, but
require obligated parties to apply them to only the  gasoline and diesel in 2010 after the effective
date of the  RFS2 regulations. This approach would fail to ensure that the total volumes for three
of the volume mandates are met  for 2010. In effect EPA would be requiring that obligated
parties use enough cellulosic biofuel, biomass-based diesel, and advanced biofuel to meet
approximately 50% of the total volumes required for these fuels under EISA, assuming that the
RFS2 standards went into effect  on July 1, 2010.  While the total volume mandate under EISA
for renewable fuel would likely be met, the other three volumes mandates would only be met in
part. This failure to maximize compliance with the requirements of EISA makes it appropriate to
reject this option, given there is adequate lead time to ensure the use of the entire annual volumes
as called for by these final rules.

       In addition, this option would have introduced significant new complications into the
program for both standard setting and compliance.  For instance:

       (1)     We would have been required to determine an RFS1 applicable percentage
              standard based on just the total renewable fuel volume mandate, using the same
              total volume for renewable fuel as used in our final action, and require  obligated
                                          2-20

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RFS2 Summary and Analysis of Comments
             parties to apply that percentage to the gasoline produced from January 1, 2010
             until the effective date of the RFS2 regulations

       (2)    We would have been required to determine the four RFS2 applicable percentage
             standards as discussed above, but require obligated parties to apply them to only
             the gasoline and diesel in 2010 after the effective date of the RFS2 regulations.

       Another option would have delayed all of the RFS2 requirements until January 1, 2011,
which would avoid the complexity of the above alternative, but would be even less consistent
with EISA's volumes requirements. Again, given the adequate lead-time to implement the
requirements imposed in this final rule, it is appropriate for EPA to reject this option.
                                          2-21

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               Renewable Fuel Standard Program
                (RFS2) Summary and Analysis of
                            Comments

                            Chapter 3
                 Major Elements of the Program
                      Required Under EISA
                         Assessment and Standards Division
                        Office of Transportation and Air Quality
                        U.S. Environmental Protection Agency
v>EPA
United States                               EPA-420-R-10-003
Environmental Protection                          r ,   „„.„
Agency                                  February 2010

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3.     MAJOR ELEMENTS OF THE PROGRAM AS REQUIRED BY EISA

3.1     Changes to RINs                                                              3-1
       3.1.1  Valid Life of RINs                                                      3-1
       3.1.2  Designation of D Codes Differently for RFS2                              3-2
       3.1.3  D-Code for Cellulosic Diesel Fuel                                        3-4
3.2     Changes in Renewable Fuel Definitions                                          3-5
       3.2.1  Renewable Fuel                                                        3-8
       3.2.2  Treatment of MSW                                                     3-9
       3.2.3  Advanced Biofuel                                                     3-23
       3.2.4  Cellulosic Biofuel                                                     3-25
       3.2.5  Biomass-Based Diesel                                                  3-27
       3.2.5.1 Definition of Co-processed                                             3-31
       3.2.5.2 Algae                                                                 3-34
       3.2.6  Additional Renewable Fuel                                             3-36
       3.2.7  Biogas Used as Process Heat                                           3-42
3.3     Renewable Biomass                                                          3-44
       3.3.1  Alternative Legislative Definitions of "Renewable Biomass"               3-44
       3.3.2  Definitions of Terms                                                   3-45
       3.3.2.1 Planted Crops                                                         3-45
       3.3.2.2 Crop Residue                                                         3-47
       3.3.2.3 Agricultural Land                                                     3-48
       3.3.2.4 Cleared or Cultivated and Actively Managed Agricultural Land             3-54
       3.3.2.5 Fallow                                                               3-56
       3.3.2.6 Planted Trees                                                         3-58
       3.3.2.7 Tree Residue                                                          3-61
       3.3.2.8 Tree Plantations                                                       3-62
       3.3.2.9 Cleared and Actively Managed Tree Plantations                           3-64
       3.3.2.10      Slash                                                          3-67
       3.3.2.11      Pre-Commercial Thinnings                                      3-68
       3.3.2.12      Forestland and Nonforested Land                                 3-72
       3.3.2.13      Ecologically Sensitive Forestland                                 3-75
       3.3.2.14      Old-Growth Forest                                              3-77
       3.3.2.15      Areas at Risk of Wildfire                                        3-79
       3.3.2.16      Animal Wastes and Byproducts                                  3-81
       3.3.2.17      Other Comments on Definitions                                  3-82
       3.3.3  Requiring a Demonstration that Feedstocks Meet the Renewable Biomass
             Definition Prior to Generating RINs                                     3-84
       3.3.3.1 General Comments                                                    3-84
       3.3.3.2 Direct Regulation of Feedstock Producers/Suppliers                       3-86
       3.3.3.3 Agricultural Land                                                     3-87
       3.3.3.4 Tree Plantations and Forestland                                         3-96
       3.3.3.5 Verification Requirements for Non-Cultivated Feedstocks                  3-97
       3.3.3.6 Alternative Compliance Approaches                                     3-98
       3.3.4  Requiring a Demonstration that Feedstocks Do Not Meet the Renewable
             Biomass Definition Prior to Producing Renewable Fuel Without RINs      3-104

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       3.3.5  Use of Data from USD A Programs                                    3-106
       3.3.6  Third-Party Programs                                                3-109
       3.3.7  Treatment of Foreign Renewable Fuel                                 3-113
       3.3.8  Effect of "Renewable Biomass" Proposal on Achieving RFS Goals        3-120
       3.3.9  Sustainability and Renewable Biomass Production                      3-123
3.4    Renewable Fuel Exempt from 20 Percent GHG Threshold (Grandfathering)       3-126
       3.4.1  Definition of Commence Construction                                 3-128
       3.4.2  Basic Approach: Grandfathering Limited to Baseline Volumes            3-131
       3.4.2.1 Limitation on Baseline Volumes                                      3-131
       3.4.2.2 Changes at Facilities that Increase GHG Emissions                      3-140
       3.4.2.3 Comments  on Allowing Tolerance Limit on Baseline Volume             3-141
       3.4.2.4 Restriction of Deemed Compliant Facilities to Produce Only Ethanol      3-143
       3.4.3  Alternative Options                                                  3-144
3.5    Generation of RINs                                                        3-150
       3.5.1  Equivalence Values                                                  3-151
       3.5.1.1 Supports Energy-based Approach to Equivalence Values                 3-151
       3.5.1.2 Supports Straight Volume Approach to Equivalence Values              3-152
       3.5.1.3 Other Aspects of Equivalence Values                                  3-159
       3.5.2  RIN Generation for Domestic Producers                               3-161
       3.5.3  RIN Generation for Foreign Producers and Importers                    3-163
       3.5.3.1 Party that Generates RINs                                            3-163
       3.5.3.2 Different Requirements for Foreign Versus Domestic Producers           3-165
       3.5.4  Facilities with Multiple Applicable Pathways                           3-167
       3.5.5  Facilities that Co-process Renewable Biomass and Fossil Fuels           3-168
       3.5.6  Fuels Without an Applicable D Code                                  3-169
       3.5.7  RINs Generated for Electricity, Natural Gas, and Propane                3-172
3.6    Applicable Standards                                                       3-173
       3.6.1  Calculation of Standards                                             3-178
       3.6.2  Treatment of Biomass-based Diesel in 2009 and 2010                    3-180
       3.6.2.1 Supports the Proposed Treatment of Biomass-based Diesel               3-184
       3.6.2.2 Opposes the Proposed Treatment of Biomass-based Diesel               3-185
       3.6.2.3 Request for Interim Rulemaking                                      3-189
       3.6.2.4 Treatment of 2008 and 2009 Biodiesel RINs                            3-193
3.7    Fuels that are Subject to the Standards                                        3-196
       3.7.1  Coverage Expanded to Transportation Fuels                            3-196
       3.7.2  Treatment of Heating Oil and Jet Fuel                                 3-198
       3.7.3  Treatment of Fuels for Use in Ocean-Going Vessels                     3-198
3.8    Renewable Volume Obligations  (RVOs)                                      3-200
       3.8.1  Treatment of RFS 1 RINs under RFS2                                 3-202
       3.8.2  RINs Eligible to Meet Each RVO                                      3-205
       3.8.3  Deficit Carryovers                                                  3-205
       3.8.4  Obligated Volumes                                                  3-206
       3.8.5  Exported Renewable Fuel                                            3-207
3.9    Designation of Obligated Parties                                             3-209
       3.9.1  Supports Existing Approach                                          3-209
       3.9.2  Blenders or Other Downstream Parties Become Obligated Parties         3-213

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       3.9.3  Expired RINs Used to Reduce Nationwide Obligation for the Following
             Year                                                               3-217
       3.9.4  Other                                                               3-217
3.10   Separation of RINs                                                         3-219
       3.10.1 Nonroad Diesel Fuel, Heating Oil, and Jet Fuel                          3-219
       3.10.2 Exporters                                                           3-222
       3.10.3 Neat Renewable Fuels                                                3-222
       3.10.4 Biodiesel                                                           3-225
       3.10.5 Other                                                               3-226
3.11   Alternative Approaches to RIN Transfers                                     3-227
       3.11.1 Opposes Allowing Producers and Importers to Separate RINs             3-227
       3.11.2 Supports Allowing Producers and Importers to Separate RINs             3-232
       3.11.3 Direct Transfer Approach                                             3-237
       3.11.4 Other                                                               3-238
3.12   Treatment of Cellulosic Biofuel                                              3-242
       3.12.1 Approach to Cellulosic Biofuel Credits                                 3-243
       3.12.2 Adjustments to Other Standards in the Event of a Cellulosic Waiver       3-251
3.13   Production Outlook Reports                                                 3-255

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RFS2 Summary and Analysis of Comments
3.      MAJOR ELEMENTS OF THE PROGRAM As REQUIRED BY EISA

What We Proposed:

       The comments in this section correspond to Section III of the preamble to the proposed
rule and address elements of the program required by the Energy Independence and Security Act
of 2007 (EISA). A summary of the comments received and our response to those comments are
located below (and in Section II of the preamble to the final rule).


3.1 Changes to RINs

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2393
Organization:      American Petroleum Institute (API)
Comment:
The commenter states that EPA should require a cellulosic ethanol RIN generator to apply the
narrowest possible RIN type definition and allow the obligated party to choose if the fuel is used
to meet the cellulosic, advanced or total renewable fuel mandate. This approach should reduce
the risk of market manipulation to favor one product over another and enhance the available
information regarding each renewable fuel. [[Docket number 2393.1, pp. 8-9]]

Our Response:

   Cellulosic ethanol that meets the definitional requirements of cellulosic biofuel will be
assigned a D code  of 3. As described in the regulations at §80.1427(a) (2), a RIN with a D code
of 3 can be used to meet an obligated party's RVO for cellulosic biofuel, advanced biofuel, and
total renewable fuel.  However, there is no requirement that an obligated party apply a RIN to all
the RVOs for which it is valid.  Thus, an obligated party could apply a RIN with a D code of 3 to
its advanced biofuel RVO, but not its cellulosic biofuel or total renewable fuel RVO.
3.1.1   Valid Life of RINs

What Commenters Said:

Document No.:  EPA-HQ-OAR-2005-0161-0952
Organization:   Renewable Fuels Association
Comment:
The commenter (2329.1) believes EPA can take actions to ensure RINs are available to all
obligated parties, including implementing the 12-month limit on the life of RINs and eliminating
the use of equivalence values. Limiting the amount of excess RINs that may be available
ensures that RINs move through the system, and are available to obligated parties. (2329.1, p.88-
89) [[See Docket Number 2329.1, pp.88-89 for a more detailed discussion of the 12-month
limit]]
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                        Chapter 3: Major Elements of the Program As Required By EISA
Our Response:

   As described in the final rulemaking for the RFS1 program [72 FR 23933], we have
implemented the 12-month limit on the life of "credits" under the statute by allowing RINs to be
valid for 12 months following the year in which they are generated. Thus, the valid life of RINs
will span two annual compliance periods, and RINs can be used for compliance purposes in the
year generated and the following year. The rollover cap (see Section 5.4) limits the amount of
excess previous-year RINs that can be used for compliance purposes and ensures that the valid
life of RINs is real. Further limits on the number of RINs that could be used for compliance
purposes, and the elimination of Equivalence Values, are not necessary to implement the credit
provisions under the Act and would make RINs less available for compliance purposes in the
marketplace. EPA's decision to retain energy-based equivalence values is discussed in Section
II.D.I of the preamble and Section 3.5.1 of this S & A document.
3.1.2   Designation of D Codes Differently for RFS2

What Commenters Said:

Document No.:  EPA-HQ-OAR-2005-0161-0994
Organization:   Griffin Industries
Comment:
The commenter (0994.1)  supports the alternative of the six D codes to distinguish the difference
between 2009 RINs and 2010 RINs. (0994.1, p.3)

Upon examination of the  proposed regulations §80.1425(g), the commenter notes that EPA has
not utilized the six D codes.  The commenter recommends that the regulations be changed as
such. The commenter also recommends that Table 1  for §80.1426 be revised to utilize the six D
codes, recognizing that the D=l and D=2 apply to 2009 biofuels and their RIN numbers. Tables
2 and 3 of this section also need to be changed to reflect use of the six D codes. (0994.1, p.3)

Document No.:  EPA-HQ-OAR-2005-0161-2014
Organization:   Clean Fuels Clearinghouse
Comment:
The commenter (2083.1)  recommends that EPA modify the proposed regulations to utilize a
sequence of codes as 3, 4, 5,  and 6 for RFS2. In this way there will be no dual intra-year
representation for the use of codes 1 and 2, and the same effect will be achieved. (2083.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (2249.2)  agrees with EPA's proposal to use four D codes numbered 1, 2, 3 and
4, and to only allow RINs with a D code of "2" to be  able to be used to meet the RVO for
Biomass-based Diesel.
                                           3-2

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RFS2 Summary and Analysis of Comments
Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) supports EPA's proposal, which makes minimal changes to the current
RIN.

Document No.:   EPA-HQ-OAR-2005-0161-2505
Organization:    Shell Oil Products US
Comment:
The commenter (2505.2) generally supports EPA's approach of maintaining the existing RIN
structure, but modifying the D code to identify the categories of renewable fuels. The
commenter is concerned, however, about the possibility of this system growing in complexity if
EPA attempts to implement the RFS2 program mid-year, or if obligated parties become
responsible for averaging various biodiesel fuels to meet the Act's GHG threshold.  EPA should
avoid these complexities by making the biodiesel producers or importers responsible for meeting
the GHG reduction thresholds. (2505.2, p.6)

Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) noted that if in finalizing the rule EPA changes a particular biofuel's
qualification in a manner that in essence "demotes" its "D-code" assignment, EPA should
provide notice and allow an opportunity to comment before finalizing. The commenter believes
that EPA should also allow for notice and comment before finalizing a new pathway assessment
or revised assessment that demotes the  previously-assigned "D" code  for a fuel. (2471.1, p.l 1)

Our Response:

   We agree in concept with the need for a minimum of four separate D codes under RFS2. As
discussed in section II of the preamble, we believe that the best way to do this to allow for a
smooth transition from RFS1 to  RFS2 is to maintain the use of D codes  1 and 2 for RFS1 RINs,
since RINs will be generated under RFS1 regulations for the first part of 2010. Subsequent D-
Codes in the final regulations are then assigned to RFS2 RINs. These D-codes effectively allow
renewable fuel producers to distinguish their product as meeting the 4 different renewable  fuel
categories under RFS2, and allow obligated parties to demonstrate compliance with the 4
different RFS2 standards.

   As described in preamble Section V.C, there is no longer a need to allow for averaging of
various types of biodiesel in order to meet the GHG threshold associated with the biomass-based
diesel standard. Therefore, the D code  structure that we have finalized will not create additional
complexities in this context.

   The final D codes assigned to individual renewable fuel pathways as shown in the lookup
table in §80.1426(f) are based on the updated lifecycle analysis completed for this final rule.
Stakeholders were given an opportunity to provide comments on the draft versions of those
lifecycle analyses in the NPRM, and EPA reviewed those comments as part of the process of
                                           3-3

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                        Chapter 3: Major Elements of the Program As Required By EISA


updating those analyses.  If additional pathways are added to the lookup table in the future, or
changes made to the D codes assigned to existing pathways, stakeholders will be given an
opportunity to provide comment on draft versions in a notice-and-comment process.


3.1.3   D-Code for Cellulosic Diesel Fuel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter opposes the alternative approach to create 5 D codes to give obligated parties the
choice  to apply RINs for cellulosic biodiesel to either its cellulosic biofuel or biomass-based
diesel obligation, but not both. (2329.1, p.91)

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter opposes EPA's proposed alternative treatment of cellulosic-based diesel, which
would  create five D codes and give the obligated party the choice to apply that RIN to either its
Cellulosic Biofuel or Biomass-based Diesel obligation, but not both.  Congress clearly intended
to treat Biomass-based Diesel separately from Cellulosic Biofuel, by creating two distinct RVOs
and a higher volume mandate for Cellulosic Biofuel than Biomass-based Diesel. The definition
of Cellulosic Biofuel and Biomass-based Diesel do not coincide, and EPA should require
cellulosic diesel to be applied toward the Cellulosic Biofuel requirement,  [[docket number
2249.2, p.  12]]

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter supports the alternative D code definitions in Table III.D.2.a-l  but does not
agree that the producer should be allowed to choose whether to categorize his product as either
cellulosic biofuel or biomass-based diesel.  The commenter suggests  that  EPA create a flexible D
code that would denote a fuel that can be counted as either, and that the obligated parties have
the ability to choose  whether to apply such a RIN to cellulosic or biomass-based diesel.  (2124.1,
p.32)

Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The commenter (2145.1) recommends that a separate D code be established for cellulosic diesel.
Cellulosic diesel has the unique ability to qualify as "Biomass-based  Diesel" or as "Cellulosic
Biofuel". The  commenter believes the obligated party should have the decision rights to use
these RINs in either category depending on its needs.  This can be accomplished by assigning a
unique D code to this type of renewable fuel (e.g., D code "5").  Under this process, a producer
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RFS2 Summary and Analysis of Comments
would assign a D code of 5 to the fuel and the obligated party could use the RIN to satisfy the
obligation under biomass-based diesel or cellulosic biofuel. The RIN could still only be used in
one of these categories (2145.1, p.7)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) supports EPA's alternative D code approach to  accommodate cellulosic
diesel.  This approach would enable the obligated party to choose if the fuel is used to meet the
cellulosic, advanced or renewable fuel mandate. [[Docket number 2233.2, p. 7]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
In addition, the commenter supports EPA's alternative approach where an additional D code is
created to accommodate cellulosic diesel. This approach reduces the risk of market manipulation
to favor one product over another. It is  also more appropriate to allow the obligated party to
determine the RINs ultimate use and is consistent with the "nested requirements" methodology.
[[Docket number 2393.1, pp. 8-9]]

Our Response:

   We disagree with the comment that the definition of cellulosic biofuel and biomass-based
diesel do not coincide. As described in the proposal and the final rule,  a renewable diesel made
from cellulosic feedstocks would meet the definition of both categories. As such, the D-code
must allow for cellulosic biofuel qualify for either the cellulosic biofuel standard or the biomass-
based diesel standard. As discussed in Section II.A of the preamble, we believe that  the best way
of implementing this for the smooth implementation of the program is to have the cellulosic
diesel producer identify their product in a way that allows it to be used  to qualify for either
standard. Therefore, we have created a separate D code of 7 for cellulosic diesel, and producers
are required to use this D code for any renewable  diesel fuel that they produce from cellulosic
feedstocks.
3.2    Changes in Renewable Fuel Definitions

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) noted that Table II.A.1-1 should be revised to list all four categories
and their required volumes as well as the total renewable requirement so that it matches the
categories listed in all tables such as Table II.A-2. Table II.A.1-1 does not support the statement:
"As shown in the table, the volume requirements are not exclusive, and generally result in nested
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                        Chapter 3: Major Elements of the Program As Required By EISA


requirements." If the volumes are to be nested, then the regulations need to say so directly and
the direction of the nesting. (0994.1, p.2)

Our Response:

       Table II.A. 1-1 in the NPRM reflects the four fuel volume requirements as stipulated in
EISA.  The nested nature of these standards is made clear in the definitions of these four fuel
standards. We have attempted to clarify the text in the FRM to better explain the nested nature
of these volume requirements.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter noted that the fourth category should have its own name such as "Other
Renewable Biofuels" and should be used throughout these regulations.  Then regulated parties
will know when the term "Renewable Fuel" is used, the regulations are referring to all four
categories of biofuel and not just the fourth category.  Section II.A.2 and other like sections
should be revised and consistently use the term "categories".  In Section II.A.2 there are
definitions of three of the biofuel categories; there also needs to be a definition for the fourth
category under its specific name. (0994.1, p.2)

Our Response:

       There is not a separate standard for "Other Renewable Fuels".  Given the nested nature of
the RFS2 standards, the total renewable fuel standard is made up of fuels required to meet the
advanced biofuel standard and any other renewable fuels meeting the renewable fuel definition.
The advanced biofuel standard in turn is made up of fuels required to meet the cellulosic biofuel
standard and the biomass-based diesel definition, and any other fuels meeting the advanced
biofuel definition. We appreciate that this matter may be confusing, and in the final rule and
preamble have tried to make the requirements clear.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2118
Organization:       CountryMark Cooperative, LLP
Comment:
The commenter (2118.1) requests clarification on the definitions of advanced biofuels; biomass-
based diesel; and non-ester renewable diesel. Table 1 to §80.1426 provides the applicable D
codes for each pathway for generating RINs. The commenter believes that this table is
inconsistent with the above definitions. For advanced biofuels, there are only two pathways
identified that qualify: Ethanol from Sugarcane and Non-ester renewable diesel produced from
waste grease, waste oils, tallow, chicken fat, or non-food grade corn oil that is hydrotreated and
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co-processed in a facility that also processes petroleum feedstock. This is inconsistent with the
discussion of advanced biofuels in the preamble.  Other feed stocks and pathways should qualify
for a D code of 2 or 3 such as waste grease, etc. hydrotreated in a dedicated process;
hydrotreating of non-edible plant oils such as camelina, jatropha, algae, or pennycress in a
dedicated process; etc. Section 80.1426 does not provide a method to qualify other fuel
pathways for applicability. (2118.1, p.3)

The commenter also noted that Table 1 to 80.1426 also provides three pathways for non-ester
renewable diesel each having different D codes of 2, 3, or 4.  This is inconsistent with the
definition of non-ester renewable diesel. The commenter contends that non-ester renewable
diesel definition should include D codes of at least 2 or 3.  The commenter believes that other
virgin plant oils that are non-edible such as camelina, jatropha, algae, or pennycress should
qualify for a D code 2 or 3. In addition, a dedicated facility that processes waste grease, etc.
should qualify  as a D code of either 2 or 3. (2118.1,  p.4)

Our Response:

      The table in §80.1426 of the regulations has been substantially modified since the NPRM
to reflect the fuel pathways for which lifecycle assessments have been completed for the final
rule. Fuel pathways that have not yet been modeled, such as some of those listed by the
commenter, may still qualify in the future depending the results of future lifecycle GHG
assessments. The process by which future pathways are assessed and will be added to the table
in section 80.1426 is described in Section V.C. of the preamble.

      However, the commenter appears to be confusing generation of RINs with use of RINs.
The table in §80.1426 is the table used by renewable fuel producers for the generation of RINs,
and identifies the specific RIN that should be generated for each qualifying renewable fuel.
Section 80.1427 describes the provisions for the appropriate use of RINs for compliance.  RINs
may often be used for multiple standards.  For example, any RIN with a D-Code of 3, 4, 5, or 7
may be used for compliance with an obligated party's total renewable fuel obligation.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter (2310) supports EPA's proposal to allow generation of RINs for renewable fuels
used as jet fuel, home heating oil, and locomotive and marine diesel. EPA should also allow
RIN credits to be generated for the sale of renewable fuels in the broadest possible applications.
[[Docket number 2310.1, p.  14]]

Document No.:      EPA-HQ-OAR-2005-0161-2425
Organization:       Petro Algae
Comment:
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                        Chapter 3: Major Elements of the Program As Required By EISA


The commenter (2425) does not agree with the exclusion of ocean vessels from the definition of
eligible transportation fuels. Ocean going vessels are a very large consumer of diesel fuel and a
major emitter of COz. By excluding ocean vessels, EPA will omit a significant sector and will
limit the demand of renewable fuels thus making it more difficult to reach the aggressive
consumption goals. [[Docket number 2425.1, p. 7]]

Our Response:

       In keeping with the revisions to section 211 (o) of the Clean Air Act in EISA, we are
finalizing these provisions as proposed. EISA explicitly excludes fuel used in ocean-going
vessels from the definition of transportation fuel, so EPA does not have the discretion to adopt
the commenter's suggestion.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2486
Organization:       Primafuel, Inc.
Comment:
The commenter (2486.1) believes that oils recovered from biomass streams post primary
processing should be considered waste greases. This should include materials like corn oil
recovered from dry-mill ethanol plants post-fermentation. [[Refer to Docket Number 2486.1, p. 1
for additional details of this issue.]]

Our Response:

       We are allowing all waste greases, fats and oils that meet the definition of renewable
biomass to be valid for generating renewable fuels under RFS2.  Any oils present in post-primary
processing that would otherwise be discarded would be considered waste oils. We have included
non-food grade corn oil in the lookup table in regulation section 80.1426(f) as a valid feedstock
for the  production of biodiesel and renewable diesel.
3.2.1   Renewable Fuel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter believes that the proposed definition for "renewable fuel" in §80.1401 clearly
states that ethanol shall be denatured. This should be repeated in other places, such as
§§80.1426, 80.1428, 80.1460, and 80.1466. (2124.1, p.42)

Our Response:
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RFS2 Summary and Analysis of Comments
       We have specified in §80.1401 that ethanol must be denatured before RINs can be
generated for it. We also reiterate this requirement in §80.1415 in the context of specifying its
Equivalence Value.  However, §80.1401 is preceded by the following statement: "The
definitions of §80.2 and of this section apply for the purposes of this Subpart M."  Therefore,
there is no need to repeat any part of the definitions in other sections of Subpart M.
3.2.2   Treatment of MSW

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2021
Organization:       Fulcrum Energy
Comment:
The commenter (2021.1) believes that the text of EISA is ambiguous with regard to the
definition of Renewable Biomass and it is well within EPA's discretion to find that urban waste
qualifies as Renewable Biomass, especially post-recycled urban waste. Renewable Biomass
includes urban waste because the definition of Renewable Biomass lists the primary  constituents
of urban waste that can be converted to biofuel: biomass gathered from areas of human
habitation, separated yard waste, and food waste. A careful textual reading shows that these
wastes need not be separated to qualify but, regardless, urban waste is sorted several times before
being converted to biofuel, which satisfies any reasonable requirement for sorting and separation
of the eligible components  of urban waste.  The commenter believes that  EPA's final RFS2 rule
should clarify that such  urban waste qualifies as  Renewable Biomass, leaving no question that
fuels derived from urban waste can qualify as Renewable Fuel and Cellulosic Biofuel. (2021.1,
p.26)  (See Docket Number 2021.1, pp.15-26 for a detailed discussion of this issue.)

The commenter also believes that if EPA concludes that urban waste must be sorted  to remove
recyclable materials  in order to be an eligible feedstock for some or all types of renewable fuels,
the commenter recommends that EPA  define a new term, "post-recycled urban waste," to
describe the waste materials that would be allowable as biofuel feedstock. The commenter
recommends that Post-Recycled Urban Waste be expressly included in the RFS2 regulations as a
form of "Renewable Biomass" and defined as "solid waste derived from residential or
commercial waste streams that have been subjected to separation through a recycling process."
(2021.1, p.32) (See Docket Number 2021.1, pp.32-33 for a detailed discussion of this issue)

The commenter also believes that EPA must allow Advanced Biofuel to be derived from urban
waste because the definition of Advanced Biofuel in EISA leaves no question that urban waste is
an eligible feedstock. Congress clearly intended for the RFS2 program to allow the use of urban
waste to produce Advanced Biofuel, regardless of EPA's interpretation of the definition of
Renewable Biomass. Advanced Biofuel need not be  derived from Renewable Biomass if it is
one of the five types of eligible fuels derived from a broader category of feedstocks.  The ethanol
generated from urban waste fits at least two of those broader categories since it would be derived
principally from "cellulose, hemicellulose, or lignin," and "waste material." Urban waste-
derived ethanol is therefore eligible to  be Advanced Biofuel under a careful textual reading of
EISA, so long as it meets the lifecycle greenhouse  gas reduction requirements for Advanced
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                       Chapter 3: Major Elements of the Program As Required By EISA


Biofuel. (2021.1, p.8 & pp. 13-14) (See Docket Number 2021.1, pp.8-14 for a detailed discussion
of this issue).

Document No.:      EPA-HQ-OAR-2005-0161-2021
Organization:      Fulcrum Energy
Comment:
The commenter (2021.1) noted that EPA requested comment on its plan to assign Renewable
Identification Numbers (RINs) in situations where a facility co-processes a renewable feedstock
simultaneously with a fossil fuel feedstock. The commenter believes that most or all waste
plastics are either direct "food wastes" (e.g., packaging, utensils), become contaminated with
food residues after entering the waste stream, or are collected from the "vicinity of buildings and
other areas regularly occupied by people" which qualifies them as Renewable Biomass as
discussed above. The commenter recommends that EPA's final rule explicitly classify post-
recycled urban waste as a renewable feedstock and not consider it to be a mixed feedstock.
(2021.1, p.37) (See Docket Number 2021.1, pp.37-42 for a detailed discussion of this issue.)

Document No.:      EPA-HQ-OAR-2005-0161-2401
Organization:      Clean Energy
Comment:
The commenter (2401)  urges EPA to include, not exclude, MSW  as a qualifying feedstock for
renewable biomass under the RFS2. [[Docket number 2401.1, p. 3]] [[See docket number
2401.1, pp. 2-4 for extensive discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:      GEN-X Energy Group Inc.
Comment:
The commenter (1044)  supports changes to the renewable fuel definitions that include Municipal
Solid Wastes (MSW) in its original un-segregated (neat) form. (1044.1, p. 1)

Document No.:      EPA-HQ-OAR-2005-0161-2130
Organization:      ExxonMobil Refining & Supply Company  (ExxonMobil)
Comment:
The commenter (2130)  believes that municipal solid waste (MSW) should not be considered
renewable biomass.  [[Docket number 2130.1, p. 15]]

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:      Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233)  believes that the fact that Congress included MSW in EPAct 05, but not
later EISA 07  and limited EISA 07 to food and yard waste that is  often contained in MSW
suggests Congressional intent to exclude MSW and provides an incentive for separation of those
renewable biomass components of MSW.

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:      American Petroleum Institute (API)
Comment:
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RFS2 Summary and Analysis of Comments
The commenter (2393) believes that the fact that Congress included municipal solid waste
(MSW) in EPACT05, but not later in EISA07 and limited EISA07 to food and yard waste that is
often contained in MSW suggests Congressional intent to exclude MSW and provides an
incentive for separation of those renewable biomass components of MSW. [[Docket number
2393.1, p. 78]]

Document No.:      EPA-HQ-OAR-2005-0161-2416
Organization:       Enerkem
Comment:
The commenter (2416) urges EPA to include MSW as an eligible feedstock and notes that this is
within EPA's Authority and consistent with broad public policy goals. The definition of
"renewable biomass" in EISA includes materials that ordinarily comprise MSW - food waste,
yard waste, biomass removed from the vicinity of occupied structures, and wood waste.
Additionally, the definition of "advanced biofuel" includes "ethanol derived from waste material,
including crop residue, other vegetative waste material, animal waste, and food waste and yard
waste." As with renewable biomass, the listed materials are among those generally within the
scope of MSW. [[Docket number 2416.1, p. 3]]

The commenter believes that because the definitions in EISA reflect the composition of MSW,
the inclusion of MSW as a single category is consistent with the statute.  Requiring biofuels
producers to separate waste streams into smaller component parts creates a significant cost and
compliance burden, without a corresponding benefit and is not necessary to comply with the
statutory language of EISA.  [[Docket number 2416.1, p. 3]]

Additionally, the greenhouse gas profile of fuels derived from MSW is well within the most
aggressive greenhouse gas targets of the statute. EISA requires "advanced biofuels" to
demonstrate a 50 percent GHG reduction, while "cellulosic biofuel" must demonstrate a 60
percent reduction. A 2007 joint study between Michigan State University and the University of
Toronto indicated that MSW reduces GHG emissions by at least 65% percent compared to
gasoline,  based on a GREET model analysis of lifecycle emissions.  In addition, using EPA's
WARM model, the study showed significant GHG reductions for MSW-to-ethanol as compared
to landfilling MSW. The commenter states that if EPA included the reduction in landfill
emissions as a part of the lifecycle analysis of MSW, the emissions reduction profile of MSW
would be even stronger. [[Docket number 2416.1, p. 3]]

Regarding EPA's request for comments on the inclusion of certain non-fossil portions of MSW,
such as non-recyclable plastics, the commenter recommends that EPA allow non-recyclable
plastics to be included in the waste stream used to process fuels.  Plastics represented 12% of
MSW in 2007 (EPA Waste Statistics). Overall recovery of plastics is small: only 7%. Of the 30
million tons of plastics generated in 2007, only 2.1 million tons of plastics were recycled. The
rest was discarded in landfills. Plastic trash bags, plastic packaging and plastics in non-durable
goods are virtually all discarded while recovery of PET (polyethylene terephthalate) soft drink
bottles is  significant with a rate of more than 36%.

[[See docket number 2416.1, pp 3-6 for extensive discussion of this issue.]
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Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter (2472) urges EPA to interpret the definition of renewable biomass to include
MSW that contains, but isn't limited to yard and/or food waste. As EPA notes in the preamble of
the proposed rule (pg. 24922), the statutory definition of renewable biomass does not include a
reference to MSW as did the definition of "cellulosic biomass ethanol" but instead references
"separated yard waste and food waste."  However, as EPA also observes, ethanol derived from
waste material and biogas including landfill gas are specifically identified as eligible for
consideration under the definition of advanced biofuel (pg. 24922). The commenter believes that
at a minimum, EPA should define all biogenic materials in MSW as renewable biomass and
consider them qualifying feedstock for renewable fuels. The commenter concludes that failure to
define, at a minimum, all biogenic materials in MSW as renewable biomass would be
counterproductive and contrary to Congress' inclusion of landfill gas as an eligible biofuel
feedstock, due to the fact that landfill gas is the result of the decomposition of the entire biogenic
portion of MSW. [[Docket number  2472.1,  pp 10-11]] [[See Docket number 2472.1, pp 10-11
for further discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2491
Organization:       International Council on Clean Transportation (ICCT)
Comment:
The commenter (2491) suggests that all components of MSW that are biogenic (derived from
plants and animals) in origin such as paper, yard trimmings, food waste, etc. should qualify as
renewable biomass. Therefore, an important criterion for classifying the components of MSW as
renewable or nonrenewable should  be how it is produced.  Although fuels can be made from
fossil derived waste such as plastics, they should not be characterized as renewable biomass.
However, there should not be any restrictions on fuel production from non-renewable portions of
MSW. [[Docket number 2491.1, p.  2]]

Document No.:      EPA-HQ-OAR-2005-0161-2095
Organization:       New Planet Energy
Comment:
The commenter (2095) states that urban waste is an expressly permitted feedstock for advanced
biofuel. The commenter adds that carbon-based wastes represent the nation's most promising
and virtually untapped renewable energy source. Advanced conversion technologies, which will
be commercially proven and a recognized factor in the nation's energy mix within the next three
years, could produce enough ethanol from these resources to not only satisfy the requirement for
Advanced Biofuel in EISA but to completely  eliminate U.S. dependence on foreign oil. Since
one of Congress' objectives in passing EISA was to promote the use of advanced biofuels with
reduced land-use impact, and urban waste is the only currently viable feedstock with no indirect
land-use impact, the commenter believes that it is especially important that urban waste be a part
of the RFS2 program. [[Docket number 2095.1,  pp. 1-2]] [[See docket number 2095.1, pp. 3-5
for background information on advanced conversion technologies]]

Document No.:      EPA-HQ-OAR-2005-0161-2532
Organization:       BioEnergy Producers Association
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RFS2 Summary and Analysis of Comments
Comment:
The commenter (2532) points out that the text of EISA unambiguously requires ethanol derived
from urban waste to be considered advanced biofuel.  Statutory context affirms that ethanol
derived from urban waste can be "advanced biofuel."  The Obama administration, by its actions
and key appointments, has affirmed its commitment to advanced biofuels as an essential element
in America's quest for energy independence. The President has stated his intention to double
within three years the amount of energy that could be  produced from renewable resources.
[[Docket number 2532, pp. 3-4]]

Document No.:      EPA-HQ-OAR-2005-0161-2376
Organization:       County Sanitation Districts of Los Angeles County
Comment:
Sanitation Districts strongly believe that as long as there is no attempt to "spike" the waste with
plastics beyond what is considered normal disposal for a community, the entire MSW waste
stream should be defined as a "renewable biomass." EPA can ensure that plastics and other
components of concern are present at the lowest levels possible. One  approach could require that
in order for a community's MSW to qualify as renewable biomass, that community shall have a
recycling program that achieves diversion  rates at least as great as the national average for the
year of qualification. [[2376.1 p.3]

The commenter states that waste-to-fuel advanced technologies have potential to produce
significant volume of renewable fuels that could help  EPA achieve the RFS2 volume mandates
of 36 billion gallons of renewable fuel by 2022.  However, the emerging waste-to-fuel industry
needs additional incentives to improve the economic feasibility of such projects.  Credit trading
systems for renewable fuels such as the trading system in RFS will help the emerging waste to-
fuel industry gain economic stability and promulgate long-term investments. Therefore, we
again request that waste-derived renewable fuels be included in RFS2 in order to participate in
the credit trading system. [[2376.1 p.6]]

The commenter cites evidence on pages 5-7.

Document No.:      EPA-HQ-OAR-2005-0161-2023
Organization:       New York Biomass Energy Alliance
Comment:

The commenter (2023) supports the inclusion MSW as renewable biomass. The commenter also
believes that yard waste and food waste should be considered renewable biomass.  The
commenter suggests categorizing landfill gas as an advanced biofuel, will make RFS2 serve as a
stimulant to improved waste handling and  development of waste-to-energy technologies, while
contributing the overall EISA goal of reducing fossil fuel consumption. (2023.1.pdf, p6)

Document No.:      EPA-HQ-OAR-2005-0161-2466
Organization:       Northeast States for Coordinated Air Use Management (NESCAUM)
Comment:
The commenter (2466) recommends that EPA include MSW that contains yard and/or food
waste within the definition of renewable biomass. (2466.1.pdf, p.8)
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Document No.:      EPA-HQ-OAR-2005-0161-1995
Organization:       Waste Management (WA)
Comment:
The commenter (1995.1) recommends that EPA interpret the definition of renewable biomass to
include MSW that contains, but isn't limited to, yard and/or food waste. The commenter
believes that at a minimum, EPA should define all biogenic materials in MSW as renewable
biomass and consider them qualifying feedstock for renewable fuels. Exclusion of MSW as a
qualifying feedstock would exclude unprocessed MSW from any role in the development of
renewable fuel under the Energy Independence and Security Act (EISA), and would also likely
severely limit the amount of yard and food waste available as feedstock for EISA-qualifying
fuel, since large quantities of these materials are disposed of as un-separated MSW. (1995.1,
pp.1-2) (See Docket Number 1995.1, p.2 for more discussion on this issue)

The commenter also believes that the inclusion of MSW in the definition of renewable biomass
should not reduce paper recycling. To ensure that the inclusion of MSW as renewable biomass
does not divert recyclable paper materials from recycling, EPA could define all MSW as
qualifying feedstock for renewable fuels as long as the producer can certify that the MSW came
from communities that provide recycling services for their residents, or comes from commercial,
industrial or institutional sources  that operate or have access to a recycling program. (1995.1,
pp.2-3)

Document No.:      EPA-HQ-OAR-2005-0161-2004
Organization:       NxENRG
Comment:
The commenter (2004.1) is concerned that the proposed definition of renewable biomass does
not expressly include Municipal Solid Waste (MSW) in all forms.  The exclusion of MSW will
severely limit the available feedstocks under both the advanced biofuels and cellulosic biofuels
categories.  Not only does the exclusion of MSW reduce available feedstocks and thereby  make
compliance more difficult, it undermines the opportunity to reduce the amount of materials in
our nation's landfills. The commenter believes that MSW should include all items that are
routinely placed in landfills including construction waste, demolition waste and used tires.  The
commenter also believes that:
(1) All MSW should qualify as renewable biomass including plastics and used tires that are
derived in whole or in part from petroleum.
(2) There is no sound policy reason and no Congressional directive requiring that fossil portions
be treated differently than other components of MSW.

Document No.:      EPA-HQ-OAR-2005-0161-2047
Organization:       Terrabon
Comment:
The commenter [[2071]] states that by interpreting "separated yard and food waste" to include
MSW, the EPA will encourage the use of MSW as a feedstock and provide an environmentally
desirable alternative for disposing of MSW by allowing the repurposing of waste that would
otherwise be placed into costly, polluted landfills.
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RFS2 Summary and Analysis of Comments
The commenter [[2071]] also states that yard and food waste should be interpreted to include
MSW because it will facilitate the economics of the domestic fuel industry and fulfill the
objectives of the EISA in encouraging domestic fuel production using domestic feedstocks.
[[#2071.lp.3]]

The commenter [[2071]] states the American Clean Energy and Security Act of 2009, amended
the definition of renewable biomass to include MSW. HR 2454 states that renewable biomass
includes "the non-fossil biogenic pollution of municipal solid waste and construction,
demolition, and disaster debris."  The House's amendment would definitively make clear that
MSW will be considered renewable biomass.  EPA should follow the House's lead and include
MSW within the definition of renewable biomass. [[#2071.1 p.6]]

Document No.:      EPA-HQ-OAR-2005-0161-2095
Organization:       New Planet Energy
Comment:
The commenter (2095) states that EPA can and should interpret "renewable biomass" to include
urban waste. The commenter adds that carbon-based wastes represent the nation's most
promising and virtually untapped renewable energy source. Advanced conversion technologies,
which will be commercially proven and a recognized factor in the nation's energy mix within the
next three years, could produce enough ethanol from these resources to not only satisfy the
requirement for Advanced Biofuel in EISA but to completely eliminate U.S. dependence on
foreign oil. Since one of Congress' objectives in passing EISA was to promote the use of
advanced biofuels with reduced land-use impact, and urban waste is the only currently viable
feedstock with no indirect land-use impact, the commenter believes that it is especially important
that urban waste be a part of the RFS2 program. [[Docket number 2095.1, pp. 1-2]] [[See docket
number 2095.1, pp. 3-5 for background information on advanced conversion technologies]]

Document No.:      EPA-HQ-OAR-2005-0161-2102
Organization:       RENTECH, INC
Comment:
The commenter (2102.1) believes that the definition of renewable biomass should not be limiting
and therefore should explicitly include waste streams found in Municipal Solid Waste.  Every
effort should be made to allow and encourage the use of renewable  wastes that are collected as
part of rural and municipal waste and recyclable collection programs, or as part of conventional
municipal waste collection. These materials, tree and yard trimmings from various sources,
waste from food production and processing (including table scraps) are truly zero carbon
feedstocks as they are gathered in the normal course of municipal waste collection. The
definition should also seek to sweep in other materials that are currently not economic to recycle
but could be used in fuels production. (2102.1, pp.3-4)  (See Docket Number 2102.1, p.4 for more
discussion of this issue)

Document No.:      EPA-HQ-OAR-2005-0161-2112
Organization:       Biomass Rules, LLC
Comment:
The commenter (2112.1) believes that not including MSW in the RFS2 standards eliminates
some  140 million tons of biogenic and non-biogenic MSW materials annually. As we pursue
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                        Chapter 3: Major Elements of the Program As Required By EISA


energy independence the U.S. can not afford to turn our backs on this significant source of
renewable energy. The commenter noted that of the roughly 56 cellulosic biofuel technologies
currently being developed, 20 percent (nearly 160 million gallons total capacity) of these planned
projects utilize MSW as a feedstock. (2112.1, p.5)

The commenter also believes that the neglect of biomass from federal lands in the proposed
RFS2 rule adds significant restrictions to the success of energy independence.  Without the
inclusion of biomass from federal lands in the RFS2 standards, the incentive to remove this
undervalued resource from federal lands goes away. (2112.1, p.5)

The commenter noted that most of EPA's assumptions on advanced biofuel production are based
on the brief history of using corn for ethanol which the regulation is moving away from. This
rule is written for land-centric biomass (ag and forestry). It nearly ignores all the human-centric
biomass (wastes).  (2112.1, p. 13)

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth,  National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
Renewable Biomass from Waste
The commenters would like EPA to consider making post-recycling residues such as the biomass
portion of the waste material left over at material recovery facilities eligible as renewable
biomass feedstocks.  The commenters believe that these residues from recycling programs,
separated out in the recycling process, fit within the letter and spirit of the definition of
renewable biomass. (2129.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2132
Organization:       Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) recommends that EPA interpret the term "renewable biomass" as
broadly as is reasonable, so that it includes both MSW and C&D streams as eligible feedstocks
under the RFS2.  (2132.1, p.10).

Document No.:      EPA-HQ-OAR-2005-0161-2302
Organization:       UC Berkeley - Energy Biosciences Institute
Comment:
The commenter [[2302]] states that they strongly urge EPA to modify the category of renewable
biomass, "Separated food and yard waste" to include all forms of organic municipal sold waste,
including demolition and construction residues and food processing waste.  Also they strongly
urge EPA to add a new category of renewable biomass, "8. Plant material, including invasive
species, removed for habitat  restoration, fire mitigation, or as  a result of natural disaster".  They
further suggest that this new  category be excluded from predictive assessments.  Also that they
encourage EPA to include the possibility that new forms of renewable biomass may emerge that
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RFS2 Summary and Analysis of Comments
are not specifically designated in the rule, and that they support EPA's inclusion of CRP land as
agricultural.

The commenter [[2302]] also states that they encourage EPA to include rangeland as agricultural
land, and that they encourage that EPA not set limits on fallow periods, and that abandoned
agricultural land be included in the allowance for renewable biomass production. [[#2302 p. 1-2]]

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter also states that regulated entities for several years have planned facilities based
upon the settled expectation that biomass portions of MSW would be acceptable feedstocks
under the RFS2 program. Indeed, much of EPA's modeling analysis in the draft RFS2 assumes
inclusion of some MSW within the definition of renewable biomass.  We urge EPA to not upset
these settled expectations and allow biomass portions of MSW as renewable fuel feedstock.
[[Docket number 2310.1, p. 7] [[See docket number 2310.1, p. 6 for further discussion of this
issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2370
Organization:       NGVAmerica
Comment:
The commenter (2370.1) believes that MSW, while  not specifically identified under the
definition of renewable biomass, should be counted  as renewable biomass for purposes of the
RFS Program.  Even if renewable biomass does not  include MSW, it is important to note that the
definition of advanced biofuel specifically includes  "biogas (including landfill gas and sewage
waste treatment gas)." Even if MSW is somehow excluded from the general  definition of
renewable biomass, the more specific definition of advanced biofuel expressly includes
biomethane produced from landfill gas and does not require the separation of yard waste and
food waste at the landfill in order to qualify. (2370.1, p.7)

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
2.  MSW: There is no policy or scientific reason why material that is renewable and biogenic in
nature and may otherwise be discarded, should not be available as feedstock for the production
of renewable fuels. [[Docket number 2383.1, p. 14]]

Document No.:      EPA-HQ-OAR-2005-0161-2408
Organization:       Advanced Biofuels Association
Comment:
The commenter (2408.1) believes that EPA should clearly include the use of municipal solid
waste ("MSW") and industrial waste gases in its definition for biomass.  By including MSW in
its definition of renewable biomass, the EPA will maintain feedstock neutrality and enhance a
number of various participants who otherwise would be excluded from participation. The
commenter also urges EPA to consider defining MSW as  it is  defined in the Solid Waste
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                        Chapter 3: Major Elements of the Program As Required By EISA


Disposal Act of 2002. This approach would harmonize the EPA's approach with the approach
under the Solid Waste Disposal Act. (2408.1, pp.3-4)

The commenter also supports the inclusion of all non-recyclable waste streams found in MSW as
well as construction and demolition and disaster debris destined for landfills. Specifically, after
the last several natural disasters, significant amounts of refuse was available for use to produce
biofuels at affordable cost. The commenter believes this will significantly reduce the amount of
landfill waste, decrease total landfill methane emissions, reduce GHG impacts and  extend the life
of the existing landfills.  (2408.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2475
Organization:       LanzaTech, Inc.
Comment:
The commenter urges EPA to include MSW in the definition of renewable biomass. Defining
renewable biomass to include MSW will capitalize on the opportunity to tap into what Congress
has identified as a valuable energy source.  Additionally, by including MSW in the definition of
renewable biomass, EPA will maintain feedstock neutrality. In short, a broad definition of
renewable biomass which includes  both MSW and industrial waste gases will further EPA's
goals of minimizing GHG emissions and reducing the carbon footprint. Finally, including MSW
in the definition of renewable biomass is consistent with similar definitions in existing federal
programs. [[Docket number 2475, p. 3]]

The commenter also believes that EPA should define MSW as it is defined in the Solid Waste
Disposal Act of 2002, adding that the definition of renewable biomass should explicitly include
all non-recyclable waste streams found in MSW destined for landfills. Currently, the anaerobic
decomposition of these wastes in landfills releases methane, a potent GHG with a global
warming potential 21 times that of carbon dioxide.  Methane emissions from landfills constitute
34 percent of U.S. methane emissions. Even with advanced mechanisms to recover landfill gas,
approximately 30 percent of the landfill methane emissions will still reach the atmosphere.
Recognizing these waste streams in the definition of renewable biomass will reduce the amount
of landfill waste, decrease total landfill methane emissions, reduce GHG emissions, and
ultimately extend the life of existing landfills. [[Docket number 2475, pp. 3-4]]

Document No.:      EPA-HQ-OAR-2005-0161-2526
Organization:       Coskata
Comment:
The commenter (2526) urges the EPA to adopt an inclusive and attainable approach towards the
Renewable Biomass Definition and recordkeeping requirements. This will allow the cellulosic
biofuels industry to fully achieve its potential for reducing greenhouse gases. The commenter
makes the following points:
       Waste streams should specifically include MSW and C&D waste.

Document No.:      EPA-HQ-OAR-2005-0161-2532
Organization:       BioEnergy Producers Association
Comment:
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RFS2 Summary and Analysis of Comments
The commenter (2532) notes that the implied requirement that only source separated food waste
or green waste will qualify for RINs and RFS2, which they believe is based upon a flawed
interpretation of the intent of federal statute, will place feedstock source separation and
regulatory reporting responsibilities on the shoulders of this industry that will meaningfully stifle
its development—whereas it is beneficial to the nation, both from an environmental and energy
recovery point of view, to encourage  the production of advanced biofuels from the complete
range of carbonaceous materials that  are now being placed in landfills. [[Docket number 2532, p.
2 and 2539, p. 1]] [[See docket numbers 2532, pp. 3-4 and 2539, p. 1 for discussion of food
waste, nonrecycleable paper, construction and demolition lumber, methane, urban waste, and
conversion technologies.]]

Document No.:      EPA-HQ-OAR-2005-0161-2534
Organization:       Minnesota Pollution Control Agency
Comment:
The commenter (2534) believes that the final rule should specifically allow MSW that contains
yard waste or food waste to qualify as renewable biomass. Although additional analysis is
needed, it is likely that the  conversion of MSW to biofuel provides significant Greenhouse Gas
(GHG) benefit compared to landfilling. (2534, p.l)

The commenter also believes that the final rule should not require that both yard waste aid food
waste be present in the MSW for it to qualify. By replacing "and" with "or" the rule will fully
facilitate the use of MSW for biofuel. This clarification  is also supported by the EISA definition,
which uses "separated yard waste or food waste" rather than separated yard waste and food
waste, as listed in the proposed rule. (2534, p.2)

The commenter noted that the  processing of MSW into a biofuel involves technology, which can
utilize both the fossil and nonfossil portions of the MSW. The rule should clarify that both
portions will qualify as renewable biomass because of the significant potential for GHG benefits
from using all of the feedstock. By allowing the fossil portions of the MSW to be counted as
renewable biomass, the EPA will provide an incentive to use MSW in a way that could achieve
greater GHG benefits and reduce future landfill disposal. In the event that EPA chooses not to
include both fossil and non-fossil portions of MSW in the final definition of renewable biomass,
the commenter suggests that the  final rule include, at a minimum, the nonfossil portion. The
commenter also believes that the final rule should not require the non-fossil portion to be
separated from the remaining MSW prior to processing,  but rather acknowledge that the
separation requirement of the statute can be accounted for through the testing of the final fuel
product in accordance with recognized scientific methods such as ASTM test method D-6866.
(2534, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2047
Organization:       Terrabon
Comment:
The commenter [[2071]] states that with the expected number of facilities Terrabon expects to
build, the commenter believes  the reduction in GHG emissions will be 4.5 million tons by 2015
and 8.0 million tons by 2022.  These  GHG emission reductions would be even greater as other
companies use different technologies to convert MSW to biofuels. [[#2071.1 p.6]]
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                        Chapter 3: Major Elements of the Program As Required By EISA
Document No.:      EPA-HQ-OAR-2005-0161-2549
Organization:       Triton Energy LLC
Comment:
The commenter (2549.1) noted that the definition of "fallow land" may be in line with
terminology used within the United States Department of Agriculture (USDA), however
marginal lands, lands that are not suitable for agriculture represent potential areas for growing
energy crops.  Given the large volumes of biofuel that will be required to fulfill RFS2, all land
and resources possible, including MSW, will be required unless or until there are major
advancements with algae oils or cellulosic biofuels. (2549.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter (2156) recommends that demolition wood waste, construction wood wastes and
wood product manufacturing wood wastes in addition to backyard waste should be included in
the definition  of renewable biomass. (2156.1 p.2)

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) believes that EPA should promote the use of landfill gas, which may be
transported through common carrier pipelines.  EPA should include the use  of methane from
animal wastes and landfill gas, including methane transported through common carrier pipelines,
as part of the pathways in the final rule implementing the RFS2 program. (2329.1, p. 99-100)

Our Response:

       The majority of commenters stated that MSW should be considered  as renewable
biomass. American Petroleum Institute and Marathon Petroleum  Company  felt it should not be.
They argued that since EPAct of 2005 included MSW and EISA specifically did not, renewable
biomass is limited only to the separated yard and food waste portion of MSW.

       Generally, commenters supporting the use of MSW in producing qualifying fuels under
EISA, favored either 1) a determination that unsorted MSW can be used as a feedstock for
advanced biofuel even if it does not meet the definition of renewable biomass, 2) that the  Act be
interpreted to  include MSW as renewable biomass, or 3) that MSW from which varying amounts
of recyclable materials have been removed could qualify as renewable biomass. Clean Air Task
Force et al. said that for EISA volume mandates to be met, it is important to take advantage of
biomass resources from urban wastes that would otherwise be landfilled.  They urged that post-
recycling residues would fit within the letter and spirit of the definition of renewable biomass.

       Fulcrum Energy, New Planet Energy, Enerkem and Bioenergy Producers Association
argued that the statute can be reasonably interpreted to allow advanced biofuel to be made from
material that does not meet the definition of renewable biomass. We do not agree with the
argument because the definition of advanced biofuel specifies that it is a form of "renewable
fuel," and renewable fuel is defined in the statute as fuel that is made from renewable biomass.
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RFS2 Summary and Analysis of Comments
While the definition of advanced biofuel includes a list of materials that "may" be "eligible for
consideration" as advanced biofuel, and that list includes "ethanol derived from waste materials"
and biogas "including landfill gas," the fact that the specified items are "eligible for
consideration" indicates that they do not necessarily qualify but must meet the definitional
requirements - being "renewable fuel" made from renewable biomass and having life cycle
greenhouse gas emissions that are at least 50% less than baseline fuel. There is nothing in the
statute to suggest that Congress used the term "renewable fuel" in the definition of "advanced
biofuel" to have a different meaning than the definition provided in the statute. The result of the
commenter's approach would be that general renewable fuel and cellulosic biofuel would be
required to be made from renewable biomass because the definitions of those terms specifically
refer to renewable biomass, whereas advanced biofuel and biomass-based diesel would not,
because their definitions refer to "renewable fuel" rather than "renewable biomass." EPA can
discern no basis for such a distinction. EPA believes that the Act as a whole is best interpreted
as requiring all types of qualifying renewable fuels under EISA to be made from renewable
biomass.  In this  manner the land and feedstock restrictions that Congress deemed important in
the context of biofuel production apply to all types of renewable fuels.

       EPA also does not agree with Fulcrum Energy's argument that the listing in the
definition of renewable biomass of "biomass obtained from the immediate vicinity of buildings
and other  areas regularly occupied by people, or of public infrastructure, at risk from wildfire"
should be interpreted to include MSW.  It is clear that the term "at risk of wildfire" modifies the
entire sentence, and the purpose of the listing is to make the biomass that is removed in wildfire
minimization efforts, such  as brush and  dead woody material, available for renewable fuel
production.  Such material does not typically include MSW. Had Congress intended to include
MSW in the definition of renewable biomass, EPA believes it would have clearly done so, in a
manner similar to the approach taken in  EPAct, as Marathon Petroleum and API both argue.
EPA also  does not believe  that it would  be reasonable to interpret the reference to "separated
yard or food waste" to include unsorted  MSW. Although MSW contains yard and food waste,
such an approach would not give meaning to the word "separated."

      The Clean Air Task Force et al stated that residues from recycling programs, separated
out in the  recycling process, fit within the letter and spirit of the statutory definition of renewable
biomass.  Also, the County Sanitation Districts of Los Angeles County argued that EPA could
ensure that plastics and other non-biogenic and fossil components of MSW are minimized. The
commenter suggested that  waste collected in municipalities that had curbside recycling or other
comparable programs be considered separated for purposes of the definition  of "separated yard
and food waste." Such an  approach would leave to municipalities and waste handlers a
determination of how much waste should be recycled before the residue was used as a feedstock
for renewable fuel production. EPA believes that such an approach would not guarantee
sufficient  "separation" from MSW of materials that are not yard waste or food waste to give
meaning to the statutory text.  Nevertheless, the suggestion that the non-biogenic and fossil
components of MSW be minimized has  merit.  We believe it is reasonable to interpret the word
"separated" in the term "separated yard  or food waste" to refer to  the degree  of separation that is
practicable.  Material recovered from waste streams is typically sold to companies that will
recycle the material.  EPA  believes that  the MSW-derived residue remaining after reasonably
practicable efforts to separate  out recyclable materials  should be considered separated yard and
food waste and, therefore,  renewable biomass.  The final rule adopts this approach. This MSW-
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                         Chapter 3: Major Elements of the Program As Required By EISA


derived residue would include some amount of residual non-recyclable plastic and rubber of
fossil fuel origin, much of it being wrapping and packaging material for food. Since this material
cannot be practicably separated from the remaining food and yard waste, EPA believes it is
appropriate to include it in the category of separated food and yard waste.  In sum, EPA believes
that the residue remaining after paper, cardboard, plastic, textiles, metal and glass have been
removed for recycling should qualify as renewable biomass. This interpretation is consistent
with the text of the statute, and will promote the productive use of materials that would otherwise
be landfilled. It will also  further the goals of EISA in promoting energy independence and the
reduction of GHG emissions from transportation fuels.

       Producers using this second option, will need to determine what RINs to assign to a fuel
that is derived from a variety of materials, including yard waste (largely cellulosic) and food
waste (largely starches and sugar), as well as incidental materials remaining after reasonably
practical separation efforts such as plastic and rubber of fossil origin.  EPA has not yet evaluated
the lifecycle greenhouse gas performance of fuel made from such mixed sources, so is unable at
this time to assign a D code for such fuel.  The final  rule, however, requires ASTM test method
D-6866 to be applied to the fuel made from MSW-derived  feedstock.  Through this method,
producers can determine what portion of the fuel is of biogenic origin.  That biogenic portion of
the fuel will likely be largely derived from cellulosic materials (yard waste, textiles and
construction materials), and to a much smaller extent starch-based materials (non-cellulosic food
wastes).  (See Tables 1 and 3 in EPA's "Municipal Solid Wastes in the United States,  2007 Facts
and Figures.) Unfortunately, EPA is not aware of a test method that is able to distinguish
between cellulosic- and starch-derived renewable fuel.  Under these circumstances, EPA believes
that it is appropriate for producers to base RIN assignment  on the predominant component and,
therefore, to assume that the biogenic portion of their fuel is entirely of cellulosic origin. The,
non-biogenic portion of the fuel, however, would not qualify for RINs at this time Thus, we are
providing via the ASTM testing method an opportunity for producers using a MSW-derived
feedstock to generate RINs only for the biogenic portion of their renewable fuel, and to assign a
D code of 3  (cellulosic biofuel) to such portion. There is no D code for the remaining fossil-
derived fraction of the fuel in the  final rule.  There is also no D  code applicable to the entire
volume of renewable fuel produced when using MSW-derived residue as a feedstock. The
petition process for assigning such codes in the final rule can be used for such purpose.

       NGV America suggested that biogas from landfills  should be treated in the same manner
as renewable fuel produced from  MSW. EPA agrees with the commenter to a certain extent. The
definition of "advanced biofuels" in EISA identifies "Biogas (including landfill gas and sewage
waste treatment gas) produced through the conversion of organic matter from renewable
biomass" as "eligible for consideration" as an advanced biofuel. However, as with MSW, the
statute requires that advanced biofuel be a "renewable fuel" and that such fuel be made from
"renewable biomass." The closest reference within the  definition of renewable biomass to
landfill material is "separated yard or food waste." However, in applying the interpretation of
"separated" described above  for MSW to landfill material,  we come to a different result.
Landfill material has by design been put out of practical human reach.  It has been disposed of in
locations, and in a manner, that is designed to be permanent.  For example, modern landfills are
placed over impermeable  liners and sealed with a permanent cap. In addition, the food and yard
waste present in a landfill has over time become intermingled to an extraordinary extent. This
occurs in the process  of waste collection, shipment, and disposal, and subsequently through


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RFS2 Summary and Analysis of Comments
waste decay, leaching and movement within the landfill. Additionally, we note that the process
of biogas formation in a landfill provides some element of separation, in that it is formed only
from the biogenic components of landfill material, including but not strictly limited to food and
yard waste. Thus, food and yard wastes are effected a significant degree of separation from other
landfill materials through the process of biogas formation.  As a result of the intermixing of
wastes, the fact that biogas is formed only from the biogenic portion of landfill material, and the
fact that landfill material is as a practical matter inaccessible for further separation, EPA believes
that biogas should be considered as produced from separated yard and food waste for purposes of
EISA. Therefore, we agree with the commenter that all biogas from landfills is eligible for RIN
generation

      A number of commenters asked that additional waste streams be considered renewable
biomass, including construction and demolition wastes industrial waste gases, and invasive
species removed from lands for various beneficial purposes. However, EISA lists materials that
are eligible for consideration as renewable biomass, and EPA does not believe that these waste
categories fit within the statutory structure.

      Comments regarding the lands from which renewable biomass may be obtained are
addressed in Section 3.3 of this document.
3.2.3   Advanced Biofuel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2303
Organization:       American Bakers Association
Comment:
The commenter (2303.1) believes that EPA should restructure the RFS2 to accelerate the
development of advanced biofuels. Modifying the food-to-fuel mandates and restructuring the
RFS2 to give priority to advanced biofuels would limit the diversion of food to fuel. The
commenter encourages EPA to freeze mandates for conventional biofuels, and establish an "off-
ramp" that would automatically reduce the RFS2 for corn based ethanol in years when too much
food will be diverted to fuel.  The commenter does not support efforts to fill the deficit created
by an inadequate supply of advanced biofuels with conventional biofuels. (2303.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2504
Organization:       American Frozen Food Institute
Comment:
The commenter [[2504]] states that EPA should restructure the RFS to accelerate the
development of advanced biofuels. Modifying the food-to-fuel mandates and restructuring the
RFS2 to give priority to advanced biofuels would limit the diversion of food to fuel. And that
implementing the RFS 2 proposal would pose economic harm by significantly increasing the cost
of food, [[see #2504.1 p.l]]

Document No.:      EPA-HQ-OAR-2005-0161-2309
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                        Chapter 3: Major Elements of the Program As Required By EISA


Organization:       Grocery Manufacturers Association, National Council of Chain
Restaurants, and Snack Food Association
Comment:
The commenter [[2309]] urges EPA to restructure the RFS to give priority to advanced biofuels
and to limit the diversion of food and feed to fuel. The Clean Air Act provides EPA with the
power to waive the requirements of the RFS, in whole or in part, if implementation of the RFS
would severely harm the economy or the environment. [[#2309.1.p. 1]]

Our Response:

       These comments are really comments on the CAA provisions in EISA and not on our
implementing regulations. EISA establishes the required volumes of each type of renewable
fuel, and EPA regulations are designed to create a program to implement and enforce those
volume requirements. As the commenters note, however,  EPA is granted authority to waive
volume mandates specified in the statute under certain conditions.  EPA intends to monitor the
effect of EISA implementation on the economy and will consider waiving volume requirements
if circumstances warrant.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2422
Organization:       North American Affairs Committee of the International DME Association
Comment:
The commenter (2422) petitions EPA to specifically include DME as motor fuel in its
rulemaking.  Many scientific tests have proven the merits of DME as motor fuel.  DME is a
clean, colorless gas, with high ignition quality, which is easy to liquefy and transport which
makes it an ideal diesel fuel replacement, suitable for passenger cars, trucks and buses. The
commenter believes it offers great potential as a fuel for diesel vehicles due to its high cetane
number and environmental benefits (no soot, particulates or sulfur emissions).  When made from
coal, natural  gas or biomass, DME lowers CO and NOx emissions slowing global warming.
Moreover only modest engine modifications are required to use DME and such equipment is
available today. Extensive testing of advanced transportation fuels including DME has been
funded by government agencies.  The results have proven the benefits of DME and methanol as
excellent low-carbon motor fuels. [[Docket number 2422.1, pp. 2-3]]

The commenter adds that various academic institutions that specialize in biofuels have confirmed
the merits of DME as a superior transportation fuel.  Their testing confirms that these fuels have
low-carbon footprint and among the lowest green house gas emissions.

Leading global vehicle manufacturers have studied the performance  of various renewable fuels
and find DME to be among the best biofuels in terms of performance, climate impact and energy
efficiency. [[Docket number 2422.1, p. 4]]

Our Response:
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RFS2 Summary and Analysis of Comments
       This rulemaking is not approving fuels for use as motor vehicle fuels. Rather, those fuels
that meet all the other requisite requirements under the CAA and also meet the requirements
under 211 (o) for renewable fuels as implemented through the final RFS2 regulations are allowed
to generate RINs under the RFS2 program.
3.2.4   Cellulosic Biofuel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0953
Organization:       Great River Energy
Comment:
The commenter (0953) believes that the proposed new Renewable Fuel Standards (RFS2)
definition and criteria has eliminated "other waste materials...and...otherwise used to displace
90% or more of the fossil fuel normally used in the production of ethanol" from the definition of
Cellulosic biofuel.  The commenter feels that this change deals a serious financial blow to
owners and operators of Combined Heat and Power (CHP) plants and their renewable fuel
partners.  (P.I)

The commenter notes that the new definition would shift some of the current "Cellulosic biofuel"
volumes into the conventional biofuel category, making it more difficult to achieve future
volumetric requirements. Eliminating the incremental RINs for each gallon produced from steam
fired conventional ethanol plants that no longer qualify under the proposed "Cellulosic biofuel"
definition, impedes the ability of power plants  and other combined heat and power (CHP)
operations to attract new renewable fuel partners to utilize excess thermal energy and steam
rather than relying on the incremental combustion of primary fuel to drive the conversion process
tobiofuels. (P.I)

The commenter strongly advocates adding a simple steam fired CHP provision to the qualifying
definition of Cellulosic biofuel. This additional provision would make a meaningful contribution
toward improving energy independence and domestic security by promoting co-location of
renewable, advanced and cellulosic biofuels with new or existing combined heat and power
(CHP)  plants without increasing the combustion  of primary fuels. (P.I)

Document No.:      EPA-HQ-OAR-2005-0161-2362
Organization:       Canopy Prospecting, Inc. and Trinidad Dehydration Company, Limited
Comment:
The commenter (2362) believes that EPA should consider a waiver of the Cellulosic Biofuel
mandated description of a renewable fuel from any cellulosic, hemicellulosic, or lignin source so
as to include cane ethanol especially since its bagasse by-product is usually used in power
generation as well as for a new source of cane derived ethanol. Such a waiver would reduce the
proposed 60% reduction to  50% in the case of  cellulosic ethanol for baseline lifecycle GHG
emissions. With such a modification any current projected shortfall for mandated volumes of
cellulosic ethanol would be replaced with superior advanced biofuels that meet the 50%
reduction goal. [[Docket number 2362.1, p. 2]]
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                        Chapter 3: Major Elements of the Program As Required By EISA
Our Response:

       These comments are really comments on the CAA provisions in EISA and not on our
implementing regulations.  In EISA, Congress eliminated the provision in EPAct that allowed
ethanol to be considered cellulosic biomass ethanol if produced in plants that use waste materials
to displace 90 percent or more of the fossil fuel normally used in the production of ethanol.
Thus, there is no such provision under the new definition of cellulosic biofuel, and the statute
does not provide EPA with the authority to modify the new definition. The statute also does not
allow EPA to provide other mechanisms for starch- or sugar-derived ethanol to be considered
cellulosic. However, the final rule does recognize that ethanol made from "cellulosic biomass
from agricultural residues" achieves the 60% GHG reduction threshold required of cellulosic
biofuel. Therefore, if the agricultural residues are renewable  biomass, such fuel would be
eligible for cellulosic biofuel RINs.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2549
Organization:       Triton Energy LLC
Comment:
The commenter (2549.1) noted that while the new statute more accurately defines cellulosic
biofuel, not providing incentives to existing ethanol producers to have a lower environmental
impact ensures that the industry will remain status quo given that it has been grandfathered.
While 2.5 RINs may be too high under the new program, the commenter believes that there
should be some incentives to the ethanol industry to improve its environmental footprint.
(2549.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2369
Organization:       New Generation Biofuels (NGBF)
Comment:
The commenter (2369) states that while the new statute more accurately defines cellulosic
biofuel, not providing incentives to existing ethanol producers to have a lower environmental
impact ensures that the industry will remain status quo given that it has been grandfathered.
While 2.5 RINs may be too high under the new program, the commenter believes that there
should be some incentives to the ethanol industry to improve its environmental footprint.
[[Docket number 2369.1, p. 1]]

Our Response:

       As discussed in response to the comments above, EPA does not have the authority to
amend the statutory definition of cellulosic biofuel in EISA. Nevertheless, we believe that
incentives will still  exist to improve the lifecycle GHG performance of grandfathered renewable
fuel volumes. An incentive continues in the marketplace to reduce energy related costs in
producing fuels, which would also tend to improve GHG performance. In addition, any facility
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RFS2 Summary and Analysis of Comments
expansions beyond the baseline volume will require that the expanded volume meet the lifecycle
thresholds.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2502
Organization:       Verenium Corporation
Comment:
The commenter (2502.1) believes that EPA should modify its definition of eligible feedstocks for
cellulosic biofuels production. To ensure consistent treatment and avoid undue discrimination
among these various types of biomass, a different definition along the following lines would be
more suitable:

"Cellulose and hemicellulose from agricultural residues (for example, including but not
limited to corn stover, wheat straw, rice straw, and sugarcane bagasse); planted grasses; planted
trees, slash and pre-commercial thinnings; and yard waste." (2502.1, p.5)

Our Response:

       We do not believe that a new definition is needed.  The statutory definition specifies that
cellulosic biofuel be renewable fuel  derived from any cellulose, hemicellulose, or lignin that is
derived from renewable biomass. It is clear from the reference to "any" cellulose, hemicellulose
or lignin that the sources of cellulose and hemicellulose that the commenter cites are included.
3.2.5   Biomass-Based Diesel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) believes that Renewable Jet Fuel needs to be included in the discussion
on Advanced Biofuels, and should state that for Renewable Jet Fuel to qualify as Advanced
Biofuel it must use animal fats or waste greases as the feedstock. The discussion should also
specify that Renewable Jet Fuel produced from vegetable oils (and palm oils) are not classified
as Advanced Biofuel but are classified as Other Renewable Biofuel. The same discussion in
Biomass-based Diesel on co-processing in section III.B.l.d should be repeated in the Advanced
Biofuel section for Renewable Jet Fuel.  (0994.1, p.4)

Our Response:

       Renewable fuel that is used for jet fuel may fall into multiple renewable fuel categories
depending on its feedstock and lifecycle  performance. Several pathways have been specified in
the regulations in §80.1426, while others will need to be added at a later date. However, the
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                        Chapter 3: Major Elements of the Program As Required By EISA


restrictions suggested by the commenters on what can qualify or not qualify as advanced would
be inconsistent with the requirements under the Act, and as such we do not have authority to
impose such restrictions. Renewable jet fuel does not have to be produced from animal fats or
waste greases for it to be considered an advanced biofuel, especially given the lifecycle results
now developed for the final rule.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
The commenter (1044) believes the definitions at §80.1401 are incomplete and offers the
following recommendation:

Non-Ester Renewable Diesel—the commenter proposes the definition of Non-Ester Renewable
Diesel to include the federally defined standards of both ASTM 975, as amended for
transportation fuel, and ASTM 396 for heating oil applications.  In addition, the standard for
aviation (jet fuel) should be included. The commenter proposes the language change to state (3)
intended for use as transportation fuel, home heating oil or jet fuel and (4) to read &derived from
renewable biomass sources.

Their recommendation is based upon the fact the EISA changed the definition of the fuels and
the current definition does not codify the change. The language for item (5) does not correlate
with reference to §80.1426 and conflicts with §80.1426 table 1.

The commenter also feels the D code qualifier is inaccurate because renewable diesels can be
made with advance techniques other than hydro-cracking and thermal depolymerization.  This is
supported by other companies being approved by the agency with technologies other than those
mentioned this year. The commenter believes these changes are warranted to accurately reflect
the intent of the EISA to capture transportation and alternate fuels as defined. [[Docket number
1044.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2099
Organization:       Honeywell International, Inc.
Comment:
The commenter (2099.1)  believes that EPA should include green diesel meeting ASTM D975
fuel specifications in its definition of biomass-based diesel. (2099.1, p. 13) (See Docket Number
2099.1, pp.13-14 for more discussion on this issue)

Document No.:      EPA-HQ-OAR-2005-0161-2377
Organization:       National Solid Wastes Management Association (NSWMA)
Comment:
NSWMA is concerned about the impact of these new biofuels on engine performance. We urge
EPA to mandate that cellulosic biofuels conform with ASTM's specification D-975 for diesel
fuels.
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RFS2 Summary and Analysis of Comments
Our Response:

       We do not believe that the definition of renewable diesel or cellulosic diesel should
include the ASTM specifications in D-975 for diesel fuel. There may be renewable fuels or fuel
additives that are or will be approved for use in diesel engines, but which nevertheless do not
meet all specifications in ASTM D-975. In addition, heating oil and jet fuel are already defined
in §80.2. The definition of renewable fuel in §80.1401 requires such fuel to be made from
renewable biomass, and be used to replace or reduce the quantity of fossil fuel present in a
transportation fuel, heating oil, or jet fuel. Thus, §80.1401 codifies the changes in definitions
required by EISA, and these definitions apply to all RFS2 provisions in Subpart M.

       The final lookup table in §80.1426(f) is more general that the one proposed in the NPRM
with respect to required elements of the renewable diesel production process. Moreover, insofar
as the lookup table does not specify a D code for a particular production pathway, a party can
petition the Agency for assignment of a D code through the provisions of §80.1416.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2147
Organization:       Engine Manufacturers Association
Comment:
The commenter (2147.1) suggests that the final rule provide that any "neat" biodiesel used for
biodiesel/petroleum diesel blends be blended at a rate consistent with applicable industry
standards and manufacturers' guidelines. (Page 11)

Our Response:

       The Agency would prefer that these issues be handled and addressed by industry outside
of EPA rulemaking to the extent possible, particularly if they relate more to vehicle performance
issues rather than to emission performance.  The final RFS2 regulations allow biodiesel to be
blended at any level and still be valid for RFS2 compliance purposes so long as it is used as
transportation fuel, heating oil, or jet fuel. If necessary, we may address these issues through
future rulemaking efforts.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
While the commenter (2249.2) generally supports the definition of biomass-based diesel, they
urge consistency for purposes of complying with multiple federal agencies and recommends
EPA utilize the most updated version of the ASTM standard, which would make the definition
consistent with IRS tax guidance. (Docket number 2249.2, p. 10)
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                        Chapter 3: Major Elements of the Program As Required By EISA
Our Response:

       We have included the most recent version of ASTM D-6751 in the definition of biodiesel
in §80.1401.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2132
Organization:       Alliance of Automobile Manufacturers
Comment:
With regards to the "Biomass-based Diesel and Non-ester Renewable Diesel" definitions, the
commenter (2132.1) recommends allowing "non-ester renewable diesel" to retain its chemically
natural interpretation as being something other than biodiesel and moving the code qualification
from this definition to Biomass-based Diesel, for a parallel construction of the two types of
biomass-based diesel. This change will make both definitions internally consistent and less
confusing, and it will improve flexibility in the event of future policy changes. (2132.1, p.9)

The commenter urges EPA to clarify that renewable fuels in general and non-ester renewable
diesel fuel in particular exclude non-hydrogenated vegetable oils. This change is needed to
ensure that only hydrogenated vegetable oils which undergo processing to remove oxygen and
thus are fully compatible with typical diesel fuel vehicles may be used to produce non-ester
renewable diesel. (2132.1,p.9)

Document No.:      EPA-HQ-OAR-2005-0161-2099
Organization:       Honeywell International, Inc.
Comment:
The commenter (2099.1) believes that EPA should revise the definitions of renewable fuel
categories to include categories of advanced biofuels able to meet EISA objectives and provide
certainty regarding appropriate RIN credits. (2099.1, p. 12) (The commenter's proposed
definition revisions can be found in Docket Number 2099.1, p.29)

The commenter believes that the definition of non-ester renewable diesel should be revised to
include fuel that qualifies for a D code of 2 or higher. (2099.1, p.14) (See Docket Number
2099.1, pp.14-15 for more discussion on this issue)

Our Response:

       We agree that the definitions of biodiesel, non-ester renewable diesel, and biomass-based
diesel were not clear in the NPRM.  They have been revised for this final rule to clarify that
biodiesel and non-ester renewable diesel are two different types of fuel that both meet the
requirements for biomass-based diesel.  EPA, however, does not have authority under EISA to
revise the definition of advanced biofuels to include additional categories of fuel  beyond those
specified in the Act. Moreover, we do not believe it would be appropriate to specify that
advanced biofuels include "green gasoline" as that term is not defined elsewhere in the
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RFS2 Summary and Analysis of Comments
regulations, and regardless the lookup table in §80.1426(f) identifies the specific types of fuels
that qualify as advanced biofuel. We do not believe that the definition of renewable diesel
should include ASTM D-975, as some renewable diesels or diesel additives are or may be
approved for use in diesel engines even though they do not meet all aspects of D-975. Finally,
we do not believe that non-ester renewable diesel should be allowed to be assigned a D code of 2
"or higher" as this would provide producers with inappropriate market power.

      The Alliance of Automobile Manufacturers suggests that renewable fuels in general and
non-ester renewable diesel fuel in particular exclude non-hydrogenated vegetable oils. We are
not authorized to make such a change because the Clean Air Act (CAA) allows credit under
211 (o) for any qualifying renewable fuel.  Accordingly, our RFS2 regulations must as well. It is
important to note, however, that qualifying as renewable under RFS2 does not constitute
qualification as a fuel under the CAA. To be a fuel, it must still satisfy any other applicable
requirements under the CAA, including 211 (f).  Under present EPA policy, we will allow for the
use of vegetable oil as an additive at up to 5% in petroleum diesel fuel for use in motor vehicles.
3.2.5.1 Definition of Co-processed

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) supports EPA's proposal for defining renewable diesel as co-processed
or not co-processed. The commenter also supports EPA's proposed definition of co-processed.
This definition enables manufacturers of non-ester renewable diesel to categorize their product as
biomass-based diesel by choosing to operate existing or modified equipment in a blocked out or
sequential operation rather than processing the renewable feedstock simultaneously with
petroleum feedstock. The definition also provides additional flexibility to meet the biomass-
based diesel requirement in the most cost effective manner. (2124.1, p.21)

Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:       ConocoPhillips
Comment:
The commenter (2154.1) supports EPA's proposed definition of co-processed renewable diesel.
The proposed definition would allow producers of non-ester renewable diesel to categorize their
product as biomass-based diesel by choosing to operate existing or modified equipment in a
blocked out or sequential operation rather than processing the renewable feedstock
simultaneously with petroleum feedstock. (2154.1, p.8)

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
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                        Chapter 3: Major Elements of the Program As Required By EISA


The commenter (0994.1) supports EPA's definition of co-processing and agrees that the end
product classification, Advanced Biofuel or Other Renewable Biofuel, must depend on the GHG
reduction of the biomass feedstock. (0994.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-0999
Organization:       Darling International Inc.
Comment:
The commenter (2151.1) believes that co-processing of biomass feedstock and petroleum
products in the same unit ("Co-mingling") is not the proper scenario to decrease our nation's
dependence on imported sources of petroleum or meet Congressional renewable fuel mandates.
Simply utilizing existing hydro-treating capacity available for processing crude oil does not
increase our nation's "refining" capacity and in no way lessens our dependence on foreign oil. If
the EPA were to allow this as an option, further development of the industry would be "on hold"
as potential investors of new units designed to convert biomass feedstock into renewable diesel
would have to wait to see if the difficult technical issues associated with Co-mingling could be
overcome. (2151.1, p.2)

The commenter does support the definition for "Co-processed" in the NPRM because it allows
an alternative to the traditional uses of a petroleum hydrotreater, reduces the risk profile for the
construction of new renewable diesel capacity and encourages investment in renewable fuel
development and production. At the same time, the definition does not promote or encourage
"Co-mingling" as a solution to meeting RFS2's biomass-based diesel volume mandates. (2151.1,
P-3)

Document No.:      EPA-HQ-OAR-2005-0161-2106
Organization:       Endicott Biofuels II, LLC
Comment:
The commenter (2106) recommends that EPA choose option 2 whereby only processing in
dedicated hydrotreating equipment can be considered as valid for compliance with production of
biomass-based diesel.  This is the most practical option in our opinion since it is unlikely that the
same equipment would be able to readily switch from renewable feedstocks to petroleum without
change out of catalysts and/or other critical processing equipment.  It is also recommended for
compliance purposes that the renewable portion of the fuel be held in a separate storage vessel
until such time as it can be certified and not be blended with petroleum diesel until final
certification. This should also be the  case where further processing such as isomerization or
other pre or post hydrotreating steps occur. These criteria should also be strongly considered
where the finished product is renewable aviation fuels. [[Docket number 2106.1, p. 3]]

Document No.:      EPA-HQ-OAR-2005-0161-2132
Organization:       Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) believes that the "co-processed" definition will help those newer
biofuels that can be produced at refineries, blended interchangeably with diesel fuel and are
compatible with vehicle technologies and existing infrastructure. (2132.1, p.9)

Document No.:      EPA-HQ-OAR-2005-0161-2127
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RFS2 Summary and Analysis of Comments
Organization:       Caterpillar Inc.
Comment:
The commenter (2127) encourages the EPA to reconsider the co-processing position.
Processing virgin plant oils, used oils and greases in refineries results in a renewable fuel that is a
drop-in replacement in the engines and that reduces, or eliminates, the risks of engine
incompatibility. The commenter believes the exclusion of co-processed fuel from consideration
as a renewable fuel can result in undue production burden and discourages the production of this
fuel by refining pathway. Table V.B4-3 of the NPRM shows the significant volume currently
co-processed with petroleum and shows a projected decrease in volume from new facilities due
to the current Proposed Rule. [[Docket number 2127.1, p. 10]]

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (2249.2) recommends that the statutory definition of Biomass-based Diesel
expressly exclude biomass co-processed with petroleum feedstock. EPA seeks comments on two
options to deal with this exclusion. The commenter (2249.2) supports the second option because
it fulfills the intent of Congress. The 1 billion gallon requirement for Biomass-based Diesel was
based on estimates of biodiesel capacity in the United States, which is currently 2.69 billion
gallons. By excluding co-processing in the definition, Congress clearly did not intend for co-
processed renewable diesel produced by conventional petroleum refiners to qualify as Biomass-
based Diesel under the RFS2 program. There is no principled reason for EPA to treat refineries
that happen to separate the feedstocks and then mix the fuels later to allow the fuel to be
considered Biomass-based Diesel. Thus, EPA should exclude any renewable  diesel coproduced
at refineries from the definition of Biomass-based Diesel, and implement the second option.
(docket number 2249.2, pp. 10-11)

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter (2310) believes that in order to more clearly demonstrate that only certain types
of co-processed fuels do not qualify as biomass-based diesel, EPA should alter the biomass
based diesel definition to read "renewable fuel that is simultaneously processed with petroleum
feedstock in the same unit or units is not biomass-based diesel." EPA could then eliminate the
definition  of "co-processed," which the commenter believes is confusing in its own right  as it is
limited to petroleum co-processing. [[Docket number 2310.1, p.  15]]

Document No.:      EPA-HQ-OAR-2005-0161-2425
Organization:       Petro Algae
Comment:
The commenter (2425) strongly disagrees with the definition of co-processing and the exclusion
of biomass-based diesel if co-processing occurs.  The definition as included in RFS2 will remove
any possibility of manufacturing biomass-based diesel at refineries. This must seriously be
evaluated and reconsidered. The commenter believes that the definition of co-processing must
be changed, because it is not feasible as written and will limit biomass-based diesel processed
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through oil refineries. [[Docket number 2425.1, pp. 4 and 8]] [[See docket number 2425.1, pp. 4-
5 for further discussion of this issue.]]

Our Response:

       Commenters were split between allowing biomass-based diesel to be processed in the
same equipment at a refinery provided that fossil fuel was not processed at the same time, and
allowing processing only in dedicated equipment. Darling International, Endicott Biofuels, and
the National Biodiesel Board favored the second option. We note that changes in refinery
capacity are not a requirement or goal in EISA as it relates to the production of biomass-based
diesel under RFS2. Nevertheless, our country is currently shutting down refining capacity.
Allowing petroleum refining equipment to instead produce renewable fuels would be both
financially and environmentally responsible and in keeping with the intent of EISA to reduce
dependence on foreign supplies of fuel.

       The National Biodiesel Board states that "There is no principled reason for EPA to treat
refineries that happen to separate the feedstocks and then mix the fuels later to allow the fuel to
be considered Biomass-based Diesel."  EISA is clear that co-processing of renewable biomass
and petroleum precludes the product from being categorized as biomass-based diesel, but says
nothing about mixtures of renewable fuels and petroleum-based fuels after processing.  Our final
regulations implement the requirements of statute.

       We selected the first option to be used in the final rule.  We believe this is the most
straightforward approach and an appropriate one, given that it would allow RINs to be generated
for volumes of fuel meeting the 50% GHG reduction threshold that is derived from renewable
biomass, while not providing any credit for fuel derived from petroleum sources. In addition,
this approach avoids the need for potentially complex provisions addressing how fuel should be
treated when existing or even mothballed petroleum hydrotreating equipment is retrofitted and
placed into new service for renewable fuel production or vice versa.

       Under the final rule, any fuel that does not satisfy the definition of biomass-based diesel
only because it is co-processed with petroleum will still meet the definition of "Advanced
Biofuel" provided it meets the 50% GHG threshold and other criteria for the D code of 5.
Similarly it will meet the definition of renewable fuel if it meets a GHG  emission reduction
threshold of 20%. In neither case, however, will it meet the definition of biomass-based diesel.

       This restriction is only really an issue for renewable diesel and biodiesel produced via the
fatty acid methyl ester (FAME) process.  For other forms of biodiesel, it is never made through
any sort of co-processing with petroleum.  Producers of renewable diesel must therefore specify
whether or not they use "co-processing" to produce the fuel in order to determine the correct D
code for the RIN.
3.2.5.2        Algae

What Commenters Said:



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RFS2 Summary and Analysis of Comments
Document No.:      EPA-HQ-OAR-2005-0161-2425
Organization:       Petro Algae
Comment:
The commenter (2425) states that although the definition of biomass diesel includes micro-algae,
it does not specifically include the more broad definition of micro-crops.  Limiting the definition
will limit advancement in biofuel. [[Docket number 2425.1, pp. 3 and 8]]  [[See docket number
2425.1, pp 3-4 for further discussion of algae and micro-crops.]]

Our Response:

      As discussed in Section II.B.4 of the preamble, we have modified  the definition of
"planted crops" to specifically reference duckweed and, more broadly, any crop intentionally
applied to a tank, pond or other growth medium. Thus, these micro-crops can qualify as
renewable biomass under the same conditions as other planted crops such as corn or soy.  Algae
are separately listed in the definition of renewable biomass.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2490
Organization:       Sapphire Energy
Comment:
The commenter (2490) notes that the current version of the RFS, including the amendments
made by the Energy Independence and Security Act of 2007, does not provide parity for algae-
based fuels. This lack of parity, which must be addressed through changes to EISA itself and is
beyond the scope of the present rulemaking proceeding, limits the ability of the current RFS
program to fully encourage the development of algae-based fuel. [[Docket number 2490.1, pp.  1-
2]]

The commenter adds that algae-based fuels are also presumptively excluded from the remaining
portion of the RFS. While the law does not specify that the first 15 billion gallons of the RFS
must be comprised of corn-based ethanol, existing market conditions are such that conventional
ethanol will likely comprise all of it. Furthermore, Congress has grandfathered corn ethanol
production facilities built prior to 2009 that meet a requisite 20 percent GHG reduction
threshold, further ensuring that corn ethanol will survive environmental scrutiny.  Therefore,  as a
practical matter, the RFS will start with 15 billion gallons of conventional, corn-based ethanol,
and the remaining 21 billion gallons will be comprised of advanced biofuels nearly 80 percent of
which will exclude algae-based biofuels. [[Docket number 2490.1, pp. 2-3]] [[See docket number
2490.1, pp. 1-4 for a discussion of this issue]]

Our Response:

       This comment includes certain comments on the CAA provisions in EISA that EPA is
unable to remedy through its implementing regulations. In setting the volume requirements
under EISA for RFS2, Congress divided the total renewable fuel standard into four separate
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mandates. Biomass-based diesels, of which algal oil based diesel fuels would qualify, have their
own separate mandate. However, algal oil based fuels could also qualify for the advanced
biofuel and total renewable fuel standards. By virtue of the Act's restriction that cellulosic
biofuels be produced from cellulose, hemicellulose or lignin, only the cellulosic biofuel standard
would not be applicable for algal oil derived biofuels.
3.2.6  Additional Renewable Fuel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) noted that EISA defines "additional renewable fuel" as fuel produced
from renewable biomass that is used to replace or reduce fossil fuels used in home heating oil or
jet fuel, and indicates that EPA may allow for the generation of credits for the production of such
additional renewable fuel. The commenter supports EPA's proposal to effectuate these
provisions and allow RINs attached to qualifying renewable fuel used as heating oil or jet fuel to
remain viable. The commenter believes that this change from RFS1 should help both biodiesel
producers and Obligated Parties. (2471.1, p. 15)

Document No.:      EPA-HQ-OAR-2005-0161-2130
Organization:       ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter believes that marine use  of blended biodiesel should not be excluded from
additional renewable fuel credit. [[Docket number 2130.1, p.  17]]

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) believes that the discussion in Sections II.A.2 and III.B.l.e needs to
clarify the concept that any qualified biofuel from one of the four biofuel categories, not some
other category called "additional renewable fuel" can now have RINs attached and used for
compliance when used as described for home heating oil or jet fuel. Biofuels used in these
applications are not "new" renewable fuels, but existing renewable fuels that are now qualified
for compliance purposes when used in these applications. (0994.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2408
Organization:       Advanced Biofuels Association
Comment:
The commenter (2408.1) supports EPA's intention to allow for RINs to be generated for
renewable fuels that displace fossil fuels  used in jet fuel, home heating oil, locomotive and
marine diesels.  The overarching goal of the statute was to reduce U.S. dependence on foreign oil
and lower the overall greenhouse gas footprint of fuels. Limiting renewable fuels only to those
used in ground vehicles is not consistent with those goals. EPA should assign RINs based on
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RFS2 Summary and Analysis of Comments
equivalency value of the energy contained in the fuel to each gallon of renewable jet fuel that
meets the ASTM specifications or other nonroad fuels. (2408.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter believes that EPA's interpretation of Congressional intent with the inclusion of
"home heating oil" as an additional renewable fuel is overly restrictive.  The term  "home heating
oil" is a generic reference.  Congress did not intend to limit the crediting of biofuel use in heating
oil to only residential uses. This overly restrictive interpretation should  be changed so as to
encourage the use of biofuels in stationary source and industrial applications. The commenter
points out that several states have either already imposed requirements or are considering such
requirements for blending biofuel into heating oil. It would be ineffective if biofuel mandated
for use in heating oil in state laws were not allowed to be credited under the RFS, particularly
given the limited amount of diesel-type biofuel qualified under the RFS2 thresholds. [[Docket
number 2393.1, p. 11]]

The commenter also supports allowing all renewable fuels to be counted towards RVO
compliance, including fuels used in ocean going vessels. Regarding the EISA-defined
Additional Renewable Fuel "home heating oil", the difficulty in ascertaining that fuels which can
be used for home heating are actually used for home heating suggests that any fuel that can be
used as home heating oil should qualify.  The commenter believes this is the correct
interpretation of the intent of EISA and EPA should clarify in the final rule and preamble. If
EPA does not allow such an interpretation, this Additional Renewable Fuel, created by EISA, is
meaningless due to the inability of obligated parties to track home heating oil use to the
consumer. [[Docket number 2393.1, p. 10]]

Document No.:      EPA-HQ-OAR-2005-0161-2314
Organization:       The New England Fuel Institute
Comment:
The commenter (2134.1) strongly supports the proposal in the NPRM that would allow RINs to
be generated and traded when biodiesel is blended with heating oil. The commenter believes that
RINs generation will greatly assist the recent and ongoing  efforts by the heating oil industry to
promote and market a product blended with renewable fuel. (2134.1, p.l)

The commenter also believes that allowing marketable RINs to be generated for renewable fuel
volumes blended with heating oil would significantly advance the transformation of this vital
product into a new generation "bioheat". (2134.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2328
Organization:       Petroleum Marketers Association of America (PMAA)
Comment:
The commenter (2328.1) strongly supports the proposal that would allow renewable fuels used in
heating  oil and jet fuel to generate RINs.  The commenter believes that the RINs generation will
greatly assist the recent and ongoing efforts by the heating oil industry to promote and market a
greener product blended with renewable fuel. (2328.1, p.4)
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The commenter opposes any effort to subject these fuels to the RVO mandate. The problem with
calculating the RVO for heating oil obligated parties is that it is difficult to predict with any
reliability the volumes used for a particular year due to fluctuating winter weather conditions.
The commenter understands that neither EISA nor the NPRM calls for assigning RVOs to
heating oil refiners, importers or blenders but wishes to point out the logistical problems that
such a requirement would create for both the agency and the heating oil industry. (2328.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2345
Organization:       Independent Fuel Terminal Operators Association (IFTOA)
Comment:
The commenter (2345) strongly supports the reinstatement of RINs for heating oil and jet fuel.  It
is consistent with statutory intent to encourage as much use of renewable fuels as possible to
reduce petroleum usage and to reduce GHG emissions. [[Docket number 2345.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter seeks clarification to ensure that biodiesel used in heating oil applications
meeting the latter definition in EISA is  applicable for the renewable fuel category under RFS2.
The commenter also seeks clarification on D code applicability for biodiesel used in jet fuel or
home heating applications. [[Docket number 2249.2, p. 36]]

Document No.:      EPA-HQ-OAR-2005-0161-2099
Organization:       Honeywell International, Inc.
Comment:
The commenter (2099.1) supports EPA's proposed inclusion of jet fuel as additional renewable
fuel eligible to generate RINs. (2099.1, p.21)

Document No.:      EPA-HQ-OAR-2005-0161-2102
Organization:       RENTECH, INC
Comment:
The commenter (2102.1) supports EPA's intention to allow for RINs to be generated for
renewable fuels that displace fossil fuels used in jet fuel, home heating oil, locomotive and
marine diesels. By including additional fuels, EPA will promote the development and use of
renewable fuels by a broader spectrum  of industries. The commenter believes that EPA should
assign RINs, based on Equivalency Value of energy contained in the fuel, to each gallon of
renewable jet fuel that meets the ASTM specification (ASTM 7566) or the specifications for
other nonroad fuels. This will allow fuel marketers and consumers greater flexibility in meeting
their obligations under the law, as well  as encourage the development of renewable jet fuel
production. (2102.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2110
Organization:       Chevron
Comment:
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RFS2 Summary and Analysis of Comments
The commenter (2110.1) believes that EPA should apply a broad interpretation of the definition
of home heating oil. The commenter urges EPA to view the term "home heating oil" as it appears
in Section 21 ll(o) (I) (A) as a generic reference to heating oil not intended to limit the crediting of
biofuel use in heating oil to only residential uses. This overly restrictive interpretation should be
changed so as to encourage the use of biofuels in such stationary source applications. Providing
credit for blending biofuel in heating oil under RFS2 would not only be consistent with RFS2
program goals of increasing renewable fuel use but also with existing mandates for use of biofuel
in heating oil in several of the  states. (2110.1, p.5)

Document No.:     EPA-HQ-OAR-2005-0161-2130
Organization:       ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter believes that EPA's interpretation of Congressional intent with the inclusion of
"home heating oil" as an additional renewable fuel is overly restrictive. Home heating oil is a
generic reference to heating oil not intended by Congress to limit the crediting of biofuel use in
heating oil to only residential uses. [[Docket number 2130.1,  pp. 11-12]]

Document No.:     EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter supports allowing all renewable fuels to be counted in the program, including
fuels used in ocean going vessels. [[Docket number 2233.2, pp. 8-9]]

Document No.:     EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
The commenter (2358)  suggests that RINs should be created when neat renewable fuel is
designated as transportation fuel, home heating oil or jet fuel.  This approach simplifies the
tracking and trading system by limiting the possible number of transactions and advances the
programs goal.  [[Docket number 2358.1, pp. 10-11]]

Document No.:     EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
The commenter (1044)  recommends the following change to §80.1401:
Home Heating Oil—the use of the phrases Home Heating Oil and Heating Oil are ambiguous. 40
CFR 80.2 clearly identifies the legal definition of heating oil. In this instance a new definition
for Home Heating Oil is needed  as directed by the EISA.  In addition, all references to heating
oil should be changed to home heating oil (HHO) as a consistent use of the term throughout
RFS2. [[Docket number 1044.1, p. 4]]

Document No.:     EPA-HQ-OAR-2005-0161-2135
Organization:       Ad Hoc Coalition of Small Business Refiners (SBR)
Comment:
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                        Chapter 3: Major Elements of the Program As Required By EISA


The commenter (2135) agrees with the proposal that petroleum based heating oil should not be
included in requirement calculation for renewable volume obligation. If, however, renewable
fuels are used in boiler and heating or off-road applications, the commenter believes that their
associated RINs should not have to be retired. Thus, renewable fuels, such as biodiesel, that are
blended into non-motor vehicle fuels should not void the RINs associated with those fuels.
[[Docket number 2135.1, pp. 20-21]]

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that the reference to "home heating oil" in the proposed
definition of Additional Renewable Fuel should be clarified. The commenter recommends that
RINs associated with any renewable fuel blended into diesel, heating oil or other distillates be
allowed to be  separated and used for compliance purposes without regard to ultimate end use of
that fuel.  Distillate usage in stationary sources and ocean-going vessels is minor compared with
other uses. Allowing RINs associated with such usage to be used for compliance rather than
being retired will not change an obligated party's RVO, will not result in less renewable fuel
being used and will only contribute to meeting the renewable fuel volume mandates in EISA.
(2124.1, p.29)

Document No.:      EPA-HQ-OAR-2005-0161-2023
Organization:       New York Biomass Energy Alliance
Comment:
The commenter (2023) argues that the draft regulation considers biodiesel to be the only
available substitute for home heating oil. In the Northeastern United States,  where most of the
country's home heating oil is consumed, liquid renewable fuel alternatives to number 2 heating
oil are quite limited. On the other hand, wood pellets, which meet the definition of an advanced
biofuel for cellulosic fuels (i.e., 40-44% GHG reduction), presents a viable alternative to home
heating oil throughout the region.  The commenter (2023)  strongly urges EPA to work with the
rapidly expanding wood pellet industry to include a workable system by which pellet fuel
manufacturers (whether using wood or cropped biomass as a feedstock) can generate RINs under
RFSII.  (2023.1.pdf,p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2466
Organization:       Northeast States for Coordinated  Air Use Management (NESCAUM)
Comment:
The commenter (2466) supports allowing RINs for use of renewable fuels in heating oil and jet
fuel. (2466.1.pdf, p-9)

Note - These are additional comments are from the State of New Jersey to the commenter.

Our Response:

       The majority of commenters believed  that renewable fuel blended into heating oil and jet
fuel should be allowed to be used for compliance purposes without regard to the ultimate end use
of the fuel. We believe that this is an  appropriate approach. Thus, under our final regulations,
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RFS2 Summary and Analysis of Comments
there is no difference between renewable fuels blended into fuels used for transportation
purposes, versus fuels used for heating oil and jet fuel purposes.

       EISA uses the term "home heating oil" in the definition of "additional renewable fuel."
The statute does not clarify whether the term should be interpreted to refer only to heating oil
actually used in homes, or to all fuel of a type that can be used in homes. We note that the term
"home heating oil" is typically used in industry in the latter manner, to refer to a type of fuel,
rather than a particular use of it, and the term is typically used interchangeably in industry with
heating oil, heating fuel, home heating fuel, and other terms depending on the region and market.
We believe this broad interpretation based on typical industry usage best serves the goals and
purposes of the statute. If EPA interpreted the term to apply only to heating oil actually used in
homes, we would necessarily require tracking of individual gallons from production through
ultimate use in use in homes in order to determine eligibility of the fuel for RINs. Given the
fungible nature of the oil delivery market, this would likely be sufficiently difficult and
potentially expensive so as to discourage the generation of RINs for renewable fuels used as
home heating oil. This problem would be similar to that which arose under RFS1 for certain
renewable fuels (in particular biodiesel) that were produced for the highway diesel market but
were also suitable for other markets such as heating oil and non-road applications where it was
unclear at the time of fuel production (when RINs are typically generated under the RFS
program) whether the fuel would ultimately be eligible to generate RINs.  Congress eliminated
the complexity with respect to non-road applications in RFS 2 by eliminating the Epact restriction
that renewable fuel was a type of "motor vehicle fuel," and instead providing that renewable fuel
must be used to replace or reduce the quantity of fossil fuel present in "transportation fuel."  That
term is broadly defined to  include nonroad fuel.  We  believe it best to interpret the Act so as to
also avoid this type of complexity in the heating oil context. Thus, under today's regulations,
RINs may be generated for renewable fuel used  as or blended into "heating oil," as defined in
existing EPA regulations at §80.2(ccc). In addition to simplifying implementation and
administration of the Act, this interpretation will best realize the intent of EISA to reduce or
replace the use of fossil fuels.

       New York Biomass Energy Alliance stated that wood pellets should qualify as a
renewable fuel. We believe this would be an inappropriate interpretation and expansion beyond
the statutory language. EISA specifically defines additional renewable fuel as that which "is
used to replace or reduce the quantity of fossil fuel present in (emphasis added) home  heating
oil or jet fuel."  By this we believe a qualifying renewable fuel must be actually blended in
heating oil or jet fuel, or is a fungible fuel with them  in the marketplace and capable of being
used in similar equipment. For example, in the case of home heating oil, it must be a fuel that
meets the marketplace requirements for the type of fuel referred to as heating oil. Thus, other
types of fuel, such as wood, wood pellets, and biogas that are today used to heat homes and
provide energy to businesses but which are not capable of blending into heating oil or replacing
it in similar equipment would not get credit under the RFS2 program for those heating
applications.
What Commenters Said:
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                        Chapter 3: Major Elements of the Program As Required By EISA


Document No.:      EPA-HQ-OAR-2005-0161-2115
Organization:       Corn Plus
Comment:
We would propose that EPA define home heating oil to include qualifying Renewable Fuels
utilized to displace #2 Fuel Oil at Renewable Fuel production facilities in boiler applications. In
addition, because we utilize a production process that reduces GHG emissions in additional
respects, we request that EPA also consider these components and establish a fuel pathway for
DBS Fuel in Table 1 to §80.1426 that recognizes the benefits of our process.  The proposed fuel
type we propose is "Dewatered Distiller Solubles."  We believe that under the definitions above,
DOS Fuel generated at the Corn Plus facility that is blended into #2 Fuel Oil and is combusted in
our facility's fluidized bed boiler to produce steam for the production facility qualifies as a
Renewable Fuel and therefore generates RIN credits. Our reasoning for this is as follows.

Our Response:

       As described above, we have determined that any fuel product commercially known as
heating oil may be valid for the generation of RINs if the fuel is made from renewable biomass.
However, we have not conducted a lifecycle analysis of a pathway in which coproducts of a corn
ethanol process, such as dewatered distillers solubles, are used to displace heating oil for the
generation of process heat in the ethanol production facility.  Therefore, the lookup table in
§80.1426 (f) does not include a pathway in which a D code is designated for such a renewable
fuel. The petition process described in §80.1416 may be used for this purpose.  However, based
on the commenter's description of dewatered distillers solubles, we do not believe that this
product could be sold commercially as heating oil, and thus may not be valid for the generation
of RINs.
3.2.7  Biogas Used as Process Heat

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2081
Organization:       Novogy, Inc.
Comment:
The commenter (2081) recommends that in the case where finished cellulosic biogas is injected
into a pipeline network or sold directly to an industrial user on a pipeline network that serves
intended users under RFS2, that the volume sold then be allowed to qualify for RINs. This
recommendation is made on the basis that direct displacement of fossil derived natural gas with
cellulosic biogas can be verified within a network serving intended transportation (and
potentially home heating)  users.  The intended use is not in question when displacement can be
verified against an offsetting PTD compliant sales contract. This is a unique opportunity
available only to the most fungible forms  of renewable fuels, such as cellulosic biogas where the
methane molecule produced legitimately carries unique renewable characteristics. In summary,
the commenter recommends suppliers of cellulosic gas be allowed to demonstrate the fuel has
been irrevocably committed to its final use once it has been sold. [[Docket number 2081.1, p.
11]] [[Also see docket number 2081.1, p.  12 for suggested modification to 80.1429(b)(4).]]
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RFS2 Summary and Analysis of Comments
The commenter also recommends that in the case where finished cellulosic biogas can be
verified as being used as a direct displacement of fossil derived natural gas within a network
serving intended transportation (and potentially home heating) users, that the volume sold then
be allowed to qualify for RINs.  [[Docket number 2081.1, p. 11]]  [[Also see  docket number
2081.1, p. 12 for suggested modification to 80.1429(b)(4).]]

Our Response:

       The commenter suggests that biogas injected into a pipeline network or sold directly to an
industrial user (such as a renewable fuel facility) on a commercial pipeline network should
generate  RINs provided that the fuel has been "irrevocably committed to its final use once it has
been sold". We believe that portions of the suggested approach have merit.  We agree that it
does not  make any difference in terms of the beneficial environmental attributes associated with
the use of landfill gas whether the displacement of fossil fuel occurs in a fungible natural gas
pipeline, or in a specific facility that draws gas volume from that pipeline. In fact, a similar
approach is widely used with respect to electricity generated by renewable biomass that is placed
into a commercial electricity grid.  A party buying the renewable power is credited with doing so
in state renewable portfolio programs even though the power from these sources is placed in the
fungible  grid and the electrons produced by a renewable source may never actually be used by
the party purchasing it. In essence these programs assume that the renewable power purchased
and introduced into the grid is in fact used by the purchaser, even though all  parties acknowledge
that use of the actual renewable-derived electrons can never be verified once placed in the
fungible  grid.  We believe that adopting a similar approach in RFS2, with  appropriate limitations
related to the statutory scheme, will ultimately further the GHG reduction  and energy security
goals of EISA.

       The final rule allows producers of biogas that meets the definition  of renewable fuel and
is introduced into a fungible pipeline as a result of a contract with a user of gas for transportation
purposes to generate RINs for that fuel under specified conditions. There  must be a contractual
pathway  that provides evidence that specific quantities of the renewable was purchased and
contracted to be delivered to a specific transportation fueling facility.l  In the final rule, we
specify that the pipeline must ultimately serve the subject facility.  We are also providing for
those situations in which biogas is provided directly to the transportation facility, rather than
using a commercial distribution system such as pipelines.  For both cases—dedicated use and
commercial distribution—producers must provide contractual evidence of the production and
sale of such fuel, and there are also reporting and recordkeeping requirements to be followed as
well.  The final rule establishes similar procedures for renewable electricity ultimately used for
transportation purposes that is introduced into a fungible grid.  The final rule also allows
renewable fuel facilities causing landfill gas to be introduced into a fungible gas pipeline to be
allowed to claim those volumes in establishing the fuel pathway and appropriate D code for
generation of RINs.

       The final rule includes biogas as a potential renewable fuel type that qualifies as
advanced biofuel with a D code of 5 when derived from landfills, sewage and waste treatment
 Note that biogas used for transportation fuel includes propane made from renewable biomass.


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                        Chapter 3: Major Elements of the Program As Required By EISA


plants, and manure digesters.  Produces who believe that their biogas should qualify as cellulosic
biofuel can petition us to have it classified as such.

      We do not agree with the commenter that RINs can be generated if the gas is ultimately
used for home heating, as discussed above in section 3.2.6.


3.3   Renewable Biomass

3.3.1  Alternative Legislative Definitions of "Renewable Biomass"

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2140
Organization:       John Deere Agriculture & Turf Division
Comment:
The commenter (2140.1) believes that EISA's definition of "renewable biomass" is unduly
constraining and could result in delays in development of alternative feedstock utilization for
production of advanced biofuels. The commenter advocates a uniform and inclusive definition
of renewable biomass that will enable achieving the RFS2 targets for advanced biofuels with a
broad array of biomass feedstocks. (2140.1, pp.4-5)

Document No.:      EPA-HQ-OAR-2005-0161-2139
Organization:       EnerTech Environmental, Inc.
Comment:
The commenter (2139) requests that the RFS2 classify biosolids or sewerage sludge as an
alternative fuel and that Section 211 (o) of the CAA be amended to include biosolids as a
renewable biomass. [[Docket number 2139.1, p. 2]] [[See docket number 2139.1, pp 1-2 for
further discussion of this request.]]

Document No.:      EPA-HQ-OAR-2005-0161-2374
Organization:       Amyris Biotechnologies, Inc. (Amyris)
Comment:
The commenter (2374) believes that in the interest of maximizing the opportunity for production
of renewable fuels, EPA should exercise its discretion in allowing biomass that is sustainably
produced for conversion into fuels. The U.S. Department of Agriculture 2008 farm bill contains
a definition of renewable biomass that may serve as a broader example. [[Docket number 2374.1,
p. 3]]

Our Response:

      We have made every effort to  interpret EISA's definition of "renewable biomass" as
broadly as possible without undermining the environmental protections the definition is meant to
confer. The commenters correctly note that revised legislative definitions for "renewable
biomass" have been considered - and, in the case of the Food, Conservation, and Energy Act of
2008 (2008 Farm Bill), enacted - by Congress. However, these definitions do not change the
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RFS2 Summary and Analysis of Comments
EISA definition, and EPA is required to promulgate regulations based on the EISA definition.
Therefore we are finalizing our regulations to implement the EISA definition of "renewable
biomass."
3.3.2   Definitions of Terms

3.3.2.1       Planted Crops

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters support EPA's proposed definition of "planted crops," which makes eligible
long-standing mixed natives, eliminating a perverse incentive for land-owners to rip up mixed
grasslands to grow specific crops, such as on restored grasslands and expired CRP property. The
commenters also support including as eligible renewable biomass plant materials removed for
the purposes of invasive species control or fire management as long as they are harvested under
terms of a conservation plan designed to protect natural resources and the environment. (2129.1,
p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
The commenter supports EPA's proposal to define "renewable biomass" to include all annual or
perennial crops and supports the proposal that this definition would include all crops
intentionally applied to the ground by humans or through "intentional natural seeding by mature
plants left undisturbed for that purpose."

Document No.:      EPA-HQ-OAR-2005-0161-2144
Organization:       New York State Department of Agriculture and Markets
Comment:
The commenter disagrees with the EPA proposal to exclude planted trees from the definition of
planted crops  and crop residue, also contained in the above referenced section.  While this
distinction may be appropriate for the establishment of some types of tree plantations, the
commenter feels that Short-Rotation Woody Crops (SRWC) such as willow should be included
under Planted Crops  and Crop Residues. (2144.1, p.3) (See Docket Number 2144.1, p.3 for more
discussion on  this issue)

Document No.:      EPA-HQ-OAR-2005-0161-2408
Organization:       Advanced Biofuels Association
Comment:
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                        Chapter 3: Major Elements of the Program As Required By EISA


With regard to the dedicated perennial energy grasses for use in the production of renewable
biofuels, the commenter (2408.1) believes that EPA should recognize the wide variety of these
types of feedstocks. To the extent possible, EPA should be as flexible and broad in its definition
of these new types of feedstocks. Where appropriate, EPA should consider the inclusion of the
term "other energy grasses" to qualify as a feedstock for use in the production of RFS2 fuels.
[[See Docket Number 2408.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2508
Organization:       Environmental Working Group (EWG)
Comment:
The commenter thinks EPA should exclude row or close-grown annually planted feed stock
planted on land that was pastureland at the date of enactment from the definition of renewable
biomass.

Our Response:

       EPA believes that its final definition of "planted crops" is sufficiently broad to
encompass energy grasses. The final definition of "planted crops" includes all annual or
perennial agricultural crops from existing agricultural land that may be used as feedstock for
renewable fuel, such as grains, oilseeds, and sugarcane, as well as energy crops, such as
switchgrass, prairie grass, duckweed and other species (but not including algae species or planted
trees), providing that they were intentionally applied by humans to the ground, a growth
medium, or a pond or tank, either by direct application as seed or plant, or through intentional
natural seeding or vegetative propagation by mature plants introduced or left undisturbed for
that purpose.  Because EISA contains specific provisions for planted trees and tree residue from
tree plantations, separate from those provisions concerning planted crops, our final definition of
planted crops in EISA excludes planted trees, even if they may be considered planted crops
under some circumstances as noted by one of the commenters.

       We do not agree that row or close-grown annual crops planted on land that was actively
managed as pastureland at the date of enactment should be excluded from the definition of
renewable biomass. EISA provides that planted crops and crop residues must come from certain
"agricultural land." EPA believes that pastureland is appropriately and traditionally considered
within the scope of "agricultural land."  Had Congress intended that planted crops only be
considered renewable biomass if harvested from land that was managed  as cropland as of the
date of EISA enactment, as the commenter appears to suggest, then Congress would likely have
used that term rather than the broader reference to "agricultural land" in the definition of
renewable biomass.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2137
Organization:       Brazilian Sugarcane Industry Association (UNICA)
Comment:
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RFS2 Summary and Analysis of Comments
The commenter (2137) states that there is no question that Brazilian sugarcane meets the EISA's
statutory definition of a renewable biomass feedstock, as it is a "planted crop "that has been
"harvested from agricultural land" that was under cultivation prior to December 2007 and
remains "actively managed." [[Docket number 2137.1, p. 4]] [[See docket number 2137, pp. 4-6
for further information.]]

Our Response:

       Even if it is clear that a planted crop used by a foreign producer meets the definition of
renewable biomass, the foreign producer is still subject to requirements verifying that. As
described in the preamble, we are finalizing an "aggregate approach" for renewable biomass
verification for domestic producers using planted crops as feedstock, but are unable to adopt
comparable measures for foreign producers at this time.  Therefore foreign producers of planted
crops and crop residue must provide the verification required of domestic producers for every
other type of renewable biomass. EPA will consider expanding the aggregate approach to other
countries if sufficient information and documentation becomes available.

       Foreign producers of renewable fuel that is imported into the U.S., if they are generating
RINs for that volume of fuel, must designate renewable fuel intended for  export to the U.S. as
such, segregate the volume until it reaches the U.S., post a bond to ensure that penalties can be
assessed in the event of a violation, and comply with other requirements designed to facilitate
enforcement, as discussed in Section II.D.2.b of the preamble. Similarly to domestic producers
of renewable fuel other than planted crops and crop residue subject to the aggregate compliance
approach, foreign producers must obtain and maintain written documentation from their
feedstock providers that can serve as evidence that their feedstocks meet the definition of
renewable biomass. For each feedstock purchase, producers must maintain documents that
identify the type and amount of feedstocks and where the feedstock was produced, as well as
documents that are sufficient to verify that the feedstock  qualifies as renewable biomass.
Specifically, renewable fuel producers must maintain maps and/or electronic data identifying the
boundaries of the land where the feedstock was produced, product transfer documents (PTDs) or
bills of lading tracing the feedstock from that land to the  renewable fuel production facility, and
other written records that serve as evidence that the feedstock qualifies as renewable biomass.
Furthermore, foreign producers must report to EPA quarterly a summary of the types and
volumes of feedstocks used throughout the quarter, as well as electronic data or maps identifying
the land from which those feedstocks were harvested. Foreign producers  may also develop a
quality assurance program for their renewable fuel production supply chain, as described in
Section II.4.c of the preamble.

       If the importer is generating the RINs for the foreign-produced fuel (if the foreign
producer has not already done so), then importers must obtain from the foreign producer and
maintain in their records written documentation, as described above, that serves as evidence that
the renewable fuel for which they are generating RINs was made from feedstocks meeting the
definition of renewable biomass.
3.3.2.2        Crop Residue
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                        Chapter 3: Major Elements of the Program As Required By EISA
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
The commenter supports that "crop residue" should be defined to include biomass removed for
purposes of invasive species control or fire management. EPA's definition also should make
clear that crop residue is defined to include biomass from crops or crop residue that is a co-
product from industrial, commercial, or agricultural operations. "Renewable biomass" should be
defined to include any biomass removed from agricultural land that facilitates crop management,
whether or not the crop is part of the residue. [[Docket number 2383.1, pp. 14-15]]

Document No.:      EPA-HQ-OAR-2005-0161-2150
Organization:       American Farm Bureau Federation
Comment:
The commenter (2150.1) disagrees with EPA's definition of crop residue as the residue left over
from the harvesting of planted crops. They feel that it severely limits the types of feedstocks that
may be used under the RFS. Crop residue such as husks, seeds, bagasse, and roots can be used
as feedstock for cellulosic ethanol.

Our Response:

       We agree that biomass removed from agricultural land for purposes of invasive species
control and/or fire management could be considered a form of biomass residue related to crop
production, whether or not derived from a crop itself, and therefore have modified the proposed
definition of "crop residue" to include it. We believe that such biomass is typically removed
from agricultural land for the purpose of preserving or enhancing its value in agricultural crop
production. It may  be removed at the time crops are harvested, post harvest, periodically (e.g.,
for pastureland) or during extended fallow periods. We also agree with the comments
encouraging us to expand the definition of crop residue to include materials left over after the
processing of the crop into a useable resource, such as husks, seeds, bagasse and roots, and we
have altered the final definition to cover such materials. Thus our final definition of "crop
residue" is the biomass left over from the harvesting or processing of planted crops from existing
agricultural land and any biomass removed from existing agricultural land that facilitates crop
management (including biomass collected from such lands in relation to invasive species control
or fire management), whether or not the biomass includes any portion of a crop or crop plant.
3.3.2.3       Agricultural Land

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2515
Organization:       Minnesota Department of Natural Resources (MnDNR)
Comment:
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RFS2 Summary and Analysis of Comments
The commenter supports EPA's proposal to include CRP lands as "agricultural" lands. The
commenter noted that management of these lands can be enhanced through periodic managed
mowing and removal of biomass in-lieu of or in addition to prescribed burning. Biomass
produced from these sites should be eligible under the RFS.  Individual program rules will
protect the conservation values of the lands enrolled. (2515.1, p.2)

The commenter noted that farmers and grazers that have maintained native grazing lands should
be rewarded for good stewardship.  Preservation of healthy grasslands will require expanding
markets for grass based agriculture  - rather than reducing economic opportunities. The
commenter believes that the standards should include biomass harvested from rangelands that
does not impair the ecological integrity of these sites. Disqualifying all  "range land" is not
appropriate and EPA should coordinate with USDA and its biomass programs to facilitate
incentives and rewards for sustainable management of the nation's grasslands in the context of
cellulosic biomass production.  (2515.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife  Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters strongly support EPA's exclusion of rangeland from its definition of
agricultural land.  (2129.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2508
Organization:       Environmental Working Group (EWG)
Comment:
The commenter (2508) supports EPA's exclusion of rangeland from its definition of agricultural
land.

Document No.:      EPA-HQ-OAR-2005-0161-2446
Organization:       Minnesota Farm Bureau Federation
Comment:
The commenter states that rangeland should be specified as agricultural  land under the RFS2.
The Agency's assertion that it is questionable whether any rangeland should qualify as actively
managed under EISA is misguided. Ranchers vigorously manage rangeland for multiple
agricultural purposes.

Document No.:      EPA-HQ-OAR-2005-0161-2463
Organization:       National Farmers Union
Comment:
The commenter believes rangeland  should be included in the definition of existing agricultural
land. Rangeland fits within the definition of renewable  biomass in the RFS2 statute. As long as
it can be established that the land was cleared and/or cultivated prior to 2007 and has been
managed as a natural ecosystem since that point, it meets the letter of the law and should be
eligible under the rule.
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                        Chapter 3: Major Elements of the Program As Required By EISA
Document No.:      EPA-HQ-OAR-2005-0161-2502
Organization:       Verenium Corporation
Comment:
The commenter (2502.1) believes that EPA should delete the proposed rule's proposed
restrictions on the use of "rangeland." The commenter believes that EPA should favor a
presumption that rangeland is considered an eligible category of land for the production of
biomass, unless specific types of such land are excluded for valid and specified reasons. (2502.1,
p.4) (See Docket Number 2502.1, p.4 for a detailed discussion of this  issue)

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
Supports EPA's interpretation that crop land, pastureland and Conservation Reserve Program
land all meet this definition. Rangeland also should be included within the broad definition of
"agricultural land." Rangeland is subject to active management in terms of controlled access
through fencing and oversight and control of invasive species and grazing rates. [[Docket
number 2383.1, p. 15]]

Document No.:      EPA-HQ-OAR-2005-0161-2374
Organization:       Amyris Biotechnologies, Inc. (Amyris)
Comment:
The commenter also believes that EPA should include rangeland as agricultural land.  The
proposal to rule rangelands ineligible is inconsistent with the congressional intent and would
likely intensify competition for lands better suited for food crop production. While there is no
commonly accepted definition of rangeland, the USDA has published estimates for U.S.
"grassland and range" to be as much as 600 million acres, which equates to approximately 66
billion gallons of corn derived ethanol. Hence this rangeland prohibition could have astonishing
affects. [[Docket number 2374.1, p. 3]]

Document No.:      EPA-HQ-OAR-2005-0161-2150
Organization:       American Farm Bureau Federation
Comment:
The commenter (2150.1) does not believe sales and purchasing receipts are readily available to
prove the management of rangeland. (Page 2)

The commenter (2150.1) asserts that rangeland should be specified as agricultural land under the
RFS2. They note that ranchers vigorously manage rangeland for multiple agricultural purposes.
Additionally, USDA's definition of agricultural land includes rangeland.

Document No.:      EPA-HQ-OAR-2005-0161-2302
Organization:       UC Berkeley - Energy Biosciences Institute
Comment:
The commenter supports EPA's inclusion of CRP land as agricultural. They also encourage
EPA to include rangeland as agricultural land, and to include abandoned agricultural land in the
allowance for renewable biomass production. [[#2302 p. 1-2]]
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RFS2 Summary and Analysis of Comments
Document No.:     EPA-HQ-OAR-2005-0161-2144
Organization:      New York State Department of Agriculture and Markets
Comment:
While the commenter (2144.1) recognizes the need to include certain provisions to safeguard this
specific land type, EPA by developing proposed rules around rangelands has effectively ruled
out, by making ineligible, significant areas of land that could be used for the establishment and
sustainable production of advanced biofuel feedstock in New York State, the Northeast and
much of the lands east of the Mississippi River. (2144.1, p.l) (See Docket Number 2144.1, pp.l-
2 for more discussion on this issue)

Document No.:     EPA-HQ-OAR-2005-0161-2023
Organization:      New York Biomass Energy Alliance
Comment:
The commenter (2023) discusses the definition of renewable biomass, with particular reference
to biomass produced on agricultural land. The commenter strongly disagrees with the
interpretation that abandoned farmland should be excluded from producing renewable biomass.
(2023.1.pdf, pl-5)

For additional data on agricultural land,  see addendum on page 7-8 COMPARISON OF LAND
AREA DATA FROM THE CENSUS OF AGRICULTURE AND THE NATIONAL
RESOURCES INVENTORY (2023.1.pdf, p7-8)

Document No.:     EPA-HQ-OAR-2005-0161-2156
Organization:      Georgia Forestry  Commission
Comment:
The commenter (2156) comments that CRP lands include millions of acres of planted native tree
species in the South and much of these forests are over 20 years old and will eventually be
forests of saw timber size. The commenter raises question of whether this land should be
considered agricultural, as implied by the EPA proposed rules (2156.1.docx, p.3).

Document No.:     EPA-HQ-OAR-2005-0161-2393
Organization:      American Petroleum Institute (API)
Comment:
The commenter supports EPA's efforts to make the land restriction provisions on renewable fuel
producers as consistent as possible with  current industry practice and USDA interpretation.  The
commenter does not object to Conservation Reserve Program (CRP) land being included as
"agricultural"  land, but does not think rangeland should be considered agricultural land since,
generally, it has never been under till. [[Docket number 2393.1, p. 42]]

Document No.:     EPA-HQ-OAR-2005-0161-2130
Organization:      ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) supports EPA's efforts to make the land restriction provision on
renewable fuel producers as consistent as possible with current industry practice and USDA
interpretation. The commenter does not object to Conservation Reserve Program (CRP) land
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                        Chapter 3: Major Elements of the Program As Required By EISA


being included as "agricultural" land, but does not think rangeland should be considered
agricultural land since, generally, it has never been under till. [[Docket number 2130.1, p. 6-7

Document No.:      EPA-HQ-OAR-2005-0161-2369
Organization:       New Generation Biofuels (NGBF)
Comment:
The commenter (2369) states that the definition of "fallow land" may be in line with terminology
used within the United States Department of Agriculture (USDA), however marginal lands, lands
that are not suitable for agriculture, represent potential areas for growing energy crops.  The
commenter encourages EPA to include marginal and rangelands as lands where renewable
biomass may be grown and the subsequent carbon offsets or sequestration should be included in
the GHG models. [[Docket number 2369.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter believes EPA improperly excluded rangeland.

Document No.:      EPA-HQ-OAR-2005-0161-2425
Organization:       Petro Algae
Comment:
The commenter (2425) believes it is critical EPA allow existing rangeland to quality as
agricultural land under RFS2 which will make millions of acres of non-cropland, non-forested
land qualify for renewable feedstock production.  The commenter believes this is essential to
support the rigorous renewable fuel production goals. As EPA references in the proposal, the
inclusion of a land restrictions omitting existing rangeland may drive renewable fuel producers
to use rangeland and simply forgo the benefits of qualifying for RINs.  This would result in an
undersupply of RINs which would drive RINs prices upward do to the  supply/demand curve.
[[Docket number 2425.1, p. 7]]

Document No.:      EPA-HQ-OAR-2005-0161-2120
Organization:       Society for Range Management
Comment:
The commenter [[2120]] states that under the EISA language, biomass  feedstocks may only be
considered "renewable" if they were grown on agricultural land.  EPA  interprets agricultural land
to include cropland and pastureland, but not rangeland.  The Society for Range Management
feels that this is a mistake.

The commenter states rangelands hold great potential for biofuels production. A number of
important studies are exploring the feasibility and impact of production of cellulosic ethanol
from switchgrass and other native grasses on the rangelands of the Great Plains. While
environmental interests rightly point out that many of these prairie lands have large subsoil GHG
deposits that would be  released through conversion to cropland, switchgrass also sequesters
significant amounts of carbon in the soil. A study by Frank et al. shows that in soil planted with
switchgrass (which has a perennial root system) carbon increased at a rate of 1.01 kg C m-2
y(1.2 Another study by Lee et al. reported that switchgrass grown in the South Dakota
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RFS2 Summary and Analysis of Comments
Conservation Reserve Program stored carbon at a rate of 2.4 to 4.0 Mg ha-1 y(l at the 0 to 90 cm
depth-relatively deep soil. [[#2120.1 p.2]]

The commenter [[2120]] states that EPA has expressed concern about the difficulty of
determining the boundaries of rangeland. The Chicago Climate Exchange, for example, uses the
USDA Land Resource Regions selecting counties that qualify on the basis of precipitation levels
and other factors.  Satellite imaging technology, similar to those used by EPA in its attempts to
project the indirect GHG effects of land use change, can also determine vegetation types with a
high degree of accuracy, including those typical of rangeland. Much of the uncertainty revolves
around the question of active management.  To put it simply, where there is no evidence that
forest cover grew on rangeland in the past, it is by definition "clear" and hence should qualify as
"cleared." It should be a relatively simple exercise to verify, through third parties, that the land
was clear of trees on December 19, 2007, based on plant growth and other evidence. [[#2120.1
p.4]]

Document No.:      EPA-HQ-OAR-2005-0161-2244
Organization:       Altrius Group. LLC
Comment:
Regarding the inclusion of rangeland as qualifying agricultural land, the commenter notes that
EPA interprets agricultural land to include cropland and pastureland, but not rangeland. The
commenter feels that  this is a mistake. [[Docket number 2244.1, p. 2]] [[See docket number
2244, pp. 2-4 for detailed discussion of this issue.]]

Our Response:

       As proposed, and as generally supported by the comments, EPA is including lands
enrolled in the CRP program in the definition of "agricultural land."  However, as discussed in
detail in Section II.4.a.i.of the preamble, EPA is not including rangeland in the final definition of
existing agricultural land for  a number of reasons. Under EISA, renewable biomass includes
crops and crop residue from agricultural land cleared or cultivated at any time prior to the
enactment of EISA that is either "actively managed of fallow" and nonforested.  EPA believes
that in interpreting the phrase "actively managed" in this  definition, it is appropriate to consider
the degree and type of management that is typically applied to planted crops and crop residue.
Although EPA appreciates the comments suggesting that some degree of management does take
place on rangeland, EPA believes that the level of "active management" that is typically
associated with land dedicated to growing planted crops is far more intensive than the types of
management associated with rangeland. Furthermore, since rangeland encompasses a wide
variety of ecosystems, including native grasslands or shrublands, savannas, wetlands, deserts and
tundra, including it in the definition of agricultural land would increase the risk that these
sensitive ecosystems would become available under EISA for conversion into intensively
managed mono-culture cropland. Finally, the conversion of relatively undisturbed rangeland to
the production of annual crops could in some cases lead to large releases of GHGs stored in the
soil which would be contrary to a principal EISA goal. Plowing up well-established grasslands,
for example, would be expected to release a large pulse of stored C02. It is likely correct as
suggested by one commenter, that soil C02 levels would then rise again  if the area were planted
with a perennial crop such as switchgrass and not re-cultivated. However, by including
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                        Chapter 3: Major Elements of the Program As Required By EISA


rangeland as a type of "agricultural land" from which planted crops and crop residue may be
harvested, EPA would be allowing any type of planted crop (including annuals) to be grown on
the land, with the possibility of annual COz releases from the soil.
       For reasons similar to those articulated above with respect to rangeland, EPA has decided
not to include "marginal lands" or "abandoned agricultural lands" that do not meet the definition
of "fallow" within the definition of "agricultural land" for purposes of the renewable biomass
definition.

       One commenter asked whether CRP land that has been forested for twenty years should
be included in the definition of "agricultural land" from which planted crops and plant residue
may be obtained and qualify as renewable biomass.  EPA has included CRP land in the
definition of "agricultural land."  However, for planted crops and crop residue from CRP land (or
any other agricultural land) to be considered renewable biomass, the land must also have been
nonforested as of the date of enactment of EISA. Therefore, the specific land referenced by the
commenter would not appear to be eligible for the growth of planted crops or crop residue that
would be considered renewable biomass under the final RFS2 rule.
3.3.2.4       Cleared or Cultivated and Actively Managed Agricultural Land

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2150
Organization:       American Farm Bureau Federation
Comment:
The commenter (2150.1)  believes EPA has erroneously expanded on the EISA's existing
cropland requirement by interpreting the phrase "that is actively managed or fallow, and
nonforested" as meaning  that land must have been actively managed or fallow, and nonforested,
on December 19, 2007, and continuously thereafter in order to qualify for renewable biomass
production. While the EISA defines existing cropland requirement from an historical
perspective, EPA's definition is future oriented and will impede American agriculture's
participation and our biofuels industry.  The  commenter states that the definition of renewable
biomass contained in the  Energy Independence and Security Act of 2007 (EISA) states that land
used to grow biomass must be agricultural land cleared or cultivated at any time prior to
December 19, 2007 that is either actively managed or fallow and nonforested. (Page 1)

Document No.:      EPA-HQ-OAR-2005-0161-2446
Organization:       Minnesota Farm Bureau Federation
Comment:
The commenter states that contrary to congressional intent, EPA has expanded on the EISA's
existing cropland requirement; while EISA defines existing cropland requirement from an
historical perspective, EPA's definition  is future oriented and will impede American agricultures
participation and our biofuels industry.

Document No.:      EPA-HQ-OAR-2005-0161-2463
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RFS2 Summary and Analysis of Comments
Organization:       National Farmers Union
Comment:
The commenter states that the term "continuously" is not found in the statute. Imposing this
standard requires that land not only have been in production on December 19, 2007, but that it
has continued to be so. The plain language of the statute does not drive to this interpretation;
instead setting a static baseline of what lands would be eligible as of December 19, 2007.  The
final rule should eliminate the concept of continuously managed as farmers were not given fair
notice that this would be the potential requirement.

Document No.:      EPA-HQ-OAR-2005-0161-2317
Organization:       National Corn Growers Association (NCGA)
Comment:
The commenter (2317) urges EPA to revise the proposed definition of "Renewable Biomass" to
eliminate the "continuously" managed requirement. [[Docket number 2317.1, pp. 34-35]]

Document No.:      EPA-HQ-OAR-2005-0161-2244
Organization:       Altrius Group. LLC
Comment:
Regarding EPA's proposed requirement of documentation verifying that land was continuously
managed since December 19, 2007, the commenter (2244) points out that the term
"continuously" is not found in the statute and believes that imposing this standard requires that
land  not only have been in production on December 19,  2007, but that it has continued to be so.
The plain language of the statute does not drive to this interpretation; instead setting a static
baseline of what lands would be eligible as of December 19, 2007.  The commenter believes
final rule should eliminate the concept of continuously managed as farmers were not given fair
notice that this would be the potential requirement. [[Docket number 2244.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force,  Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters recommend that agricultural land should be defined as "cleared or cultivated at
any time" prior to December 19, 2007, if it was actively managed as agricultural land or fallow
(and  non-forested) during the 5 years prior to December 19, 2007 and has, since December 19,
2007, been actively managed as agricultural land or fallow (and non-forested).

Document No.:      EPA-HQ-OAR-2005-0161-2508
Organization:       Environmental Working Group (EWG)
Comment:
The commenter believes that agricultural land should be defined as  "cleared or cultivated at any
time" prior to December 19, 2007, was continuously actively managed as agricultural land or
fallow (and nonforested) during the 5 years prior to December 19, 2007 and has, since December
19, 2007, been continuously actively managed as agricultural land or fallow (and nonforested).
(2508, p.2)
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                        Chapter 3: Major Elements of the Program As Required By EISA
Document No.:      EPA-HQ-OAR-2005-0161-2119
Organization:       National Sorghum Producers
Comment:
The commenter feels that an ethanol facility producing advanced (sweet sorghum) or cellulosic
(energy sorghum) biofuel produced from feedstock grown on land that was brought into
production after December 19, 2007 should not be penalized on all produced gallons. (2119.1,
p.4)

Our Response:

       EPA has modified the definition of existing agricultural land so that the "active
management" requirement is satisfied for those lands that were cleared or cultivated and actively
managed or fallow, and non-forested on December 19, 2007.  EPA believes that the goal of the
EISA and RFS program, to increase the presence of renewable fuels in transportation fuel, will
be better served by interpreting the "actively managed or fallow" requirement in the renewable
biomass definition as applying to land actively managed or fallow on December 19,  2007, rather
than interpreting this requirement as applying beginning on December 19, 2007 and continuously
thereafter. This approach will also greatly ease compliance burdens, since parties will need only
demonstrate active management as of one date (the date of EISA enactment) to satisfy the active
management component of the requirements related to planted crops and crop residue, rather
than having to demonstrate active management as of that date and continuously thereafter.  This
approach will also parties to suspend active management of qualifying lands for a period of time
without fear of losing qualifying status under RFS2, which could have many benefits in terms of
resource protection and wildlife management.

       EISA, however, limits the eligibility of crops to those coming from agricultural land
(cropland, pastureland, and CRP land) that was cleared or cultivated prior to December 19, 2007.
Any crops coming from lands cleared after that date are not considered renewable biomass under
EISA, and, therefore, under the RFS2 program, a producer may not generate RINs for any fuel
made from those crops.
3.3.2.5       Fallow

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2144
Organization:       New York State Department of Agriculture and Markets
Comment:
The commenter is concerned with the manner in which the term "fallow" is proposed to be
defined under Section 111(4) (a) (I) of the NPRM. Since the RFS2 only has purview over lands
used for the production of biofuel feedstock crops, the decision to use a very narrow definition
for fallow land could have significant unintended consequences.  (2144.1, p.2) (See Docket
Number 2144.1, p.2 for more discussion on this issue)
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RFS2 Summary and Analysis of Comments
Document No.:      EPA-HQ-OAR-2005-0161-2150
Organization:       American Farm Bureau Federation
Comment:
The commenter (2150.1) does not believe it is plausible to require proof that land has been or is
currently intentionally fallow.  Further, the  EPA should not specify a time period after which
land that is not actively managed for agricultural purposes should be considered to have been
abandoned for agriculture.  (Page 2)

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters believe that EPA should revise the definition of fallow land to include land that
has been planted to cover crops for the purpose of erosion control or soil improvement, in
accordance with USDA definitions of idle cropland. EPA should also set a time limit for land to
qualify as fallow. EPA should expand the definition of actively-managed existing agricultural
land to include land that has recently come  out of a contract for the Conservation Reserve
Program (CRP), rather than placing CRP in the definition of fallow as they have done.

Document No.:      EPA-HQ-OAR-2005-0161-2302
Organization:       UC Berkeley - Energy Biosciences Institute
Comment:
The commenter encourages EPA not to set  limits on fallow periods [[#2302 p. 1-2]]

Document No.:      EPA-HQ-OAR-2005-0161-2244
Organization:       Altrius Group. LLC
Comment:
EPA has suggested that, for fallow land, "the decision to let land lie fallow is made deliberately
and intentionally by a land owner or farmer such that there should be documentation of such
intent."  The commenter (2244) respectfully disagrees on this point. Quite often, farmers do not
intend to leave fields fallow at all, but are forced to do so for economic, regulatory, climatic or
water-related reasons. In addition, the commenter urges the EPA not to require farmers to
produce documentation of the decision to leave fields fallow, as in many cases it does not exist
and would disqualify a great deal of agricultural land  that can and should contribute to the goals
of the RFS2 program. Alternatively, if such proof were to be required, the commenter suggests
that it would be far more reasonable for EPA to accept various alternative forms of evidence,
including affidavits or other substantiating evidence. [[Docket number 2244.1, pp. 1-2]]

Regarding EPA's request for a time period  for land management, the commenter believes that
EPA's presumption is unreasonable and contravenes congressional intent. If the purpose of the
statute is to use on land that was previously cultivated, an arbitrary time limit would unfairly
exclude many farmers and ranchers from the program. Many farmers may be forced to leave
land fallow against their will or may simply choose not to cultivate farmland for a period of time
for economic or other reasons. Such a period of time absent substantial other evidence, should
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                        Chapter 3: Major Elements of the Program As Required By EISA


not be sufficient basis to presume "abandonment" for purposes of the statute. It should not be the
role of the statute or EPA to penalize farmers further by setting an arbitrary time limit after
which their land is considered to be "abandoned." [[Docket number 2244.1, p. 2]]

Our Response:

       We have decided not to include a time limit for land to qualify as "fallow" because we
understand that agricultural land may be left fallow for many different purposes and for varying
amounts of time. Any particular timeframe that EPA might choose for this purpose would be
somewhat arbitrary. Further, EISA does not indicate a period of time that qualifying land could
be fallow, so EPA does not believe that it would be appropriate to do so in its regulations.
Therefore, EPA is finalizing its proposed definition of "fallow." Also, EPA believes that
feedstock producers will be able to provide some written proof of their land being left fallow on
December 19, 2007, such as a farm management plan, evidence of participation in CRP, or other
such documentation.

       While the decision to let land lie fallow may not always be the feedstock producer's first
choice, even when it is in response to economic, regulatory or other stimuli, EPA believes is still
a deliberate and intentional decision on behalf of the farmer not to plant crops on his  land and to
leave that land fallow. EPA believes that the documentation required to show that land is
actively managed or fallow is sufficiently flexible to cover such situations, for example, one in
which a feedstock producer decides that the economic circumstances are such that he must leave
his land fallow for a period of time.

       The definition of "fallow" specifies that for  RFS2 purposes, fallow land must be
cropland, pastureland or CRP land.  These are the three land types that are  also  included in the
definition of "existing agricultural land," and from which planted crops and crop residue may be
harvested providing that other definitional criteria are satisfied. [[Although EPA believes that
presence of land in the CRP program demonstrates  "active management," such that there is no
additional reason to qualify CRP land as "fallow,"]] EPA has retained the reference to CRP land
in the definition of "fallow"  to avoid the possible confusion that might arise if EPA were to list
other qualifying agricultural land types but not CRP land.

       Clean Air Task Force comments that the definition of fallow land should include land
planted with cover crops. EPA believes that agricultural land planted with cover crops would be
considered actively managed rather than fallow, as the farmer is actively managing the land for a
specific purpose by planting cover crops for various reasons, including to reduce runoff or
replenish soil nutrients, among others.
3.3.2.6       Planted Trees

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2129
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RFS2 Summary and Analysis of Comments
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters encourage EPA to modify the definition of "planted trees" to ensure that this
definition does not encourage the conversion of natural forests to plantations. The commenters
urge EPA to limit the definition of "planted trees" to those that were established by human
intervention.

Document No.:      EPA-HQ-OAR-2005-0161-2173.1
Organization:       National Association of Forest Owners (NAFO)
Comment:
The commenter supports EPA's inclusion of trees established by seeding by mature trees in the
definition of planted trees. Also, the commenter recommends that EPA include other methods of
tree regeneration, such as coppice or root suckers.

Document No.:      EPA-HQ-OAR-2005-0161-2308
Organization:       Environmental Defense Fund
Comment:
The commenter (2308.1) urges EPA to reconsider the breadth of the definition of "planted trees"
as the currently drafted definition, which allows naturally regenerated trees to be harvested as a
"plantation", could bypass the restrictions on harvests in ecologically sensitive forestland. (Page
2)

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter recommends for the definition of "planted trees" that EPA provide exclusion in
the definition of planted trees for trees that are not indigenous to the region (planted trees must
be native) and provide that any non-native trees to be included as an agricultural crop.

Document No.:      EPA-HQ-OAR-2005-0161-2349
Organization:       Kentucky Division of Forestry
Comment:
The commenter (2349) support the interpretation of planted trees and recommends rewording the
definition to "trees from stands established by planting, artificial or natural seeding or coppice"
to include other methods of regeneration. (2349.pdf, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2494
Organization:       Council of Western State Foresters
Comment:
The commenter suggests rewording the definition for the term Planted Trees to "trees from
stands established by planting, artificial or natural seeding, or coppice."

Document No.:      EPA-HQ-OAR-2005-0161-2472
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Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter supports EPA's definition of "planted trees" and agrees with EPA that planted
trees should include not only trees established by human intervention, but also trees established
from natural seeding by mature trees left undisturbed for such a purpose.

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter supports EPA's proposal to include in the definition of planted trees naturally
regenerating trees left undisturbed from natural seeding by mature trees left undisturbed for such
purpose.

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
NASF supports EPA's interpretation that "planted trees" include more than those planted by
humans using nursery stock or artificial seeding. Forest management includes a variety of
artificial and natural regeneration approaches. All of these techniques are necessary to
successfully and sustainably manage the wide-variety of forest types in the United States.  In
addition to including trees  established by natural seeding, NASF recommends the definition be
broadened to include other applied methods of direct  and natural regeneration including
coppicing and sucker roots. We suggest rewording the definition to: "trees from stands
established by planting, artificial or natural seeding, or coppice."

Our Response:

       EPA agrees that the inclusion of natural reseeding in the definition of "planted trees"
would make distinguishing between tree plantations and forests difficult or impossible, thus
negating the separate restrictions that Congress placed on the two types of land, as noted by
some of the commenters.  On the other hand,  EPA believes that trees that are naturally seeded
and grown together with hand- or machine-planted trees in a tree plantation should not
categorically be excluded from qualifying as renewable biomass.  Such natural reseeding may
occur after planting the majority of trees in a tree plantation, and may be consistent with the
management plan for a tree plantation. EPA has decided, therefore, to modify its proposed
definition of "planted tree" to be trees harvested from a tree plantation. The term "tree
plantation" is defined as a stand of no less than 1 acre composed primarily of trees established by
hand- or machine-planting of a seed or sapling, or by coppice growth from the stump or root of a
tree that was hand- or machine-planted." The net effect is that as long as a tree plantation
consists "primarily"  of trees that were hand- or machine planted (or derived therefrom, as
described below), then all trees from the tree plantation, including those established from natural
seeding by mature trees left undisturbed for such a purpose, will qualify as renewable biomass.

       EPA does  not understand planted trees to be limited to native species.  Furthermore, EPA
disagrees that non-native tree species on tree plantations should be considered crops. Under
EISA, planted crops and crop residue are only considered renewable biomass if they are
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harvested from existing agricultural land. EPA's final definition of "tree plantation" is an area
predominantly composed of planted trees.
3.3.2.7       Tree Residue

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter (2156) recommends that demolition wood waste, construction wood wastes and
wood product manufacturing wood wastes in addition to backyard waste should be included in
the definition of renewable biomass. (2156.1.docx, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2515
Organization:       Minnesota Department of Natural Resources  (MnDNR)
Comment:
The commenter disagrees with EPA's proposal to subsume the definition of tree residue into
"slash". The commenter believes that mill residues such as sawdust, bark, and black liquor
should be considered residue as they are residual after processing (2515.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2494
Organization:       Council of Western State Foresters
Comment:
The commenter agrees with EPA that the term  "slash" is more descriptive than "tree residue,"
and yet in practice means the same thing. Using the term "slash" rather than "tree residue" makes
sense and will be less confusing.

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter believes that EPA may have overlooked several issues in proposing to simplify
its regulations by including tree residues within its definition of slash and suggests that EPA
either include unmerchantable trees within the definition of slash, or explicitly include them
within the  definition of planted trees. The commenter also states that merging the definition of
tree residue into the definition of slash leaves mill residue outside of the definition of biomass
and believes that this omission is a major oversight with significant unintended consequences.
The commenter states that Congress clearly intended for tree wastes to be included, as
demonstrated by its inclusion  of separated yard waste, and that black liquor should also be
included within the definition of tree residue.

Document No.:      EPA-HQ-OAR-2005-0161-2081
Organization:       Novogy, Inc.
Comment:
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The commenter (2081) recommends that cellulosic biogas produced from waste sludge which is
a residual of the pulp & paper and recycled paper making process, be allowed to generate RINs
under RFS2. Like woodchips, saw dust and other derivatives qualifying as renewable biomass
under §80.1401, the commenter believes residual waste sludge from renewable biomass
materials should be allowed to generate RINs. Given the emphasis within EISA to focus on the
full utilization of waste cellulosic feedstocks for renewable fuels production, the commenter
would like to interpret the intent of the legislation to include waste paper sludge as a renewable
biomass feedstock. An alternative to allowing all paper sludge would be to allow only those that
can be shown to have been derived from eligible renewable biomass contained as  defined in the
current regulation. [[Docket number 2081.1, p. 14]]  [[See docket number 2081.1,  p. 14-16 for
basis for this recommendation and suggested modification to 80.1401.]]

Our Response:

       EPA has considered these comments and has expanded the definition of tree residue to
include some wood product manufacturing wastes, including residues from processing planted
trees at lumber and paper mills, but is limiting it to the biogenically derived portion of the
residues that can be traced back to feedstocks meeting the definition of renewable biomass (i.e.,
planted trees and tree residue from actively managed tree plantations on non-federal land cleared
at any time prior to December  19, 2007).  RINs may only be generated for the fraction of fuel
produced that represents the biogenic portion of the tree residue, using the procedures described
in ASTM test method D-6866. Thus, if the tree residues are mixed with  chemicals or other
materials during processing at the lumber or paper mills, producers may only generate RINs for
the portion of the mixture that is actually derived from planted trees.

       For a discussion of demolition wood waste and construction wood wastes, see discussion
of MSW and separated yard and food wastes in section 3.2 of this document.
3.3.2.8       Tree Plantations

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter notes that EPA proposed to define a tree plantation as a stand of no fewer than
100 planted trees of similar age and comprising one or two tree species, or an area managed for
growth of such trees covering a minimum of 1 acre, and states that both the number of trees and
minimum acreage are difficult to quantify without incurring a large expense.

Document No.:      EPA-HQ-OAR-2005-0161-2173.1
Organization:       National Association of Forest Owners (NAFO)
Comment:
The commenter states that EPA should expand the definition of "tree plantation," by adopting
the Dictionary of Forestry definition, which is "a stand of trees composed primarily of trees
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established by planted or artificial seeding." The definition should allow for a mixture of tree
species, should allow for purposeful, "natural" regeneration, and should not require a minimum
number of trees per acre.

Document No.:      EPA-HQ-OAR-2005-0161-2417
Organization:       Forest Landowners Association
Comment:
The commenter notes that tree plantations are typically stands of trees established by planting.
However plantations may also include tree stands resulting from natural regeneration.
Plantations can also be pure or mixed species with uniform or diverse structures and age classes
and can be grown on rotations of varying length including an indefinite length for some values.

Document No.:      EPA-HQ-OAR-2005-0161-2515
Organization:       Minnesota Department of Natural Resources (MnDNR)
Comment:
The commenter believes that the proposed EPA definition of tree plantation is overly restrictive
and will undermine the formation of a cellulosic ethanol industry based on woody biomass.
Excluding sustainably produced wood and discouraging ecological management of forest
resources is not consistent with Congress' intent. The commenter suggests that EPA not narrow
the definition established within the Dictionary of Forestry. (2515.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter (2156) comments that a stand of less than 100 trees per acre is common in
managed  hardwood stands and raises question that will this disqualify the forest stand for
biomass harvest for next rotation? (2156.1.docx, p.2).  The commenter also recommends that
EPA either define tree plantations as areas where planted trees exist or simply not define tree
plantations. (2156.1.docx, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
The commenter states that tree plantations are established by planting or artificial seeding and-
depending on the management objectives—often include mixed species and understory
components. EPA's definition of "Tree Plantation"  should not arbitrarily be limited to one or
two tree species, rather should allow for a mixture of tree species. NASF recommends EPA
broaden their definition to include stands with trees or understory components that have resulted
from natural regeneration. We suggest changing the definition to "A stand of no less than one
acre in an area with trees of similar age."

The commenter strongly encourages EPA to recognize trees planted on surface-mined lands after
Dec. 19, 2007 as eligible for RINs under EISA. Replanting surface-mined lands will enhance
their management and reduce biomass harvest pressures from other natural systems.

Document No.:      EPA-HQ-OAR-2005-0161-2494
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Organization:       Council of Western State Foresters
Comment:
The commenter comments that the term Tree Plantation should not be restricted to 1 or 2 species.
The expected climate change impacts on forests require that we plant trees with a consideration
for climate change, which may suggest planting multiple species rather than monocultures. The
commenter suggests changing the definition to "A stand of no less than one acre in area with
trees of a similar age."

Our Response:

       In the final rule, EPA is not requiring a minimum number of trees per acre as part of the
definition of tree plantation, or specifying that a tree plantation be restricted to a set number of
species. We agree with those commenters who stated that such these proposed limitations were
too restrictive. However, EPA is maintaining the minimum 1 acre designation because EPA
believes that the statutory references to "plantation" indicate a commercial enterprise of
significant size, and that one acre is a reasonable measure of such an enterprise.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2361
Organization:       Indonesian Palm Oil Commission
Comment:
The commenter (2361) is not sure if the definition of non-forested land includes oil palm
plantations.  The commenter believes that the IPCC had an agreed-upon definition of forested
land and therefore oil palm should be considered as tree plantation and not forest, so that biofuel
feedstock may be legitimately obtained from it after December 19, 2007. (2361.1.pdf, p.2)

Our Response:

       With respect to the categorization of oil palm plantations, we believe such plantations are
more similar to orchards than to tree plantations referred to within the definition of renewable
biomass in that they are planted and managed for the purpose of harvesting palm kernels and not
for harvesting the trees themselves,  in the same way that a fruit orchard is planted and managed
to yield fruit and not woody biomass per se.  Our final definition of forestland purposefully
includes tree plantations but excludes orchards, as we believe orchards are more appropriately
considered a type of agricultural land (cropland, specifically), and orchard fruits planted crops.
With this reasoning, palm kernels would also qualify as planted crops under the EISA definition
of renewable biomass, and oil palm plantations would have to meet the criteria for existing
agricultural land in order for their kernels and residue to qualify as renewable biomass under
RFS2.
3.3.2.9        Cleared and Actively Managed Tree Plantations

What Commenters Said:
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Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters recommend that EPA verify forests as being "continuously actively managed"
using the mechanisms listed in the proposed rule, and in addition consider income tax treatment
of revenue from the property or enrollment in use value property tax programs. (2129.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2173.1
Organization:       National Association of Forest Owners (NAFO)
Comment:
The commenter recommends that EPA expand the types of documents that demonstrate active
management of a tree plantation.

Document No.:      EPA-HQ-OAR-2005-0161-2417
Organization:       Forest Landowners Association
Comment:
The commenter states that active management is a broad concept usually embodied in some kind
of plan. A management plan is a "predetermined course of action and direction to achieve a set
of results." Management plans are usually memorialized in writing, but a plan can take  many
forms.  The commenter also recommends that EPA expand the documentation that shows
evidence of active management.

Document No.:      EPA-HQ-OAR-2005-0161-2507
Organization:       Forest Landowners Association
Comment:
The commenter [[2507]] believes the following definition is appropriate from a forestry
standpoint: "Actively managed tree plantations are forests managed for a predetermined outcome
as evidenced by: 1) A written Management Plan; 2) Participation in or management in
accordance with a certification program; 3) Harvest conducted by a logging professional that has,
or is in the process of completing, a state approved Master Logger Program; 4) An agreement
with a consulting forester; 5) Enrollment in a Landowner Assistance Program such as Forest
Map or (spell out what CMP is) CMP; 6) Participation in a  silvicultural, conservation,
stewardship or other natural resource management program sponsored by a Federal, state or local
government (e.g., FIP, SIP FLEP, CRP, EQIP); or 7) Any agreement or action requiring or
implying active forest management, including harvest agreements, conservation easements,
silvicultural expenditures or other similar agreements or actions.  [[2507 p.2]]

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter (2156) comments that the requirement of documentation for tree plantations to
meet the "actively managed" definition will not be the same as agricultural lands, stating that the
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consideration of tree plantations as the same as agricultural lands is inappropriate, and noting
that planted forests grow one, two, or three decades without a significant treatment to document.
(2156.1.docx, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2349
Organization:       Kentucky Division of Forestry
Comment:
The commenter (2349) recommends expanding the definition of "actively managed" land to
include 1) harvest conducted by logging professionals 2) agreement with consulting forester 3)
enrollment in landowner program 4) agreement implying active forest management 5) existence
of road system with evidence of ongoing maintenance 6) evidence of skid trails indicating
thinning with in the standard rotation period.  (2349.pdf, p. 1-2)

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
The commenter believes the evidence list included in the "actively managed" definition is too
narrow.  Nationally, there are 10.4 million family forest owners in the U.S. who own an average
of 25 acres. Many of these landowners actively manage their forests, but are not required (by
state law or otherwise) to do so under a management plan.  Further, many of these family forest
owners may not have ready access to sales  or purchase records from past management activities
that can date back as many as 30-80 years.  To avoid eliminating many family forest owners
from participating, NASF recommends the list of management evidence be expanded to include:
- Harvests conducted by a logging professional that has, or is in the process of completing, a
state approved Master Logger Program;
- An agreement with a consulting forester;
- Enrollment in a Landowner Assistance Program (e.g., ForestMap);
- An agreement or action requiring or implying active forest management, including a harvest
agreement, conservation easement, a silvicultural expenditure or any other similar agreement or
action;
- The existence of a road system or other physical infrastructure with evidence of ongoing
maintenance; or
- Stumps, slash, or evidence of skid trails indicating thinning or other logging within the length
of a standard rotation for the region.

The commenter also recognizes there may be other options available for demonstrating active
management (e.g., evidence of fire breaks,  boundary line maintenance) and encourage EPA to
build in flexibility within the program to  consider actual circumstances on the ground.

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter believes that any number of records, including sales records, tax records,  and
insurance records, in conjunction with verification from a professional forester, would be
appropriate for verifying that land was actively managed prior to December 19, 2007.
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RFS2 Summary and Analysis of Comments
Our Response:

       EPA has expanded the types of documents that can be used by a renewable fuel producer
to show that the tree plantation from which their feedstocks were harvested was actively
managed on December 19, 2007. Active management is evidenced by any of the following
document that can be traced to the land in question: sales records for planted trees or slash;
purchasing records for seeds, seedlings, or other nursery stock together with other written
documentation connecting the land in question to these purchases; a written management plan
for silvicultural purposes; documentation of participation in a silvicultural program sponsored by
a Federal, state or local government agency; documentation of land management in accordance
with an agricultural or silvicultural product certification program; an agreement for land
management consultation with a professional forester that identifies the land in question; or
evidence of the existence and ongoing maintenance of a road system or other physical
infrastructure designed and maintained for logging use, together with one of the above-
mentioned documents.

       LFSA and the Clean Air Task Force comment that tax records should be  considered
sufficient evidence of active management of a tree plantation.  We  considered these comments
and believe that the information these documents provide, income from sales of planted trees or
tree residue, should be reflected in sales invoices or revenue receipts.

       In response to the comment that in light of the duration of tree growth, that records
evidencing management may be spaced decades or more apart, EPA notes that the regulations do
not specify a particular date for the documentation in question.  Thus, although the objective of
the evidence should be to show that the plantation was actively managed as of the date of EISA,
in many instances documents prepared well before or after the date of EISA enactment may
accomplish this objective.  For example, a management plan prepared in 2000 that calls for tree
growth over a twenty year period would be evidence that a tee plantation was actively managed
in 2007.
3.3.2.10      Slash

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
EPA's definitions should broadly interpret slash and pre-commercial thinnings to allow use of
biomass materials that may be otherwise wasted for production of renewable fuels.  Renewable
biomass and slash should be defined to include tree bark and trees that are damaged and
destroyed by natural disasters including floods.

Document No.:      EPA-HQ-OAR-2005-0161-2349
Organization:       Kentucky Division  of Forestry
Comment:
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The commenter (2349) suggests the definition of slash to also include "materials from stands that
have been rendered unmerchantable for logging due to degradation from natural and manmade
disturbances resulting in loss of merchantability" (2349.pdf, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter (2156) recommends that the proposed definition of slash needs to include the
understory trees and cull material.  (2156.1.docx, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
The commenter states that according to the Dictionary of Forestry (1998, pp. 168), slash is "the
residue, e.g., treetops and  branches, left on the ground after logging or accumulating as a result
of a storm, fire, girdling, or delimbing. NASF supports EPA's proposal to use the Dictionary of
Forestry definition of "slash" in place  of the term "residue" in an effort to simplify the RFS
regulations and use a silvicultural term that is widely-used in the industry. We also support
clarifying that slash can include tree bark and can be the result of any natural disasters, including
(but not limited to) flooding.  Nothing in the definition of slash should preclude the use of
material from stands that have been rendered unmerchantable for logging due to degradation
from natural and manmade disturbances resulting in loss of merchantability.  Further, mill
residues such as sawdust,  bark and black liquor should not be excluded as an eligible source of
renewable biomass for RIN credits.

Document No.:      EPA-HQ-OAR-2005-0161-2494
Organization:       Council of Western State Foresters
Comment:
The commenter believes the definition of slash should clarify that slash can include tree bark and
can be the result of any natural  disaster, including flooding.

Our Response:

        We proposed to define  slash according to the Dictionary of Forestry (1998, pp. 168), as
"the residue, e.g., treetops and branches, left on the ground after logging or accumulating as a
result of a storm, fire, girdling,  or delimbing." We also proposed to clarify that slash can include
tree bark and can be the result of any natural disaster, including flooding. In response to these
comments in support of this additional inclusion, we are expanding the definition of "slash" to
include  tree bark and residue  resulting from natural disaster, including flooding. EPA believes
understory trees and cull are best considered "pre-commercial thinnings" under the renewable
biomass definition.
3.3.2.11      Pre-Commercial Thinnings

What Commenters Said:


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Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
With regard to pre-commercial thinnings, the commenters recommend that EPA should not use
maximum tree diameter as a basis to define pre-commercial thinning,  as this maximum tree
diameter would need to vary greatly between forest type and location  and thus one maximum
diameter would not be accurate for all locations. Instead, the commenters recommend that EPA
modify its definition of pre-commercial thinnings to include criteria which require biomass
facilities to meet minimum on-site retention of a basal area along with maximum tree diameters
appropriate to the forest type as determined by the United States Forest Service (USFS)
silvicultural stock guidelines.  EPA should work with the USFS and the  U.S. Fish and Wildlife
Service  (FWS) to establish basal area retention rates for different forest types and regions and
develop Memorandums of Understanding as appropriate with states that have developed rigorous
biomass harvesting standards or forest management practices.

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
The commenter states that pre-commercial thinnings should include trees that are cut to
concentrate growth of more desirable trees. Regarding EPA's requested comment on whether
the agency should include a maximum diameter beyond which pre-commercial thinnings would
no longer qualify as renewable biomass, the commenter notes that appropriate thinning and
forest management practices will vary by geography and species, and  states that any limitation
on the diameter of a tree to qualify as biomass will be arbitrary, cumbersome to enforce, and
provide  no appreciable GHG or environmental benefit and therefore is not supported. [[Docket
number  2383.1, p. 15]]

Document No.:      EPA-HQ-OAR-2005-0161-2515
Organization:       Minnesota Department of Natural Resources (MnDNR)
Comment:
The commenter agrees that financial returns should not be included in the determination of the
category of pre-commercial thinnings.  The commenter concurs with EPA's proposal to include
removal of diseased trees as a component of thinning. This provision  could be extended to forest
health prescriptions that are designed to contain pest and disease outbreaks and infestations.  The
commenter further urges EPA to consider biomass generated by other silvicultural practices that
broadly  fall within the category of stand improvement as renewable. (2515.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter (2156) suggests the need to include insect infested trees to the definition of pre-
commercial thinning. (2156.1.docx, p.3)
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Document No.:      EPA-HQ-OAR-2005-0161-2143
Organization:       New York State Department of Environmental Conservation
Comment:
The commenter (2143) mentions that the term "pre-commercial" is used inappropriately in the
discussion of the eligibility of forest biomass derived renewable fuels for inclusion in RFS.
(2143.2, p.6)

Document No.:      EPA-HQ-OAR-2005-0161-2349
Organization:       Kentucky Division of Forestry
Comment:
The commenter (2349) does not agree with providing the maximum diameter for pre-commercial
thinning but does support the proposed definition of pre-commercial. (2349.pdf, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
The commenter commends EPA's decision to remove any reference to "financial return" found
in the definition of pre-commercial thinning.  Further, state foresters support EPA's decision to
include diseased or insect-infested trees, and recommend the agency include trees killed by other
natural events such as by fire, flood, wind, hurricanes and other extreme events. In many cases,
pre-commercial thinnings involve removing trees of different species, crown sizes, sizes and
condition classes including the removal of diseased or infested trees to improve forest health.

The commenter also strongly recommends that EPA remove any reference to establishing
arbitrary diameter limits as this would almost certainly complicate implementation.

Document No.:      EPA-HQ-OAR-2005-0161-2494
Organization:       Council of Western State Foresters
Comment:
The commenter agrees with EPA that reference to "having no commercial value" should be
removed from the definition of pre-commercial thinning. The commenter recommends not
having a diameter limit for this definition because the market situation needs to evolve to allow
material to move between markets depending on local economic conditions. The commenter
supports including diseased or insect-infested trees, trees killed by fire, flood, wind and other
extreme events in the definition of pre-commercial thinning for the reasons contained in the
proposed rules.  They do not support a maximum diameter, as this would necessarily be  an
arbitrary limit and would unnecessarily complicate implementation. Pre-commercial thinning is
conducted for numerous purposes and can target vegetation  of different species, crown sizes,
condition, stand position etc.  Placing a diameter limit would not only be arbitrary, but could
work at cross-purposes for the thinning itself, including removal of diseased or infested trees to
maintain stand health.  The commenter suggests the following definition for the term pre-
commercial thinnings:  "Removal of trees from a stand of trees in order to reduce stocking to
improve overall stand vigor, concentrate future growth on more desirable trees, and in fire prone
ecosystems, reduce the potential of stand loss to fire."
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Document No.:      EPA-HQ-OAR-2005-0161-2171
Organization:       Mascoma Corporation
Comment:
The commenter believes that it is critical that EPA define "pre-commercial thinnings" and
"slash" appropriately so that the rule does not unjustifiably limit the types and quantities of wood
products-including whole trees and pulpwood-that can be harvested in a sustainable manner and
used in the production of advanced biofuels.  The commenter explains that generally, pulpwood
is derived from trees that do not make good sawlogs such as heavily branched trees, diseased
trees, and tops of trees harvested for sawlogs and should be included within the definition of
"pre-commercial thinnings" and "slash." The commenter believes that pulpwood should be
specifically included as an eligible feedstock in the final rule. The House of Representatives has
passed the American Clean Energy and Security Act of 2009 which clarifies the definition of
renewable biomass including eligibility of woody biomass from both private and federal
forestlands and the commenter urges EPA to consider these modifications as it finalizes the
RFS2rule. [[Docket number 2171.1, p. 2]]

Our Response:

      EPA agrees with  the assessment that tree diameter varies greatly by forest type and
location, making any diameter limitation EPA might set as a basis for defining pre-commercial
thinnings arbitrary. We have therefore defined  pre-commercial thinnings based on the
Dictionary of Forestry, which contains commonly understood definitions of forestry
terminology, as "the removal of trees not for immediate financial return but to reduce stocking to
concentrate growth on the more desirable trees  or other vegetative material that is removed to
promote tree growth." EPA is not establishing basal area retention rates for different forest types
and regions as one commenter suggests, as a case-by-case assessment of each forest type by a
professional forester would be necessary, and such an assessment is impractical for purposes of
RFS2.

      Finally, EPA notes, EISA specifically prevents slash and pre-commercial thinnings from
qualifying as renewable biomass if it is collected from federal forestlands. However, there is no
such restriction regarding biomass from federal lands  if it is taken from the immediate vicinity
off buildings and other areas regularly occupied by people, or public infrastructure, at risk of
wildfire.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2173.1
Organization:       National Association of Forest Owners (NAFO)
Comment:
The commenter suggests that in issuing regulations to effectuate the EISA's definition of
"renewable biomass," EPA should not overlook any important sources of forest biomass. For
example, the commenter is concerned that EPA has overlooked intercropping as a potential
source of renewable biomass. Intercropping is an innovative concept that forest landowners are
exploring, whereby foresters are planting perennial plants (such as switchgrass) between rows of
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young trees. These landowners hope to achieve annual harvests for at least ten years after
establishment, before the crops are shaded out by adjacent trees.

The commenter notes that another important source of forest biomass is understory vegetation,
including shrubs, brush, and other plants. Such vegetation is often removed to maintain
desirable forest conditions and improve tree growth. The resulting biomass  can and should be
eligible for use as a fuel source along with eligible biomass from trees. Although not specifically
identified in the definition of renewable biomass, the commenter believes it  is reasonable to
assume that Congress intended such material to qualify as eligible biomass,  as it is a byproduct
of ordinary forest operations producing brush, slash, and other types of forest residues.  The
commenter urges that EPA's regulations be drafted broadly so that the greatest array of forest
vegetation, including crops produced through intercropping and understory plants, are eligible as
renewable biomass.

Our Response:

       Under EISA, renewable biomass may include "slash and pre-commercial thinnings"  from
non-federal forestlands, and "planted trees and tree residue" from actively managed tree
plantations on non-federal land.  EPA is including tree plantations as a subset of forestland in the
final RFS2 regulations since it is commonly understood as such throughout the forestry industry,
which will effectively allow pre-commercial thinnings and slash, in addition to planted trees and
tree residue, harvested from tree plantations to serve as qualifying feedstocks for renewable  fuel
production.  Thus because we  have defined "pre-commercial thinnings" in the  final regulations
as "trees, including unhealthy  or diseased trees, primarily removed to reduce stocking to
concentrate growth on more desirable, healthy trees, or other vegetative material that is removed
to promote tree growth," understory vegetation as described by the commenter would qualify as
renewable biomass under RFS2.

       However, although intercropping can help to diversify the types of feedstocks harvested
from tree plantations as noted  by the commenter, we do not believe that perennial plants or other
planted crops can reasonably be considered planted trees, tree residue, slash, or pre-commercial
thinnings,  and therefore intercropped plants from tree plantations would not qualify as renewable
biomass under RFS2.
3.3.2.12      Forestland and Nonforested Land

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2143
Organization:       New York State Department of Environmental Conservation
Comment:
The commenter (2143) recommends that EPA should define forest land the same as the USDA
Forest Service, Forest Inventory & Assessment (FIA). (2143.2, p.6)

Document No.:      EPA-HQ-OAR-2005-0161-2173.1
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Organization:       National Association of Forest Owners (NAFO)
Comment:
The commenter (2173) recommends EPA amend its proposed definition of "forestland" to
include tree plantations consistent with the use of the term among forestry professionals.

Document No.:      EPA-HQ-OAR-2005-0161-2144
Organization:       New York State Department of Agriculture and Markets
Comment:
The commenter has considerable concern regarding language regarding the proposed definition
of "nonforested." The commenter noted that the intent of the last line in the definition is unclear.
(2144.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2515
Organization:       Minnesota Department of Natural Resources (MnDNR)
Comment:
The commenter believes that EPA's proposal which defines forestland as any parcel of one acre
or more with predominately tree cover will create eligibility problems. Restoring these sites to
grass cover types and allowing those lands to  supply renewable biomass will provide biomass
and enhance the ecological value and function of the sites.  The commenter believes it to be more
appropriate to look at the landscape context to determine forest land status. Tools such as the
Ecological Classification System can be employed to determine forest status. (2515.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2349
Organization:       Kentucky Division of Forestry
Comment:
The commenter (2349) suggests that the term Forestland should be defined according to U.S
Forest Service's Forest Inventory and Analysis (FIA) definition.  (2349.pdf, p.l)  The commenter
(2349) also recommends that the EPA should adopt one of the two definitions of non-forest lands
as described by: 1) RPA assessment definition of non-forest land 2) FIA definition of non-forest
land. (2349.pdf, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter (2156) suggests that the definition of forestland seems appropriate, with the very
obvious exception of the proposal to not include tree plantations as forestland.  This is
inappropriate and serves no purpose within the language. It could also result in unintended
effects beyond the scope of this legislation. (2156.1.docx, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
The commenter comments that EPA's definition of forestland does not include plantations,
which are a commonly-accepted type of forest land throughout the forest industry.  Planted
forests may differ from those of natural origin. In practice, however, there is no clear dichotomy
between a tree plantation and a natural forest. In place of the proposed RFS2 definition, NASF
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strongly recommends EPA defer to the commonly understood, widely used forest land definition
developed by the U.S. Forest Service Forest Inventory and Analysis (FIA) program.

Similarly, the commenter notes that the FIA definition of non-forest land is commonly-
understood in the forestry community and should be applied in EPA's RFS2 regulations.

Document No.:      EPA-HQ-OAR-2005-0161-2494
Organization:       Council of Western State Foresters
Comment:
The commenter suggests using the definition for non-forested land used by the US FS Forest
Inventory and Analysis program and RPA Assessment.

Document No.:      EPA-HQ-OAR-2005-0161-2361
Organization:       Indonesian Palm Oil Commission
Comment:
The commenter (2361) is not sure if the definition of non-forested land includes oil palm
plantations.  The commenter believes that IPCC had an agreed definition of forested land
therefore oil palm should be considered as tree plantation and not forest so that biofuel feedstock
may be legitimately obtained from it after December 19, 2007. (2361.1.pdf, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2016
Organization:       Malaysian Palm Oil Board (MPOB)
Comment:
The commenter (2016.1) would like to confirm that the definition of "nonforested" land (page
249330) includes oil palm plantations. This means that oil palm is to be considered "tree
plantation" and not "forest" so that biofuel feedstock may be legitimately obtained from it after
December 19, 2007. (2016, p.2)

Our Response:

       In response to many of these comments, EPA's final definition of forestland is similar to
the FIA definition of forest, that is "generally undeveloped land covering a minimum of 1 acre
upon which the primary vegetative species is trees, including land that formerly had such tree
cover and that will be regenerated and tree plantations.  Tree covered areas in intensive
agricultural crop production settings, such as fruit orchards, or tree-covered areas in urban
settings such as city parks, are not considered forestland."

       In response to comments to broaden the definition of "forestland" to include tree
plantations, we are including tree plantations as a subset of forestland since they are commonly
understood as such throughout the forestry industry.

       With respect to the categorization of oil palm plantations, we believe such plantations are
more similar to fruit orchards than to tree plantations referred to within the definition of
renewable biomass in that they are planted and managed for the purpose of harvesting palm
kernels and not for harvesting the trees themselves, in the same way that a fruit orchard is
planted and managed to yield fruit and not woody biomass per se.  Our final definition of
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RFS2 Summary and Analysis of Comments
forestland purposefully includes tree plantations but excludes orchards, as we believe orchards
are more appropriately considered a type of agricultural land (cropland, specifically), and
orchard fruits planted crops. With this reasoning, we believe that palm kernels would also
qualify as planted crops under the EISA definition of renewable biomass, and oil palm
plantations would have to meet the criteria for existing agricultural land in order for their kernels
and residue to qualify as renewable biomass under RFS2.

Document No.:      EPA-HQ-OAR-2005-0161-2143
Organization:       New York State Department of Environmental Conservation
Comment:
The commenter (2143) states the proposal is not clear regarding the status of land that is
currently not actively used for agriculture or forest. These lands, that might be "idle" well into
the future and not used for activities that would interfere with the establishment of trees and
forests for biomass production, should be recognized for their ability to contribute to the
production of renewable biomass if and when action may be taken to establish forest growth.
 (2143.2, p.6)

Our Response:

       EISA specifies not only the types of feedstocks that may be used  to produce renewable
fuel but also the types of land and status of the land from which many types of feedstocks may
come.  Tree plantations must have been cleared and actively managed as of December 19, 2007
in order for biomass taken from such lands to qualify as renewable biomass. Thus land that was
"idle" on that date, unless intentionally so as a result of management decision, cannot be
considered a tree plantation under the  final RFS2 regulations.

       However, if at any point in the future such idle land meets the definition of forestland, is
non-federal land, and is not ecologically-sensitive land, then slash and pre-commercial thinnings
taken from such land could qualify as  renewable biomass under RFS2. In addition, land that was
idle on December 19, 2007 could  also potentially qualify for renewable biomass production if it
includes buildings and other areas regularly occupied by people or public infrastructure at risk of
wildfire or is used for production of non-cultivated feedstocks such as algae and animal wastes.
3.3.2.13      Ecologically Sensitive Forestland

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2143
Organization:       New York State Department of Environmental Conservation
Comment:
The commenter (2143) suggests that the state forester should be responsible for defining
"ecologically sensitive forest land" as it varies by state and the entire country does not fit into
this definition. (2143.2. P.6)

Document No.:      EPA-HQ-OAR-2005-0161-2349
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Organization:       Kentucky Division of Forestry
Comment:
The commenter (2349) proposes that EPA should install a state-preferred method - in
consultation by the state forester to define & delineate ecologically sensitive forest land state by
state. (2349.pdf, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter (2156) suggests that more clarity is needed concerning the State Natural
Heritage Program areas and globally ranked ecological community database. (2156.1.docx, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
EPA proposes to use data compiled by NatureServe to publish a special report to identify
"ecologically sensitive forestland." The report would list all forest ecological communities in the
U.S. with a global ranking of Gl,  G2, or G3, or with a State ranking of SI, S2, or S3, and would
include descriptions of the key geographic and biologic attributes of the referenced ecological
community. It is our understanding the report would identify those ecological communities from
which slash and pre-commercial thinnings could not be used as feedstock and would be
ineligible for RINs.

Ecological communities identified as critically imperiled, imperiled or rare by the Natural
Heritage Program in one state may not mean the same ecological community has the same status
in another state. EPA must be clear as they promulgate the final rule that designations as to the
status of ecological communities is restricted to the state in which  it resides.  Blanket, nation-
wide designations are not defensible and will further restrict the ability of meeting the goals set
forth in EISA. Rather than publishing a special report, NASF recommends EPA install a state-
deferred process whereby the State Natural Heritage Program—in consultation with the State
Forester—delineate where ecologically sensitive forest lands reside. These decisions—
alongside determinations for making information regarding the location of sensitive sites
publicly available—best reside at  the state level.

Document No.:      EPA-HQ-OAR-2005-0161-2173.1
Organization:       National Association of Forest Owners (NAFO)
Comment:
The commenter believes EPA's inclusion of G3 forests in the list of ecologically sensitive forests
is flawed because the NatureServe rankings do not include a "rare" designation.

Document No.:      EPA-HQ-OAR-2005-0161-2494
Organization:       Council of Western State Foresters
Comment:
The commenter notes that NatureServe and State Natural Heritage databases are proposed by
EPA for using these designations to identify "ecologically sensitive lands" where slash and pre-
commercial thinnings could not be used as feedstock for production of renewable fuel.  The
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RFS2 Summary and Analysis of Comments
CWSF are concerned about land use restrictions for state and private lands included in the draft
regulations that could put further restrictions on utilization of biomass from legal forest
management activities conducted by private landowners and state forest managers. Furthermore,
biomass removal may be fully consistent and appropriate for addressing conservation threats and
restoration needs for some of the identified "ecologically sensitive" forest lands, especially
where returning the system to a more traditional fire regime is part of the system's ecology and
where fire suppression has contributed to the current condition.  New bioenergy markets could
help make restoration efforts on these lands more economical.  The commenter recommends not
automatically excluding Nature Serve areas from potentially contributing to renewable biomass.

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters recommend that EPA should not rely solely on state natural heritage programs
to identify ecologically sensitive lands. Databases of sensitive lands maintained by non-profit
organizations, such as NatureServe, should also be consulted in determining what ecologically-
sensitive lands should not be eligible to provide biomass.

Our Response:

       EISA explicitly excludes from its definition of renewable biomass slash and pre-
commercial thinnings taken from forestland ecological communities ranked as critically
imperiled, imperiled, or rare pursuant to  a State Natural Heritage Program. Therefore we have
finalized our regulations to exclude biomass from such areas, specifically those with Natural
Heritage Programs global ranking of Gl or G2, or with a State ranking of SI, S2, or S3, and we
are  including in the docket lists of ecological communities fitting these descriptions. The lists
consist of data compiled by NatureServe and are published in special reports to identify
"ecologically sensitive forestland."  These lists are specified on a state-by-state basis.
3.3.2.14       Old-Growth Forest

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters recommend that EPA should not use a single age of 200 years to define old
growth and late-successional forests as this would not be appropriate for all locations and
ecosystems.  Rather, research funding should be provided to accomplish nation-wide mapping of
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these ecosystems in order to exclude old growth and late-successional forest harvests from the
definition of renewable biomass.

Document No.:      EPA-HQ-OAR-2005-0161-2349
Organization:       Kentucky Division of Forestry
Comment:
The commenter (2349) suggests that the definition of Old-Growth trees should be based on
various characters as described in the Dictionary of Forestry  (1998, p. 127) published by
American Society of Foresters and not based on absolute measure of 200 years of age. (2349.pdf,
P-4)

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association  (LCSFA)
Comment:
EPA proposes that ecologically sensitive forestland, which is excluded from the EISA definition
of renewable biomass, be defined to include forest that is characterized by trees at least two
hundred years old. This definition requires greater refinement due to its regional applications.

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter (2156) recommends that older trees must be  predominant in a forest to trigger
the old-growth and late successional forests classification. (2156.1.docx, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
The commenter holds that old growth, late-successional and many of the forest communities
ranked by NatureServe are the same forests at greatest risk to insect, disease and catastrophic
wildfire threats. In fact, NatureServe often calls for the active management of these areas. We
strongly recommend EPA avoid further restricting the type and amount of biomass  that can be
removed from these areas as they are the same forests that can benefit most from forest health
treatments and are already protected by federal requirements for threatened and endangered
(T&E) species.  Access to new biomass markets—such as those likely to be created by a RFS—
can help cover the costs associated with  restoring these areas. A narrowly interpreted EISA
biomass definition will preclude these markets from developing in many areas.

NASF disagrees with EPA's proposition to characterize old-growth and late-successional  forests
as including trees at least 200 years old.  As indicated in the dictionary of forestry, old-growth
forests are characterized more by structural characteristics (e.g., live trees, canopy conditions,
snags, down logs,  etc.) and less by the age of the trees found in the stand.  Old-growth conditions
vary by forest type, climate, site conditions and disturbance regime. Using an age-related
definition disregards other structural characteristics that more accurately identify old growth
conditions. NASF recommends EPA adopt the following definition of old-growth developed by
the US Forest Service: "Old growth encompasses the later stages of stand development that
typically differ from earlier stages in a variety of characteristics which may include tree size,
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RFS2 Summary and Analysis of Comments
accumulations of large dead woody material, number of canopy layers, species composition, and
ecosystem function."

Document No.:      EPA-HQ-OAR-2005-0161-2494
Organization:       Council of Western State Foresters
Comment:
The commenter comments that EPA should use the US Forest Service definition of old-growth
(see below) and provide for biomass removal that helps achieve ecological restoration or that
helps maintain ecological integrity of these forests. The definition should not include reference
to tree age (200 year old) or "virgin" forests.

Our Response:

       While EPA understands that there are a number of criteria that professional foresters may
use in determining whether a forest is old growth and that the criteria differ depending on the
type of forest, for purposes of the RFS2 rule, EPA seeks to use definitive criteria that can be
applied by non-professionals. We have therefore finalized the proposed definition of "old
growth" as characterized by trees at least 200 years old.
3.3.2.15      Areas at Risk of Wildfire

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters would like EPA to use Community Wildfire Protection Plans and Wildland
Urban Interfaces in order to decide which materials should be removed and used to reduce
wildfire instead of assessing distance to vegetated land to determine eligible areas. (2129.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2515
Organization:       Minnesota Department of Natural Resources (MnDNR)
Comment:
The commenter recommends all fuel wood within 200 ft of a given structure be eligible for
biomass (the maximum distance for eligible wood).  Limiting material eligible for fuels
reduction to 100 ft is unnecessarily restrictive. Additionally, the commenter believes eligible
biomass from fuel wood reduction should not be limited to communities with Community
Wildfire Protection Plans (CWPPs).  (2515.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2349
Organization:       Kentucky Division of Forestry
Comment:
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The commenter (2349) does not support the definition of biomass obtained from communities at
risk being within 100 feet; however they do support immediate vicinity within 200 ft of
buildings, campgrounds, public infrastructure to be eligible for RIN.  Also, the commenter
(2349) recommends that EPA use the existing definition of wildland urban interface as defined in
the Healthy Forests Restoration Act of 2003 to be eligible for RIN credits. (2349.pdf, p4)

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
The commenter notes that the EISA definition of renewable biomass includes biomass obtained
from the immediate vicinity of buildings and other areas regularly occupied by people, or of
public infrastructure, at risk from wildfire.  EPA proposes that under RFS2, the term "immediate
vicinity" would mean within 200 feet of a given structure or area. NASF supports EPA's
proposition to allow biomass within 200 feet of buildings, campgrounds, and other areas
regularly occupied by people, or of public infrastructure to be eligible for RINs.

EPA has called for comments on two implementation alternatives for identifying "areas at risk of
wildfire"  including the use of biomass from priority areas identified in Community Wildfire
Protection Plans (CWPPs) and any area within the Wildland Urban Interface (WUI). NASF
recommends these should not be  considered "implementation alternatives" rather biomass from
both the WUI and from priority areas identified in CWPPs should be eligible for RIN  credits.
We recommend EPA use existing definitions of WUI already defined in statute under the
Healthy Forests Restoration Act of 2003 (PL 108-148 and HR1904).

Document No.:      EPA-HQ-OAR-2005-0161-2494
Organization:       Council of Western State Foresters
Comment:
The commenter states that woody material  removed to reduce fire risk to communities must be
included in the definition of "renewable biomass". The definition should be consistent with the
definition of WUI and areas at risk of wildfire that are currently in legislation, specifically the
Healthy Forests Restoration Act of 2003.

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter believes that EPA's alternative approach for identifying biomass from areas at
risk of wildfire would ease recordkeeping requirements and would be more readily verifiable.
[[Docket number 2310.1, pp. 7-10]]

Our Response:

       EPA believes that the statutory definition of WUI from the Healthy Forests Restoration
Act (Pub. L. 108-148) is too vague to use directly in implementing the RFS2 program. If EPA
used this WUI definition, individual plots of land  would have to be assessed by a professional
forester on a case-by-case basis in order to  determine if they meet the WUI definition, creating
an expensive burden for landowners seeking to sell biomass from their lands as renewable fuel
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RFS2 Summary and Analysis of Comments
feedstocks. In light of these comments and the need for a relatively simple way for landowners
and renewable fuel producers to track the status of particular plots of land, for the final rule we
are defining "areas at risk of wildfire" as those areas in the "wildland-urban interface," where
humans and their development meet or intermix with wildland fuel. The SILVIS laboratory at
the University of Wisconsin maintains a website that provides a detailed map of areas that meet
this criteria at: http://www.silvis.forest.wisc.edu/projects/US  WUI 2000.asp. The electronic
WUI map is a readily accessible reference tool that was prepared by experts in the field of
identifying areas at risk of wildfire, and is thus an ideal reference for purposes of implementing
RFS2.
3.3.2.16      Animal Wastes and Byproducts

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) noted that the definition of renewable biomass is not clear as to whether
animal byproducts include all the rendered fats and oils, and believes that this section should
expand the definition of animal byproducts or reference that these include animal tallows, pork
fat, chicken grease, fish oil, etc. The commenter also believes that the list of renewable biomass
should include an eighth category called waste greases that includes waste cooking oil (called
yellow grease) and brown grease. (0994.1, p.3), stating that these greases are significant
renewable biomass feedstocks and are not identified by any of the other seven items listed.
(0994.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2305
Organization:       The Soap and Detergent Association
Comment:
The commenters [[2305]] expressed concern with the inclusion of animal waste material and
animal byproducts within the definition of renewable biomass, noting that tallow and other
byproducts have many uses and that the price per barrel for tallow is similar to and at times
higher priced than a barrel of crude oil. SDA believes that they should not to be included in the
definition of renewable biomass. [[#2305.1 p.4]]

Our Response:

       In the definition of renewable biomass, EISA and our final RFS2 regulations specifically
list separated food waste, "including recycled cooking and trap grease" and "animal waste
material and animal byproducts." EPA believes these listings cover the materials specified by
the first commenter. Because the category "animal wastes and animal byproducts" is included in
the statutory definition of renewable biomass, EPA cannot exclude this category from its
regulatory definition as the second commenter  suggests.
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3.3.2.17      Other Comments on Definitions

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) believes that EPA's definition of "Existing Agricultural Land" is
inconsistent with the statute and could leave land out of the program that would meet the
definition established by Congress. (2329.1, p.74) [[See Docket Number 2329.1, pp. 74-77 for a
detailed discussion on this issue]]

The commenter supports the definitions used by EPA to define cropland and forested land to the
extent those definitions are consistent with USDA and generally used definitions.  The
commenter also believes that EPA's definitions of fallow, planted crops and crop residues, and
forestland  are too limiting. The commenter believes that EPA should use USDA definitions that
are well-known and understood by the agricultural community, rather than create new definitions
that are likely to raise confusion and that may restrict the lands Congress sought to allow for
biofuel feedstock production. (2329.1, pp.77-79)  [[See Docket Number  2329.1, pp.77-79 for a
detailed discussion of this issue]]

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
The commenter holds that EISA overly restricts the ability of the nation's forests to contribute
biomass, and that a narrow interpretation from EPA will further inhibit the ability to meet the
RFS2 goals.
Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
The commenter (2383) states that EPA's definitions and requirements for feedstocks and energy
sources must maximize the availability of renewable fuel consistent with the text and purpose of
EISA. In implementing the RFS2  program, EPA should adopt definitions of key terms that are
consistent  with terms defined by Congress, support the purpose of the RFS2 program to increase
the production and use of renewable fuels, and avoid creation of unnecessary burdens,
restrictions, or costs that impede the use of renewable feedstocks or fuels. [[Docket number
2383.1, p.  12 and 2380.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2342
Organization:       Burack Environmental Law Offices
Comment:
The commenter (2342) believes that "Biomass" is broadly defined in RFS2 (within the definition
of "Renewable Biomass")  as "organic matter that is available on a renewable or recurring basis"
and that biomass is already listed as a feedstock for process heat in conjunction with one of the
corn ethanol pathways. The commenter also notes that "cellulosic biomass" does not appear to
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be specifically defined in RFS2, but has a reasonably clearly understood meaning within the
agency and regulated community. (2342, p.2)

Our Response:

       EISA's renewable biomass definition includes a number of terms that require definition.
We have made every attempt to define these terms as consistently with other federal statutory
and regulatory definitions as well as industry standards as possible, while keeping them workable
for purposes of program implementation. We have also attempted, within the statutory confines
of EISA, to interpret them broadly in order to further the goal of the EISA and RFS program, to
increase the presence of renewable fuels in transportation fuel, without at the same time
compromising the environmental protections Congress intended through adopting the renewable
biomass restrictions.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2143
Organization:       New York State Department of Environmental Conservation
Comment:
The commenter (2143) suggests that the definition of renewable biomass should include material
that is available from actively managed native or natural forests as well as from plantations. The
commenter (2143) suggests that participation in a federal, state or locally sponsored
"conservation" program, including the USDA Forest Service Forest Stewardship Program (as
well as the certification programs mentioned on page 24934 of the preamble) be incorporated in
the definition. (2143.2, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2302
Organization:       UC Berkeley - Energy Biosciences Institute
Comment:
The commenter strongly urges EPA to add a new category of renewable biomass, "8. Plant
material, including invasive species,  removed for habitat restoration, fire mitigation, or as a
result of natural disaster". They further suggest that this new category be excluded from
predictive assessments. They also encourage EPA to include the possibility that new forms of
renewable biomass may emerge that are not specifically designated in the rule.

Document No.:      EPA-HQ-OAR-2005-0161-2349
Organization:       Kentucky Division of Forestry
Comment:
The commenter (2349) encourages the establishment of biomass  plantations on surfaced mined
lands and including them regardless of the time of establishment. (2349.pdf, p.l)

Our Response:

       EISA restricts the materials that can be considered renewable biomass under RFS2, so
EPA cannot add additional categories of biomass. However, where possible without
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undermining the environmental objectives of the statute, EPA has broadly defined EISA's terms
related to renewable biomass. For example, EPA has included biomass from agricultural land
removed for purposes of invasive species control or fire management in the definition of crop
residue. Additionally, the definition of slash has been clarified to include biomass resulting from
natural disaster, including flooding.

       In response to the last comment, we emphasize that EISA specifically limits the land that
renewable fuel feedstocks may come from. We have interpreted the "cleared or cultivated"
requirement in the renewable biomass definition as requiring that agricultural lands and tree
plantations be cleared prior to EISA's enactment on December 19, 2007 and actively managed
on that date. EPA cannot allow for clearing of additional lands after December 19,  2007 for
purposes of RFS2 and cannot include lands as tree plantations that were not actively managed
tree plantations as of the date of EISA enactment.
3.3.3   Requiring a Demonstration that Feedstocks Meet the Renewable Biomass Definition
       Prior to Generating RINs

3.3.3.1 General Comments

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2510
Organization:       Iowa Renewable Energy, LLC
Comment:
The commenter (2510) states that they have found no data source that will tell how to determine
the value of land (all types) that may be used for renewable fuels, regardless of the feedstock
type. The commenter believes that without this data, it is without merit to expect small business
to spend fortunes to chase numbers that have not been determined to be relevant to the process.
[[Docket number 2510.1, p. 3]]

Document No.:      EPA-HQ-OAR-2005-0161-1015
Organization:       Renewable Energy Group
Comment:
The commenter (1015) asks for a delay in the certification for feedstock land restrictions
regulation until a cost benefit analysis is conducted on behalf of the biofuel producer and
feedstock producer to implement this section. As EPA correctly concludes, no current data is
collected from agricultural land owners, producers, and forest owners for assessing the status of
agricultural land, forest land, and other types of land that could be used for renewable fuel
feedstock production. The commenter has not identified any federal or state agency or third
party that collects such data in a timely and meaningful way. [[Docket number 2123.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-2010
Organization:       SoyMor Biodiesel, LLC
Comment:
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The commenter (2010) asks for a delay in the certification for feedstock land restrictions
regulation until a cost benefit analysis is conducted on behalf of the biofuel producer and
feedstock producer to implement this section.  As EPA correctly concludes, no current data is
collected from agricultural land owners, producers, and forest owners for assessing the status of
agricultural land, forest land, and other types of land that could be used for renewable fuel
feedstock production. The commenter has not identified any federal or state agency or third
party that collects such data in a timely  and meaningful way. [[Docket number 2010.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-2011
Organization:       Western Dubuque Biodiesel LLC
Comment:
The commenter (2011) asks for a delay in the certification for feedstock land restrictions
regulation until a cost benefit analysis is conducted on behalf of the biofuel producer and
feedstock producer to implement this section.  As EPA correctly concludes, no current data is
collected from agricultural land owners, producers, and forest owners for assessing the status of
agricultural land, forest land, and other types of land that could be used for renewable fuel
feedstock production. The commenter has not identified any federal or state agency or third
party that collects such data in a timely  and meaningful way. [[Docket number 2011.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-2013
Organization:       Central Iowa Energy, LLC
Comment:
The commenter (2013) asks for a delay in the certification for feedstock land restrictions
regulation until a cost benefit analysis is conducted on behalf of the biofuel producer and
feedstock producer to implement this section.  As EPA correctly concludes, no current data is
collected from agricultural land owners, producers, and forest owners for assessing the status of
agricultural land, forest land, and other types of land that could be used for renewable fuel
feedstock production. The commenter has not identified any federal or state agency or third
party that collects such data in a timely  and meaningful way. [[Docket number 2013.1, p. 5]]

Our Response:

       EPA is required by law to promulgate regulations to implement the language contained in
EISA, including the definition of renewable biomass which restricts renewable fuel feedstocks
and the land from which they may come.  We believe that there is sufficient data, as well as
documentation on historic and current use of land, for all renewable fuel producers to be able to
meet the renewable biomass provisions contained in the  final RFS2 regulations.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2354
Organization:       Massachusetts Department of Environmental Protection
Comment:
The commenter (2354) encourages EPA to develop a system by which feedstocks used for
biofuels production are tracked with some specificity at the facility level. Lifecycle emissions
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depend on the location and method of feedstock production, collection so this information would
be helpful in program evaluation.

Our Response:

       In the final RFS2 regulations we are requiring renewable fuel producers to report the
types and volumes of feedstocks used in each batch of renewable fuel for which RINs are
generated. We are also requiring producers who are not subject to the aggregate compliance
approach for renewable biomass to submit on a quarterly basis documentation that links their
feedstocks to their source. This information will be at the facility level.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2014
Organization:       Clean Fuels Clearinghouse
Comment:
The commenter (2243.1)  recommends that EPA be more prescriptive in defining renewable
biomass and modify the regulations as proposed under §80.14151 (b)(6)(I) to include the
following language "must show title evidence of ownership or lawful right of use of lands upon
which the biomass was produced."  This qualifying criteria builds upon established land title
practices and will assure that EPA can administer the program as proposed. (2243.1, p.2)

Our Response:

       EPA does not believe that it is necessary to adopt the specific recommendation of the
commenter.  EPA believes that implementation of the renewable biomass provisions requires
some traceability of the feedstock to the land from which it was harvested. Therefore, our final
regulations contain a requirement that feedstock verification documents be traceable to the land
in question.  EPA believes it is unlikely that producers will collect biomass unlawfully when
required to report to EPA the location of such collection. In addition, EPA has no reason to
believe that these or other producers would obtain feedstocks illegally, and existing state and
local laws and procedures are in place to rectify such activities if they do occur.
3.3.3.2 Direct Regulation of Feedstock Producers/Suppliers

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
The commenter (2383) is concerned about EPA's proposed requirements that renewable fuel
producers must obtain and keep records and documents demonstrating that feedstock meets the
definition of "renewable biomass," and must certify that all biomass used meets this definition,
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are unnecessarily burdensome. The feedstock producers will have greater knowledge of the
historical use of land where feedstock is produced, the production of feedstocks, and will hold
the primary records necessary to support such certification. The feedstock producers, rather than
the renewable fuel producers, should be the entities that are required to maintain primary records
regarding whether biomass meets the definition of "renewable biomass" and to certify that such
biomass meets this definition.. [[Docket number 2383.1, p. 59]]

Our Response:

       We understand that in many, if not most, cases, feedstock producers will have a better
knowledge of the historical and current use of land used for growing renewable fuel feedstocks
than a renewable fuel producer will.  RIN generation responsibilities, however, remain with
renewable fuel producers. For this reason, our approach for implementing the renewable
biomass provision of EISA requires renewable fuel producers to obtain documentation from the
feedstock producer (in the case of planted crops and crop residue and planted trees and tree
residue).  In order for EPA to be able to properly enforce against invalid RIN generation, the
burden of proof for demonstrating that feedstocks do or do not meet the definition of "renewable
biomass" must also reside with the renewable fuel producer.
3.3.3.3       Agricultural Land

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2488
Organization:       Kansas Corn Growers Association
Comment:
The commenter (2488) believes that by requiring proof that feedstocks used for ethanol
production came from cropland which was in production prior to 2007, the proposed rule has the
potential to place a great burden on corn growers. (2488, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2189
Organization:       Technical Consultant for Enzyme Development Corporation and
Genencor International
Comment:
The commenter believes that the EPA proposal would put a heavy and unwarranted burden on
feedstock providers. EPA's proposal requires proof that croplands used to create biofuel
feedstock were in existence prior to EISA becoming law in 2007.  But there's no risk that new
lands will be cleared for feedstock for biofuel production —and the rule would mean extra costs
and inconveniences for feedstock providers.  (2189, p.2-3)

Document No.:      EPA-HQ-OAR-2005-0161-2120
Organization:       Society for Range Management
Comment:
The commenter [[2120]] feels that the evidence EPA requires of producers in order to verify that
their feedstock is eligible for RINs should be kept to a minimum.  This is particularly true in the
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case of rangelands, where most landowners have been documenting their land management
activities for a much shorter time than is generally the case for America's farmers. EPA should
cite examples of forms of evidence that would be acceptable, but not limit its approval to those
kinds of records, in order to grant maximum flexibility to producers to demonstrate their claims.
[[#2120.1 p.4]]

Document No.:      EPA-HQ-OAR-2005-0161-2446
Organization:       Minnesota Farm Bureau Federation
Comment:
The commenter believes that EPA's definition of existing cropland creates onerous land use
rules and record-keeping requirements that would bar many farmers from growing crops used for
biofuel production and in so doing would reduce the value of a great deal of American farmland.

The commenter also states that EPA makes several assumptions about the management of
agricultural land that are not borne out by commonly accepted practices. For instance, the
agency asserts that sales and purchasing receipts should be available to indicate that pastureland
is being managed. Many farmers maintain their pastures even when the land is not actively
being grazed. This maintenance may include mowing to reduce noxious weeds or fire hazards.
There are not normally sales receipts or records for these routine practices.

The commenter states that a farmer may leave land fallow for a myriad of reasons. These
decisions are rarely documented. It is also unreasonable to expect that records such as sales
receipts will be transferred when land is sold to  new owners.  For example, following a
landowners' death land may lie fallow while estate issues are resolved. These issues can often
take years to resolve.

Document No.:      EPA-HQ-OAR-2005-0161-2549
Organization:       Triton Energy LLC
Comment:
The commenter (2549.1) is concerned with the unnecessary and unworkable feedstock
certification requirements that EPA has proposed. This would create a whole new trading group
on the Chicago Board of Trades and other world markets for beans and oils before the
implementation date and those after the date. Those crops and oils raised and sold before the
date would be more valuable because of the duel use  of food or fuel and those after the date
would only be used for food.  It will be impossible for the farmer, grain elevator, bean crusher,
storage facilities, oil transporters etc. to keep this product from getting mixed without billions of
dollars of new storage capacity which will have a negative effect on what we are trying to do.
The amount of tracking and paperwork to keep records and proof will be a nightmare for both
producers, sellers, storage facilities, traders and consumers. (2549.1, pp.1-2).

Document No.:      EPA-HQ-OAR-2005-0161-2300
Organization:       Dow AgroSciences
Comment:
The commenter is concerned with the unnecessary and unworkable feedstock certification
requirement that EPA has proposed. (2300, p.l)
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RFS2 Summary and Analysis of Comments
Document No.:      EPA-HQ-OAR-2005-0161-2150
Organization:       American Farm Bureau Federation
Comment:
The commenter (2150.1) believes that EPA's requirements (records of sales, written
management plans, participation in state, local or federal management agency, or certified
program) for proving cropland has been "continuously actively managed as agricultural land or
fallow" as are unnecessarily burdensome and unclear. (Page 2)

Document No.:      EPA-HQ-OAR-2005-0161-2353
Organization:       Iowa Soybean Association
Comment:
The commenter [[2353]] states that most Iowa farmers have extensive on-farm grain storage
facilities.  Overflow grain is usually trucked to local grain elevators for temporary storage before
being commingled with grain from other farms and shipped by rail or truck to processing or
export facilities. It would be very difficult to identify (and maintain the identity of) the
originating land of any amount of production. USDA programs are in place to identify farm
acreages, provide cropping histories and monitor environmental practices, and almost all Iowa
farmers participate in these programs. Iowa soybean producers believe EPA should eliminate the
impractical and nearly impossible burden of certification of production from existing and eligible
cropland. [[#2353 p.3]]

Document No.:      EPA-HQ-OAR-2005-0161-2119
Organization:       National Sorghum Producers
Comment:
The commenter (2119.1) believes that the tracking requirements associated with existing
agricultural land as proposed by EPA are unrealistic and unenforceable. The commenter
believes that a system that exempts grain sorghum and other grain feedstocks is reasonable  and
enforceable.  The new system, however, should track other feedstocks, including sweet sorghum
and energy sorghum, since these other advanced and cellulosic feedstocks will be grown in much
closer proximity to the ethanol producing facility and will not be traded via arbitrage. (2119.1,
P-4)

Document No.:      EPA-HQ-OAR-2005-0161-2419
Organization:       Cargill Incorporated
Comment:
The commenter (2511.1) noted that EPA is  proposing an overly burdensome administrative
requirement for traceability that will have little, if any, benefit. EPA's proposed feedstock
certification provisions effectively require renewable fuel producers to segregate or identify
preserve commodity crops.

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) believes that EPA improperly placed a substantial and undue burden of
proving renewable biomass requirement on renewable fuel producers. The statute does not
impose an affirmative duty on renewable fuel producers to use renewable biomass. The
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commenter noted that RINs are not a statutory requirement, and no where in the statute does
Congress indicate an intent to impose such stringent regulations on renewable fuel producers.
Renewable fuel producers do not have access to the type of information needed to determine
compliance with the existing cropland definition. Renewable fuel producers will need to rely on
the feedstock providers, who are either likely to impose substantial costs to obtain and provide
the information or are not likely to provide the information at all, unless EPA requires them to do
so. (2329.1, p.79)

The commenter also noted that the majority of feedstock is obtained from grain elevators or
other centralized locations.  These terminals receive feedstock from numerous sources, which are
mixed together, and sell the feedstock to numerous sources.  A recent study showed that 62
percent of corn from Iowa farms went to a grain elevator.  Tun-Hsiang (Edward) Yu and Chad
Hart, Impact of Biofuel Industry

Expansion on Grain Utilization and Distribution: Preliminary Results of Iowa Grain and Biofuel
Survey, at 5 (2009), available at
ttp://ageconsearch.umn.edu/bitstream/46847/2/Impact%20of%20Ethanol%20Industry%20Expan
sion%20on%20Corn%20Utilization%20and%20Distribution-Final.pdf. The commenter believes
that EPA's proposal does not address the crucial fact that would make it virtually impossible for
renewable fuel producers to seek and obtain the required documentation. The commenter
believes that EPA has failed to  consider this important aspect of the problem, which renders the
proposal arbitrary and capricious.  (2329.1, p.79) [[See Docket Number 2329.1, pp.79-81 for a
detailed discussion of this issue]]

The commenter believes that EPA cannot impose such substantial regulatory requirements on
these producers. RFS does not give EPA broad authority to regulate renewable fuel producers,
just to implement the requirements for the fuels under the program. EPA must justify its
regulation under other Clean Air Act authority, but EPA has no such authority under the Clean
Air Act.  (2329.1, pp.81-82)

The commenter believes that the proposal unfairly treats crop-based renewable fuel. EPA needs
to apply a similar presumption as it did for other types of renewable fuel. While the RFS
mandates place sufficient incentives on renewable fuel producers to ensure that the feedstock
used meets the definition of renewable biomass, the feedstock suppliers are the only ones in a
position to confirm that their feedstock meets the Act's requirements, and renewable fuel
producers should be able to  rely on their representations. Except for an incorrect reading of the
statute, EPA provides no explanation as to why renewable fuel producers should not be allowed
to rely on certifications by feedstock producers for the existing cropland and planted tree
requirements, as with other feedstocks.  At a minimum, the commenter believes that EPA should
provide a good faith defense for ethanol producers.  (2329.1, p.83)

The commenter (2329.1) believes that EPA should provide a presumption that domestic crops
used as biofuel feedstock in the Final Rule, focusing its enforcement actions against those with
knowledge that they are using feedstock that does not meet the definition. (2329.1, p.84) [[See
Docket Number 2329.1, pp.84-85 for a detailed discussion of this issue]]
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Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:       ConocoPhillips
Comment:
The commenter (2154.1) noted that the recordkeeping requirements concerning demonstration
that feedstocks meet the definition of renewable biomass appear to be very onerous. The sheer
volume of documentation that would have to be passed from feedstock producers to renewable
fuel producers is staggering. EPA should give serious consideration to ways to simplify this
requirement, particularly for domestic feedstocks. (2154.1, p.8)

Document No.:      EPA-HQ-OAR-2005-0161-2529
Organization:       National Grain and Feed Association
Comment:
The commenter (2529) is not aware that the proposed record keeping system presently exists and
believes that any requirement mandated by EPA to create such a system is unjustifiable and
would place an unreasonable administrative burden on renewable fuel feedstock suppliers.

The commenter particularly emphasizes that due to RIN and supplier recordkeeping
requirements, grain elevators simply could  choose not to participate in the renewable biomass
program, denying the use of these stocks to the renewable fuels market. This is because such
facilities receive feedstock from numerous sources, which are commingled together, and then
sell the feedstock to numerous sources.  Such segregation would be extremely costly and
burdensome because it would require identity preserved storage, and would be necessary to
ensure that the grain elevator could lawfully sell its commingled feedstock as a renewable
biomass to a fuel ethanol producer.

Instead of imposing costly and burdensome inefficiencies on biofuels producers and their
suppliers, the NGFA urges EPA to work with US DA to ensure that substantial amounts of new
land are not being cleared to comply with the EISA requirements.

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (Docket number 2249.2) believes that the proposal related to the EISA
renewable biomass  definition is arbitrary and capricious and should be eliminated.  The
commenter does not support EPA's proposal to address the "existing cropland" requirement nor
is EPA's definition  of "existing agricultural land" consistent with the statute.  In addition,  EPA's
approach ignores important aspects of the problem and therefore is arbitrary and capricious and
the proposal also creates unnecessary and overly burdensome administrative requirements. The
Agency's approach essentially seeks to "identify preserve" crops and should be rejected. The
commenter suggests alternative proposals to address "existing agricultural land" including
establishing baseline production of eligible. [[Docket number 2249.2, pp. 17-26]]

[[See docket number 2249.2, pp. 17-26 for  the commenters" comprehensive discussion of EPA's
proposal related to definitions of "existing cropland." Also see docket number 2249.1, pp. 3-4
and docket number  2232.1, Attachment 3 for additional discussion.]]
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The commenter also believes that EPA should allow renewable fuel producers to rely on
certifications by feedstock providers for all renewable biomass, including planted crops and crop
residues and planted trees and tree residues. [[Docket number 2249.2, p. 28]]

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that the recordkeeping requirements concerning demonstration
that feedstocks meet the definition of renewable biomass are very onerous.  Some simplifying
assumptions should be made and applied that would significantly reduce the recordkeeping
burden.  The commenter noted that there are certain types of feedstocks that could be declared
renewable by list.  These would include  those that clearly come from agricultural lands such as
corn and soybeans. The burden of having every farmer provide documentation that then must
get passed along to the renewable fuel producer seems great when essentially all of certain types
of crops would fall into the renewable biomass category.  The commenter encourages EPA to
consider ways to reduce the burden associated with demonstrating feedstock classification.
(2124.1, p.32)

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter believes that Section 80.1451 contains onerous documentation requirements for
renewable fuel producers.  For each batch of renewable fuel produced, the renewable fuel
producer would be required to maintain  records to establish that the feedstock used meets the
definition of renewable biomass as that term is  defined in section 80.1401. [[Docket number
2393.1, p. 42]]

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter (2472) strongly encourages EPA to consider ways to reduce the burden
associated with demonstrating feedstock classification. The proposed recordkeeping
requirements concerning demonstration  that feedstocks meet the definition of renewable biomass
are very onerous.  Some simplifying assumptions should be made and applied that would
significantly reduce the recordkeeping burden.  For example, certain types of feedstocks should
be declared renewable by list. The burden of having every farmer provide documentation that
then must get passed along to a grain elevator or the renewable fuel producer seems great when
essentially all of certain types of crops would fall into the renewable biomass category. [[Docket
number  3472.1, p. 7]]

Document No.:      EPA-HQ-OAR-2005-0161-2343
Organization:       Osage Bio Energy
Comment:
The commenter (2343) states that the proposed rule requiring producers to certify feedstock as
renewable biomass is cumbersome, at best, and will create a difficult administrative burden. The
commenter believes that EPA should consider revising the rule to either eliminate or simplify the
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requirement to certify feedstock as renewable biomass, or; establish an exemption for biofuels
produced from winter grain crops. [[Docket number 2343, pp. 5 and 7]] [[See docket number
2343, pp. 5-7 for further discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2363
Organization:       Ag Processing Inc.
Comment:
The commenter (2363) recommends that instead of requiring mass amounts of paperwork, audits
and segregation for the 99% of the biomass produced for renewable fuel production in
compliance with the "non-native" and "actively managed" standards, EPA should instead focus
on the 1% that might not be in compliance. The commenter states that renewable fuel producers
and grain handlers could be supplied an inventory of land in their region/or nationwide that has
been determined to not be in compliance or at risk. EPA can use satellite information and
presently available maps to identify virgin lands in the United States.  Owners of such land are
also easily identified and could be notified. Similarly, renewable fuel producers could be given
such maps and ownership records. The commenter believes that such information would be
sufficient to warn the system not to take biomass from the operator of such land unless he or she
verifies that they have segregated the harvest from such non-compliant land. [[Docket number
2363.1, p. 10]]

Document No.:      EPA-HQ-OAR-2005-0161-2487
Organization:       Abengoa Bioenergy Corporation
Comment:
The commenter (2487) believes that the proposal puts a heavy and unwarranted burden on
feedstock providers by requiring proof that croplands used to create biofuel feedstock were in
existence prior to EISA becoming law in 2007.  But there's no risk that new lands will be cleared
for feedstock for biofuel production and the rule would mean extra costs and inconveniences for
feedstock providers. [[Docket number 2487,  p. 1]]

Document No.:      EPA-HQ-OAR-2005-0161-1975
Organization:       Canadian Bioenergy Corporation
Comment:
The commenter (1975) believes that EPA should delay the "chain  of supply" certification until a
less burdensome tracking program is available.  Allowing a delay in this chain of supply
certification for feedstock land restrictions regulation until a cost benefit analysis is conducted on
behalf of the biofuel producer to implement this section. The primary feedstock used for
biodiesel production has been a fungible commodity.  According to EPA's proposed rule,
feedstock would suddenly be required to be containerized and not  blended or mixed with the
same grain from different fields from, perhaps, the same farm as part of the tracking program.
This cost burden is prohibitive to the entire supply chain and is a regulatory structure that would
stifle production agriculture. [[Docket number 1975, p. 1]]

Document No.:      EPA-HQ-OAR-2005-0161-2526
Organization:       Coskata
Comment:
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The commenter (2526) urges the EPA to adopt an inclusive and attainable approach towards the
Renewable Biomass Definition and recordkeeping requirements. This will allow the cellulosic
biofuels industry to fully achieve its potential for reducing greenhouse gases. The commenter
makes the following points:
       EPA should opt for the least onerous approach towards enforcement of the land-use
       requirement - voluntary certification combined with satellite surveillance.
       Land use should allow innovations that enhance land's carbon sequestration. [[Docket
number 2526.1, pp. 1-2]] [[Also see docket number 2526.1, pp. 9-11 for further discussion of
this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2244
Organization:       Altrius Group.  LLC
Comment:
Regarding verification of eligible renewable biomass, the commenter (2244) is concerned that by
limiting the options for verification to a small set of accepted records, farmers in some sectors
will benefit, while others may be unable to qualify because they do not have the right types of
evidence.  This is particularly true in the case of rangelands, which have fewer formal
management practices in place and, therefore, fewer and different forms of evidence than
cultivated lands. Furthermore, the types of documents EPA specifies may not be commonly used
overseas, which would unfairly disadvantage producers in foreign countries who should receive
equal treatment with respect to verification.  The commenter supports the alternative approach
EPA raises in its Proposed Rule,  in which producers certify on their production reports that their
feedstocks meet (or do not meet) the definition of renewable biomass and are required to
maintain records to support their claims, but without specifying what those records would have
to include, in order to grant maximum flexibility to producers to demonstrate their claims.
[[Docket number 2244.1, pp. 4-5]]

Document No.:      EPA-HQ-OAR-2005-0161-2612
Organization:        Citizen  (sample of 478 comment letters received from mass comment
campaign sponsored by American Soybean Association)
Comment:
The commenter believes the proposed feedstock certification requirements are unnecessary and
onerous.

Our Response:

       In light of the comments received on the proposed renewable biomass recordkeeping
requirements and implementation options, EPA sought assistance from USDA in determining
whether existing data and data sources might suggest an alternative method for verifying
compliance with renewable biomass requirements associated with the use of domestic crops and
crop residue for renewable fuel production. Taking into consideration extensive publicly
available data on agricultural land available from USDA and USGS as well as expected
economic incentives for feedstock producers, EPA has determined that an aggregate compliance
approach is appropriate for planted crops and crop residue from the United States.
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       Under the "aggregate compliance approach," EPA is determining for this rule the total
"existing agricultural land" in the U.S. at the enactment date of EISA. EPA will monitor total
agricultural land annually to determine if national agricultural land acreage increases above this
2007 national aggregate baseline  Feedstocks derived from planted crops and crop residues will
be considered to be consistent with the definition of renewable biomass and renewable fuel
producers using these feedstocks will not be required to maintain specific renewable biomass
records as described above unless and until EPA determines that the 2007 national aggregate
baseline is exceeded. If EPA finds that the national aggregate baseline is exceeded, individual
recordkeeping and reporting requirements as described below will be triggered for renewable
fuel producers using crops and crop residue. We are confident that the aggregate approach will
effectively implement the EISA renewable biomass provisions related to crops and crop residue,
while also easing the burden for certain renewable fuel producers and their feedstock suppliers
vis a vis verification that their feedstock qualifies as renewable biomass.

       There are four main factors supporting the aggregate compliance approach we are taking
for planted crops and crop residue. First, EPA is using data sets that allow us to obtain an
appropriately representative estimate of the agricultural lands in the U.S. that are available under
EISA for the production of crops and crop residue as feedstock for renewable fuel production.
Second, USDA data indicate an overall trend of agricultural land contraction.  These data,
together with EPA economic modeling, suggest that 2007 aggregate baseline acreage should be
sufficient to support EISA renewable fuel obligations and other foreseeable demands for crop
products, at least in the  near term, without clearing and cultivating additional land. Third, EPA
believes that existing economic factors for feedstock producers favor more efficient utilization
practices and bringing existing agricultural land into crop production rather than converting non-
agricultural lands to crop production.  Fourth, if, at any point, EPA finds that the total amount of
land in use for the production of crops including crops for grazing and forage is equal or greater
than 397 acres (i.e., within 5 million  acres of EPA's established 402 million acre baseline), EPA
will conduct further investigations to evaluate whether the presumption built into the aggregate
compliance approach remains valid.  Lastly, EPA has set up a trigger mechanism such that in the
event that EPA finds in the future that there are more than the baseline amount of acres of
cropland, pastureland and CRP land, then renewable fuel producers will be required to meet the
same individual or consortium-based recordkeeping and reporting requirements applicable to
other feedstocks used in the RFS2  program. Taken together, these factors give EPA high
confidence that the aggregate compliance approach for domestically grown crops and crop
residue will effectively  implement the statutory  obligation that feedstock volumes used to meet
the renewable fuel requirements also comply with the definition of renewable biomass.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2360
Organization:       Archer Daniels Midland Company (ADM)
Comment:
The commenter (2360.1) noted that EPA stated in the proposed rule the possibility of requiring a
certification program for feedstocks that are used in renewable fuel production.  However, EPA
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did not provide a clear method to implement this certification despite the significant challenges it
would present. (2360.1, p.6)

Our Response:

       EPA agrees that the proposal lacked specificity regarding certain elements of the
proposed feedstock verification requirements. In response to comments, and upon further
deliberation within EPA, EPA has modified the  proposed requirements considerably for the final
rule, and has established detailed regulations explaining the types of documents and
certifications to be obtained, the parties who must generate them, how and when reports related
to feedstock verification are provided to EPA, as well as associated recordkeeping requirements.
3.3.3.4       Tree Plantations and Forestland

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter (2156) is most concerned about the proposed idea of certifying renewable
biomass. The commenter disagrees that documentation of tree plantations already exist on the
many forestland tracts involved in the supply chain, as suggested by EPA and recommends that
monitoring land use at regional/state level on yearly/biannually may provide the best quality
assurance. The commenter (2156)  also recommends additional thought, research, and discussion
on this topic.  (2156.1.docx, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2173.1
Organization:       National Association of Forest Owners (NAFO)
Comment:
The commenter believes that a true chain-of-custody tracking system is an overly burdensome
verification option for forest-derived biomass.

Document No.:      EPA-HQ-OAR-2005-0161-2349
Organization:       Kentucky Division of Forestry
Comment:
The commenter (2349) does not believe that chain-of-custody tracking system would be
efficient. The commenter suggests EPA to engage forest industry to develop a flexible tracking
system based on state approved management plan to track use of slash associated with logging
residues. (2349.pdf, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
The commenter feels responsibility of verifying biomass should reside with the renewable fuel
producer and should include flexibility for producers and suppliers to choose among different
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verification tools.  The system should take into consideration that most forest land ownership in
the U.S. is fragmented and held in small, private ownerships, and that brokers will aggregate
supply from multiple sources, often in the form  of chipped material, making a chain-of-custody
system difficult to implement.

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
Regarding EPA's proposed tracking requirements for renewable biomass the commenter does
not believe that renewable fuel producers should be required to track and document the origin of
woody biomass and whether a particular tree plantation has been "actively managed." EPA
should consider the use of satellite imagery to verify that current tree plantation land has been
actively managed since December 19, 2007, and that renewable fuel is indeed produced using
"renewable biomass" as defined by EPA (planted trees and slash from tree plantations located on
non-federal land that have been actively managed since December 19, 2007). Alternatively, if
EPA requires renewable fuel producers to verify qualified renewable biomass from planted trees,
the commenter agrees with EPA's proposal to allow substantiation of "active management."
[[Docket number 2472.1, pp. 11-12]]

Our Response:

      EPA does not believe that the use of satellite imagery would effectively implement
EISA's renewable biomass requirements with respect to woody biomass.  Satellite imagery
cannot identify the location from which a particular load of feedstock is derived. Although the
final rule establishes an aggregate compliance approach for domestic planted crops and crop
residues, EPA was not able to identify a comparable approach  that would provide assurance
regarding compliance with renewable biomass requirements for woody biomass that does not
require tracking and  documentation of the type that the comments disapprove of.  However, the
final rule does provide an option for renewable fuel producers  to utilize an alternative tracking
system involving the use of an independent third party to conduct comprehensive annual
compliance surveys.  EPA believes that this alternative approach could facilitate compliance for
some producers, and is prepared to assist interested parties in developing a plan for such an
alternative approach.
3.3.3.5       Verification Requirements for Non-Cultivated Feedstocks

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2149
Organization:       Dynamic Fuels, LLC
Comment:
The commenter (2149.1) believes that any approach EPA settles on to ensure that RINs are
properly generated should only be applied for feedstocks directly cultivated from land.  The four
approaches described by EPA for ensuring that RINs are properly generated are discussed in the
context of the land restrictions. However, there are feedstocks that qualify as renewable biomass
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that are not cultivated from land, such as animal fats and waste yellow grease. The commenter
believes that EPA should make it clear that these feedstocks and others not directly cultivated
from land are not subject to the requirements under the verification program. (2149.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2364
Organization:       Tyson Foods, Inc.
Comment:
The commenter (2364.1) believes that any approach EPA settles on to ensure that RINs are
properly generated should only be applied for feedstocks directly cultivated from land. The
commenter noted that the four approaches described by EPA for ensuring that RINs are properly
generated are discussed in the context of the land restrictions. However, there are feedstocks that
qualify as renewable biomass that are not cultivated from land, such as animal fats and waste
yellow grease. The commenter believes that EPA should make it clear that these feedstocks and
others not directly cultivated from land are not subject to the requirements under the verification
program. (2364.1, p.4)

Our Response:

       While EISA is more explicit about the  origins of feedstocks cultivated from land than it is
about non-cultivated feedstocks,  it nonetheless limits renewable fuel feedstocks  to those listed
under the definition of "renewable biomass." For this  reason, both the final RFS2 regulations
require renewable fuel producers to obtain certifying documentation from their feedstock
suppliers for any non-cultivated feedstocks, including animal fats and waste grease, that they
claim qualifies as renewable biomass. This approach will help to ensure that RINs are properly
generated for renewable fuel produced from all types of feedstocks, not just those cultivated
from land.
3.3.3.6       Alternative Compliance Approaches

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2549
Organization:       Triton Energy LLC
Comment:
The commenter (2549.1) supports the proposal whereby the chain of custody requirement is
eliminated by creating instead a baseline of land use. The commenter noted that the record
keeping requirements outlined under §80.1451 (6) will either eliminate most small biofuel
producers or prevent any biofuel producer that uses an agriculture crop product that is widely
traded in the market to be able to meet the recording requirements. The commenter believes that
the Recordkeeping Requirements must be modified or few to no biofuel producers will be able to
meet the requirements. (2549.1, p.6)

Document No.:      EPA-HQ-OAR-2005-0161-2172
Organization:       Minnesota Soybean Processors
Comment:
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The commenter states that EPA should recognize that soybeans produced inside the U.S. by U.S.
soybean growers are being grown on land cultivated for over 100 years. It is unreasonable to
believe that land under cultivation for well over 100 years will cause new land use change.

Document No.:      EPA-HQ-OAR-2005-0161-2100
Organization:       American Soybean Association
Comment:
The commenter believes data from USDA should demonstrate that no new acres are being
planted in the United States. There are laws and regulations already in place that prevent farmers
from breaking new land if they participate in the federal crop programs administered by USDA.
These conservation compliance and enforcement mechanisms already exist at USDA. The
existing USDA rules, and the information collected by USDA in their administration of those
rules, should be sufficient for EPA to  ensure that the domestic feedstock being used in biodiesel
production is from existing and eligible cropland.

Document No.:      EPA-HQ-OAR-2005-0161-2463
Organization:       National Farmers Union
Comment:
NFU does not believe that this level of burden is required to ensure new lands are not being
converted to crop production. Farmers already have to report planted acres to USDA's Farm
Service Agency. EPA should use existing USDA data to establish a baseline level of production
that can be compared against the  eligible  lands established on December 19, 2007. On a yearly
basis, EPA can compare actual feedstock usage for ethanol, as reported by renewable fuels
producers against USDA data of feedstock production. This will validate that new domestic
lands are not being cleared to produce feedstocks such as corn for fuel production.

Document No.:      EPA-HQ-OAR-2005-0161-2516
Organization:       Imperium Renewables
Comment:
The commenter believes the EPA requirements to comply with the existing cropland requirement
is overly burdensome.  Given U.S. land use requirements, increasing yields and production
efficiencies, and the availability of existing  cropland, it is highly unlikely that new lands in the
U.S. will be cleared for purposes  of RFS.

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum  Institute (API)
Comment:
The commenter views the enforceability of  land restrictions as particularly problematic and
states that considerable flexibility must be afforded renewable producers to keep such restrictions
from preventing the production of renewable fuels with RINs.  The commenter suggests that the
agricultural community and renewable fuel  producers may want to consider something akin to
the RFC Association Survey approach to demonstrate to EPA that such restrictions are being
followed.  A representative survey of  feedstock deliveries could be audited on a periodic basis to
confirm general adherence to the  land restrictions without having to require the pedigree of each
and every feedstock delivery to a renewable producer to be proved. The commenter believes the
latter approach to be unworkable  and  likely to result in the production of significant amounts of
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renewable fuel that will not be able to generate RINs simply due to a lack of documentation on
feedstock pedigree. This will frustrate not only renewable producers, but also obligated parties
and EPA in terms of having a workable RFS2 program. [[Docket number 2393.1, p. 43]]

The commenter suggests that EPA provide a phase-in period of several years where-in current
renewable feedstock sources are deemed to be compliant with the feedstock land restrictions.
This period will provide the agricultural community and renewable producers with adequate time
to design and implement a survey program that meets the land restriction requirement to EPA's
satisfaction. Without such a phase-in period, EPA may be forced to disqualify RINs and
renewable fuels that were purchased in good faith. [[Docket number 2393.1, p. 43]]

[[See docket number 2393.1, pp.  42-44 for detailed discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2173.1
Organization:       National Association of Forest Owners (NAFO)
Comment:
The commenter supports the alternative of bringing together renewable fuel producers and
feedstock suppliers to develop a reliable and efficient quality assurance program.

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter (2472) believes that renewable fuel producers should not be required to track
renewable biomass. The commenter strongly supports shifting the responsibility for land use and
"renewable biomass" verification from renewable fuel producers to the regulating agency (EPA).
The commenter suggests that EPA consider the use of satellite imagery to verify that current land
use has not changed substantially from December 19, 2007, and that today's renewable fuel is
indeed produced using "renewable biomass" as defined by EPA (biomass produced from land
cultivated before December 19, 2007). [[Docket number 2472.1, p. 6]]

The commenter explains that currently in the U.S., very little land that was  not previously
cultivated is being used.  Or is likely to be used in the future, to generate feedstock for renewable
fuels.  The majority of deforestation in the U.S. is due to the expansion of urban areas into
uncultivated or forested areas. Moreover, the majority of new land being farmed is land coming
out of the CRP program.  The commenter finds it nearly impossible to envision a case where the
vast majority of renewable fuel produced in the U.S. would not be produced from renewable
biomass. Furthermore, EPA fails to take into account com growers' ability to continually
produce a larger supply of com, even on shrinking acreage, through increased yields.  The
commenter adds that alternatively, if this is not acceptable to EPA,  then EPA should consider
other options to facilitate the ability of renewable fuel producers to demonstrate that the fuels
that they produce meet the definition of "renewable biomass." [[Docket number 2472.1, p. 6]]
[[See docket number 2472.1, pp 6-7 for further discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2136
Organization:       Iowa Renewable Fuels Association (IRFS)
Comment:
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The commenter (2136) supports Congressional intent that biofuels feedstock should not come
from virgin prairie and similar lands; however, a workable and cost-effective system to ensure
this requirement is met must be incorporated into the final rule. The commenter urges the
Agency to work with the USDA to use an acreage baseline in which feedstock verification is
only required if the baseline acreage is exceeded. Even in that case, the Agency should take a
state-by-state or regional approach so that only the area realistically impacted would have to
verify the lineage of its feedstocks. [[Docket number 2136.1, pp. 8-9]]

Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) believes that EPA should provide clear guidance to producers that
propose certain documentation or records to demonstrate that their fuel meets the qualifying
criteria. There are likely various existing forms of documentation upon which EPA can rely and,
thus, limit the potential documentation burden created by EISA and the proposed RFS2
regulations. (2471.1, p. 13)

Document No.:      EPA-HQ-OAR-2005-0161-2369
Organization:       New Generation Biofuels  (NGBF)
Comment:
The commenter (2369) supports the proposal whereby the chain of custody requirement is
eliminated by creating instead a baseline of land use. Marginal and strip mine lands should be
taken into consideration in the baseline. The commenter adds that record keeping requirements
outlined under §80.1451 (6) will either eliminate  most small biofuel  producers or prevent  any
biofuel producer that uses an agriculture crop product that is widely traded in the market to be
able to meet the recording requirements.  The commenter believes that creating such a
requirement is untenable and it will be overly expensive to create multiple crushing and
processing facilities. Alternatively, the chain of custody requirement will most likely cause the
price of feedstocks to increase, thereby having the effect of creating higher energy costs.  The
commenter contends that the requirement is tantamount to a closed loop biomass system of
which very few have ever been successfully and economically or sustainably maintained.
[[Docket number 2369.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-1015
Organization:       Renewable Energy Group
Comment:
The commenter (1015) states that the primary feedstock used for biodiesel production has always
been a fungible commodity. To overlay an extensive certification process for purposes of
EISA's definition of "renewable biomass", will necessitate a procedure that may require
feedstock to be containerized and not blended or mixed with the same grain from different fields
from perhaps the same farm.  The increased cost will rule out market competitiveness and
facilitate a regulatory structure that would stifle production agriculture. [[Docket number  2123.1,
p. 5]]

The commenter adds that a second approach that would simplify and yet ensure compliance is to
construct new data points between known data points,  interpolation.  In this case, the known data
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points are the total production acreage by feedstock and the RFS2 gallon requirements. The
number of acres needed for fuel feedstock production, taking into account waste oils, can then be
calculated.  Measures can then be taken if the number of fuel feedstock acres exceeds land
restriction criteria. [[Docket number 2123.1, pp. 5-6]]

Document No.:      EPA-HQ-OAR-2005-0161-2010
Organization:       SoyMor Biodiesel, LLC
Comment:
The commenter (2010) states that the primary feedstock used for biodiesel production has always
been a fungible commodity. To overlay an extensive certification process for purposes of EISA's
definition of "renewable biomass", will necessitate a procedure that may require feedstock to be
containerized and not blended or mixed with the same grain from different fields from perhaps
the same  farm. The increased cost will rule out market competitiveness and facilitate a
regulatory structure that would stifle production agriculture. [[Docket number 2010.1, p. 5]]

The commenter adds that a second approach that would simplify and yet ensure compliance is to
construct new data points between known data points, interpolation.  In this case, the known data
points are the total production acreage by feedstock and the RFS2 gallon requirements. The
number of acres needed for fuel feedstock production, taking into account waste oils, can then be
calculated.  Measures can then be taken if the number of fuel feedstock acres exceeds land
restriction criteria. [[Docket number 2010.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-2011
Organization:       Western Dubuque Biodiesel LLC
Comment:
The commenter (2011) states that the primary feedstock used for biodiesel production has always
been a fungible commodity. To overlay an extensive certification process for purposes of
EISA's definition of "renewable biomass", will necessitate a procedure that may require
feedstock to be containerized and not blended or mixed with the same grain from different fields
from perhaps the same farm. The increased cost will rule out market competitiveness  and
facilitate  a regulatory structure that would stifle production agriculture. [[Docket number 2010.1,
p.  5]]

The commenter adds that a second approach that would simplify and yet ensure compliance is to
construct new data points between known data points, interpolation.  In this case, the known data
points are the total production acreage by feedstock and the RFS2 gallon requirements. The
number of acres needed for fuel feedstock production, taking into account waste oils, can then be
calculated.  Measures can then be taken if the number of fuel feedstock acres exceeds land
restriction criteria. [[Docket number 2011.1, pp. 5-6]]

Document No.:      EPA-HQ-OAR-2005-0161-2013
Organization:       Central Iowa Energy, LLC
Comment:
The commenter (2013) states that the primary feedstock used for biodiesel production has always
been a fungible commodity. To overlay an extensive certification process for purposes of
EISA's definition of "renewable biomass", will necessitate a procedure that may require
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feedstock to be containerized and not blended or mixed with the same grain from different fields
from perhaps the same farm. The increased cost will rule out market competitiveness and
facilitate a regulatory structure that would stifle production agriculture. [[Docket number 2010.1,
p. 5]]  The commenter adds that a second approach that would simplify and yet ensure
compliance is to construct new data points between known data points, interpolation. In this
case, the known data points are the total production acreage by feedstock and the RFS2 gallon
requirements. The number of acres needed for fuel feedstock production, taking into account
waste oils, can then be calculated. Measures can then be taken if the number of fuel feedstock
acres exceeds land restriction criteria. [[Docket number 2013.1, pp. 5-6]]

Document No.:      EPA-HQ-OAR-2005-0161-2016
Organization:       Malaysian Palm Oil Board (MPOB)
Comment:
The commenter (2016.1) requests that any certification system  must not be administratively
burdensome. The suggestion to have a baseline level is worth further consideration if it can
reduce the administrative burden. (2016.1, pp.2-3)

Document No.:      EPA-HQ-OAR-2005-0161-2361
Organization:       Indonesian Palm Oil Commission
Comment:
The commenter (2361) suggests having a baseline if it reduces  the burden and suggests that the
requirements imposed on foreign producers should not be more onerous than those imposed on
local producers. Foreign producers whose raw material is not for generating RINs must have an
option not to provide documentary evidence of compliance or certification.  Similarly, local
renewable fuel producers should not be compelled to demonstrate origin of feedstocks if such
biofuels are not intended to generate RINs. (2361.1.pdf, p.2, 3)

Document No.:      EPA-HQ-OAR-2005-0161-1033
Organization:       Poet Ethanol Products
Comment:
The commenter (1033.1) proposes that EPA set a Renewable Biomass Allowance for Renewable
Fuel Producers prior to the start  of each calendar year in much the same way that they set a
Renewable Volume Obligation (RVO) for Obligated Parties. Since each Renewable Fuel
Producer is expected to submit a Production Forecast on an annual basis to assist EPA in
determining the RVO for each category of renewable fuel, the volume and type of Renewable
Biomass expected to be used in the production of the fuel would be known to EPA prior to the
beginning of each calendar year. (1033.1, p.l)

The commenter believes that for situations where the volume of Renewable Biomass forecasted
to be consumed is greater than the amount that could be reasonably produced on Existing
Agricultural Lands, then a rationing or allocation of the allowances would have to be
implemented and any purchase of feedstock in excess of the Renewable Biomass Allowance
would be subject to the documentation procedures identified by EPA at that time. (1033.1, p.2)

Our Response:
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       After considering these comments and engaging in extensive dialogue with USDA, we
are finalizing reporting and recordkeeping requirements comparable to those in the approach we
discussed in the proposed rule for all categories of renewable biomass with the exception of
planted crops and crop residue from agricultural land in the United States, which will be covered
by the aggregate compliance approach discussed in Section II.B.4.c.iii of the preamble. Under
the aggregate compliance approach, EPA has determined the total amount of "existing
agricultural land" in the U.S. at the enactment date of EISA, which is 402 million acres.  EPA
will monitor total agricultural land annually to determine if national agricultural land acreage
increases above this 2007 national aggregate baseline. Feedstocks derived from planted crops
and crop residues will be considered to be consistent with the definition of renewable biomass
and renewable  fuel producers using these feedstocks will not be required to maintain specific
renewable biomass records as described below unless and until EPA determines that the 2007
national aggregate baseline is exceeded.  If EPA finds that the national aggregate baseline is
exceeded, individual recordkeeping and reporting requirements will be triggered for renewable
fuel producers  using crops and crop residue. EPA believes that the aggregate approach, though
different in details than some other alternatives suggested by commenters, will address the
commenters' primary concerns that verification procedures for domestic planted crops should be
substantially simplified from those that EPA proposed.

       EPA has not identified similar simplified mechanisms that would be applicable to
feedstocks other than domestic crops and crop residues, and is therefore finalizing an individual
verification process that is similar in many respects to that proposed. However,  EPA is also
finalizing as an option an alternative approach in which EPA allows renewable fuel producers
and renewable  fuel feedstock producers and suppliers to develop a quality assurance program for
the renewable fuel production supply chain, similar to the model of the Reformulated Gasoline
Survey Association. While individual  renewable fuel producers may still choose to comply with
the individual renewable biomass recordkeeping and reporting requirements rather than
participate in a quality assurance program, we believe that this preferred alternative could be less
costly than an individual compliance demonstration, and it would add a quality assurance
element to RFS2.
3.3.4   Requiring a Demonstration that Feedstocks Do Not Meet the Renewable Biomass
       Definition Prior to Producing Renewable Fuel Without RINs

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that the regulations should limit the ability of producers and
importers to produce or import renewable fuel that does not have RINs.  The RFS2 regulations
should also take into account the existence of "RIN-less" renewable fuel in the RFS2 program.
The commenter understands that the EPA is considering removing the requirement that
renewable fuel producers and importers demonstrate that renewable fuel was not made from
renewable biomass.  If this is done, demonstrating that renewable fuel was made from renewable
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biomass will in effect be optional and there will be renewable fuel with no associated RINs or
"RIN-less" renewable fuel in the RFS2 program. (2124.1, p.36) [See Docket Number 2124.1,
pp.36-37 for a more detailed discussion of this issue]

Document No.:      EPA-HQ-OAR-2005-0161-2173.1
Organization:       National Association of Forest Owners (NAFO)
Comment:
The commenter believes the proposed requirement for the renewable fuel producer to trace the
source of their feedstock even if they do not generate RINs for that fuel is unnecessarily
burdensome  and impossible to satisfy.

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
EPA proposes to require that all renewable fuel producers document the origin of their
feedstocks regardless of whether they plan to generate RINs, reasoning that all eligible fuel will
be needed  to meet RFS2 mandates. While the  commenter (2310) agrees that all producers that
want to generate RINs for their fuel should be required to document the origin of their
feedstocks, they believe that the market price for RINs should be a sufficient inducement to
encourage  all fuel producers that produced their fuel with eligible feedstocks to generate RINs
for those volumes. [[Docket number 2310.1, p. 17]]

Document No.:      EPA-HQ-OAR-2005-0161-2317
Organization:       National Corn Growers Association (NCGA)
Comment:
The commenter (2317) urges EPA to streamline the requirements for verification of renewable
biomass feedstock and the requirements that apply to feedstocks used to generate non-RIN fuel.
[[Docket number 2317.1, p. 36]] [[See docket number 2317.1, pp. 36-43 for extensive discussion
of this issue.]]

Our Response:

      EPA  realizes that the implication of these proposed requirements is that renewable fuel
producers would be caught in the untenable position of being forced to participate in the RFS2
program (register, keep records, etc.) even if they are unable to generate RINS because their
feedstocks do not meet the definition of renewable biomass. After considering the comments
received, EPA has determined that this requirement would be overly burdensome and
unreasonable for producers. The burden stems from the requirement that producers prove that
their feedstocks do not qualify if they are not generating RINs.  If the  data did not exist or could
not be obtained, producers could not produce the fuel, even if no RINs would be generated.
Thus, for the final rule, EPA is requiring only that producers that do generate RINs have the
requisite records (as discussed in section II.B.4.C.L of this preamble) documenting that their fuel
is produced from feedstocks meeting the definition of renewable biomass. Non-RIN generating
producers need not maintain any paperwork related to their feedstocks and their origins.
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3.3.5  Use of Data from USDA Programs

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2302
Organization:      UC Berkeley - Energy Biosciences Institute
Comment:
The commenter [[2302]] states they strongly encourage  EPA to allow USDA to certify
renewable biomass feedstocks. [[#2302 p.3]]

Document No.:     EPA-HQ-OAR-2005-0161-2419
Organization:      Cargill Incorporated
Comment:
The commenter believes that certification of land that has been cleared or cultivated prior to
enactment should be documented by USDA or other governmental agencies such that individual
producers should not be required to have a document for every load of grain that is received into
the facility. (2511.1,p.5)

Document No.:     EPA-HQ-OAR-2005-0161-2087
Organization:      Ag Partners
Comment:
The commenter [[2087]] states that EPA already knows that 99 percent or more of the biomass
produced for renewable fuel production will meet the "non-native" and "actively managed"
standards of the law. EPA states that the onerous feedstock verification regimes proposed could
be streamlined and simplified if they had access to USDA information already collected from
producers. Surely the various bureaucracies of government can find a way to share what they
already know, [[see docket#2087 p. 1]]

Document No.:     EPA-HQ-OAR-2005-0161-2000
Organization:      Galva Holstein Ag, LLC
Comment:
The commenter [[2000]] states that EPA already knows that 99 percent or more of the biomass
produced for renewable fuel production will meet the "non-native" and "actively managed"
standards of the law. EPA states that the onerous feedstock verification regimes proposed could
be streamlined and simplified if they had access to USDA information already collected from
producers. Surely the various bureaucracies of government can find a way to share what they
already know, [[see docket#2000 p. 1]]

Document No.:     EPA-HQ-OAR-2005-0161-2348
Organization:      StateLine Cooperative
Comment:
The commenter (2348) noted that EPA already knows that 99 percent or more of the biomass
produced for renewable fuel production will meet the "non-native" and "actively managed"
standards of the law. EPA states that the onerous feedstock verification regimes proposed could
be streamlined and simplified if they had access to USDA information already collected from
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producers. The commenter believes that surely the various bureaucracies of government can find
a way to share what they already know. (2348, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2363
Organization:       Ag Processing Inc.
Comment:
EPA states that the onerous feedstock verification regimes proposed could be streamlined and
simplified if they had access to USDA information already collected from producers. The
commenter  (2363) suggests that the government bureaucracies find a way to share what they
already know. S imilarly, at the renewable fuel level, the IRS already performs audits plant to
make sure we produced the fuel for which tax incentives are applied.

Document No.:      EPA-HQ-OAR-2005-0161-2515
Organization:       Minnesota Department of Natural Resources (MnDNR)
Comment:
The commenter noted that the intent of the statutory language and supporting proposed rules to
limit biomass production to existing agricultural lands is good.  However, NRCS land use
categories are not intended for this purpose. A better mechanism would be to build on existing
farm program mechanisms. If land cover is converted on lands subject to Sodbuster or Swamp
Buster provisions of the farm program, then these acres should be excluded from the RFS
market.  This strategy would in fact better preserve those lands by creating a new market for the
forage-type biomass produced on those lands. (2515.1, pp.1-2)

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters noted that land use and cropping history data will be needed to verify land
eligibility. U.S. Department of Agriculture  (USDA) can verify  this land use and cropping
history for EPA or for the renewable biomass purchaser without violating producer privacy by
implementing a system similar to the one USDA has proposed to use with IRS to verify producer
compliance with the adjusted gross income requirements in the  Farm Bill. If USDA determines
that it cannot share the needed information with EPA due to data privacy concerns, then EPA
must require all landowners who wish to produce renewable biomass to sign a limited data
privacy release waiver to allow EPA or the renewable biomass purchaser access to only the data
needed to determine eligibility. (2129.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2104
Organization:       US Canola Association
Comment:
The commenter [[2104]] states that EPA does not provide a clear method to implement this
feedstock certification, and they must recognize the challenge it would present.  These
conservation compliance and enforcement mechanisms already exist at USDA.  The existing
USDA rules, and the information collected by USDA in their administration of those rules,
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should be sufficient for EPA to ensure that the domestic feedstock being used in biodiesel
production is from eligible cropland.  EPA's proposal on the existing cropland requirement does
not have practical application and will not work in practice as part of the day-to-day operation of
producing biodiesel. Additionally, given U.S. land use requirements, increasing yields and
production efficiencies, and the availability of existing cropland, it is highly unlikely that new
lands in the U.S. will be cleared for purposes of the RFS. [[#2104.1 p.5-6]]

Document No.:      EPA-HQ-OAR-2005-0161-1050
Organization:       American Council for Ethanol (ACE)
Comment:
The commenter (2101.1) acknowledges that Congress inserted a provision into EISA that
requires renewable fuels to be produced from biomass  harvested from agricultural land cleared
or cultivated at any time prior to EISA's passage, essentially prohibiting corn or other feedstocks
from new cultivation to be used in ethanol production.  The commenter is concerned about the
bureaucratic red tape that may be associated with enforcement of this provision for both farmers
and ethanol producers, in addition to the limits this provision places on land owners.  This
provision, while perhaps a well-intended if imperfect effort to achieve land conservation goals, is
unworkable and unenforceable. The commenter encourages EPA to rely upon reporting tools
currently used by USDA instead of creating a new set of regulations and reports to comply with
this provision. (2101.1, p. 15)

Document No.:      EPA-HQ-OAR-2005-0161-2245
Organization:       Illinois Corn Growers Association, et al.
Contributors to this comment letter include: Iowa Corn Growers Association, Iowa Soybean
Association, Illinois  Soybean Association, Illinois Renewable Fuels Association, Kentucky
Soybean Association, Minnesota Soybean Growers Association, Missouri Corn Growers
Association, Missouri Soybean Association, Monsanto, the National Corn to Ethanol Research
Center, Nebraska Corn Board, Nebraska Soybean Association, Novozymes, Ohio Soybean
Association, South Dakota Soybean Association, University of Illinois Chicago, Energy
Resources Center, University of Illinois Champaign-Urbana plant breeding, animal nutrition  and
agronomy, DuPont, Ethanol Technologies, John Deere, and the U.S. Grains Council
Comment:
The commenters (2245.1) believe that EPA should defer to existing USDA programs for farm
use verification instead of suggesting new crop identity demonstration systems.  The
recommendation by  EPA that a renewable fuel producer must be able to demonstrate that their
renewable fuel was derived from renewable biomass has the potential to add significant cost  to
the renewable fuels channel.  For the EPA to  consider any other option for determining whether
or not non-agricultural land is being utilized outside of existing USDA procedures for farm use
verification, will add both cost and uncertainty to the channel. (2245.1, pp.29-30)

Document No.:      EPA-HQ-OAR-2005-0161-2360
Organization:       Archer Daniels Midland Company (ADM)
Comment:
The commenter (2360.1) noted that several agricultural organizations have recommended that
EPA accept USDA data, regulations and existing laws to demonstrate that no new acres are
being planted in the  U.S. and  that further certification requirements are unnecessary.  While the
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commenter supports simplifying this requirement, it could have the unintended consequence of
drawing a distinction between, for example, U.S. and Canadian feedstocks used in similar
production. (2360.1, p.6)

The commenter supports using USDA data for meeting feedstock certification requirements in
the U.S., but is concerned this could lead to significant NAFTA implications. (2360.1, p.6)

Document No.:      EPA-HQ-OAR-2005-0161-2508
Organization:       Environmental Working Group (EWG)
Comment:
The commenter (2508) is concerned about the monitoring and enforcement of land conversion
prohibitions. The commenter recommends that the USDA certify to EPA those lands that met
the definition of actively managed agricultural land on the date of enactment using existing
Common Land Unit and cropping history data.  The commenter also recommends that EPA, in
consultation with USDA, develop a process for renewable fuel feedstock producers who have not
participated in USDA Farm Service Agency programs to register their land. (2508, p.2)

Our Response:

       In light of the comments received on the proposed renewable biomass recordkeeping
requirements and implementation options, EPA sought assistance from USDA in determining
whether existing data and data sources might suggest an alternative method for verifying
compliance with renewable biomass requirements associated with the use of crops and crop
residue for renewable  fuel production. Taking into consideration extensive publicly available
data on agricultural land available from USDA and USGS as well as expected economic
incentives for feedstock producers, EPA has determined that an aggregate compliance approach
is appropriate for certain types of renewable biomass, namely planted crops and crop residue
from the United States.
3.3.6   Third-Party Programs

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2014
Organization:       Clean Fuels Clearinghouse
Comment:
The commenter (2243.1) recommends that EPA adopt a qualification approach for the renewable
biomass whereby a third party certifies the feedstock pathway from the field to the production
facility through a documented chain of title, similar to the tracking approach utilized for the
renewable fuel under RFS. (2243.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2361
Organization:       Indonesian Palm Oil Commission
Comment:
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The commenter (2361) agrees that there is no existing third party certification system that
exactly fits the requirements of RFS 2 and requests that any certification system must not be
burdensome and other international standard (e.g., EU Directive on renewable energy sources
and RSPO P&C) should be taken into account and not created double burden.

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) believes that EPA should consider other options to facilitate the ability
of renewable fuel producers to demonstrate that the fuels that they produce meet the definition of
"renewable biomass." EPA should require producers to make a one time demonstration to EPA
during the registration process to establish the typical source of feedstocks and the process at the
facility.  Thereafter, rather than requiring each producer to amass the records that  EPA proposes
for each feedstock for each batch, EPA should recognize certifications from third  party
organizations such as the Roundtable for Sustainable Palm Oil, the Roundtable for Responsible
Soy, the Better Sugarcane Initiative, and the Roundtable for Sustainable Biofuels, as sufficient.
(2505.2, p.11) (See Docket Number 2505.2, pp.11-12 for a discussion on the third party
organizations mentioned above)

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic  Fuels Association (LCSFA)
Comment:
The commenter (2310) states that EPA has presented a number of options for verification of
feedstock origins and encourages EPA to leverage existing programs in implementing the RFS2
as both the agricultural and forestry sectors are familiar with existing programs that
independently verify collection and accounting practices.  The commenter believes that an
industry-run quality assurance  program, taking advantage of existing third-party certification
programs that include inspections of feedstock suppliers, facilities, and accounting practices,
would be an effective and efficient means of ensuring that feedstocks qualify as renewable
biomass.  [[Docket number 2310.1, p.  7]]

Document No.:      EPA-HQ-OAR-2005-0161-2348
Organization:       StateLine Cooperative
Comment:
The commenter (2348) noted that EPA did not audit or require third party verifications under
RFS1 and it should not under RFS2. The commenter believes that EPA should do spot audits or
rely on IRS audits. (2348, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter also believes that renewable fuel producers should not be required to administer
a Quality Assurance Program.  This should administered by EPA. Renewable fuel producers do
not necessarily have the expertise to set up and administer such a program.  In addition,
feedstock producers are more likely to comply with federal requirements. (2329.1, p.84)
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Document No.:      EPA-HQ-OAR-2005-0161-2493
Organization:       American Forest & Paper Association
Comment:
The commenter (2493) feels that in regards to RINs, the approaches outlined in the Proposal are
all impractical and ignore, or underplay, the extremely large volumes of very low value biomass
which will be involved in production of renewable fuels. The commenter states that current pulp
mill operations give some sense of the scale at which renewable biomass supply operations may
operate once the technology becomes commercially viable. Pulp mills consume wood generally
from within a 50 mile radius, on average  consuming over 4,100 tons of pulpwood per day. This
translates to roughly 164 truckloads delivered daily, [[see docket#2493.1 p. 8]]

The commenter states that Recognized third party certification systems provide a means of
assuring that wood fiber used to produce  pulp, paper, and wood products come from sustainably
managed forests. Requiring compliance with one of these programs, including use of an
auditable wood procurement system, can easily be matched up to the proposed rules registration
(§80.1450) recordkeeping (§80.1451), reporting (§80.1452), and attest agreement (§80.1463)
requirements to provide an assurance that fiber being converted into renewable fuels meets the
requirements of the EISA mandates, [[see docket#2493.1 p. 9]]

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) encourages EPA to recognize certifications of third party organizations
such as the RSPO, or the RSB, as sufficient to meet EISA's requirements concerning the
definition of "renewable fuel." At a minimum, in lieu  of the burdensome recordkeeping and
certification requirements that EPA proposed, the commenter believes that EPA should provide
renewable fuel producers the opportunity to establish a third party organization similar to  the
RFC Survey Association to audit compliance with the  Act to ensure that biofuels are in fact
made from "renewable biomass" without imposing requirements on individual producers to track
every kernel of corn, bean of soy, or cane of sugar used to produce biofuels. (2505.2, p.14)

Document No.:      EPA-HQ-OAR-2005-0161-2494
Organization:       Council of Western State Foresters
Comment:
The commenter [[2494]] states that chain of custody tracking system, records and documents
proving that woody feedstocks meet the criteria for renewable  biomass will be problematic
because most of these materials are not part of an existing commodity market. This will be
particularly challenging because there will be a large portion of available woody material  within
any selected supply shed that is excluded from the definition of renewable biomass.

The commenter agrees with  EPA that there is currently no third-party forest certification system
that incorporates all of the complexities of the highly restrictive RFS2 renewable biomass
definition. However, there are forestry certification systems available that represent accepted
sustainable forestry practices, [[see docket #2492 p.3]]

Document No.:      EPA-HQ-OAR-2005-0161-2124
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Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that EPA should consider other options to facilitate the ability
of renewable fuel producers to demonstrate that the feedstocks they use meet the definition of
"renewable biomass."  The commenter stated that EPA should require producers to make a one
time demonstration to EPA during the registration process to establish the typical source of
feedstocks and the process at the facility.  Thereafter, rather than requiring each producer to
amass the records that EPA proposes for each feedstock for each batch, EPA should recognize
certifications from third party organizations.  At a minimum, EPA should provide renewable fuel
producers the opportunity to establish a 3rd party organization similar to  the RFC Survey
Association to audit compliance with the Act to ensure that biofuels are in fact made from
"renewable biomass" without imposing requirements on individual producers to track every
kernel of corn, bean of soy, or cane of sugar used to produce biofuels. (2124.1, p.23)

Document No.:      EPA-HQ-OAR-2005-0161-2517
Organization:       National Association of State Foresters
Comment:
The commenter concurs with EPA's conclusion that existing third-party certification systems are
not currently well-suited to verify that biomass from forests qualifies  as renewable under the
EISA definition. However, some certification systems are undergoing reviews of their standards
to address the removal of biomass from forests, and that certification standards will be available
once biomass markets have fully matured.

Our Response:

       In the  NPRM, we proposed not to solely rely on any existing third-party verification
program to implement the land restrictions on renewable biomass under RFS2 for several
reasons.  These programs are limited in the scope of products they certify, the acreage of land
certified through third parties in the U.S. covers only a small portion of the total available land
estimated to qualify for renewable biomass production under the EISA definition, and none  of
the existing third-party systems had definitions or criteria that perfectly match the land use
definitions and restrictions contained in the EISA definition of renewable biomass.

       While the requirements of third party programs may not encompass all of the restrictions
and requirements of EISA's renewable biomass definition at this time, as noted by some
commenters, EPA agrees that it is possible that some third-party programs may alter their criteria
in the future to parallel EISA's requirements. Therefore in the future  we will consider the use of
these programs in order to simplify compliance with the renewable biomass  requirements. We
encourage fuel producers to work to identify changes to such programs that could allow them to
be used as a viable compliance option.

       EPA is also finalizing an option to allow renewable fuel producers and renewable fuel
feedstock producers and suppliers to develop a quality assurance program for the renewable fuel
production  supply chain, similar to the model of the successful Reformulated Gasoline Survey
Association. While individual renewable fuel producers may still choose to  comply with the
individual renewable biomass recordkeeping and  reporting requirements  rather than participate
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in a quality assurance program, we believe that this preferred alternative could be less costly than
an individual compliance demonstration, and it would add a quality assurance element to RFS2.
Those participating renewable fuel producers would be presumed to be in compliance with the
renewable biomass requirements unless and until the quality assurance program finds evidence to
the contrary. Under this rule, renewable fuel producers must choose either to comply with the
individual renewable biomass recordkeeping and reporting described above, or they must
participate in the quality assurance program.
3.3.7   Treatment of Foreign Renewable Fuel

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2329
Organization:      Renewable Fuels Association
Comment:
The commenter (2329.1) supports requiring foreign producers to provide evidence regarding
land use. Requiring such information can assist EPA in gathering data to further developing its
lifecycle emissions analysis. (2329.1, p.84)

Document No.:     EPA-HQ-OAR-2005-0161-2361
Organization:      Indonesian Palm Oil Commission
Comment:
The commenter (2361) suggests having a baseline if it reduces the burden and suggests that the
requirements imposed on foreign producers should not be more onerous than those imposed on
local producers. Foreign producers whose raw material is not for generating RINs must have an
option not to provide documentary evidence of compliance or certification.  Similarly, local
renewable fuel producers should not be compelled to demonstrate origin of feedstocks if such
biofuels are not intended to generate RINs. (2361.1.pdf, p.2, 3)

Document No.:     EPA-HQ-OAR-2005-0161-2012
Organization:      Caribbean Basin Ethanol Producers Group
Comment:
The commenter (2012.1) recommends that the traceability requirements be modified to reflect
the nature of how hydrous  alcohol is collected, shipped, discharged, processed and stored.
(2012.2, p.3)

Document No.:     EPA-HQ-OAR-2005-0161-2020
Organization:      European Commission
Comment:
The commenter (2020) is concerned about the difference in treatment between materials  moving
within and outside U.S. The commenter (2020) argues that the chain of custody requirement for
foreign fuels is lot more burdensome than the "mass balance"  or book and claim" method used
for U.S. based fuels. (2020.1, p, 2)
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The commenter also notes that the proposal excludes the crops from converted grassland that has
not been previously cultivated.  The EC is aware that while the U.S. has a large stock of
previously cultivated land not currently under cultivation, and good records to enable producers
to demonstrate compliance with this criterion, the same is not true of all regions of the world. It
is not clear that such a blanket ban can be justified either in terms of effects on carbon stocks or
in terms of other environmental, social or economic impacts. The burdensome character of the
proposed methods of verification of compliance (pp. 84-88) adds to the EC concern. Hence, the
EC would like the U.S. authorities to clarify if they carried out any impact assessment that
assessed the merits of this provision against alternatives and if so, if this analysis could be made
available to the EC. (2020.1, p2)

Document No.:      EPA-HQ-OAR-2005-0161-2132
Organization:       Alliance  of Automobile Manufacturers
Comment:
With regards to the foreign refiner/producer certification, the commenter (2132.1) appreciates
the approach EPA is proposing  to use to assure compliance, including the use of bonds. The
commenter is concerned that the complexity of the system combined with the distant origins of
the fuels may lead to a high risk of fraud, given the unproven nature of the proposed safeguards.
The commenter believes that  EPA should consider a more direct and active approach to
certification to prevent non-uniform standards, misrepresentations and disparate impacts on
domestic and foreign producers. (2132.1, p. 13)

Document No.:      EPA-HQ-OAR-2005-0161-2137
Organization:       Brazilian Sugarcane Industry Association (UNICA)
Comment:
Referring to EISA's definition of "renewable biomass" and the creation of a requirement for
biofuel producers to verify that  the source of their feedstock meets the requirements, the
commenter (2137.1) believes that there is no need to establish additional requirements for the
enforcement of the renewable biomass provision in EISA. The commenter believes that the
nature in which the sugarcane feedstock must be produced facilitates compliance to identify the
origin of the feedstock, one needs only to identify the mill, as its feedstock must come from
nearby areas.  [[Docket number  2137.1, p. 37]]

The commenter is pleased to work on established agreed-upon protocols for verification. In
Brazil the verification process can be simplified by using remote sensing tools. The proposal
advocated by Poet on July 21  concerning the establishment of Renewable Biomass Allowance
for biofuel producers may present a reasonable solution. Alternatively, nearly every mill in
Brazil must renew its operating license every two years with state authorities; the commenter
recommends EPA consider using this regulatory process as part of its compliance mechanism.
[[Docket number 2137.1, pp.  37-38]]

The commenter states that two areas of the "expanded" facility registration process need
clarification in the Final Rule. First, EPA should permit the required independent engineering
review to be conducted by an independent third party who is based in and licensed by foreign
countries. Second, EPA should facilitate facility registration by allowing the registration of mills
by holding companies or cooperatives. [[Docket number 2137.1, p. 38]]
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Regarding the Proposed Rules prohibition of commingling of similar foreign-produced
renewable fuel until it enter the U.S. market, the commenter (2137.1) is concerned about possible
trade law violations and generation of additional costs for exports.  The commenter recommends
that EPA reconsider its approach and follow the example set by the European Union in the
Renewable Energy Sources Directive by considering a mass balance approach. In addition, the
U.S. IRS is working with U.S. agencies to harmonize import, production, and distribution codes
in order to better track fuels; the commenter suggests that EPA explore how this effort might
serve the Agency's compliance requirements. [[Docket 2137.1, pp.38-39]]

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (2249.2) believes that because of the substantial risk EPA is imposing on
renewable fuel producers, they are likely to be unable to seek feedstock from outside the United
States. EPA should implement a workable program to allow imports of feedstock, particularly in
the case where there is a drop in U.S. production based on natural causes. [[Docket number
2249.2, p. 28]]

The commenter (2249.2) suggests that EPA implement a "baseline" proposal for feedstock
imported from overseas and provides suggestions for how such a baseline proposal might work.
The commenter believes that in instances where U.S. biodiesel facilities must import feedstock,
imposing certification requirements on imported feedstock may unduly restrict the market.
[[Docket number 2249.2, p. 27]]

Although the commenter believes that information may be available or can be  obtained to
determine baseline levels for other countries to assess whether imported feedstock meets the
renewable biomass definition, the commenter recognizes that EPA does not have the same
authority or ability to conduct oversight over foreign renewable fuel producers. In these cases,
EPA should require foreign renewable fuel producers to provide additional evidence regarding
land use. [[Docket number 2249.2, p. 28]]

Similarly the commenter supports EPA's proposal to require foreign producers to provide the
location of land from which they will or have acquired feedstocks, along with historical satellite
or aerial imagery demonstrating that feedstocks from these lands meet the definition of
renewable biomass. [[Docket number 2249.2, pp. 28-29]]

Document No.:      EPA-HQ-OAR-2005-0161-2156
Organization:       Georgia Forestry Commission
Comment:
The commenter comments that a Brazilian landowner can clear land and plant sugarcane for the
production of ethanol to be exported to the U.S. and the ethanol will qualify for an advanced
biofuel, yet forestland owners in the U.S. who do not have documented proof of "actively
managed plantations" cannot plant native species of trees  in forestlands to produce cellulose for
conversion to any category of biofuels proposed by EPA (cellulosic biofuel, advanced biofuel,
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renewable biofuel). The interpretation has provided incentive for land conversion in Brazil and a
dis-incentive for regenerating forests in the U.S.

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter (2310) believes that the bond requirement should be limited to smaller
companies without U.S. assets. EPA should look to its bonding requirements under last year's
Phase III Nonroad Spark Ignition and Equipment Rule. There, EPA allowed companies that
meet a U.S. asset test to avoid the increased cost and burden of obtaining a bond. The
commenter recommends that EPA adopt a similar approach under the RFS2 program. [[Docket
number  2310.1, p. 17]]

Document No.:      EPA-HQ-OAR-2005-0161-2312
Organization:       LyondellBasell Industries
Comment:
The commenter (2312.1) strongly supports EPA's proposal for "an alternative that would
provide  foreign renewable fuel producers an option of... not participating at all in the RFS2
program." The commenter's support is based on the belief that the proposed restrictions on
imported biofuels will cause more renewable fuels to be used in non-RFS2 markets, thereby
reducing the supply of RINs available for satisfying RFS2 obligations and likely resulting in
raising the market price of RINs. Since exported biofuels in various forms are expected to be a
large non-RFS2 use of biofuels in the near future, the commenter also believes that relief from
the requirements for "RIN retirement for exported renewable fuels" also needs to be applied to
the non-certified, foreign biofuels that are imported for non-RFS2 purposes. (2312.1, p.3)

The commenter believes that these non-qualify ing foreign biofuels should not be burdened with
added RFS2 verification costs. In the U.S.  market, the added verification and supply chain
segregation cost for the renewable fuels required and sold in the RFS2 program will be  captured
and compensated in the associated RIN prices. Since obligated parties under RFS2 are  required
to obtain RINs to meet their Renewable Volume Obligations (RVOs), they anticipate  absorbing
the extra costs of the RINs program. The global biofuels market will not compensate or pay for
any verification costs that are otherwise not required in global markets. (2312.1, pp.3-4) [[See
Docket Number 2312.1, pp.5-7 for a detailed discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2345
Organization:       Independent Fuel Terminal Operators Association (IFTOA)
Comment:
Based on the preamble, the commenter (2345) states that EPA believes that a significant number
of foreign producers will become subject to all aspects of the RFS2 program. The commenter
believes that such action is unlikely and notes as with other fuel programs, foreign
producers/suppliers typically rely on U.S. importers to comply with EPA regulatory regimes. In
addition EPA is proposing only to allow U.S. importers to enter foreign-sourced renewable fuels
and generate RINs if the renewable product comes from a registered foreign producer.  The
commenter believes that there will be few such producers and foreign-produced renewable fuel
will become scare. The result is greater demand for RINs, more difficult and costly compliance,
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and increased prices for transportation fuels for consumers. The commenter believes the RFS2
should not be administered in a manner that effectively forecloses foreign-sourced renewable
fuels and offers recommendations to ensure that foreign-sourced renewable fuels remain
available to the market. [[Docket number 2345.1, pp. 3-4]]

Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) believes that EPA should work with foreign renewable fuel producers
and their importers to determine how best to meet the requirements related to the Renewable
Biomass definition. The commenter agrees with EPA that the foreign producer is in the best
position to verify certain criteria with high accuracy, such as feedstock, land-use and production
processes. The commenter noted that EPA is working with certain foreign producers and
stakeholders.  The commenter encourages EPA to continue these discussions, and to include
renewable fuel importers, to determine how best to meet these requirements. The commenter
also believes that EPA should determine what documentation is currently required by its sister
agencies and could be utilized under RFS2. (2471.1, pp.13-14) (See Docket Number 2471.1,
pp. 13-14 for more discussion on this issue)

Document No.:      EPA-HQ-OAR-2005-0161-2513
Organization:       Institute for Agriculture and Trade Policy
Comment:
The commenter (2513) believes imported ethanol and biodiesel should not be allowed to
contribute toward the RFS2 production mandates, because our dependence upon imported fossil
fuels would be replaced by a dependence on imports. It is proving difficult to judge the
environmental merits of our domestically produced biofuels.  The U.S. is not ready to evaluate
the climate and environmental performance of imported biofuels. A clear prohibition on
imported biofuels in the RFS2 would help reduce direct land use changes abroad, while keeping
the rural development benefits of biofuels development in the U.S. [[docket #2513.1 p.4]]

Document No.:      EPA-HQ-OAR-2005-0161-2514
Organization:       Western Organization of Resource Councils
Comment:
Conversion [[2514]] of land to agro-fuels crops outside the borders of the U.S. is an issue that
needs to be dealt with forcefully and directly. The obvious approach is by not permitting imports
of ethanol and biodiesel. [[#2514.1 p.3]]

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
All requirements  for foreign producers of renewable fuels related to "renewable biomass" should
be comparable to those required of domestic producers, with the caveat that such provisions must
ensure the same degree of certainty and provide the same opportunity for review and compliance
assurance as requirements applicable to domestic producers. EPA must make sure that its
regulations provide additional measures necessary to afford the same degree of enforce ability
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and certainty that renewable feedstocks from foreign countries meet the definition of renewable
biomass as those from American biomass suppliers. [[Docket number 2383.1, p. 16]]

Our Response:

       EPA is not at liberty to prohibit imported biofuels under the RFS2 program, as some
commenters suggest.  Since imported renewable fuels will be included in the program, EPA must
ensure that the imported fuels conform to the same standards as domestic fuels.  With regard to
renewable biomass requirements, EISA does not distinguish between domestic renewable fuel
and fuel feedstocks and renewable fuel and fuel and feedstocks that come from abroad.  Thus,
EPA must apply feedstock verification requirements to both domestic and foreign feedstocks.
EPA believes that the renewable biomass recordkeeping and  reporting provisions are necessary
in order for EPA to ensure that RINs are being generated for  fuel that meets EISA's definition of
renewable fuel.  Just as for domestic producers, foreign producers must maintain evidence that
the fuel meets the GHG reduction requirements and is made from renewable biomass.

       For the final rule, EPA is requiring that importers may only generate RINs for renewable
fuel if the foreign producer has not already done so. The foreign producers must be registered
with EPA under the RFS2 program, and must have conducted an independent engineering
review. Furthermore, we are requiring that importers obtain from the foreign producer and
maintain in their records written documentation that serves as evidence that the renewable fuel
for which they are generating RINs was made from feedstocks meeting the definition of
renewable biomass. The foreign producer that originally generated the fuel must ensure that
these feedstock  records are transferred with each batch of fuel and ultimately reach the RIN-
generating importer. A requirement that importers maintain these renewable biomass records is
consistent with the  renewable biomass recordkeeping requirements imposed on domestic
producers of renewable fuel.

       Foreign  producers that intend to generate RINs would be required to designate renewable
fuel intended for export to the  U.S. as such, segregate the volume until it reaches the U.S., and
post a bond to ensure that penalties can be assessed in the event of a violation, as discussed in
Section II.D.2.b. This ensures that the volume of fuel for which the RINs were generated
ultimately is imported into the U.S. and not used elsewhere.  Similarly to domestic producers of
renewable fuel,  foreign producers must obtain and maintain written documentation from their
feedstock providers that can serve as evidence that their feedstocks meet the definition of
renewable biomass. Foreign producers may also develop a third-party quality assurance program
for their renewable fuel production supply chain, as described in the preamble. However, while
domestic renewable fuel producers using crops or crop residues may rely on the aggregate
compliance approach described below to ensure that their feedstocks are renewable biomass, this
approach is not  available at this time to foreign renewable fuel producers. EPA does not, at this
time, have sufficient data to make a finding that non-domestically grown crops and crop residues
used in renewable fuel production satisfy the definition of renewable biomass. Nevertheless, if,
in the future, adequate land use data becomes available to make a finding that, in the aggregate,
crops and crop residues used in renewable fuel production in a particular country satisfy the
definition of renewable biomass, EPA is willing to consider an aggregate compliance approach
for renewable biomass on a country by country basis, in lieu of the individual recordkeeping and
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reporting requirements. We note that the Brazilian Sugarcane Industry Association suggests that
a simplified feedstock verification system may be possible in Brazil, and we are willing to work
with them and the Brazilian government to analyze this possibility.

       With regard to the EC's comment that biomass should not be excluded from converted
grassland that has not been previously cultivated, we note that the statute specifically imposes
this limitation and EPA is not authorized to modify it.  Accordingly, EPA has not conducted an
impact assessment comparing the merits of this requirement and any alternatives. In general,
these restrictions eliminate an incentive for converting native grasslands and other undeveloped
lands to biofuel production, with the consequent carbon releases, loss of habitat for native
species, and loss of biodiversity that would follow. EPA has attempted to fashion the feedstock
verification mechanisms in a workable manner, and in general requires no more of foreign
producers than of domestic producers. The one significant exception is with respect to planted
crops and  crop residues, for which the aggregate approach has been adopted for domestic
feedstocks, but not for those grown  overseas, for the reasons noted above.

       In response to the comment  that EPA's proposed feedstock certification program would
make it difficult for producers to import feedstock, EPA notes that in general the same
requirements apply for imported feedstocks as for domestic feedstocks (with the exception of
domestic feedstocks qualifying for the aggregate approach.)  Thus, parties importing feedstocks
should develop similar arrangements with foreign feedstock producers for documents verifying
feedstock origin as will be needed for producers using domestically-grown biomass as feedstock.
EPA understands that there will be considerable initial effort needed to understand the new
requirements and to develop standard operating procedures for providing needed documentation,
but we expect that the process can run smoothly, without significant effort, once established.
EPA will monitor the process during initial implementation, and is prepared to  make
modifications that prove to be necessary so as to facilitate and promote renewable fuel
production that complies with statutory requirements.

       With respect to the comment that foreign renewable fuel producers should not be
required to participate in the RFS2 program, we note that the final rule only allows the
generation of RINs for domestic or  imported renewable fuel if a party demonstrates that the fuel
is made from renewable biomass. If that demonstration is not made, RINs cannot be generated,
but the biofuel may still be sold and used in the United States.

       EPA disagrees with the commenter who expects that imports of RIN-generating
renewable fuel will decrease as a result of implementation of the RFS2 program.  EPA  believes,
on the contrary, that RFS2 will provide a level of certainty in renewable fuel demand in the U.S.
that will stimulate additional  renewable fuel imports.

       With respect to UNICA's comment concerning the registration process  and independent
engineering review for foreign facilities, EPA is allowing them  to be conducted by a licensed
professional engineer or foreign equivalent that works in the chemical engineering field,
provided the engineer provides EPA with proof of appropriate license. EPA is  requiring each
foreign production facility to be registered in order ensure from the beginning of the RFS2
program that the correct types of RINs are being generated by facilities.
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       UNICA's comment expresses concern about the proposed prohibition against
commingling of similar foreign-produced renewable fuel until it enters the U.S. market. For the
final rule, EPA is allowing renewable fuel produced at foreign facilities to be comingled prior to
entry into the U.S. market if the importer is generating the RINs for the fuel, provided the
importer has documentation that tracks the volume of fuel from the foreign production facility to
the U.S. port of entry.  However, EPA is maintaining the requirement that, in the situation in
which it is the foreign producer that generates RINs for a batch of renewable fuel, that foreign
producer must segregate that volume of fuel as it travels to the U.S. This requirement is
necessary to ensure that the volume of fuel for which the RINs were generated actually makes it
to the U.S.

       NBB comments that EPA should use a "baseline" approach for imported feedstocks
similar to the aggregate compliance approach  EPA is applying to biomass from U.S. agricultural
land. At this time, EPA does not have sufficient data to apply an aggregate compliance approach
to foreign feedstocks. However, EPA will consider expanding the aggregate compliance
approach to other countries if sufficient information and documentation becomes available.

       LCSFA suggests that EPA should limit the bond requirement for foreign facilities to
smaller companies without U.S. assets. EPA feels that the bond requirement is necessary for all
foreign producers in order to ensure any judicial judgments against the companies for violations
of the Clean Air Act can be satisfied.
3.3.8   Effect of "Renewable Biomass" Proposal on Achieving RFS Goals

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2388
Organization:       Oglethorpe Power
Comment:
The commenter (2388.1) is concerned that the proposed rules, which provides for a narrow
interpretation of the term "renewable biomass," does not adequately promote the policy goals
upon which the EISA legislation is based and will not be sufficiently compatible with developing
technologies aimed at reducing both our dependence on foreign oil and GHG emissions. The
commenter noted that the term "renewable biomass" incorporates a number of key terms whose
proposed definitions demonstrate that EPA has given insufficient consideration to the purposes
of the RFS amendments and the potential impact of the proposed regulations.  (2388.1, p.2) (See
Docket Number 2388.1 pp.2-3 for a detailed discussion of the issues with the renewable biomass
definition)

Document No.:      EPA-HQ-OAR-2005-0161-2549
Organization:       Triton Energy LLC
Comment:
The commenter (2549.1) noted that the definition of "fallow land" may be in line with
terminology used within the United States Department of Agriculture (USDA), however
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marginal lands, lands that are not suitable for agriculture represent potential areas for growing
energy crops. Given the large volumes of biofuel that will be required to fulfill RFS2, all land
and resources possible, including MSW, will be required unless or until there are major
advancements with algae oils or cellulosic biofuels. (2549.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2493
Organization:       American Forest & Paper Association
Comment:
The commenter states the definition of renewable biomass is extremely limited and would
severely restrict the availability of renewable fuel and the ability of the nation to achieve the RFS
targets in EISA. As just one example, the fuels produced in the Old Town, Maine, cellulosic
biofuels project included in the Proposal at Table V.B.23  (74 Fed  Reg. 24990), might not qualify
as renewable fuel because the hemicellulose from which the renewable fuel is derived may not
have come from biomass that meets the statutory definition.[[see docket#2493.1 p. 3]]

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter supports the concept of sustainability criteria,  but they are concerned that the
regulatory structure that EPA has proposed will be unworkable. EPA's proposed  approach will
require elaborate new processes for biofuel producers to ensure that the feedstocks that they are
using meet the definition of "renewable biomass" and it will likely discourage imports of
biofuels, which could make the advanced biofuel mandate unworkable.  (2505.2, p. 14)

Document No.:      EPA-HQ-OAR-2005-0161-2515
Organization:       Minnesota Department of Natural Resources (MnDNR)
Comment:
The commenter (2515.1) believes that the proposed definitions exclude many sustainable
biomass resources from the nation's biomass mix. This will likely result in one or more of the
following: 1) the industry fails to achieve Congress' goal of 16 billion gallons of cellulosic
biofuel; 2) eligible resources, such as  crop residues, are exploited well beyond sustainable limits;
or 3) landowners will respond to perverse incentives to remove land from environmentally
beneficial  land uses. (2515.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2446
Organization:       Minnesota Farm Bureau Federation
Comment:
EPA's definition of existing cropland creates onerous land use rules and record-keeping
requirements that would bar many farmers from growing crops used for biofuel production and
in so doing would reduce the value of a great deal of American farmland.  The commenter states
that contrary to congressional intent, EPA has expanded on the EISA's existing cropland
requirement; while EISA defines existing cropland requirement from an historical perspective,
EPA's definition is future oriented and will impede American  agricultures participation and our
biofuels industry.

Our Response:
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       We have made every effort to interpret EISA's definition of "renewable biomass" as
flexibly as possible and in such a way that will allow the mandated renewable fuel volumes to be
met without undermining the environmental protections the definition is meant to confer. We
believe that the final regulations' requirements for verifying that feedstocks used in the
production of renewable fuel meet the definition of "renewable biomass" provide sufficient
flexibility for renewable fuel producers and feedstock producers/suppliers to comply with the
requirements at minimal cost and administrative burden once the procedures are understood and
become accepted operating practice in the industry.

       One commenter took issue with EPA's proposal to require that planted crops and crop
residue be eligible as renewable biomass only if taken form land actively managed as farmland
on the date of EISA enactment and consistently thereafter.  EPA has modified this provision in
the final rule, requiring only that the land be actively managed on the date of EISA enactment.

       We understand, as some commenters have noted, that the renewable biomass restrictions
may effectively preclude some biofuel  from participation in the RFS2 program. EPA has no
discretion under the statute to waive or modify these requirements.

       With respect to the comment that "marginal lands" should qualify for the production of
renewable biomass, EPA responds that the renewable biomass requirements are specified in the
statute, and EPA is not at liberty to modify them.  EPA considered and rejected the concept of
including rangeland in the definition of "existing agricultural lands" from which planted crops
and crop residue may be obtained for renewable fuel production. EPA's rationale for this
decision is described in the preamble to the rule.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter (2310) states that EPA's estimates of feedstock availability do not account for
competitive uses of feedstock for electricity generation under most versions of a Renewable
Electricity Standard. The commenter is concerned that feedstock constraints may inhibit the
development of biofuels, and notes that diversion of biomass to energy production is an
inefficient use of biomass.  The commenter believes that EPA should provide an analysis of the
most efficient use of biomass in the final rulemaking.  Such an analysis would inform
policymakers of the need to prioritize biomass availability among competing policy mandates.
[[Docket number 2310.1, pp. 5-6]]

Document No.:      EPA-HQ-OAR-2005-0161-2493
Organization:       American Forest & Paper Association
Comment:
The commenter (2493.1) states that utilities and independent power generators are likely to
increase their use of wood biomass in response to state and national mandates/incentives
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RFS2 Summary and Analysis of Comments
regarding renewable energy and carbon emissions, and that this would present significant
challenges in terms of woody biomass supply and forest sustainability.  [[See Docket Number
2493.1, p. 6]]

Our Response:

      We acknowledge that there could be competing needs for renewable biomass feedstocks
as other requirements are put in place at the National, State, or local level for renewable
electricity. However, we believe our projections of cellulosic biomass for producing renewable
fuels are supportable even with such future competition. Although the idea of studying the most
efficient uses of biomass has merit, such an undertaking is beyond the scope of this rulemaking.
3.3.9   Sustainability and Renewable Biomass Production

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters comment that EPA should include additional safeguards to limit the amount of
crop residue that can be considered renewable biomass to only that amount that can be removed
without damage to soil and water resources. The commenters also urge EPA to allow materials
from stands planted to restore rare or historic native forest types within their historic range, as
many of these forest types benefit from the incentive for active management created by the
market for renewable biomass.

Document No.:      EPA-HQ-OAR-2005-0161-2512
Organization:       Conservation International
Comment:
The commenter (2512.1) supports the intent to restrict any clearing of natural habitat, and thus
limit potential GHG emissions, as well as loss of biodiversity habitat and other ecosystem
services.  However, only allowing feedstock production on existing cropland will have the effect
of placing biofuel feedstocks in direct competition with feed crops, and potentially push food and
fiber crops onto newly-cleared land. The commenter suggests this risk be mitigated in two ways:
1) Create incentives to produce feedstocks on degraded or underutilized land without a current
land-use that would be displaced (i.e., grazing livestock, shifting crops);
2) Allow limited clearing of new lands, providing an independent assessment of carbon stocks,
ecosystem service value, biodiversity, and current land use is carried out. (2512.1, pp.1-2)

The commenter also believes that the issue of monitoring the cut-off date also needs to be
examined. The commenter questions how compliance will be monitored, especially for
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feedstocks such as corn, soy, and palm oil which are traded in the market, and which may have
multiple uses beyond biofuels. (2512.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2513
Organization:       Institute for Agriculture and Trade Policy
Comment:
The commenter (2513) says that based on current scientific assessments of feedstock impacts in
these areas, the following preferences should be established in determining feedstock eligibility:
Preferences for perennial feedstocks over annual feedstocks, preferences for non-genetically
modified feedstocks, required conservation plans for biomass production, similar to the newly
developed Conservation Measurement Tool, preferences for non-irrigated feedstocks,
preferences and promotion of locally-owned, locally-supplied production facilities, [[docket #
2513.1 p.3]]

Document No.:      EPA-HQ-OAR-2005-0161-2515
Organization:       Minnesota Department of Natural Resources (MnDNR)
Comment:
The commenter does not want to incent the conversion of existing grass-based CRP, pasture, or
rangeland acres to dedicated woody biomass production within the prairie biome. The
commenter encourages EPA to explore rules that allow the use of trees in the context of
ecosystem restoration, but do  not contribute to the conversion or degradation of native plant
communities. (2515.1, pp.2-3)

Document No.:      EPA-HQ-OAR-2005-0161-2374
Organization:       Amyris Biotechnologies,  Inc. (Amyris)
Comment:
The commenter (2374) believes that in the interest of maximizing the opportunity for production
of renewable fuels, EPA should exercise  its discretion in allowing biomass that is sustainably
produced for conversion into fuels. The U.S. Department of Agriculture 2008 farm bill contains
a definition of renewable biomass that may serve as a broader example. [[Docket number 2374.1,
p. 3]]

Document No.:      EPA-HQ-OAR-2005-0161-2491
Organization:       International Council on Clean Transportation (ICCT)
Comment:
The commenter (2491) believes that the definition of renewable biomass should not preclude the
land that would become carbon neutral or a net carbon sink and would not adversely impact
biodiversity when biomass is grown and harvested. While  the commenter recognizes that some
portion of rangeland should not be used for crop production to maintain biodiversity and prevent
soil erosion, they believe some portion of rangeland can potentially be used to grow crops while
improving soil C-sequestration. The rangeland as a whole should not be precluded from the
definition of renewable biomass.  Even if a part of the rangeland that is suitable for growing
biomass in a sustainable way is available, it should be eligible for biofuel production. Therefore,
in addition to the land types that are eligible for growing renewable biomass according to the
standard definition, the commenter believes that other types of land parcels that allow sustainable
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production of biomass should also be included in the definition of renewable biomass. [[Docket
number 2491.1, p. 3]]

The commenter (2491) notes that the RFS2 does not explicitly use sustainable criteria to regulate
biomass production and processing and requests explicit provisions in the RFS2 that ensure that
biomass is produced and processed in a sustainable way.  Sustainable criteria similar to those of
the UK Renewable Transport Fuel Obligation can be included in RFS2. [[Docket number 2491.1,
p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2143
Organization:       New York State Department of Environmental Conservation
Comment:
The commenter (2143) suggests that more emphasis should be placed on the sustainability of
biofuel feedstock production including environmental quality and land use change concerns.
The commenter (2143) would like to see a greater emphasis on setting sustainability principles
(for example, water quality and availability, soil conservation, and biodiversity), evaluation of
management practices (for example,  cropping management practices such as no-till and no-till
plus cover crops) within the proposed rulemaking.

The commenter (2143) mentions that the EPA should not provide incentives for increased crop
production on Conservation Reserve Program lands without sustainability principles in place and
suggests a tracking method to verify  environmental sustainability of all biofuel feedstock
sources. (2143.2, p,4-5)

Document No.:      EPA-HQ-OAR-2005-0161-2497
Organization:       Wisconsin Department of Natural Resources
Comment:
The commenter (2497.1) noted that if rangeland is to be included, harvest of plant materials must
be according to approved management plan that ensures sustainable harvest and management
practices. Sustainable management planning should in fact be emphasized throughout the rule.
Further suggestions for doing this are included below. The commenter also would suggest
broader consideration of biomass harvesting on all lands (e.g., State and/or Federal lands) and
management systems. The commenter believes that this should be conditional upon the
development and use of sustainable harvest guidelines by each state. (2497.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2508
Organization:       Environmental Working Group (EWG)
Comment:
The commenter would like EPA to include additional safeguards that limit the amount of crop
residue that can be considered renewable biomass to only that amount of crop residue that can be
removed without damage to soil and  water resources. Renewable fuel producers should be
required to certify sustainability of harvesting in order to determine whether crops and crop
residue may be considered renewable biomass. (2508, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2526
Organization:       Coskata
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Comment:
 We commend the EPA in following EISA guidance on defining Renewable Biomass with the
land use restrictions. However we are concerned that the land use restrictions may be too
confining to currently known agricultural and forestry management practices. For instance,
some forestry land owners are experimenting with inter-cropping of energy crops within the
active forest plantation.

This type of land management encourages land productivity while also enhancing the carbon
sequestration potential of the forest land. We are concerned that such innovative land
management techniques may not be encouraged with the restriction on the type of land on which
a crop must be grown.  We urge the EPA to make a specific allowance for land use and non-food
biomass production innovations that would enhance the carbon sequestration profile of existing
land. [Docket number 2526.1, pp. 9-11.]

Our Response:

       EPA appreciates the interest expressed by several commenters in incorporating
requirements or incentives for sustainable feedstock production into RFS2 to protect water and
soil quality and to promote other environmental considerations. Indeed, EPA is also interested in
ensuring that increased renewable fuel production spurred by EISA's volume mandates does not
lead to degradation in water, soil, or air quality. We also appreciate the comments suggesting
that in some instances allowing additional biomass collection from certain areas would promote
good stewardship of those lands and could help alleviate feedstock shortages or shortages of
farm products that could otherwise  be grown on agricultural lands devoted to feedstock
production. We have made every effort to interpret EISA's definition of "renewable biomass"  in
such a way that will allow the renewable fuel volumes to be met while maintaining the
environmental protections the definition  is meant to  confer. EISA's lifecycle greenhouse gas
reduction threshold requirements for different types  of renewable fuel will also help ensure that
increasing renewable fuel production  will not lead to increased greenhouse gas emissions.

       However, beyond these provisions, EISA amendments to CAA 211 (o) do not constrain
the production of renewable fuel or its feedstocks, and therefore it would be beyond EPA's
current authority to institute additional sustainability criteria, per se, such as those suggested by
some commenters. Furthermore, EPA is not at liberty to make exceptions to the renewable
biomass restrictions imposed by statute, even to promote beneficial environmental results.
Commenters should note that EISA Sec.  204 (Environmental and Resource Conservation
Impacts) instructs EPA, in consultation with USDA  and DOE, to assess and report to Congress
every three years on the impacts of RFS2 on environmental and conservation issues such as air
quality, soil conservation, water availability, and ecosystem health, and to make
recommendations for action to address any identified adverse impacts.
3.4    Renewable Fuel Exempt from 20 Percent GHG Threshold (Grandfathering)

What Commenters Said:
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Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
The commenter (1044) offers the following remarks related to §80.1403.  Which Fuels are not
subject to the 20% GHG thresholds? The language in this section is exclusive to ethanol and the
commenter opposes this perspective. The commenter supports the inclusion and replacement of
the word ethanol with renewable fuel producer.  They feel this term would be consistent with the
proper use of the intended provisions identified by the EISA. [[Docket number 1044.1, p. 6]]

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter supports EPA's proposal that GHG grandfathering applies only to the general
RFS, and not advanced biofuels, biomass-based diesel or cellulosic biofuels. (2124.1, p.26)

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) agrees with EPA that any ethanol plant that is fired with natural gas,
biomass or any combination thereof for calendar years 2008 and 2009 should be considered
grandfathered and should be treated like grandfathered ethanol facilities for as long as they
continue to burn natural gas, biomass or any combination thereof. (2124.1, p.25)

Document No.:      EPA-HQ-OAR-2005-0161-2146
Organization:       DuPont Applied BioSciences
Comment:
The commenter (2146.1) understands EPA's proposed approach to grandfathering conventional
biofuels to be that any fuel produced at the grandfathered facilities will qualify as a renewable
fuel under the RFS2, provided it is within the original facility capacity (plus reasonable
tolerances as below)  and it is used to meet the conventional biofuel target. The commenter
supports this interpretation as consistent with Congressional intent. Should the indirect land use
modeling be applied  and result in biobutanol not meeting the minimum 50% GHG threshold for
an advanced biofuel, then biobutanol can only enter the market as a grandfathered conventional
renewable fuel in the case of these facilities. (2146.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2143
Organization:       New York State Department of Environmental Conservation
Comment:
The commenter (2143) urges EPA to apply  the 20 percent lifecycle GHG reduction requirement
to production volumes from existing facilities that exceed that facility's baseline volume and
believes that the requirement must ultimately be applied to the baseline volumes of existing
facilities.

The commenter (2143) suggests setting a date (such as 15 years from the  enactment of EISA)
that meets the definition of reconstructed in 40 CFR 60.15 on which baseline production
volumes will be subject to the 20 percent lifecycle greenhouse gas  reduction requirements. The
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commenter (2143) supports separate analyses for each process type as there are a few process
plant types subject to this provision. (2143.2, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2369
Organization:       New Generation Biofuels (NGBF)
Comment:
The commenter (2369) believes that while the statute governing the expansion of the renewable
fuel standard allowed some fuels to be exempt from reducing greenhouse gases compared to
gasoline or diesel fuel, similar to the original renewable fuel standard program, the changed
program should still provide incentives for the exempt biofuels and biofuel production facilities
to improve their environmental footprint. The benchmark appears to be primarily in the form of
greenhouse gases, however, the commenter believes that improvements in overall emissions
and/or reducing water consumption and pollution should also be recognized and rewarded,
possibly by providing a greater number of RINs per gallon of biofuel produced [[Docket number
2369.1, p. 2]]

Our Response:

      The exemption from the 20% GHG requirement applies to all renewable fuel - not just
ethanol—from facilities which commenced construction prior to December 19, 2007 per the
language in EISA. For those facilities which commenced construction after December 19, 2007
but prior to December 31, 2009, the language in EISA provides an exemption from the 20%
GHG  for facilities "deemed compliant" with  EISA (i.e., they must consume only natural gas
and/or biofuel). GEN-X commented that the exemption for "deemed compliant" facilities should
include all renewable fuels, not just ethanol.  The language in EISA specifically names ethanol
rather than "renewable fuel" for "deemed compliant" facilities; therefore, EPA's regulations
limit the exemption only to production of ethanol from such facilities.

      New Generation Biofuels suggests that facilities that are grandfathered should be given
credit for improving their "environmental footprint", so that reducing water consumption and
water  pollution, for example are recognized and rewarded, possibly by allowing a greater
number of RINs per gallon of biofuel  produced. The language in  EISA provides for the
exemption from the 20% GHG threshold for renewable fuel, as discussed above. It does not
provide for awarding additional credits for improving environmental performance.
3.4.1   Definition of Commence Construction

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) supports using PSD definitions for commence construction. The
commenter believes that EPA's addition of language to address multi-phased projects creates
confusion, and EPA did not adequately explain what it meant by a multi-phase project.  The
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RFS2 Summary and Analysis of Comments
commenter also believes that foreign facilities should be required to certify compliance with
these requirements, including having obtained all necessary permits, and should be required to
provide documentation to support the certification, such as an affidavit or legal opinion. EPA
cannot determine whether a foreign entity has obtained all necessary permits under foreign law.
(2329.1, pp. 70-71)

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters (2129.1) recommend that "new facility" for purposes of the RFS be defined as
any renewable fuel production plant or renewable fuel production unit at any stationary source,
including any renewable fuel production unit at an existing renewable fuel production plant, for
which construction or reconstruction commenced after December 19,  2007. A "stationary
source" is defined at CAA Section 111 (a) (3) as "any building, structure, facility, or installation
which emits or may emit any air pollutant." (2129.1, p. 11)

The commenters recommend that "grandfathered" facilities must have all necessary
preconstruction approvals completed and begun a continuous program of actual on-site
construction that goes beyond land-clearing. For multi-phased projects, the commenters suggest
that the commencement of construction of one phase does not constitute commencement of
construction of any later phase, unless each phase is "mutually dependent" on the other as a
technical matter (not just economically). The EPA must also put some limitations on the
definition of construction. EPA should also establish a concrete obligation to begin or complete
actual construction within a reasonable time frame, such as five years. Additionally, EPA should
stipulate that if a proposed facility's pre-construction approval lapses or is withdrawn, it loses its
existing source status.  (212 9.1, p. 11)

Document No.:      EPA-HQ-OAR-2005-0161-2146
Organization:       DuPont Applied BioSciences
Comment:
The commenter (2146.1) suggests that EPA identify "commencement of construction" by
reference to the start of "beneficial operations", i.e., first commercial product shipped. (2146.1,
p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2419
Organization:       Cargill Incorporated
Comment:
The commenter (2419.1) noted that Table 1.5-15 on page 129 of the DRIA does not include the
ethanol plant expansion volume for the Blair, NE facility in the under construction column. PSD
permits from 7/7/05 and 9/8/06 are included that clearly signify that the expansion project meets
the definition of Commence Construction as outlined in the proposed regulation. [[See Docket
Numbers 2419.3 & 2419.4]] (2419.1, p.l)
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The commenter (2511.1) proposes that the "commence construction" language shall encompass
expansions at existing grandfathered facilities that commence construction prior to enactment
provided the expansion is completed by 12/19/2009. These types of expansions should be
"deemed compliant" if the construction is completed prior to enactment and operations are
started within the "deemed compliant" period up and until 12/19/2009.  (2511.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter agrees with EPA that the definitions of "commence" and "begin actual
construction" specified in the Prevention of Significant Deterioration ("PSD") regulations, which
draw upon definitions in the  Clean Air Act, provide a clear designation that is broad enough to
avoid facility-specific issues. Yet narrow enough to prevent new facilities (post-December 19,
2007) from being grandfathered. Furthermore, the commenter agrees with EPA's additional
proposed language with respect to multi-phase projects. [[Docket number 2472.1, p. 10]]

Document No.:      EPA-HQ-OAR-2005-0161-2360
Organization:       Archer Daniels Midland Company (ADM)
Comment:
The commenter (2360.1) also believes that the grandfathered production levels should be based
on permitted capacities even in cases where portions of a project may have been slowed or
temporarily stopped, and even if the stoppage exceeds 18 months and the project cannot be
completed within 36 months. (2360.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2363
Organization:       Ag Processing Inc.
Comment:
The commenter (2363) offers the following recommendations:
-The definition of commenced construction contained in the PSD regulations is familiar to most
people and is probably acceptable and should be easily documented through the air construction
permitting process that facilities are subject to.

Our Response:

      Commenters generally agreed with EPA's proposed definition of "commence
construction".  Renewable Fuels Association stated that the definition of multi-phase
construction is confusing. The definition of "commence construction" is taken from the PSD
definition, including the language on multi-phase construction.  The definition has been in effect
since the early 80 's and  the language on multi-phase construction is straightforward and has not
caused confusion. Furthermore, there is sufficient precedent and guidance on the subject of
"commence construction" to answer any questions that may arise concerning the definition.
Since qualification for the exemption from the 20% requirement is  contingent upon commencing
construction prior to Dec 19, 2007,  (or December 19, 2009 for some ethanol facilities) we do not
believe it necessary to provide a separate definition of "new facility"  as the Clean Air Task Force
et al suggested.
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RFS2 Summary and Analysis of Comments
       The Clean Air Task Force et all suggests that if air permits lapse or are withdrawn, then
the facility should no longer be considered an existing facility. The definition of "commence
construction" requires that owners have all necessary preconstruction permits. In light of this
comment we have specified in the definition of "commence construction" that the owner did not
discontinue construction for a period of 18 months or more and completed construction within a
reasonable time, not to exceed 36 months. Renewable Fuels Association states that the
requirement for preconstruction permits to have been obtained should also apply to foreign
facilities.  We agree, and are requiring that owners of foreign facilities demonstrate that they
have all necessary preconstruction permits required by the governmental entities as appropriate.

       The Clean Air Task Force et al, states that the "reasonable time for completion of
construction" should be specified in the regulations and they suggest five years. We have added
a provision in the regulations that specifies that construction should be completed within three
years of commencement, to qualify for completion of construction within a "reasonable amount
of time". We are including the three year requirement in the regulation itself.  We believe that
three years is an adequate period of time to account for economic downturns that may cause
disruptions in construction schedules.

       Cargill suggests that for facilities in "deemed compliant"  status, construction should be
completed by December 31, 2009. We are requiring that facilities are "deemed compliant" if
they commence construction after December 19,  2007 but prior to December 31, 2009, are fired
by natural gas, biofuel or combination thereof, and produce only  ethanol.  We do not require that
construction be  completed prior to December 31, 2009, and in fact, we allow the same 36 month
period as discussed above, as qualifying for a "reasonable period of time" in which construction
should be completed. Since the regulation has not gone into effect, we believe it would be unfair
to require facilities in "deemed compliant" status to have completed construction by the end of
2009.

       Clean Air Task Force, et al suggested that on multi-phased projects, construction of one
phase does not constitute commencement of construction of any later phase, unless each phase is
"mutually dependent" on the other as a technical  matter.  The definition of "commence
construction" specifies that "for multi-phased projects, the commencement of construction of one
phase does not constitute commencement of construction of any later phase, unless each phase is
mutually dependent for physical and chemical reasons only," We believe this language satisfies
the commenter's concern.

       Cargill noted that Table 1.5-15 on page 129 of the DRIA  does not include the ethanol
plant expansion volume for the Blair, NE facility in the under construction column and included
copies of their PSD permits to show that construction commenced prior to December 19, 2007.
We acknowledge this and have made changes which are reflected in Section IV.B.I.a of the
preamble as well as Sections 1.5.1.1 and 1.5.1.4 of the RIA.
3.4.2   Basic Approach: Grandfathering Limited to Baseline Volumes

3.4.2.1 Limitation on Baseline Volumes
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What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2132
Organization:       Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) agrees with the definition of "nameplate capacity." (2132.1, p.10)

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) supports EPA's proposed definition of the baseline volume to be the
greater of the permitted capacity or annual peak capacity. The commenter believes that the full
capacity provided for in the permit should be used. EPA should also eliminate its conversion
factor, and add a tolerance level. A tolerance level allows facilities to become more efficient,
which would provide additional GHG benefits.  Ten percent is a reasonable tolerance value for
EPA to apply. (2329.1, pp.69-69)

The commenter opposes using 2006 production as a potential alternative to define the baseline
volumes. Production in 2006 is not representative of a facility's potential capacity, but only
reflective of the demand that particular year.  Nor does it recognize the improvements that can be
made to increase production without expansion of the facility. (2329.1, p.69)

The commenter also supports EPA's proposal to treat "deemed compliant" facilities as
grandfathered facilities. EPA should make clear that other types of facilities existing on the date
of enactment (e.g., a chemical plant) that may be retrofitted to produce renewable fuel after
enactment or a refinery that co-process renewable biomass with petroleum would not be eligible
for deemed compliant status. (2329.1, p..73)

Document No.:      EPA-HQ-OAR-0161-2383.1
Organization:       Growth Energy
Comment:
The commenter states (pp. 4-6) that EISA does not permit EPA to limit participation by facilities
that were in production or under construction when Congress passed EISA. The 20 percent
GHG performance standard of section 211 (o) (2) (A) (i) applies to only renewable fuel facilities
that are "new."  The GHG performance standard does not apply to renewable fuel from those
facilities that are "already existing," on which construction commenced prior to the enactment of
EISA.  EPA impermissibly tries to cause existing facilities (those that commenced construction
prior to December 19, 2007) to become subject to the GHG performance standard based on
either changes to those existing facilities, changes in the volume of production at such facilities,
or the passage of time. Nowhere does EISA provide that EPA may require facilities to  meet the
GHG performance standard if existing facilities are modified, do not complete construction
within a certain duration, exceed certain volumes of production, or operate for a specified
duration. The proposed rule would require any facility, new or existing, to meet the GHG
performance standard based on increased production volumes, changes at existing facilities, or
the passage of time.  However, the only factor specified by Congress in the RFS 2 as
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RFS2 Summary and Analysis of Comments
determinative of whether the GHG performance standard applies to renewable fuel from a
facility is whether the facility is "new," with construction beginning after enactment of the RFS
2. EPA thus "takes other factors into account" than those to which Congress limited it—the
proposed rule exceeds statutory authority. EPA cannot change the statute with additional
limitations not present on the face of the text.

Document No.:      EPA-HQ-OAR-2005-0161-2079
Organization:       AE Biofuels, Inc.
Comment:
The commenter (2079.1) supports the basic option, but they believe further clarification is
required to determine exactly how the baseline volumes would be calculated, and the ability of a
company to challenge the revoking of a facility's "grandfathered" status if the EPA determined
that the modifications had increased its GHG emissions.  (2079.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-1050
Organization:       American Council for Ethanol (ACE)
Comment:
The commenter (2101.1) believes it is appropriate that EPA's RFS2 rule determines that ethanol
plants that commenced construction before the EISA enactment date are grandfathered into the
GHG reduction provisions, and that for calendar years 2008 and 2009, any ethanol plant that is
fired with natural gas, biomass, or any combination thereof is deemed to be in compliance with
the 20 percent threshold. As a  result, there is a strong likelihood that the 15 billion gallons of
corn ethanol per year called for under the RFS2 program will be deemed to comply with the
GHG reduction requirement. (2101.1, p.2)

The commenter also believes that EPA has done a thorough analysis of grandfathering options
under RFS2 for the 20 percent  GHG compliance threshold, and believes the basic, proposed
approach is workable although the commenter prefers indefinite grandfathering with no
limitations placed on volume.  If EPA proceeds to enforce the proposed approach, which
provides indefinite grandfathering of the base volume of fuel from the plant, the commenter
recommends that EPA allow ethanol plants, on a case-by-case basis, be granted permission for
additional or new ethanol capacity or volume to be grandfathered if the production methods
enable the plant to maintain its 20 percent GHG reduction threshold. (2101.1, p. 17)

Document No.:      EPA-HQ-OAR-2005-0161-1051
Organization:       Aberdeen Development Corp.
Comment:
The commenter (1051) believes there is ample support for EPA to essentially grandfather
existing facilities by deeming these facilities to be in compliance with the 50 percent reduction
requirement. [[Docket number  1051.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2012
Organization:       Caribbean Basin Ethanol Producers Group
Comment:
The commenter 92012.1) recommends that their organization be grandfathered as  an eligible
producer of advanced biofuels. (2012.1, p.3)
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Document No.:      EPA-HQ-OAR-2005-0161-2016
Organization:       Malaysian Palm Oil Board (MPOB)
Comment:
The commenter (2016.1) believes that the commence construction provision is intended to help
corn ethanol plants in the U.S.  The commenter feels it should also apply to overseas facilities in
Malaysia producing biodiesel from palm oil. Whatever expiration dates decided for such
facilities in the U.S. should also be extended to foreign facilities.  (2016.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that grandfathering should only apply to originally approved
baseline volumes.  The commenter believes that any new volume production, no matter how
small, should be required to meet the minimum 20% GHG emissions reduction threshold.  The
commenter does not agree with EPA extending any tolerance to this baseline volume. (2124.1,
p.25)

The commenter opposes any effort to apply grandfathering indefinitely or to allow any
production increases above the approved baseline to be considered to be covered under the
grandfathering provisions. (2124.1, p.26)

Document No.:      EPA-HQ-OAR-2005-0161-2132
Organization:       Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) agrees with EPA's choice to provide an "indefinite time period for
grandfathering status but with restrictions to the baseline volume  of renewable fuel that is
grandfathered." The commenter suggests using the indefinite exemption option. EPA estimated
the entire 15 billion gallons of Renewable Fuel as corn ethanol that will come from
"grandfathered" or "deemed  compliant" plants, so an indefinite exemption should not raise the
overall amount of grandfathered fuel. If EPA believes some  time limit is needed, the commenter
recommends allowing 30 years or more; by contrast, we think 15  years is too short and may limit
investments for improving operations or technologies. (2132.1, p.11)

Document No.:      EPA-HQ-OAR-2005-0161-2140
Organization:       John Deere Agriculture & Turf Division
Comment:
The commenter (2140.1) believes that it is critical that historical financial investments made
before enactment of EISA be protected. The commenter believes that EPA should appropriately
grandfather existing ethanol production in recognition of these significant investments underway.
The commenter believes that national renewable fuels policy must continue to recognize and
support investments made under current regulations and technologies and recognize appropriate
lead times in developing successive generations of regulations to which these facilities may be
subject. (2140.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2146
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RFS2 Summary and Analysis of Comments
Organization:       DuPont Applied BioSciences
Comment:
The commenter (2146.1) noted that many plants operate with only 10-20 days of downtime,
therefore the 95% conversion rate would be the preferred choice.  The commenter also noted that
the term "new expansion" should be clarified to mean material spending on new assets which
directly results in substantial additional output of product volume. (2146.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2168
Organization:       First United Ethanol, LLC
Comment:
While the commenter (2168) is encouraged that the proposed RFS2 would grandfather all
operating plants, they have to wonder about the application of that exception in the near future as
well as compliance issues that they will ultimately face. (2168, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (2249.2) generally supports the proposed grandfathering approach. The
commenter agrees that EPA's proposal is a reasonable compromise to the greenfield approach
(Alternative 5) to address the potential for unlimited expansions of a particular facility, while
still giving facilities flexibility in their operations to include new feedstocks and to maintain and
improve their equipment. This approach also is practical and provides a bright line definition that
makes clear when the 20 percent requirement is triggered. [[Docket number 2249.2, pp. 33-34]]

Document No.:      EPA-HQ-OAR-2005-0161-2304
Organization:       Gevo Inc.
Comment:
The commenter (2304) supports EPA's basic approach on grandfathering of baseline volume of
any renewable fuel. This basic approach would provide an indefinite extension of grandfathering
and deemed compliant status but with a limitation of the exemption from the 20% GHG
threshold to a baseline volume of renewable fuel. This approach is similar to how EPA has
treated small refiner flexibilities under other fuel rules.  Other proposed approaches create
significant complexity and administrative burdens to the overall program with little to no benefit.
The commenter recommends that EPA keep it simple to regulate and administer and thus simple
to comply. [[Docket number 2304.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2337
Organization:       California Air Resources Board
Comment:
The commenter (2337.1) agrees with the U.S. EPA recommendation that the baseline volume of
renewable fuel exempt from the 20 percent GHG threshold requirement be the maximum
volumetric capacity of the facility as allowed in any applicable state air permit or Federal Title V
operating permit. The production of volumes greater than this amount should be subject to the
twenty percent GHG reduction requirement.

Document No.:      EPA-HQ-OAR-2005-0161-2363
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Organization:       Ag Processing Inc.
Comment:
The commenter (2363) recommends that the baseline volume should be the greater of the
nameplate capacity or the permitted capacity of the facility. There may be situations where the
facility is not permitted for the full nameplate capacity, but the nameplate capacity more fully
represents the volume to which capital investment has been committed. [[Docket number 2363.1,
p. 11]]

In addition, the commenter states that where air permit limitations on capacity are expressed in
hourly, daily maximums, it is proposed that those numbers are extrapolated to an annual basis
using only 7884 hours per year (90% of the total 8760 hours available in a year).  The total 8760
hour per year should be used unless the permit limits the total days of operation to some number
less than 365 days per year. While  most facilities take an annual shutdown for some
maintenance or repairs, the timing of the shutdown usually does not occur on  the same days
every year. Thus a facility may operate 365 days (8760  hours) in a row in between shutdowns.
There are some situations where the annual peak production of a facility is proposed as the
avenue for determining the baseline capacity. This may not fully represent the true capacity of
the facility due to operational constraints such as market conditions or operating capital during
the early years of operation. [[Docket number 2363.1, p. 11]]

Document No.:      EPA-HQ-OAR-2005-0161-2384
Organization:       BP America  (BP)
Comment:
The commenter (2384) is generally supportive of the basic approach to the proposed
grandfathering provisions. [[Docket number 2384.1, p. 6]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
Regarding the time period that should accompany grandfathering, the commenter (2393) believes
that without a time limit on grandfathering, there may be little incentive to further reduce GHG
emissions from existing bio-refineries. The commenter  also states that EPA has extended the
definition of "grandfathering" far beyond what Congress intended. EPA should be using a 12
month time period after December 19, 2007 instead of a 36 month time period. [[Docket number
2393.1, pp. 40-41]]

The commenter agrees with the EPA interpretation of EISA that any ethanol plant that is fired
with natural gas, biomass or any combination thereof for calendar years 2008  and 2009 should be
considered grandfathered and should be treated like grandfathered ethanol facilities for as long as
they continue to burn natural gas, biomass or any combination thereof. However, the commenter
believes that grandfathering should only apply to originally approved baseline volumes. Any
new volume production, no matter how small, should be required to meet the  20% GHG
threshold. The commenter does not agree that EPA should extend grandfathering to  any
volumes above this baseline volume. [[Docket number 2393.1, pp. 40-41]]

Document No.:      EPA-HQ-OAR-2005-0161-2419
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Organization:       Cargill Incorporated
Comment:
The commenter (2511.1) supports EPA's basic approach that would provide an indefinite
extension of grandfathering and deemed compliant status, but with a limitation of the exemption
from the 20% GHG threshold to a baseline volume of renewable fuel.  The commenter also
supports uniformly applying the grandfathering provisions to both the existing biodiesel and
ethanol facilities relative to their individual GHG reduction targets in the EISA. (2511.1, p.4)

The commenter believes that facilities which are "deemed compliant" should retain their
grandfathered status for the same length of time as grandfathered facilities. The commenter does
not support the alternative in which after 2009, "deemed compliant" plants must meet the 20%
threshold in order to generate RINS for renewable fuel produced. (2511.1, p.4)

The commenter supports the provision that changes to the renewable fuel production mix would
remain grandfathered at grandfathered facilities and deemed compliant at deemed compliant
facilities, including those facilities that have expansions which bridge the 12/19/07 - 12/19/09
timeframe provided the overall volume produced does not exceed the baseline production
volume. (2511.1, p.4)

Finally, the commenter suggests that reporting information regarding process fuel,  feedstock use
and product volumes could be sourced from current reporting requirements including state
compliance reports, federal Alcohol Tax and Trade Bureau reporting and Energy Information
Administration reporting. (2511.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter (2472) supports EPA's basic approach in the Proposed Rule of providing an
indefinite extension of grandfathering for facilities that commence  construction on  or before
December 19, 2007. This approach is consistent with previous approaches established in the
CAA and other EPA regulations. [[Docket number 2472.1, p. 8]]

Document No.:      EPA-HQ-OAR-2005-0161-1052
Organization:       Pennsylvania Energy Resources Group (ERG)
Comment:
The commenter (1052) requests that existing biodiesel production plants be grandfathered under
EPA regulations as in compliance with the 50 percent reduction requirement. Because existing
feedstock sources are already meeting production levels and capable of increases, there are no
land use changes involved, and no significant emissions from any changes can be associated with
existing production.  All lifecycle analyses, including EPA's without international land use
changes, show well over 50 percent reduction in emissions. The commenter believes there is
ample support for EPA to grandfather existing facilities by deeming these facilities to be in
compliance with the 50 percent reduction requirement. [[Docket number 1052.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-1005
Organization:       Cotner Consulting Services
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Comment:
While the commenter supports having the RFS2 regulations enforceable beginning January 1,
2010 so that the biomass-based diesel requirements are implemented, EPA should use its
regulatory authority to exempt biodiesel facilities that were placed in service prior to December
19,2007. (1005.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2435
Organization:       R.W. Heiden Associates LLC
Comment:
The commenter believes that existing production of biodiesel should be deemed to meet the 50
percent GHG reduction requirement for biomass-based diesel. [[Docket number 2435.1, p. 2]]
[[See docket number 2435.1, pp. 2-3 for further discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2519
Organization:       Canada, Foreign Affairs and International Trade
Comment:
The commenter (2519) notes that EPA has proposed a grandfathering provision for existing
biofuels production facilities. Specifically, EPA has proposed that the production from plants
which commenced construction in 2008 or 2009 and are fired with natural gas or  biomass will be
deemed to be in compliance for a 20% reduction in GHGs. The commenter points out that it is
currently unclear whether foreign plants are included in this ruling.  The commenter requests
clarification and would like assurance that existing Canadian production and plants that are
under construction will be granted the same opportunities.  [[Docket number 2519.1, p. 2]]

Our Response:

       Generally, commenters supported the basic approach in which the volume of renewable
fuel from facilities qualifying for an exemption  from the 20% GHG  reduction requirement
was limited to baseline volume.  Growth Energy objected to the basic approach and argued that
the statute's use of the word "new"  and the phrase "after December 19, 2007" provided evidence
that facilities which commenced construction prior to that date would not ever be  subject to the
threshold regardless of the volume produced from such facilities. We note first that the statute
does not provide a definition of "new facility," and it is appropriate for EPA to define that  term.
For reasons described in the preamble, we believe that in interpreting  this term an appropriate
balance between providing an incentive to industry to build new facilities, including expansions,
to modern environmental standards and protecting recent investments from the hardship that
might be imposed as a result of the new program is to view increases above baseline volume of
renewable fuel from a  facility that qualifies for the exemptions to be deemed produced from a
new facility that is not subject to the exemption..

       Growth Energy also states that EPA's interpretation of EISA is contrary to Congressional
intent because the "statute induced ethanol manufacturers (and manufacturers of other renewable
fuels) to invest in plants and equipment designed to meet the renewable fuels mandate.
Congress, in passing EISA, sought to protect these investments by not making existing plants
subject to new GHG performance standards that were not in effect when such plants were
funded, designed, and built."  The commenter argues that our regulations as proposed fail to
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offer such protection by retroactively penalizing early-stage renewable fuel producers.  We
believe that the discussion in the NPRM makes clear that this comment is not correct. We stated
in the NPRM that a guiding principle in drafting these regulations was to offer protection for
historical business investments that were made prior to the enactment of EISA. We conducted a
survey of ethanol plants in operation, as well as those not yet in operation but which commenced
construction prior to December 19, 2007. The results of our survey indicated that it is likely that
production capacity of ethanol from all facilities that qualify for this exemption will likely equal
or exceed  15 billion gallons-the amount of renewable fuel that is not advanced biofuel or
cellulosic ethanol which is required to be added to transportation fuel per the new RFS
requirements.  Since the baseline volume of the facilities qualifying for the exemption is very
likely to be 15 billion gallons, we do not agree with the commenter that subjecting increases
above the baseline volume could retroactively penalize early-stage renewable fuel producers.
Furthermore, facilities will seek to ensure that the desired  and realistically planned capacity of
their facilities will be reflected in applicable environmental permits.  Our final rule provides that
baseline volume  is to be determined by reference to such permits, rather than actual past
production, unless this is not feasible. Therefore, the regulations do not have any retroactive
punitive effect, but instead are designed to establish the exemption at a level that will  provide
appropriate protection to past investments.

      Ag Processing stated that the baseline volume should be the greater of the nameplate
capacity of the permitted capacity of the facility.  We had  proposed in the NPRM that nameplate
capacity be defined as permitted capacity, but that if the capacity was not stipulated in any
federal, state or local air permit, then the actual peak output should be used. We have decided
that since permitted capacity is the limiting condition, by virtue of it being an enforceable limit
contained in air permits, that the term "nameplate capacity" is not needed.  Thus, baseline
volume will be based on 105% of the permitted capacity, and in its absence, 105% of the actual
peak output.  The 105% represents a tolerance which is discussed in Section 3.4.3.3.

      We are defining actual peak capacity to be the maximum annual volume produced for
any of the five calendars prior to 2008 for facilities for which construction commenced prior to
December 19, 2007.  For "deemed compliant" facilities, the actual  peak capacity is based on the
maximum output achieved during the any calendar year during the first three years after startup.

      We had solicited comment on how to convert volume output to annual if the permit
expresses maximum rated volume output on an hourly basis. Ag Processing commented that
although there is downtime, it doesn't always occur on an annual basis, and thus recommended
using the full 8,760 hours per year. We understand that there may be years that there  is
downtime, but such an approach would not account for those years in which downtime does
occur. Typically  uptimes for ethanol  production facilities average 95% per year.  Thus, we used a
5% downtime and will require that the hourly output be multiplied by 8,322 hours per year to
obtain the  annual output, when such is not specified in permits.

      Pennsylvania Energy Resource Group (ERG), R.W. Heiden, and Cotner Consulting
Services commented that existing biodiesel production plants be exempt under EPA regulations
from the 50% GHG reduction requirement applicable to biomass-based diesel.  We believe that
the language of the statute is clear that the exemption applies only to the 20% GHG reduction
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requirement. Thus, the final rule does not provide exemptions for the GHG reduction
requirements specified for cellulosic biofuel, biomass-based diesel or advanced biofuel.


3.4.2.2 Changes at Facilities that Increase GHG Emissions

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) noted that while EPA's regulation of expansions at existing facilities
may be reasonable, Congress intended to grandfather entire plants and did not intend to regulate
modifications to the existing equipment. The Act provides incentives to promote improvements
and efficiency to reduce GHG emissions, and regulating modifications would create a
disincentive for facilities to seek to become more efficient or to add equipment that would reduce
GHG emissions. EPA should not limit a facility's flexibility to adjust its operations and maintain
its grandfather status. (2329.1, pp.69-70)

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:

The commenter notes that the only example EPA provides as potentially troublesome from a
GHG emission perspective is a facility switching from natural gas to coal. This, however, would
require substantial investment and is not likely to occur. Also, EPA indicated that the opposite
would occur, noting plants will "transition from conventional boiler fuels to advanced biomass-
based feedstocks" and pursue combined heat technology.  Thus, the commenter believes EPA
should not limit a facility's flexibility to adjust its operations and  maintain its grandfather status.
[[Docket number 2249.2, p. 35]]

Document No.:      EPA-HQ-OAR-2005-0161-2419
Organization:       Cargill Incorporated
Comment:
The commenter recommends that changes or process improvements which improve or decrease
GHG emissions, whether the changes facilitate achievement of the 20% GHG reduction
threshold or not, should not cause a revocation of the grandfathered or deemed compliant status
of a facility.  (2511.1,p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2337
Organization:       California Air Resources Board
Comment:
The commenter recommends that facilities lose their grandfathered status if they modify their
operations resulting in an increase in GHG emissions. Moreover, "grandfathered"  and "deemed
compliant" status should expire on December 31, 2022. Following this date, all facilities should
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be subject to the 20 percent threshold requirement in order to generate Renewable Identification
Numbers (RIN). (Page 3)

Out Response:

       Generally, commenters did not support a provision that would result in facilities losing
their exemption status if modifications they made to their operations resulted in an emissions
increase in GHG emissions.  RFA pointed out that this would amount to regulating modifications
and could result in a disincentive for facilities to increase efficiency or to add equipment that
would reduce GHG emissions. We believe the comment has merit and also believe there are
many variations within a plant that cannot be adequately captured in a table of fuel and feedstock
pathways as we proposed (see 74 FR 24927). Implementing such a provision would create
questions of accounting and tracking that would need to be evaluated on a time-consuming case-
by-case basis.  For example, a facility that switched from natural gas to coal, but increased the
efficiency of operation elsewhere, may argue that that the increased efficiency offset the decrease
due to the fuel switch.  National Biodiesel Board commented out that it is not common for such
fuel switches to occur. Facilities that fire natural gas will tend to keep using natural gas, rather
than switching to coal. For the reasons discussed above, we have decided not to implement that
option. We note, however, one exception to this, in the case of deemed compliant facilities.
Such facilities are deemed compliant if they burn only natural gas, biomass or a combination of
both. Switching to coal would terminate their exemption status, because by definition they
would no longer meet the definition of "deemed compliant".
3.4.2.3 Comments on Allowing Tolerance Limit on Baseline Volume

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2146
Organization:       DuPont Applied BioSciences
Comment:
The commenter would support a tolerance on baseline volume that is the greater of 120% of
nameplate capacity, demonstrated maximum annualized capacity or annualized volume as
permitted on current air permit. The commenter also supports the grandfathered status being
valid for an indefinite time period, for the original volumes plus reasonable tolerances as
described above.  Volume above and beyond the tolerance amounts would be subject to the 20%
GHG threshold. (2146.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter generally supports the proposed definition of the baseline volume, but believes
that EPA should include a tolerance value to address improved efficiencies in facility operations.
A tolerance level also allows facilities to become more efficient, which would provide additional
GHG benefits. Although EPA suggested 10 percent may be appropriate, the commenter believes
that 20 percent is a reasonable tolerance value for EPA to apply.  Twenty percent also gives
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facilities more incentives to increase their efficiencies, which will result in energy savings. On
the other hand, the baseline value should not be based only on 2006 production, as this is not
representative of a facility's potential capacity, but only reflective of the demand that particular
year.  Further, the commenter believes EPA should make clear that the facility must be a
renewable fuel facility that was producing renewable fuel prior to enactment. [[Docket number
2249.2, p.  34]]

Document No.:      EPA-HQ-OAR-2005-0161-2419
Organization:       Cargill Incorporated
Comment:
The commenter supports the 10% debottlenecking increase to the baseline volume as proposed in
the preamble. Any volume exceeding the baseline (plus  10% debottlenecking) would be subject
to the 20% GHG reduction threshold.

Document No.:      EPA-HQ-OAR-2005-0161-2360
Organization:       Archer Daniels Midland Company (ADM)
Comment:
The commenter (2360.1) believes that the rule should grandfather an existing facility up to the
permitted capacity and allow for a 20% tolerance on baseline value to account for such things as
potential improvements in production efficiencies.

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter states that baseline volumes for grandfathered facilities should be based on
maximum monthly production with a 10% tolerance and believes that there is no justification for
establishing an overly restrictive definition of facility-specific grandfathered capacity. The
commenter believes that EPA should define the baseline volume for grandfathered facilities as
the actual maximum monthly production during any operating month that occurred prior to the
effective date of this Proposed Rule, plus 10%.  Once the baseline volume as defined above is
exceeded,  the increase above baseline volume would be subject to the 20% GHG reduction
requirement in order to generate RINs. [[Docket number 2472.1, pp. 9-10]]

Our Response

      Most commenters favored the concept of a tolerance, although some favored 10% and
others 20%.  When we had solicited the comment about a tolerance, we were keeping open all
options for structuring the basic exemptions, including the options for an expiration of the
exemption. In light of our final decision to exempt baseline volume for an indefinite period, we
have decided that a 10% (and 20%) level is not appropriate for this regulation for the following
reasons: 1) our decision to interpret the exemption of the baseline volume of renewable  fuel
from the 20 percent requirement will extend indefinitely; thus, any tolerance provided could be
present in  the marketplace for a considerable time period; 2) increases in volume of 10% or
greater could be the result of modifications other than debottlenecking, and 3) we are allowing
baseline volume to be based on the maximum capacity that is allowed under state and federal air
permits. With respect to the last reason, facilities that have been operating below the capacity
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allowed in their state permits would be able to claim a baseline volume based on the maximum
capacity. As such, these facilities may indeed be able to increase their volume by 10 to 20
percent by virtue of how their baseline volume is defined. We believe this is appropriate,
however, since their permits should reflect their design, and the fuel resulting from their original
pre-EISA (or pre-2010, for deemed compliant facilities) design should be exempt from the 20%
GHG reduction requirement.

       We do recognize and agree with commenters that some allowances should be made for
minor changes brought about by normal maintenance which are consistent with the proper
operation of a facility.  EPA is not aware of a particular study or analysis that could be used as a
basis for picking a tolerance level reflecting this concept.  We believe, however, that the value
should be relatively small, so as not to encourage plant expansions that are unrelated to
debottlenecking. We believe that a 5% tolerance level is consistent with these considerations.
3.4.2.4       Restriction of Deemed Compliant Facilities to Produce Only Ethanol

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2384
Organization:       BP America (BP)
Comment:
The commenter (2384) states that the discussion of the 20% threshold recognizes no linkage
between ethanol production and grandfathering for facilities operating or under construction
prior to December 19, 2007. The language for the "deemed compliant" facilities that
commenced construction in 2008 and 2009 comes from EISA 2007 210(a)(l). This language
does suggest a requirement that the deems compliant facility be an ethanol plant in calendar
years 2008 and 2009 but does not require that the plant remain an ethanol plant in future years.
[[Docket number 2384.1, pp. 6-7]]

The commenter recommends the following relevant  principles for evaluating conversion of an
exempt ethanol facility to the production of different renewable fuel:
-Protection of historical investment.
-Avoidance of long-term backsliding on environmental performance.
-Encouragement of new technologies. [[Docket number 2384.1, pp. 6-7]]

Our Response

      The language in EISA is specific that "deemed compliant" facilities are exempted from
the 20% GHG threshold only if the plants use natural gas, biomass or combination, and that only
ethanol is produced. The language is straightforward and provides no indication that different
renewable fuels may be produced after 2009 as the commenter suggests. We note, however, that
facilities that commenced construction prior to December 19, 2007, are not restricted to only
ethanol production to qualify for the exemption. We apply the exemption, however, only to that
volume of renewable fuel that does not exceed baseline volume.
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3.4.3   Alternative Options

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2079
Organization:       AE Biofuels, Inc.
Comment:

The commenter (2079.1) with respect to option 2, or expiration of grandfathered status after 15
years, believes that this option is tolerable, as it is clear and concise in its scope, and leaves no
doubt as to what may or may not qualify for "grandfathering." The commenter believes that
option 3 is more tolerable than option 2, as the criteria is even clearer. The commenter finds
option 4 interesting, but again, would create many of the same problems of a facility being
unable to integrate cellulosic production technology into an existing production facility without
risking being excluded from grandfathering and thus RIN generation.  With regards to option 5,
or indefinite exemption and no limitations on baseline volumes is the most preferred, as it
enables industry to innovate and increase advanced renewable biofuels production capacity,
without the compliance burden and risk of being disqualified by the EPA for any hybrid
solutions and/or integration that might be the most efficient solution. (2079.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2106
Organization:       Endicott Biofuels II, LLC
Comment:
The commenter (2106) suggests the EPA consider grandfathering only those facilities that have
shown consistent production and operation and consistent demonstration of meeting ASTM
quality specifications for the 12 months prior to enacting RFS2. The facilities should be capped
at the then current operating limits of the legally permitted capacity at the time RFS2 is enacted.
The facility should also be able to document from historical testing data that it was able to
produce at the permitted capacity. Expiration of grandfathering would then follow 15 years after
EISA enactment as in EPA proposal.  This would allow currently financially viable facilities
with significant investments to continue in operation and support the mandated levels of
renewable fuels. This boundary would also provide for adequate market pricing signals which
are necessary to incent new investment in more sustainable projects with genuine GHG
reductions that meet EPA requirements. [[Docket number 2106.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2130
Organization:       ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
Regarding regulations governing the grandfathering of conventional renewable fuels in EISA,
the commenter (2130) supports EPA's limiting grandfathered volumes to the best three-month
average during the first two years of operation.  Moreover, the grandfathering should sunset no
later than 15 years after enactment of EISA (no later than 2022. [[Docket number 2130.1, pp. 10-
11]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
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Organization:       American Petroleum Institute (API)
Comment:
Regarding the time period that should accompany grandfathering, the commenter (2393) believes
that without a time limit on grandfathering, there may be little incentive to further reduce GHG
emissions from existing bio-refineries. The commenter also states that EPA has extended the
definition of "grandfathering" far beyond what Congress intended. EPA should be using a 12
month time period after December 19, 2007 instead of a 36 month time period. [[Docket number
2393.1, pp. 40-41]]

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter does not believe that grandfathered facilities should be exempted indefinitely
and agrees with the 15 year expiration of exemption for all grandfathered facilities. The
commenter also agrees that biofuel facilities should lose their grandfathered status if they make
any changes that result in an increase in GHG emissions for the baseline volumes.  The
commenter believes that EPA should limit grandfathering to only the fuel pathways that applied
in 2007.  The commenter also agrees that if coal-fired units are replaced on grandfathered
facilities, they must be replaced by natural gas and/or biomass-fired units. (2124.1, p.25)

The commenter also agrees that EPA should require grandfathered facility owners to annually
report, starting in 2010, the expenses for replacements, additions and repairs and that EPA
should use these reports to determine when the facility effectively becomes new due to
rebuilding or modernization. (2124.1, p.25)

The commenter also agrees that EPA should require grandfathered facility owners to annually
report, starting in 2010, the expenses for replacements, additions and repairs and that EPA
should use these reports to determine when the facility effectively becomes new due to
rebuilding or modernization. (2124.1, p.25)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) believes that once EPA has published the GHG thresholds and fuel
pathways for biofuels, this will largely influence the future behavior of an existing plant.
Without a time-limit on grandfathering,  ethanol plants may have little or no incentive to further
reduce GHG emissions. The commenter adds that EPA has  extended the definition of
"grandfathering" far beyond what Congress intended; EPA should use a 12 month time period
after December 19, 2007 instead of a 36 month time period.  [[Docket number 2233.2, p. 44]]
[[See docket number 2233.2, pp. 43-44 for  the commenter's detailed discussion related to EPA's
grandfathering scenarios.]]

The commenter agrees with EPA that grandfathering provisions do not apply to advanced
biofuels,  biomass-based diesel or cellulosic biofuels. [[Docket number 2233.2, p. 47]]

Document No.:      EPA-HQ-OAR-2005-0161-2374
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Organization:       Amyris Biotechnologies, Inc. (Amyris)
Comment:
In principle, the commenter (2374) does not support grandfathering of facilities as they believe
that all biofuels should be superior to the petroleum baseline. Such a waiver will result in unfair
commercial advantages without GHG benefit. As to practical implementation, the commenter
suggests such waivers have specific limited period with a critical focus on the objectives of
reducing the carbon intensity of transportation fuels and reducing the nation's reliance on
petroleum derived transportation fuels [[Docket number 2374.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2491
Organization:       International Council  on Clean Transportation (ICCT)
Comment:
The commenter (2491) does not think that there should be an indefinite extension of the
grandfathering provision, even with limitations. [[Docket number 2491.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2497
Organization:       Wisconsin Department of Natural Resources
Comment:
The commenter (2497.1) supports Option 2, which is the expiration of the grandfather exemption
15 years after EISA enactment, industry-wide (-2022). The commenter also supports the
provision of removal of grandfather status for currently operating facilities if they switch to a
process fuel or feedstock resulting in  a net increase of greenhouse gas (GHG) emissions. The
commenter also supports allowing a 10% increase in a facility's baseline before triggering
revocation of grandfather status.  (2497.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) believes that EPA should limit the exemption to the volumes of fuels
produced at qualifying facilities as of the date of enactment, and EPA should sunset the
exemption. Both of these limitations to the exemption are consistent with congressional intent.
Congress clearly intended the renewable fuels provisions of EISA to result in greenhouse gas
emission reductions. It is consistent with that intent to limit the exemption to the volumes
produced at the date of enactment. (2505.2, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) generally supports EPA's proposed approach, but believes alternatives
(1), (2) and (3) go against the statutory language and Congressional intent. The commenter
believes that EPA's Alternative 5, referred to as the Greenfield Approach, best expresses the
statutory language and Congressional intent.  (2329.1, p.67) [[See Docket Number 2329.1, pp.
67-68 for a detailed discussion of Alternative 5]]

With regards to Alternative (1), the commenter believes that it ignored the language and intent of
the statute.  EPA cannot determine if a facility is "new" based on actions dating as far back as the
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"startup" of the facility.  The purpose of a grandfathering clause is to protect existing investment.
Under this proposal EPA would require facilities to account for actions taken well before the
EISA was enacted. This undermines the purpose of a grandfather clause. EPA must also clarify
the reporting requirements under this approach. In particular, costs of routine maintenance and
repair should not be included in such assessments. Also, facilities should not be required to find
records of costs dating back to "startup" of the facility. If EPA goes down this road, it should
limit the time period to consider costs to post-enactment, which at least recognizes the fact that
Congress sought to protect pre-EISA investment, if not comply with the statutory provisions.
(2329.1, pp. 71-72)

With regards to Alternative  (2)  & (3), the commenter also believes that it is contrary to the
language and intent of the statute.  The 15-year limit is based on an underlying assumption that
facilities are reconstructed over a set period of time-an estimated  15 years for ethanol plants.
This may not be factually correct.  The statute expressly refers to "new facilities" and making
existing facilities "new"  on a date certain beyond the dates in the statute is illegal. EPA simply
has no authority to place a time limit on the grandfathering provided by Congress. The
commenter believes that the 15 years is wholly arbitrary. Imposing time limits on the
grandfathering provision undermines the purpose of a grandfathering statute to protect pre-
enactment investment. (2329.1, pp.72-73)

Document No.:      EPA-HQ-OAR-2005-0161-2079
Organization:       AE Biofuels, Inc.
Comment:
With regards to option 1, in  which facilities are considered new if they meet the definition of
reconstruction as defined by the EPA, the commenter believes that such a provision would
eliminate the possibility of any  renewable fuel production facility electing to integrate a
cellulosic or second-generation ethanol production technology into their process.  (2079.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2106
Organization:       Endicott  Biofuels II, LLC
Comment:
The commenter (2106) suggests the EPA consider grandfathering only those facilities that have
shown consistent production and operation and consistent demonstration of meeting ASTM
quality specifications for the 12 months prior to enacting RFS2. The facilities should be capped
at the then current operating limits of the legally permitted capacity at the time RFS2 is enacted.
The facility should also be able to document from historical testing data that it was able to
produce at the permitted capacity for a reasonable time period. Expiration would then follow 15
years  after EISA enactment  as in EPA's proposal. This would allow  currently financially viable
facilities with significant investments to continue in operation and support the mandated levels of
renewable fuels.  This boundary would also provide for adequate market pricing signals which
are necessary to incent new  investment in more sustainable projects with genuine GHG
reductions that meet EPA requirements which we presume is the primary goal. [[Docket number
2106.1, p. 1]]

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National  Biodiesel Board (NBB)
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Comment:
The commenter (2249.2) believes that Alternative 1 (Reconstruction) and Alternatives 2 and 3
(Time Limited Grandfathering) are contrary to the statute. [[Docket number 2249.2, p. 35]]

The commenter states that Alternative 1 is overly burdensome and ignores the intent of Congress
to grandfather "facilities." Moreover, requiring facilities to provide information to EPA
regarding any action it takes to maintain their facility is overly burdensome, and creates
disincentives for increasing a plant's efficiency and reducing its overall GHG emissions. This
approach should be rejected outright. [[Docket number 2249.2, pp. 35-36]]

The commenter adds that similarly, Alternatives 2 and 3, which propose to  end grandfathering
after 15 years, should be rejected outright. The 15-year limit is based on an underlying
assumption that facilities are reconstructed over a set period of time. This may not be factually
correct and is irrelevant based on the statutory language. This approach does not give meaning to
Congress' use of the words "new facilities" in that it makes existing facilities "new" on a date
certain, even if they have not been reconstructed, and undermines the purpose of a
grandfathering statute to protect pre-enactment investment. The commenter believes that EPA
has no authority to place a time limit on the grandfathering provided by Congress. [[Docket
number 2249.2, p. 36]]

Document No.:      EPA-HQ-OAR-2005-0161-2363
Organization:       Ag Processing Inc.
Comment:
The commenter (2362) offers the following recommendations related to four of the five
alternative approaches:
This concept of using "reconstruction" for retiring grandfathered volumes does not work under
RFS2. RFS2 may require replacement of equipment with entirely different processes. There is
no allowance for switching to more economical fuels. There is no "cost-effectiveness
evaluation." There are no set impact thresholds for any increase in emissions.
       This is one of the most blatant violations of EPA's own stated goals in the proposed rule.
       EPA states "At the same time we also want to offer protection for historical business
       investments that were made prior to enactment of EISA.
       No proposal could contradict EPA's stated goal more than the idea of using New Source
       Performance Standards (NSPS) to interpret the EISA Grandfather Clause.
       Ethanol plants have been operating since the late 1970s and early 1980s. These plants
       will have had numerous upgrades  and expansions in the past  25-30 years in order to stay
       competitive and comply with ever increasing safety, health and environmental
       regulations.
       Even if an  old plant has been completely rebuilt prior to the date of enactment such
       business decision should surely not be interpreted as thereby  disqualification for
       grandfathering.
       Nowhere does EISA say that EPA should revoke the grandfather clause after ANY period
       of time. EPA's proposals to revoke the clause goes beyond the law and is clearly
       designed to kill any future growth in corn ethanol.
       EPA has relied on conjecture from construction and engineering companies that
       producers will upgrade existing plants with equipment that will somehow bring such
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       plants in under the 20% cap for "new" plants. In fact, EPA's proposals-taken in their
       entirety, will put a chilling effect on any further investment in existing corn based ethanol
       plants. [[Docket number 2363.1, p. 12]]

Regarding debottlenecking, the commenter notes that a facility is typically permitted at its
bottlenecked capacity. The nameplate capacity of a facility could be determined by the highest
capacity of the "significant" production components of a process, as long as the cost of
debottlenecking does not exceed 25 percent of the cost of the existing facility. [[Docket number
2363.1, p. 12]]

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter (2472) is concerned about the 15-year sunset provision discussed in the
proposed rule. The commenter believes that limiting the grandfathering provision by either a sun
setting provision or an overly restrictive definition of baseline volume will impede,  and possibly
prevent, the orderly financial recovery of the corn-based ethanol industry. [[Docket  number
2472.1, pp. 8-9]] [[See Docket number 2472.1, pp. 8-9 for extensive discussion of the
commenter's  concerns related to Grandfathering.]]

Document No.:      EPA-HQ-OAR-2005-0161-2491
Organization:       International Council on Clean Transportation (ICCT)
Comment:
The commenter (2491) believes that of five additional options presented for grandfathering
facilities, option  (2) is the most appropriate provision since it protects the business interests, and
is less costly to implement, monitor and verify.  This option puts less burden on facility operators
with regard to record keeping, and also provides an incentive to improve or modify  the
processes. Therefore, when the grandfathering provision expires after 15 years, the
grandfathered facilities would be in a good shape to meet the 20% GHG reduction requirement.
The option (2) can be imposed industry-wide so that facilities small or big will not be
discriminated. [[Docket number 2491.1, p. 2]]

Our Response:

       Some  commenters supported the option of an expiration date, specifically API, NPRA
some refining companies and others.  Renewable Fuels Association, the National Biodiesel
Board, Ag Processing and several other commenters did not support that option, nor the
reconstruction and facility options (Options 2 and 3).

       Generally, commenters who supported an expiration of the exemption did so because of
concerns that the basic approach of providing an indefinite exemption would not provide any
incentives to bring these plants into compliance with current standards. They also objected to
plants being allowed an indefinite exemption despite the fact that such plants have long since
paid off their  investors. Commenters who did not support the expiration option, opposed it
because they felt it was a violation of the  statute. Valero Energy claimed that such a limit
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would "impede, and possibly prevent, the orderly financial recovery of the corn-based ethanol
industry."

       EPA believes that it would enhance the environmental protection goals of the Act to
establish an expiration date for the exemption, and that, on the other hand, such an approach
may lead to closures of plants that might find it too expensive to retrofit at the end of the
exemption period. Such a result would not further the energy independence goals of the
statute.  Thus, a decision in either direction could both enhance and detract from important
goals  of the statute.  With these factors in mind, we have decided not to adopt one of the
exemption options for two primary reasons.  First, our approach to limiting the exemption to
baseline volumes means that there is less of a justification for an expiration of the exemption
than if we had chosen an option such as exempting all volumes of fuel that could be produced
into the indefinite future from qualifying facilities and their expansions.  Second, we find the
approach closer to the text of the statute, which does not specifically suggest a temporal
limitation.

       There were few comments addressing the "facility" approach, and the indefinite
grandfathering approach in which the exemption status is not limited to baseline volume, but to
whatever volume of renewable fuel the plant may produce. With respect to the latter option,  the
Renewable Fuels Association stated that such approach best expresses the statutory language and
Congressional intent. However, we see nothing in the text of the statute to suggest that the
expanded production from facilities that qualify for the exemption, and which may be based on
major construction into the indefinite future, should also qualify for the exemption.  We believe
that the approach we have selected for the final rule will provide appropriate protection to
existing investments, while requiring that new volumes be produced in accordance with the GHG
standards specified in EISA.
3.5    Generation of RINs

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2412
Organization:       Xebec Adsorption Inc.
Comment:
The commenter (2412.1) proposes that EPA lead the world by including a requirement for the
suppliers of fossil-based natural gas to generate RINs, calculated as a percentage of that portion
of the product that the entire industry supplies for use as transportation fuels. We recommend
that EPA apply this requirement industry wide, to all suppliers of Natural Gas. This will serve to
share the burden of cost and not dissuade any specific gas supplier from selling small volumes of
gas to fledgling NGV fuel providers. The commenter believes that this strategy will encourage
the continued growth and expanded environmental benefits of the industry. (2412.1, p.4)

Our Response:
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       CAA 211 (o) specifies that only renewable fuels are valid for meeting the volume
mandates. The statute does not provide authority for EPA to allow fossil-based natural gas to
generate RINs, regardless of whether that natural gas is used in transportation.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2146
Organization:       DuPont Applied BioSciences
Comment:
The commenter (2146.1) believes that each RIN should continue to be generated by the producer
or importer of the renewable fuel, as is the case under the RFS1 program. (2146.1, p.2)

Our Response:

       While we examined various approaches to the designation of RIN generators in the RFS1
rulemaking, we did not take comment on alternatives to the final RFS1 approach in the RFS2
NPRM. We  continue to believe that the RIN system operates most efficiently when RINs are
generated by producers and importers of renewable fuel.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2548
Organization:       Xyleco, Inc.
Comment:
To provide the legal certainty necessary for innovation, EPA should make clear in the final rules
that, even in the event of litigation, (1) pathways remain approved until modified following the
procedures of the final rules, (2) RINs generated by producers following an authorized pathway
remain valid, and (3) producers who produce in good faith in compliance with those approved
pathways are not vulnerable to compliance sanctions.

Our Response:

       The  pathways in the lookup table in §80.1426 (f) for which D codes have been assigned
remain valid for RIN generation until modified through a notice-and-comment rulemaking. In
the event of a court-ordered suspension of any portion of the RFS2 regulations, or during the
period of any litigation, the court would indicate whether and under what conditions pathways in
the lookup table at §80.1426(f) would continue to be valid for RIN generation.
3.5.1   Equivalence Values

3.5.1.1 Supports Energy-based Approach to Equivalence Values

What Commenters Said:



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Document No.:     EPA-HQ-OAR-2005-0161-0994
Organization:      Griffin Industries
Comment:
The commenter (0994.1) requests that RFS2 continue to use the RFSI Equivalence Values for
Biofuels on the basis of energy content. This will support the marketplace demand for Biofuels
above their specified minimum. (0994.1, p.7)

Document No.:     EPA-HQ-OAR-2005-0161-2110
Organization:      Chevron
Comment:
The commenter (2110.1) believes that the energy-content-based equivalency values are
appropriate. (2110.1, p.4)

Document No.:     EPA-HQ-OAR-2005-0161-2124
Organization:      National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) supports retaining the energy density-based approach to equivalence
values. An energy density-based approach helps provide a level playing field for all existing and
future potential renewable fuels. The commenter prefers the simplest approach, which would be
to provide weighting factors and the factored RIN volumes would be used to meet the standards
(i.e., the biomass-based diesel standard). (2124.1, p.21)

Document No.:     EPA-HQ-OAR-2005-0161-2130
Organization:      ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) states that EPA's RFSI equivalence values for the various renewable
fuels based on energy density is a reasonable mechanism and should be retained to encourage the
use of higher energy density fuels. [[Docket number 2130.1, p. 3]]

Document No.:     EPA-HQ-OAR-2005-0161-2132
Organization:      Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) believes that equivalence values should be based on the energy and
renewable contents of each renewable fuel against a baseline of denatured ethanol, consistent
with the approach used under the original RFS program.  The commenter also believes that EPA
is correct to convert volumes of biomass based diesel to ethanol-equivalent volumes. The
commenter also agrees with EPA's proposal to treat the  denaturant in ethanol and the
nonrenewable portion of biodiesel as de minimis, thus counting these portions as  part of the
renewable fuel compliance volume.  (2132.1, pp.6-7) [[See Docket Number 2132.1, pp.14-15 for
a detailed discussion on equivalence values]]

Document No.:     EPA-HQ-OAR-2005-0161-2143
Organization:      New York State Department of Environmental Conservation
Comment:
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The commenter (2143) recommends that the current method of generating RINs based on
equivalent amounts of fuel energy must be retained. The commenter (2143) argues that the
volume based program provides an inappropriate market advantage to low volumetric energy
content renewable fuels.(2143.2, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The commenter (2145.1) supports retaining the energy-based approach of the RFS1 program.
(2145.1, p.7)

Document No.:      EPA-HQ-OAR-2005-0161-2146
Organization:       DuPont Applied BioSciences
Comment:
The commenter (2146.1) recommends continuing the use of Equivalence Values as under RFS1.
This approach is consistent with Congressional intent to support use the development and use of
advanced biofuels, and is an appropriate measure of the biofuel's ability to replace overall fossil
fuel use and impact on the  transportation sector. (2146.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2149
Organization:       Dynamic Fuels, LLC
Comment:
The commenter (2149.1) agrees with option one, which would continue to apply equivalence
values based on the energy content and renewable content of each renewable fuel in comparison
to denatured  ethanol, consistent with the approach under RFS1. The commenter also believes
that this should continue to apply  to the biomass-based diesel category.  (21491.1, p.3)

The commenter noted that  if the second option is chosen, and all liquid renewable fuels are
counted strictly based on their measured volumes, the commenter believes the non-renewable
content of the fuels should be treated as de-minimus. The main reason is that this approach
would simplify recordkeeping for us and other renewable fuel companies. (2149.1, pp.3-4)

Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:       ConocoPhillips
Comment:
The commenter (2154.1) supports retaining the current energy based equivalence values.
(2154.1, pp.5-6)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) believes that the concept of equivalence values, the weighting of
renewable fuels volumes to account for differences in energy content, made sense for RFS1 and
makes sense  for RFS2. EPA should continue this practice. The use of equivalence values is
necessary for the total and  advanced renewable category because many different renewables will
be combined in these categories.  The commenter further states that it is essential that cellulosic
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diesel get some credit for the extra energy it supplies to U.S. transportation and the refinery
based renewable diesel should get credit for the extra BTUs it provides. [[Docket number
2233.2, p. 8]]

Document No.:      EPA-HQ-OAR-2005-0161-2337
Organization:       California Air Resources Board
Comment:
The commenter (2337.1) recommends that U.S. EPA calculate equivalence values for fuels
based on the energy content (ethanol equivalent gallons) and not on volume.  The use of energy
equivalence values will create a more level playing field for the production of different fuels
from the same feedstock.

Document No.:      EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
The commenter (2358) believes the equivalence values should be based on a fuel's energy
content rather than its volume—this approach is more consistent with the program goal of
displacing fossil fuel.  Using a volume-based equivalence value would put the fuels capable of
displacing the largest amount of fossil fuels at a cost disadvantage. [[Docket number 2358.1, p.
5]]

Document No.:      EPA-HQ-OAR-2005-0161-2364
Organization:       Tyson Foods, Inc.
Comment:
The commenter (2364.1) agrees that equivalence values need to be applied based on the energy
content and renewable content of each renewable fuel in comparison to denatured ethanol,
consistent with the approach under RFS1. The commenter believes that this should continue to
apply to the biomass-based diesel category. The commenter believes that a change in how
Equivalence Values are applies could negatively impact the value of Dynamic Fuels" product. A
change would also represent a flawed fix. The commenter noted that if EPA chose the second
option, and all liquid renewable fuels  are counted strictly based on their measured volumes, then
the commenter believes the non-renewable content of the fuels should be treated as de minimus.
The main reason is that this approach would simplify recordkeeping for us and other renewable
fuel companies. In addition, because the non-renewable content is typically a small fraction of
the overall volume of each alternative fuel, little benefit would be gained from the precision.
(2364.1, pp.3-4)

Document No.:      EPA-HQ-OAR-2005-0161-2365
Organization:       Neste  Oil Holding, Inc
Comment:
The commenter (2365.1) believes that the existing methodology for calculating equivalency
value in the Renewable Fuel Standard remains very relevant and should not be altered. (2365.1,
p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2384
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Organization:       BP America (BP)
Comment:
The commenter (2384) agrees with EPA's assessment of this issue in the RFS1 regulations and
agrees with maintaining the use of equivalence values for RFS2.  The commenter believes that
equivalency values based on energy content and renewable content are the appropriate yardsticks
for determining how different types of fuel deliver the goals of RFS2. [[Docket number 2384.1,
pp. 4-5]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter (2393) supports EPA's use of fuel energy content as the basis of establishing
RIN equivalence values and adds that equivalence values should be uniformly applied to all
renewables, regardless of production means or use location. This approach was used in the
RFS1 regulations and should be continued under RFS2 as a sound basis for weighing the relative
energy contribution by the mandated renewables. [[Docket number 2393.1, p. 3]]

Document No.:      EPA-HQ-OAR-2005-0161-2408
Organization:       Advanced Biofuels Association
Comment:
The commenter (2408.1) supports the continuation of the current EPA approach basing the
equivalence values on the energy content and renewable content of each renewable fuel in
comparison to denatured ethanol, which is consistent with the approach under RFS1. This
approach is also consistent with other energy sectors for non liquid-energy fuels such as biogas
and renewable electricity.  The commenter is concerned that the failure to utilize an energy
density approach will lead to the diversion of feedstocks away from fuels and toward other
energy sources, thus making it more difficult to reach the gallons mandated under the statute.
(2408.1, p.2)

The commenter encourages EPA to simply take the current energy density program and apply it
forward to each of the distinct categories under the redesigned RFS2. (2408.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2106
Organization:       Endicott Biofuels II, LLC
Comment:
The commenter (2106) proposes the continued use of energy content as finalized in RFS1 rather
than volume as is proposed as an alternative. The  commenter is concerned is that if Obligated
Parties are measured on compliance using volume only, we believe this will erode the value of
RINs associated with the newly developed categories of renewable  fuels which have an
inherently higher energy content per gallon when using the ethanol  equivalency basis. This
ethanol equivalency tends to incent the highest use of renewable feedstocks into delivering the
most energy dense fuels which are in turn most efficient to transport and deliver to  the end users.
[[Docket number 2106.1, p. 5]]

Our Response:
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       As discussed in Section II.D.I of the preamble to the final rule, we generally agree with
the above comments in 3.5.1.1, and have finalized an energy-based approach to Equivalence
Values that is consistent with the approach taken in RFS1.


What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (2249.2) supports EPA's proposal to retain equivalence values for biodiesel and
renewable diesel, but not for those RINs being used toward the biomass-based diesel or
advanced biofuel mandates.  Unlike the existing RFS program where biodiesel is competing with
corn ethanol, the advanced biofuel mandates should be met on a gallon to gallon basis. [[Docket
number 2249.1, p. 5]]

However, the commenter also recognizes that the existence of four standards under RFS 2 may
not obviate the value of standardizing for energy content, which provides a level playing field
under RFS1 for various types of renewable fuels based on energy content. Thus, the commenter
believes that equivalence values under RFS 1 should remain in use for the renewable fuel
category under RFS2. This category represents the RIN marketplace under RFS1 and fuels with
higher ethanol equivalent energy content should be able to  demonstrate their favorable energy
profile  in this category. [[Docket number 2249.2, p. 32 and docket number 2249.1, p. 5]]

Our Response:

       As discussed in Section II.D.I of the preamble, we are retaining the energy-based
approach to Equivalence Values promulgated with the RFS1 final rule for all renewable fuels.
However, as described in Section II.E.I of the preamble, we are treating the biomass-based
diesel volume mandate as biodiesel equivalent volume, while treating the volume mandates for
cellulosic biofuel, advanced biofuel, and total renewable fuel as ethanol-equivalent volumes. To
accomplish both of these goals, we have adjusted the biomass-based standard by the 1.5
Equivalence Value for biodiesel.

       We do not believe that it would be appropriate to treat the advanced biofuel mandate as
actual volume rather than as ethanol-equivalent volume.  While the biomass-based diesel
mandate is clearly intended to represent diesel fuel and diesel fuel substitutes, the advanced
biofuel mandate can be met with any type of renewable fuel.  To treat the advanced biofuel
mandate as actual volume would require that we  presume a specific mixture of renewable fuels
in setting the standard, and apply the appropriate Equivalence Value to each type of renewable
fuel in a manner similar to the way we have  set the standard for biomass-based diesel. The
advanced biofuel standard would then  depend on the mixture of renewable fuel types that we
assume will be produced.  Since doing so would  b equivalent to EPA choosing what renewable
fuel types should be produced or imported, we do not believe this would be appropriate.
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RFS2 Summary and Analysis of Comments
3.5.1.2 Supports Straight Volume Approach to Equivalence Values

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2419
Organization:      Cargill Incorporated
Comment:
The commenter (2511.1) noted that since EISA targets are defined in terms of volume, a 1:1
valuation for all categories of RINs should be used.

Document No.:     EPA-HQ-OAR-2005-0161-0999
Organization:      Darling International Inc.
Comment:
The commenter (2151.1) supports EPA's decision in the NPRM to adopt the straight volume
approach for measuring renewable fuel to calculate compliance with the volume mandates of
RFS2, rather than taking the approach to incorporate equivalence values for renewable fuels
based on their energy content. Specifically, the commenter supports EPA's decision to adopt the
straight volume based requirement to calculate compliance for biomass based diesel. (2151.1,
P-4)

Document No.:     EPA-HQ-OAR-2005-0161-0952
Organization:      Renewable Fuels Association
Comment:
The commenter (2329.1) believes that EPA should not retain the current equivalence values. If
EPA does retain equivalence values, the commenter would support setting the values at 1 for all
liquid fuels and all of the volume mandates.  (2329.1, pp.89-90)

Document No.:     EPA-HQ-OAR-2005-0161-1033
Organization:      Poet Ethanol Products
Comment:
The commenter (1033.1) supports EPA's proposal of shifting the RINS value of all renewable
fuels to be based on the fuel's measured volume as opposed to the existing equivalence value
formulas. (1033.1,p.2)

Document No.:     EPA-HQ-OAR-2005-0161-1044
Organization:      GEN-X Energy Group Inc.
Comment:
The commenter (1044.1) supports the proposal that demonstrates the generation of 1 RIN for 1
gallon because this concept demonstrates the actual gallons produced and distributed in the
system to ensure 100% compliance without error.  The commenter believes that EPA's concern
that the market will not respond and RINs may not have values is unfounded because recent
developments in the RIN trading markets indicate  otherwise. (1044.1, p. 1)

Document No.:     EPA-HQ-OAR-2005-0161-2119
Organization:      National Sorghum Producers
Comment:
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The commenter (2119.1) is in favor of a straight volume approach to measuring liquid gallons of
renewable fuel.  The commenter believes that an energy-based approach would favor biodiesel
and could result in not meeting the specific gallons of advanced biofuel as specified in EISA.  By
using a straight volume approach, the amount of advanced biofuel as specified in EISA would be
produced at the most efficient level.  The commenter believes that the final rule should provide a
clear incentive to produce both advanced ethanol and biodiesel. (2119.1, pp.4-5)

Document No.:      EPA-HQ-OAR-2005-0161-2360
Organization:       Archer Daniels Midland Company (ADM)
Comment:
The commenter (2360.1) believes that since EISA expanded the renewable fuels program to
include four separate categories of renewable fuel with its own volume requirement, there may
no longer be a need for Equivalence Values greater than 1.0.  The commenter also supports
EPA's proposal that all liquid renewable fuels should be counted strictly on the basis of their
measured volumes, and the Equivalence Values for all renewable fuels should be 1.0.  This
would greatly simplify the program and result in fewer calculation errors. (2360.1, pp.6-7)

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil USA, Inc.
Comment:
The commenter recommends all Equivalence Values for all renewable fuels be 1.0.  The
commenter recommends that the EPA keep the RIN types separated utilizing the different D-
codes.  By using the different RIN types instead of equivalency values, it forces certain types of
renewable fuels to be blended in, and one type  (corn ethanol) cannot be used to meet the
obligation for another (biodiesel).

Document No.:      EPA-HQ-OAR-2005-0161-2419
Organization:       Cargill Incorporated
Comment:
The commenter (2511.1) encourages EPA to use a 1:1 valuation of RINs under the RFS2
program. Based on the volume thresholds outlined in the RFS2 schedule, using an equivalence
value of 1.5:1 would be  allowing extra credit for biodiesel. (2 511.1, p. 7)

Document No.:      EPA-HQ-OAR-2005-0161-1050
Organization:       American Council for Ethanol (ACE)
Comment:
Initially, the commenter (2101.1) strongly disagreed with EPA's proposal to create equivalency
values for a range of fuels. Therefore, the commenter pleased that EPA is planning to enforce a
straight volumetric approach for RFS2, this is especially appropriate given the nested standards
that have been established in RFS2 for various  forms of advanced and cellulosic biofuel.
(2101.1, p.15)

Our Response:

       The commenters provided little support for their preference that Equivalence Values be
based strictly on measured volumes.  Although some commenters believe that the use of an
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RFS2 Summary and Analysis of Comments
energy-based approach would provide extra credit to renewable fuels other than ethanol, in fact
this approach would ensure that all renewable fuels are valued the same in terms of their ability
to displace fossil-based transportation fuels. Therefore, as discussed in Section II.D.I of the
preamble, we are maintaining the energy-based approach to Equivalence Values promulgated
under RFS1.
3.5.1.3 Other Aspects of Equivalence Values

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter supports the proposal to change ethanol energy content from 77,550 Btu per
gallon to 77,930 Btu per gallon. (2329.1, pp.89-90)

Our Response:

       We agree with the need for a change to the volumetric energy content of ethanol.
However, as described in Section III.D.I of the preamble, we are finalizing an energy content for
ethanol of 77,000 Btu/gal.


What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1050
Organization:       American Council for Ethanol (ACE)
Comment:
The commenter is aware of several corn ethanol producers who have been able to generate 2.5
credits for every gallon of ethanol produced under RFS1 because they have implemented a low
carbon technology to power their ethanol facility.  The commenter thinks it is unfair to arbitrarily
take this opportunity away from those producers, so the commenter recommend that EPA
consider a plan to gradually phase out the 2.5:1 credit. (2101.1, p. 15)

Document No.:      EPA-HQ-OAR-2005-0161-2548
Organization:       Xyleco, Inc.
Comment:
EISA displaces the explicit statutory-mandate of a 2.5 equivalence ratio.  However, EISA
prescribes that EPA shall make available credits at statutorily prescribed prices to enable
obligated parties to demonstrate compliance. The Act further delegates to EPA broad authority
to establish a credit regime that promotes cellulosic biofuels. EPA should reinstate credit
advantages for cellulosic biofuels and sharpen the incentives for new innovative technologies, to
ensure  continuation of the targeted incentives necessary for renewable fuels development. At a
minimum, EPA should maintain the  existing credit incentives through 2012, the period of
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establishment contemplated by EPAct that market participants such as Xyleco have relied on in
making investments and developing innovative cellulosic biofuels production processes.

Our Response:

      EISA eliminated the provision originally created in CAA 211 (o) by the Energy Policy
Act of 2005 which gave 2.5:1 credit to any ethanol if 90% of the facility's process energy is
derived from renewable sources.  Given the changes to the RFS standards and requirements for
what fuels qualify for those standards that were brought about by EISA, we do not believe it
would be appropriate or in keeping with the intent of the Act to continue to provide such
additional credit for these fuels. Once the provisions of the revised CAA 211 (o) are
implemented through the RFS2 regulations, the 2.5:1 credit provision ceases to be applicable.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2137
Organization:       Brazilian Sugarcane Industry Association (UNICA)
Comment:
Urging EPA not to wait for the final endangerment finding, the commenter (2137.1) asks that the
Agency promote the use of the lowest GHG emitting renewable fuels. The commenter
recommends that EPA establish in the final RFS2 rule that the best performing renewable fuel
pathway in any given  RFS2 category would receive commensurately higher equivalence values
based on their relative reduction in GHG emission (Code "RR" in 38-digit Renewable
Identification Numbers, RIN codes).  The commenter further states that in the absence of such a
requirement, the renewable fuel with the lowest price—not necessarily the fuel with the lowest
GHG emissions—would be consumed in the greatest quantity.  In contrast, by including such a
requirement, there would likely be greater demand for the fuels with lower GHG emissions as
compared to conventional renewable fuels. [[Docket number 2137.1, p. 16]]

Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:       ConocoPhillips
Comment:
The commenter believes it appropriate to provide additional equivalency value relative to the
GHG value of the utilized renewable fuels. The current approach provides very broad threshold
values that do not value a renewable fuel for its potential contribution to GHG emission
reductions. The commenter supports further weighting through added RIN production of
advance-low GHG renewable fuels in a manner similar to the EV value in RFS1. (2154.1, pp.5-
6)

Document No.:      EPA-HQ-OAR-2005-0161-2408
Organization:       Advanced Biofuels Association
Comment:
The commenter suggested that EPA consider providing additional RIN credits for all fuels that
exceed their GHG reduction requirements. This changed could be a simple formula that involves
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awarding a couple of tenths of one RIN credit for each fuel which exceeds its GHG reduction
target by some specific amount. (2408.1, pp.2-3)

Document No.:      EPA-HQ-OAR-2005-0161-2548
Organization:       Xyleco, Inc.
Comment:
EPA should also include in its approval procedure recognition for new renewable fuels
production pathways by providing additional incentives for such innovative, breakthrough
technologies.  EPA should provide in its final rules that new biofuel pathways that meet certain
criteria - e.g., new pathways representing breakthrough technologies with low environmental
impacts -- receive increased Equivalence Values of 2.5 to 5 to 1.

Our Response:

       As discussed in sections 3.5.1.1 and 3.5.1.2 above, we are finalizing Equivalence Values
based on energy content in this final rule.  We believe this effectively implements the provisions
of section  211 (o) of the CAA and results in a system that appropriately credits renewable fuels
based on their ability to displace fossil fuels.  We recognize that further adjusting Equivalence
Values to reflect GHG performance could encourage facilities to improve the environmental
attributes of their fuels beyond the specified statutory levels, and would provide additional
market encouragement to the  production of the best GHG-performing fuels.  We believe,
however, that such an approach would most effectively involve case-by-case life cycle analyses
that are beyond the ability of the Agency to perform at this time.  If in the future we develop
such capability, or discern that a broader approach may be practical, we may reconsider this
issue.
3.5.2   RIN Generation for Domestic Producers

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The commenter (2145.1) supports the concept of allowing a biodiesel producer to "average" its
production across facilities. The commenter noted that the following are advantages of using the
company-wide averaging approach: GHG reduction goals met; high quality product available;
and, better alignment with EISA volumetric goals. (2145.1, pp.3-4) [[See Docket Number
2145.1, pp.2-5 for a detailed discussion of this issue.]]

Our Response:

       Based on the updated lifecycle analyses presented in today's final rule, both soy-based
biodiesel and waste grease-based biodiesel meet the 50% GHG threshold associated with the
biomass-based diesel volume mandate. As a result, there is no longer a need for a provision
allowing biodiesel to be averaged across facilities.
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What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2312
Organization:       LyondellBasell Industries
Comment:
The commenter (2312.1) believes that the RFS2 regulations should continue the aspect of the
RFS1 regulations that recognized and maintained the market flexibility to fully pass-through the
RINs associated with renewable fuel alcohol volumes when those volumes are combined with
isobutylene in making higher value bio-ether blendstocks such as ETBE. (2312.1, pp.2-3)

Our Response:

       We agree that RINs assigned to renewable fuel used as a feedstock in the production of
another renewable fuel should be assigned to the new renewable fuel. We have retained this
provision at §80.1426(c)(6).
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
The commenter (2358) believes it is essential that RINs be generated for all eligible fuel to
maintain RIN liquidly. The commenter suggests creation of a renewable "pedigree" that
accompanies the fuel as it moves through the stream of commerce to avoid creation of fraudulent
RINs for fuel that does not meet the requirements. [[Docket number 2358.1, pp.3-4]]

Our Response:

       In the NPRM, we proposed that a producer could produce and sell biofuel without RINs
if he demonstrated that the renewable biomass definition had not been met.  For the reasons
described in Section II.B.4 of the preamble, we have determined that this requirement would
have been overly burdensome to producers.  The creation of a renewable pedigree as the
commenter suggests would have required a similar level of effort.  However, the final rule
requires that RINs be generated for all qualifying renewable fuel for which the producer has
demonstrated that the renewable fuel was made from renewable biomass. Moreover, we are
finalizing an aggregate compliance provision for domestic "planted crops and crop residue" used
as feedstock in biofuel production.  As a result those producers using such materials as
feedstock will not need to make a demonstration that their renewable fuel is made from
renewable biomass, and they will be required to generate RINs.

       We believe that the provisions we have finalized are sufficient to ensure that RINs are
properly generated, traded, and used for compliance. In particular our creation of the EMTS
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RFS2 Summary and Analysis of Comments
system for tracking RIN transactions will help tremendously. Creation of a new renewable
pedigree for RINs would appear to create considerable new complexity in the RIN system
without providing any significant degree of protection against fraudulent RINs. As a result, we
are not finalizing such a system.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2310
Organization:       Low Carbon Synthetic Fuels Association (LCSFA)
Comment:
The commenter (2310) states that normally, they would expect the fuel categories with the
highest GHG reduction thresholds to command the highest market price, and BTL producers
would clearly generate RINs for those categories. However, in the preamble EPA states that
"under certain conditions it may be possible for the market price of corn ethanol RINs to be
significantly higher than the market price of cellulosic biofuel RINs."  Under such conditions,
however remote, it would be inappropriate and contrary to Congressional intent to have corn
ethanol RINs command a higher price than those of the most advanced fuels required under the
statute, which may be more expensive to produce if externalities in the production cost
assessment are not considered (as is the case with many first generation biofuels). In such a case,
the commenter believes it would be appropriate for EPA to allow cellulosic biofuel producers the
freedom to sell into a broader RIN category. [[Docket number 2310.1, p. 16]]

Our Response:

      In order to ensure that RINs accurately represent the renewable fuels that they are
generated to represent, we are requiring that producers generate RINs according to the D codes
specified in the lookup table in §80.1426(f) that correspond to their operations.  We do not allow
producers to choose alternative D codes for the RINs, as this would misrepresent the fuels that
they produce. However, since cellulosic biofuel RINs can be used to comply with the advanced
biofuel and total renewable fuel standards, a producer of cellulosic biofuel can price its RINs to
compete with advanced biofuel RINs or renewable fuel RINs.
3.5.3   RIN Generation for Foreign Producers and Importers

3.5.3.1 Party that Generates RINs

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2012
Organization:       Caribbean Basin Ethanol Producers Group
Comment:
The commenter (2012.1) recommends that the generator of the RINS be the importer of record.
(2012.1, p.3)
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Document No.:      EPA-HQ-OAR-2005-0161-2137
Organization:       Brazilian Sugarcane Industry Association (UNICA)
Comment:
The commenter (2137.1) states given that EPA takes the view that renewable fuel ethanol
requires the addition of a denaturant, and that in the case of the sugarcane ethanol pathway the
denaturant is nearly always added at the U.S. port of entry, the Final Rule should clarify that
importers, not foreign producers, should generate the RINs under RFS2 as has been the case in
RFS1.  The requirement for adding denaturant, which ironically requires the addition of a non-
renewable fuel such as gasoline, is unique to the U.S. and consequently, one that shifts the point
of RIN generation to the port of entry in the case of imported ethanol. [[Docket number 2137.1,
p. 39]]

Document No.:      EPA-HQ-OAR-2005-0161-2362
Organization:       Canopy Prospecting, Inc. And Trinidad Dehydration Company, Limited
Comment:
The commenter (2362) is concerned about traceability and RINS. TDCL expects to operate as a
tolling facility for third parties. TDCL would only have responsibility for their ethanol from the
time it passes from the ship chartered by a client to deliver the hydrous ethanol to the time that
TDCL delivers the product again to the tolling client's chartered ship's flange.  Under such a
scenario, TDCL could not establish the origins of the hydrous or anhydrous ethanol. Therefore,
we recommend that the importer of record into the United States be responsible for generating
RINS. [[Docket number 2362.1, p. 2]]

Our Response:

       Under our final RFS2 regulations at §80.1401 (definition of "renewable fuel"),  RINs can
be generated for imported  biofuel that meets the definition of "renewable fuel," under which
ethanol must contain a denaturant.  Insofar as the importer adds the denaturant to a batch of
ethanol that he is importing, then the importer is the only party that can generate  RINs  for that
batch of ethanol. If the denaturant is added to the ethanol prior to importation, then the party that
adds the denaturant has the opportunity to generate RINs for that batch if he is registered with
the EPA and can make a demonstration that the batch meets the full definition of "renewable
fuel" including the requirement that it be made from renewable biomass.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2637
Organization:       EthylChem, Ltd
Comment:
We must also concur with others' comments in urging EPA to designate the importer of record
as the entity responsible for generating the RINs on all imports of fuel ethanol into the U.S. So
much consolidation and comingling make it virtually impossible to trace volumes back to a
single mill in Brazil.

Document No.:      EPA-HQ-OAR-2005-0161-2017
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Organization:       Aloha Petroleum, Ltd.
Comment:
The commenter (2017.1) believes that the entity that denatures imported undenatured ethanol
should not have the burden of complying with the feedstock source and pathway determination
requirements. (2017.1, p.2)

Our Response:

      A party that adds a denaturant to imported undenatured ethanol is a producer of
renewable fuel under the RFS2 regulations, since "renewable fuel" is defined in §80.1401 to
include only denatured (not undenatured) ethanol. If the party adding the denaturant wishes to
generate RINs, it must obtain appropriate information from the foreign producer regarding
compliance with the renewable biomass requirements and information about the production
process, as provided in §80.1426(a)(2).
3.5.3.2 Different Requirements for Foreign Versus Domestic Producers

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2419
Organization:       Cargill Incorporated
Comment:
The commenter (2511.1) supports equal and fair treatment for international producer certification
and registration when compared to domestic producers and facilities.  All imported biofuels
products must be held to the same standards as domestic biofuels. (2511.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2137
Organization:       Brazilian Sugarcane Industry Association (UNICA)
Comment:
The commenter (2137.1) believes that the EPA's proposed approach to implementing the new
RIN system, implicates several World Trade Organization (WTO) violations. The commenter
urges EPA to reconsider the proposed system to avoid such concerns.  Specifically, the proposed
RIN system described in the proposed RFS2 are inconsistent with the United States'
international legal obligations under the WTO Agreement in six distinct ways as grouped into the
follow three categories of measures:
A.     Additional "enforcement-related" requirements that are levied exclusively on foreign
       renewable fuel producers RFPs) and renewable fuel importers (RFIs), specifically
       requirements to (1) physically segregate fuel; (2) ensure third-party certification and
       comparison; (3) comply with an up-front bond-posting requirement; and satisfy
       additional annual attest engagement requirements;
B.     (5) the exemption of domestic small-batch RFPs from all recordkeeping, reporting and
       attest engagement requirements; and
C.     (6) The differential treatment of domestic and foreign RFPs in connection with
       documentation requirements for implementing the land use restrictions. [[Docket number
       2137.1, p. 35]]
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The commenter states that each single one of these six measure independently constitutes an
unjust discrimination of foreign renewable fuel and is thus a violation of Articles 2.1 and 2.2 of
the Agreement on Technical Barriers to Trade (TBT Agreement), as well as Article 111:4 of the
General Agreement on Tariffs and Trade (GATT).  In addition, all measures identified, except
measure (5), the small-batch waiver for domestic RFPs, are in contravention of Article XI: 1
GATT. [[Docket number 2137.1, p. 35]]

The commenter urges EPA to address these issues in finalizing the RFS2 to avoid any WTO
violations. Further, beyond mere WTO ramification, these unfair restrictions against foreign
producers risk EPA's ability to achieve the ambitious volume goals mandated by EISA,  [[docket
number 2137.1, p. 36]]  [[See docket 2137.2 pp  36-36 for details of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The commenter (2145.1) strongly agrees that a renewable fuel importer should have the same
requirements as a U.S. producer. A level playing field should exist for all participants in this
program. Ethanol and biodiesel produced by a foreign source must account for life cycle impacts
just as a domestic producer. The commenter disagrees with the structure set up in RFS2 to
accomplish this and requests EPA modify the process. The commenter suggests that EPA create
requirements for "biofuel importers" that parallel the requirements of a "renewable fuel
importer" found in §80.1426. In this scenario, the "biofuel importer" would provide
documentation that the biofuel was provided by registered "biofuel producers" (vs. renewable
fuel producers). A "biofuel producer" would have similar requirements for registration that a
"renewable fuel producer" has in §80.1450.  (2145.1, pp.5-6) [[See Docket Number 2145.1, pp.5-
6 for a detailed discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
The commenter (2358) believes EPA proposal to prevent fraud by segregating foreign fuels that
does not qualify for RIN generation is unrealistic and impractical. The commenter suggests that
foreign producers meet all the same requirements as domestic producers as the best way to avoid
fraud. [[Docket number 2358.1, pp. 4-5]]

Our Response:

       For the most part, requirements under RFS2 for foreign and domestic producers of
renewable fuel are the same.  The  RFS2 requirements that are unique to foreign producers of
renewable fuel were developed collaboratively with stakeholders in previous fuel rulemakings,
and in some cases are provisions developed and finalized in response to previous GATT
challenges. Many of these provisions were again proposed and finalized in the RFS1
rulemaking. These include such requirements as posting a bond, admitting EPA  enforcement
personnel, and submitting to third-party engineering reviews of their production  process.
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       The additional requirements imposed by EISA on renewable fuels, in particular the need
to demonstrate compliance with the GHG thresholds and the renewable biomass definition,
demand more rigor than was necessary under RFS1  in terms of enforcement and verifying
compliance because of the larger volumes and the need to determine what feedstocks and
production processes were used at the foreign facility. For renewable fuel produced outside the
U.S., this process presents special challenges due to the difficulty in gaining access to the fuel
production, storage, and distribution network.  Therefore, we believe it is both appropriate and
necessary to place requirements on foreign producers to ensure that renewable fuel entering the
U.S. is valid for compliance with the RFS2 volume mandates. See preamble Section II.D.2.C for
further discussion.
3.5.4   Facilities with Multiple Applicable Pathways

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) generally supports EPA's proposal for facilities that have multiple
pathways, but believes that facilities often mix energy sources to improve energy efficiency,
which may not be accurately addressed in EPA's pathways. (2329.1, p. 98)

Our Response:

       We have revised the fuel pathways in the lookup table at §80.1426 to accommodate
renewable fuel production facilities that utilize both fossil and non-fossil fuels for process heat
where possible. See further responses to comments on facilities with multiple process heat
energy sources in Sections 7.3 and  7.5. The final regulations also include a petition process that
parties may utilize to seek qualification of such pathways for D codes.  See responses to
comments in Section 7.4.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1033
Organization:       Poet Ethanol Products
Comment:
The commenter (1033.1) believes that the proposal of collecting the mass of different feedstocks
consumed in the production of renewable fuel is not particularly cumbersome.  The only
modification the commenter would suggest to the EPA's proposal of capturing this information
daily is that Renewable Fuel Producers be allowed to capture it no less frequently than at a batch
level. This approach would alleviate the additional complications of having to then dissect and
reassemble the data for reporting on a batch basis when the batches cross days or you have
multiple batches produced in a day.  (1033.1, p.2)
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Our Response:

      The regulations at §80.1426 (d) (5) have been modified to allow producers to use
feedstock mass data measured on a daily or per-batch basis.
3.5.5  Facilities that Co-process Renewable Biomass and Fossil Fuels

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2132
Organization:      Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) agrees with the proposal to generate RINs for the "advanced biofuel"
portion of a renewable fuel produced through co-processing. Facilities that co-process
renewable biomass and fossil fuels to produce a single fuel that is partially renewable should use
the relative energy in the feedstocks to determine the number of gallon-RINs that should be
generated. (2132.1, p.9)

Document No.:     EPA-HQ-OAR-2005-0161-2130
Organization:      ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) states that RIN generation for co-processing of renewable and fossil fuels
should be based on relative energy in the feedstocks. [[Docket number 2130.1, p. 16]]

Document No.:     EPA-HQ-OAR-2005-0161-2233
Organization:      Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) supports the  methodologies for handling facilities with multiple fuel type
pathways and co-processed fuels. [[Docket number 2233.2 p. 8]]

Document No.:     EPA-HQ-OAR-2005-0161-2393
Organization:      American Petroleum Institute (API)
Comment:
The commenter (2393) supports the  methodologies for handling facilities with multiple fuel type
pathways and co-processed fuels as proposed with subsequent application of appropriate EV and
CV equivalency factors and does not support either of the suggested alternatives. The alternative
methods involve far more complexity in compliance demonstration and enforcement than the
small amount of accuracy that would be gained. EPA's alternative clearly  is not warranted.
[[Docket number 2393.1, p. 10)

Document No.:     EPA-HQ-OAR-2005-0161-1027
Organization:      Beta Analytic, Inc.
Comment:
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The commenter (0998_Copyright) believes that it should particularly since the ASTM D6866
test can accurately determine the biomass fraction of the resultant fuel. It must be noted that the
ASTM D6866 method is already adopted in the current EPA's greenhouse gas reporting rule
under the Tier 4 sampling protocol for municipal solid waste, specifically for the measurement of
the biogenic C02 fraction.  Although the ASTM  D6866 method cannot determine the different
renewable biomass feedstock percentages, it can  determine with excellent accuracy and precision
the biomass carbon fraction of fuels.  The commenter also wanted to mention that ASTM D6866
is an accepted method for measuring the biomass fraction of fuels in the Australian, European
Union, and other regional greenhouse gas protocols, such California's AB 32 and the Western
Climate Initiative. This widely accepted method is also being considered as a biomass carbon
verification test for the Renewable Transportation Fuels Obligation in the United Kingdom.
(0998_Copyright, pp.1-2) (See Docket Number 0998_Copyright, pp.1-31 for a detailed
discussion on ASTM D 6866)

Our Response:

       We have finalized our approach to facilities that co-process renewable biomass and fossil
fuels essentially as proposed, as described in preamble Section III.D.4. We are also providing
producers the option of using a radiocarbon dating test method such as ASTM D-6866 to
determine the renewable content of their biofuels, as an alternative to determining the renewable
content of their feedstocks.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2420
Organization:       Magellan Midstream Partners
Comment:
The commenter (2420.1)  supports EPA's recognition that open-access terminals depend upon a
regulatory environment that provides the ability to co-mingle renewable fuels from multiple
suppliers in the same storage tank. Because of the potential increase in production of cellulosic,
advanced and traditional biofuels, the commenter stresses the importance of co-mingling fuels in
an effort to promote operational efficiencies and reduce distribution costs. (2420.1, p.2)

Our Response:

       We have designed the RIN program structure to allow for such commingling of fuels.


3.5.6   Fuels Without an Applicable D Code

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2408
Organization:       Advanced Biofuels Association
Comment:
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The commenter (2408.1) recognizes the limited resources and the tremendous variability and
range of renewable fuels technologies which are currently exploring their commercial
applicability under the proposed RFS2 rules.  The commenter urges that EPA create an expedited
process that would allow individual technologies utilizing specific feedstocks to be able to
demonstrate their various greenhouse gas reduction capabilities.

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
Regarding RIN-less biofuels, the commenter believes that EPA should require all biofuels that
are produced or imported to either meet the RFS2 thresholds or to be treated as transportation
fuels, with a RFS2 obligation. [[Docket number 2233.2, p.  10]]

Document No.:      EPA-HQ-OAR-2005-0161-1036
Organization:       Vision FL I, LLC
Comment:
The commenter (1036.1) noted that since fuel pathways and applicable D codes have such a
strong economic effect on ethanol sales from smaller producers (less  than 100MGY), generalized
fuel definition GHG reductions  and D codes will put many companies at a severe competitive
disadvantage because of the RIN generation and sales associated with those broad classes of fuel.
The commenter suggests that a process can choose to prove through the EPA's modeling (when
completely finalized)  they can produce GHG reductions in upwards of 60%; which would grant
said process plant the ability to us a D code of 1 for use with the associated RINs. (1036.1, p.2)

The commenter believes that the current wording and broad GHG definitions are
"unintentionally subsidizing" the cellulosic fuel class by ignoring project/process specific
fundamentals such as production costs, best management practices, and electricity sales via by-
product combustion from other advanced biofuels. The commenter recommends that the fuel
pathway tables (VI.E.1-1, VI.E.2-1, VI.E.4-1) remain as is to be used as general look up values,
but Table III.B.2-1 should reflect fuel classes such as Class I, Class II etc...that corresponds to
the appropriate GHG  lifecycle reductions. If such an approach is not acceptable, than the
commenter suggests a provision be added where a fuel producer can apply for a D code higher
than the recommended D code from their fuel pathway as long as work is completed with the
EPA on a "case-by-case" basis to confirm through the GHG models such a reduction is indeed
feasible. (1036.1, p.2)

Our Response:

       EPA is finalizing a petition process for all renewable fuels and fuel additives that are not
in the list of modeled pathways.  The  process is designed to allow companies to generate RINs, if
EPA can in its judgment determine if the unique pathway is eligible to generate RINs. We
believe this addresses the comments on the need to have an expedited process.  Not all petitions
will be granted and some will require EPA to  finalize a rule making before those pathways may
be eligible for RINs.  See additional discussion of the petition process in the response to
comments in Section  7.4.
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RFS2 Summary and Analysis of Comments
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2119
Organization:       National Sorghum Producers
Comment:
With regards to distiller's grains, the commenter believes that a facility that dries only a portion
of its distiller's grains should only be producing different RINs (or no RINs) on that portion of
biofuels that resulted in dried distiller's grains.  If a facility estimates that it will dry 20% of its
distiller's grains in a year, then 20% of the daily volume of ethanol should have a different RIN
(or no RIN). An adjustment could then be made each quarter to account for the actual amount of
dried distiller's grains produced. (21191, p.4)

Our Response:

       EPA has modeled that facilities that dry no more than 65% of their distillers grains and
solubles in a calendar year and uses other advanced technologies then they may qualify to
produce RINs. If the production facility pathways qualify as meeting the GHG threshold then
that facility may generate RINs for all qualifying volumes. If a producer believes that it should
be permitted to generate RINs with different D codes depending on the fraction of distiller's
grains that is dried, we have developed a petition process for that purpose. See responses to
comments in Section 7.4.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2110
Organization:       Chevron
Comment:
The commenter (2110.1) believes that EPA should create a Renewable Volume Obligation
(RVO) for all RIN-less renewable fuels. In the final rule, EPA should make clear that RIN-less
renewables, destined to be used neat or blended into other fuels are, by definition, transportation
fuels for the purpose of the RFS and, consequently, incur a RVO. (2110.1, p.3)

Our Response:

       We agree that biofuel may be produced or imported under RFS2 for which no RINs are
generated. If this biofuel is used as transportation fuel, it might be reasonable to treat it as
obligated fuel subject to the standards.  However, we do not believe that it would be appropriate
at this time to finalize a requirement that RIN-less biofuel be considered an obligated fuel. We
did not propose such an approach in the NPRM, and as a result many renewable fuel producers
who could be affected did not have an opportunity to consider and comment on it. Moreover, the
volume of RIN-less biofuel is likely to be small compared to the volume of renewable fuel with
RINs  since RINs have value and producers currently have an incentive to generate them. See
further discussion in preamble Section III.D.7.
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3.5.7   RINs Generated for Electricity, Natural Gas, and Propane

What Commenters Said:

Document No.:  EPA-HQ-OAR-2005-0161-2233
Organization:   Marathon Petroleum Company (Marathon)
Comment:
Regarding how to calculate RINs for electric vehicles, natural gas and propane, the commenter
believes that only VMT that is based on the actual use of renewables should be credited. There
should be no double-counting (generation) of RINs. [[Docket number 2233.2, p. 11]]

Document No.:  EPA-HQ-OAR-2005-0161-2393
Organization:   American Petroleum Institute (API)
Comment:
Regarding how to calculate RINs for electric vehicles, natural gas and propane, while the
commenter (2393) supports such RIN generation, only renewable fuels used in the direct
application allowed by Congress, i.e., transportation fuels and heating oil that is based on the
actual use of renewables in these applications should be credited. There should be no double-
counting (generation) of RINs and adequate enforcement mechanisms need to be created to
ensure  this. [[Docket 2393.1, p.  12]]

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter believes that the EPA should not include biomass electricity, natural gas, CNG
or LNG in the RFS2 program at this time. These industries are not well developed as
transportation fuel sources, and for now creates a significant burden to have to track whether
these energy sources were manufactured with qualified biomass,  and whether any portion of
these fuels (if manufactured from biomass) were used as transportation fuel. (0994.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2099
Organization:       Honeywell International, Inc.
Comment:
The commenter (2099.1) requests that EPA modify the proposed definition of renewable fuel by
eliminating the inclusion of electricity, natural gas, and propane made from renewable biomass.
(2009.1, pp.10) (See Docket Number 2099.1, pp.10-12 for a more detailed discussion on this
issue)

Our Response:

   As  discussed  in Section II.B.I of the preamble, we are finalizing provisions to  allow for the
generation of RINs for renewable electricity, natural gas, or propane that has been  shown to be
used for transportation purposes. (Note that not all of these fuels currently have a D-Code
assigned to them  and would still have to qualify as renewable fuels under future additions to the
lookup table in §80.1426.) Like any other renewable fuel producer, they will have to
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RFS2 Summary and Analysis of Comments
demonstrate at the time of registration and through annual audits that their fuel qualifies to
generate RINs under the RFS program. In addition, producers of renewable electricity, natural
gas, or propane can only generate RINs for their products if they can demonstrate that those fuels
are in fact used as transportation fuel.
What Commenters Said:

Document No.:   EPA-HQ-OAR-2005-0161-2466
Organization:    Northeast States for Coordinated Air Use Management (NESCAUM)
Comment:
The commenter (2466) supports the proposed alternative to allow or require parties that supply
these fuels to centrally fueled fleets to generate RINs even if they are not the producers of the
fuel. They support this approach because it would provide an incentive for a larger volume of
electricity, natural gas and propane that is made from renewable biomass to be used as vehicle
fuel. (2466.1.pdf.p.8)

Document No.:      EPA-HQ-OAR-2005-0161-2337
Organization:       California Air Resources Board
Comment:
The commenter (2337.1) recommends that parties who supply centrally located fleets with
renewable electricity, natural gas, and propane  be allowed to generate RINs, even if they are not
the producer of the fuel.  Any transportation fuel that can be verifiability linked via physical
pathway to renewable biomass should be allowed to generate RINs.  Only by establishing a level
playing field for all renewable fuels will the market be effective in promoting the least cost mix
of transportation fuels. (Page 4)

Our Response:

       In order to protect against possible double counting, we are restricting RIN generation for
renewable electricity, natural gas, and propane  to the producer of the fuel. Downstream
distributors or users of these fuels cannot generate RINs. We had considered allowing
downstream parties to also generate the RINs since they could better identify the use of the fuels
for transportation purposes.  However, as some commenters suggested, this might have provided
an opportunity for double-generation of RINs for these fuels.  If these fuels develop as
transportation fuels in the future and mechanisms can be developed to address potential double
counting and related enforcement concerns, then in the future we can consider allowing
downstream parties to generate  RINs as well.
3.6    Applicable Standards

Note: Comments related to our projection of the 2010 cellulosic biofuel volumes and our process
for setting the standard for cellulosic biofuel can be found in Section 6.3.2.
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What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) supports the application of the renewable fuel standard to nonroad
sources.

Our Response:

       We agree with this comment.  EISA requires that renewable fuels valid for compliance
purposes under RFS2 are those that are used to replace or reduce the quantity of fossil fuel
present in a transportation fuel, and transportation fuel is defined to include fuel used in nonroad
vehicles and engines.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) stated that if the RFS2 regulations will be effective on 1/1/11, then
statutory mandates for biomass-based diesel for 2009 and 2010 and for cellulosic biofuel for
2010 should be ignored/eliminated. The commenter then stated that if the RFS2 regulations will
be effective on 1/1/10, then the statutory mandate for biomass-based diesel for 2009 and
cellulosic biofuel for 2010 should be ignored/eliminated. (2124.1, p.10)

The commenter believes that EPA should not attempt to combine the 2010 and 2011 yearly
standards for biomass-based diesel  or cellulosic renewable fuels. (2124.1, p.11)

Our Response:

       While the RFS2  regulations will go into effect on July 1, 2010, we are applying the four
RFS2 standards to all gasoline and  diesel produced in 2010.  We do not believe that the statutory
mandate for biomass-based diesel in 2009 should be ignored. We did not have the RFS2
program in place for 2009 and thus could not establish a separate standard for biomass-based
diesel in 2009. To best implement  Congress' intent for 2009 and 2010, we are combining the
2010 biomass-based diesel volume  of 0.65 billion gallons with the 2009 biomass-based diesel
volume of 0.5 billion gallons to require that obligated parties meet a combined 2009/2010
requirement of 1.15 billion gallons  by the end of the 2010 compliance year. As described in
more detail in Section II.E.2 of the  preamble, this approach is similar in concept to the deficit
carryover provision that would have applied to the full 2009 volume mandate of 0.5 billion
gallons.

       As described in the responses to comments in Section 3.6.2 below, we also do not believe
that the cellulosic biofuel standard for 2010 should be eliminated. Based on our analysis of
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cellulosic production facilities, we have determined that 6.5 million gallons of ethanol-equivalent
cellulosic biofuel can be produced in 2010.
What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2374
Organization:      Amyris Biotechnologies, Inc. (Amyris)
Comment:
The commenter (2374) supports the proposed RFS2 fuel volumes and believes that advanced
biofuels will contribute significantly to the objectives of reducing the carbon intensity of
transportation fuels and reducing the nation's reliance on petroleum derived transportation fuels.
[[Docket number 2374.1, p. 1]]

Our Response:

       We agree that advanced biofuels are an important component of the RFS2 program for
many reasons, including the fact that they must meet a GHG threshold of 50%.
What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-0952
Organization:      Renewable Fuels Association
Comment:
The commenter (2329.1) believes that EPA must continue to implement the volume mandates
each year until it can complete its lifecycle analysis. (2329.1, p. 16)

Our Response:

      We have conducted a complete lifecycle analysis for a number of renewable fuel
pathways, and as a result we are implementing the full RFS2 program including the four RFS2
standards required by EISA.
What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2317
Organization:      National Corn Growers Association (NCGA)
Comment:
Referring to the 2008 Texas petition to reduce the RFS mandate, the commenter (2317) believes
that EPA should evaluate any waivers of the RFS volumes with a high degree of scrutiny.
[[Docket number 2317.1, p. 44]]

Our Response:
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       We agree that any request for a waiver of any portion of the volumes required by EISA
must be evaluated closely before a decision is made to approve or disapprove it. Such waiver
actions, however, are outside the scope of this final rule.


What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2408
Organization:       Advanced Biofuels Association
Comment:
The commenter (2408.1) believes that, within the Advanced Biofuels pool, if significant
shortfalls in a particular subcategory such as the biomass-based diesel pool or the cellulosic pool
require an adjustment of the volume mandate that other nested categories within the advanced
biofuels pool should be allowed to fill the shortfall. Given the specific requirements of an
advanced biofuel and the definition of conventional fuels in EISA, corn based ethanol should be
excluded from filling any volume shortfalls in the advanced categories. (2408.1, pp.4-5)

Our Response:

       Congress gave EPA the authority to lower the required total and advanced biofuel
volumes if EPA reduces the required volume of cellulosic biofuel. For 2010, while we are
lowering the cellulosic biofuel standard, we are maintaining the other standards at their EISA-
mandated levels. The biomass-based diesel volume needed to meet its standard will
automatically fulfill the advanced biofuel standard, given the energy-based Equivalence Values
for biodiesel and renewable diesel.  Decisions for standards in future years will be made at that
time.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
Referring to EPA's request for comment on how to address the individual targets identified for
2009 and 2010 in the 2007 RFS legislation, the commenter (2233) states that obligated parties
and renewable fuel producers remain at a loss as to how such targets can be addressed absent
completion of the life cycle assessment methodology and final implementing regulations.
Clearly the 2009 mandate for individual categories of renewable fuels is no longer feasible.

Our Response:

      The lifecycle analyses have been updated and finished for this final rule, and we have
determined that there exist renewable fuel pathways meeting the applicable GHG thresholds for
all four categories of renewable fuel. Therefore, we believe that the volume mandates in EISA
can be met, with the exception of the cellulosic biofuel standard which we have determined
should be based on 6.5 million gallons of ethanol-equivalent renewable fuel. Moreover, the
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2009 mandate for biomass-based diesel will be met in the context of a combined 2009/2010
standard as described in preamble Section II.E.


What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter believes that the standards for 2011 should be announced by the Agency by the
end of November 2010. The commenter supports notice-and-comment, but observes that EPA
lacks statutory authority to impose EISA Total Advanced Biofuel renewable mandates for 2010
until RFS2 final rules become effective. (2124.1, p.20)

Our Response:

      The standards for 2011 will indeed be announced by EPA by November 30, 2010,
following the statutory mandate. As described in Section I.A.2 of the preamble, we believe it is
appropriate to set the annual standards through a notice-and-comment rulemaking process.  Thus,
for future standards, we intend to issue an NPRM in the Spring and a final rule by November 30
of each year in order to determine the appropriate standards applicable in the following year.
However, in the case of the 2010 standards, we are finalizing them as part of today's  action.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2384
Organization:       BP America (BP).
Comment:
The commenter (2384) states that given the physical and regulatory barriers to implementing
RFS2, EPA should add a comprehensive market assessment to its annual process for setting
RVOs to avoid market-wide shortfalls which could cause dislocations in the RIN marketplace
and encourage unscrupulous behavior.  The commenter believes this annual assessment should
consider all aspects of the biofuels supply chain. [[Docket number 2384.1, p. 3]]

Our Response:

      As described in Section ILK of the preamble, we are requiring production outlook reports
from the renewable fuel production industry to help us in projecting the volumes of renewable
fuel that can be produced in the future. We will assess any other data that is available during our
annual rulemaking process to set the standards for the next year, including data on the operation
of the fuels market and the RIN market.
What Commenters Said:
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Document No.:     EPA-HQ-OAR-2005-0161-2233
Organization:      Marathon Petroleum Company (Marathon)
Comment:
Therefore the 2010 RFS2 obligation would be the 6.8 bgy directed under the current RFS
regulations. [[Docket number 2233.2, pp. 1-2]

Our Response:

      We do not believe it would be appropriate to continue to use the mandated volumes from
EPAct 2005 for total renewable fuel as the basis for standards in 2009 and beyond.  EISA
changed the volumes in CAA 211 (o), and the standards are based upon the volumes mandated in
CAA 211(o).
3.6.1   Calculation of Standards

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
Since the RFS2 regulations will not be in effect in 2010 and the small refinery and small refiner
exemptions expire at the end of 2010, the "Std" equations only apply for years 2011 and later.
As a result,  the "GE" terms for exempt small refineries and small refiners should be dropped
from the "Std" equations. (2124.1, p.43)

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
Since the Std RF equations only apply for years 2011 and later, the "GE" term, which is used to
represent small refinery exempted gasoline, should be dropped from the Std RF equations.
[[Docket number 2393.1, p. 7]]

Our Response:

       The  total projected non-renewable gasoline and diesel volumes from which the annual
standards are calculated are based on EIA projections of gasoline and diesel consumption in the
contiguous 48 states and Hawaii, adjusted by constant percentages of 11.9% and 15.2% in 2010
only to account for small refinery/refiner gasoline and diesel volumes, respectively, and with
built-in correction factors to be used when and if Alaska or a territory opt-in to the program.
Because the RFS2  program will be in effect in 2010, it is appropriate to maintain the "GE" term
in the equation and note that it only applies for 2010.
What Commenters Said:
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Document No.:      EPA-HQ-OAR-2005-0161-2132
Organization:       Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) agrees with EPA's proposal to base the RFS2 standards on the sum of
all gasoline and diesel fuel used. This will allow obligated parties to use RINs generated in the
most receptive markets to help satisfy their overall renewable volume obligation, and this will
help minimize the overall cost of the program. (2132.1, p.7)

Our Response:

      While we took comment on an alternative approach in which the standards would be
calculated separately for gasoline and diesel, we agree that the most straightforward approach is
to sum gasoline and diesel together in order to calculate the standards. This is the approach we
have finalized in today's rule.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) believes there are problems with EPA's calculation of the RVO in
Section 80.1405. [[Docket number 2233.2, p.6]] [[See docket number 2233.2, pp. 6-7 for
explanation of the formula issues.]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter adds that there are problems with EPA's calculation of the renewable volume
obligation (RVO) under the RFS1 regulations. In the four Standard Renewable Fuel (Std RF)
equations in this section, EPA subtracts the U.S. Energy Information Administration's (EIA)
projected renewable usage from EIA's projected gasoline and diesel demand. The commenter
believes that since EPA is actually mandating the  minimum renewable volumes for the year in
question, it should in fact only use the EIA renewable projections if they are larger than the
mandated renewable volumes.  In the cases where EIA's projected renewable volumes are less
than the renewable fuel volumes which will be mandated, the actual mandated volumes should
be used.

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that the renewable fuel standard equations must be calculated
carefully. The proposed equations for the calculation of the annual renewable fuel standard
percentages are at §80.1405(d). The denominators should be EIA projections of gasoline and
diesel volumes excluding renewable fuels.
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Our Response:

       The denominator of the equations for setting the RFS2 standards represent non-renewable
gasoline and diesel projected to be produced or imported in a calendar year. To obtain these
values, we use the projections from El A for total (renewable plus nonrenewable) gasoline and
diesel, and then subtract the EIA projections for renewable fuels blended into gasoline and
diesel. In this calculation, it does not matter if the EIA projection of renewable fuel is higher or
lower than the EISA-mandated volumes for RFS2.  The EIA projection must be used in either
case to ensure that the resulting non-renewable gasoline and diesel projections  are consistent.
3.6.2   Treatment of Biomass-based Diesel in 2009 and 2010

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1001
Organization:       Kurzman Clean Tech Research & Kurzman Capital, LLC
Comment:
The commenter (1001.1) wants the program to succeed. Under the statute, EPA has ample
authority to implement a workable program.  The proposed rule, however, does not achieve this
goal and, in fact, stands to undermine Congressional intent in establishing the biomass-based
diesel requirement—an integral part of the program. (1001.1, p. 1)

Our Response:

       The final rule includes an updated lifecycle analysis concluding that biodiesel made from
both waste greases and soybean oil will meet the 50% GHG threshold, and therefore will count
as biomass-based diesel.  In addition, to ensure that the volumes of biomass-based diesel
required by EISA for 2009 are  implemented, we are finalizing a 2010 standard that is based upon
a combination of the 2009 and  2010 volume mandates for biomass-based diesel.  Compliance
with this standard must be demonstrated by February 28, 2011.  We believe that these provisions
result in a  workable program that achieves Congressional intent.


What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2118
Organization:       CountryMark Cooperative, LLP
Comment:
The commenter (2118.1) believes that the proposed changes will not adequately stimulate
production of biomass-based diesel fuel. Based on current consumer demand, diesel fuel makes
up approximately 31% of fuel demand. However, the biomass-based diesel volumes presented
in EISA only account for 6.6% of the total renewable fuel requirement in 2012. The commenter
believes that this disproportionate distribution between biomass-based diesel and other primarily
gasoline substitute renewable fuels will lead to a potential diesel fuel supply shortfall as industry
crude throughput is reduced to  absorb gasoline substitutes. The commenter requests that the
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EPA Administrator review the volume requirement for biomass-based diesel to determine if a
higher volume requirement is necessary to ensure that adequate supplies of renewable diesel are
developed on a commercial scale. (2118.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter believes that EPA should carefully evaluate future biomass-based diesel
production capability.  The commenter stated that EPA will need to identify the annual
regulatory volume for the first year of the RFS2 program for biomass-based diesel.  To identify
an appropriate regulatory volume for 2011, the Agency should project actual supply in 2011.
The commenter believes that EPA should not just rely on nameplate production capacity and
assume that all plants will operate at 100% capacity utilization throughout 2011. (2124.1, p.23)

Document No.:      EPA-HQ-OAR-2005-0161-2106
Organization:       Endicott Biofuels II, LLC
Comment:
The commenter (2106) suggests that EPA strongly consider setting more aggressive targets for
biomass-based diesel beginning in 2013 to provide the necessary pricing signals to the market to
incent advancement of new technologies. The commenter's analysis based upon a compilation
of NREL, USDA, U.S. Bureau of Labor & Statistics, and National Renderer's Association data
concludes there is enough energy dense fats and oils neutral and non-neutral materials to support
over 2 billion gallons of biomass based diesel already in the marketplace in the U.S. If foreign
sources are included, the total is much higher. Technology exists today to convert these
feedstocks into high quality methyl esters. The commenter also suggests that the only barrier to
utilization of these feedstocks is price differential to crude oil and that the 30% suggested
restriction is overly conservative. Therefore, the commenter suggests the EPA target
significantly greater than 1 billion gallons of biomass-based diesel in 2013 and beyond. [[Docket
number 2106.1, p. 1]]

Our Response:

      The volumes for biomass-based diesel were established by EISA, and EPA does not have
the authority to increase those volumes prior to 2013.  For 2013 and beyond, EPA must
determine the appropriate volumes to require, so long as those volumes exceed 1.0 bill gal.  We
have not conducted the analyses necessary to determine the appropriate volumes for 2013 and
beyond, and  thus have not established those  volumes in today's final rulemaking.

      As discussed in our responses under  section 3.6.2.2, we have assessed the potential
biomass-based diesel volume for 2010 and believe that the standard based upon 1.15 bill gal is
feasible.  We intend to continue to assess the potential production as we set the standards for
future years based on available information, including information provided to us in the annual
production outlook reports discussed in preamble Section ILK.
What Commenters Said:
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Document No.:      EPA-HQ-OAR-2005-0161-2141
Organization:       American Trucking Associations
Comment:
The commenter (2141.1) recommends that EPA temporarily allow domestically produced soy-
based biodiesel to be used to meet the biomass-based diesel requirements under RFS2. This will
ensure that the RFS2 statutory mandates are achievable in the near term. Once EPA obtains
scientifically-defensible data on soy based biodiesel's lifecycle emissions, EPA should address
the issue in a future rulemaking. (2141.1, p.5)

Our Response:

      The updated lifecycle analysis of GHG emissions for soy-based biodiesel indicates that it
meets the 50% GHG threshold applicable to biomass-based diesel. Therefore, there is no need
for special, temporary treatment of biodiesel in order to meet the biomass-based diesel standard.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil USA, Inc.
Comment:
The commenter believes that allowing parties to utilize the same RINs over multiple years will
likely cause issues with software programs that are managing RINs and will also cause confusion
when calculating the 0100 reports. The commenter recommends that the EPA not allow
biodiesel RINs to be used twice. Allowing obligated parties to use the RINs for compliance as
well  as sell them would cause inconsistencies when performing attestations. (2400.2, p.2)

Our Response:

       We have designed the regulations such that the software issues described by the
commenter are unlikely to occur.  Under RFS2, all RINs can only be used for compliance
purposes in a single year. This includes compliance with the combined 2009/2010 biomass-
based diesel standard. However, prior to determining compliance with the combined 2009/2010
biomass-based diesel standard, obligated parties can take a credit for any biodiesel or renewable
diesel RINs that were used for compliance in 2009. In other words,  the RVO for biomass-based
diesel will be reduced by the number of RINs that the obligated party used for compliance in
2009. The resulting, adjusted RVO must then be met with 2008, 2009, and/or 2010 RINs that
have not previously been used for compliance purposes,  subject to rollover restrictions.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers and Convenience Stores of Iowa (PMCI)
Comment:
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The commenter (2155.1) believes that biomass based diesel should be treated as an ethanol-
equivalent volume as opposed to the suggested diesel volume for the purpose of continuity
amongst other types of renewable fuels (2155.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board  (NBB)
Comment:
The commenter agrees with EPA that Congress intended the required volumes related to
Biomass-based Diesel to be treated as diesel volumes rather than ethanol-equivalent volumes.
The commenter states that Congress also intended to spur the development of advanced biofuels,
through specific volume mandates. The commenter urges EPA to apply option 2 to the Biomass-
based Diesel, Advanced Biofuel, and Cellulosic  Biofuel RVOs. [[Docket number 2249.2, p. 32]]

Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The required categories of "Total Renewable Fuel", "Total Advanced Fuel" and "Cellulosic
Biofuel" should share a common basis for accounting for different renewable fuels that are
replacing both gasoline and diesel  in the marketplace.  The commenter advocates that the
biomass-based diesel standard be expressed as an ethanol-equivalent volume. This approach has
the benefits of being simple and transparent. (2145.1, p.7)

Document No.:      EPA-HQ-OAR-2005-0161-2360
Organization:       Archer Daniels Midland Company (ADM)
Comment:
The commenter (2360.1) agrees with the EPA that Congress intended the required volumes of
Biomass-based Diesel to be treated as diesel volumes rather than ethanol-equivalent volumes.
The 1 billion gallons of Biomass-based Diesel by 2012 is intended to be a strict volume
calculation and not an ethanol-equivalent energy content calculation. (2360.1, p.7)

Our Response:

       While the EISA-mandated  volumes for cellulosic biofuel, advanced biofuel, and total
renewable fuel can be met with any type of renewable fuel, we believe that the mandated volume
for biomass-based diesel was intended to be met only by renewable fuels that displace fossil-
based diesel. Moreover, we expect that the predominant renewable fuel used to meet the
biomass-based diesel requirement will be biodiesel (mono-alkyl esters). Since we are finalizing
the energy content approach to Equivalence Values, we have adjusted the biomass-based diesel
volume mandate from EISA upward by a factor of 1.5, the Equivalence Value for biodiesel. The
net result is a biomass-based diesel gallon being worth 1.0 gallons toward the biomass-based
diesel standard, but worth  1.5 gallons toward the other standards.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2471



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Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter noted that if EPA finalizes the Biomass-Based Diesel fuel standard as proposed,
an Obligated Party's BED obligation will actually exceed its Advanced Biofuel RVO in 2010
(due to the proposed combined 2009-2010 BED mandate). The commenter does not believe that
this result was intended and requests that EPA clarify this situation to allow Obligated Parties to
separate an appropriate amount of self-generated "D3" RINs. (2471.1, p.17)

Our Response:

       The biomass-based diesel volume  of 1.15 bill gal for 2010 will automatically fulfill the
advanced biofuel standard, given the energy-based Equivalence Values  for biodiesel and
renewable  diesel. However, obligated parties can still buy advanced biofuels with a D code of 5
and use them to meet their total renewable fuel standard, or retain them  for use in 2011.
3.6.2.1 Supports the Proposed Treatment of Biomass-based Diesel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) supports the Option 1 Treatment that rolls the 2009 Biomass-based
Diesel requirements into 2010 for total volume of 1.15 billion gal. The commenter also supports
the pathway of subtracting 2009 consumed Biodiesel or Renewable Diesel from the 2010
requirement of 1.15 billion gal. The commenter supports the position of being able to use excess
2009 Biodiesel volumes (RR code of 15 or 17) (at a 20% rollover cap) to go toward meeting the
balance of their 2010 Biomass-based Diesel volume requirements. (0994.1, p.8)

Document No.:      EPA-HQ-OAR-2005-0161-2110
Organization:       Chevron
Comment:
The commenter (2110.1) believes that EPA should not penalize obligated parties who responded
in good faith to EPA guidance on complying with the 2009 BED volume requirement. EPA
should explicitly allow BED RINs procured based on EPA advice to be used for BED
compliance with the first BED volume mandate established under the final RFS2 rules.  (2110.1,
P-3)

Our Response:

       We agree that the special provisions proposed in the NPRM to account for the 2009
biomass-based diesel volume requirements in EISA should be finalized.  Since the RFS1
regulatory structure did not provide a mechanism for implementing the 0.5 billion gallon
requirement for biomass-based diesel in 2009, we are combining the 2010 biomass-based diesel
requirement of 0.65 billion gallons with the 2009 biomass based diesel requirement of 0.5 billion
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gallons to require that obligated parties meet a combined 2009/2010 requirement of 1.15 billion
gallons by the end of the 2010 compliance year.  All 2009 RINs for biodiesel and renewable
diesel are valid for complying with this combined 2009/2010 standard, consistent with our
intention as described in the November 2008 notice setting the 2009 standard for total renewable
fuel.
3.6.2.2 Opposes the Proposed Treatment of Biomass-based Diesel

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2384
Organization:      BP America (BP)
Comment:
The commenter (2384) recommends commencement of a biodiesel requirement on January 1,
2011 and a volume requirement of 800 million gallons for 2011 as was legislated in EISA.  The
industry will need adequate lead time from the date of the final rule to plan, designing, construct,
and complete the  necessary biodiesel infrastructure.  [[Docket number 2384.1, p. 3]]

Document No.:     EPA-HQ-OAR-2005-0161-2124
Organization:      National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that EPA should not combine the 2009 and 2010 requirements.
By imposing the 2009 volume requirements in 2010, EPA would be imposing a retroactive
requirement and immediately put obligated parties in a compliance deficit. (2124.1, p.10)

The commenter also believes that EPA's proposal to combine the 2009 and 2010 volume
mandates for 2010 is clearly contrary to the express intent of Congress. Combining the 2009 and
2010 standards makes little sense as a practical matter since it results in a standard of 1.15 billion
gallons when Congress only envisioned a 1 billion gallon mandate in 2012. EPA is creating a
situation where unnecessary blending capacity is required for a one year period. The commenter
noted that the same would be true if EPA attempts to combine the 2010 and 2011 standards if the
RFS2 program starts in 2011. (2124.1, p.ll)

The commenter strongly opposes any attempt by EPA to impose, on a retroactive basis, biomass-
based diesel requirements for 2009 or any other period that precedes a final rulemaking for RFS2
that includes provisions sufficient to implement EISA requirements.  EPA has no authority to
"recapture" volume mandates under different start-date scenarios. (2124.1, p.ll)  [For a detailed
discussion of this issue, see pp. 12-16 of Docket Number 2124.1).

Document No.:     EPA-HQ-OAR-2005-0161-2130
Organization:      ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) states that when EPA finalizes the RFS2 rulemaking, the 2009 biomass-
based diesel requirement should not be carried forward to 2010 and the 2010 biomass-based
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diesel and cellulosic ethanol requirements should not be carried forward to 2011. [[Docket
number 2130.1, p. 8]]

Document No.:       EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
Regarding the 2010 mandates, the commenter opposes adding these mandates to 2011. Adding
the Biomass-based Diesel mandates is particularly onerous as obligated parties sort through
infrastructure, seasonality, quality, economic and GHG reduction issues.  Therefore, for 2009, by
default, EPA must rely on the RFS1 regulations and the overall mandate alone. [[Docket number
2233.2, p. 39]]

Document No.:       EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) believes that EPA should not combine the 2009 and 2010 requirements.
By imposing the 2009 volume requirements in 2010, EPA would be imposing a retroactive
requirement and immediately put virtually all obligated parties in an immediate compliance
deficit. This is not consistent with longstanding legal principles, or principles of basic fairness,
that prohibit the government  from promulgating ex post facto laws. (2505.2, pp.3-4) (See Docket
Number 2505.2 for a detailed discussion of this issue)

Document No.:       EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter further states that EPA should abandon any notion that EISA requirements can
be brought forward. Should the RFS2 start date be 1/1/2011 (as recommended by the
commenter), the 2011  EISA requirement of 0.80 bg would be a substantial fraction of the
proposed 2009/2010 lumped  requirement of 1.15 bg and would come at a time when production
is even lower than when initially proposed with the November 2008 notice. [[Docket number
2393.1, pp. 14-15 and 2523.1, p. 2]]

The commenter understands that EPA's rationale for establishing the  proposed 2009/2010 BED
standard is in jeopardy should the start date be extended, but in extending the start date EPA will
have to establish a transition  program to manage other EISA mandates and a few practical
matters that are seriously compromised by the delay in promulgating the final rules. As part of
this transition program, EPA  should explicitly allow the use of prior-year biodiesel RINs
procured based on EPA advice for BED compliance with, at a minimum, the first BED volume
mandate established under the final RFS2 rules. [[Docket number 2393.1, pp. 15-16]]

Our Response:

       We continue to believe that it is appropriate and consistent with the statute to combine
the 2009 and 2010 mandated volumes for biomass-based diesel into a single two-year obligation
for which compliance  must be demonstrated by February 28, 2011. Congress expected and
intended that RFS2 regulations would be adopted by the end of 2008, and that they would have
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applied in full to 2009 and 2010. If that had occurred, then obligated parties would have
transitioned from RFS1 requirements to RFS2 requirements starting with 2009. They would
have had a  2009 volume obligation for biomass-based diesel based on a total volume of 0.5
billion gallons, and a 2010 volume obligation based on a total volume of 0.65 billion gallons.  If
an obligated party did not satisfy their individual 2009 volume obligation by the end of 2009,
then the statute allowed the party to carry the deficit over to 2010 as long as they were in full
compliance with both 2009 and 2010 volume requirements by the  end of 2010. This is the
mechanism that Congress employed to ensure that 1.15 billion gallons would be used by the end
of 2010, spread out over 2009 and 2010, through the use of separate 2009 and  2010  volume
obligations combined with a deficit carry over provision.

       EPA did not issue  the RFS2 regulations by the end of 2008, and the transition from RFS1
to RFS2 did not occur at the beginning of 2009. EPA is thus faced with structuring  and
implementing a transition from the RFS1  to the RFS2 regulations in a way that most
appropriately meets two goals. One goal is to maximize compliance with the volume
requirements Congress set out for biomass-based diesel. The other goal is to provide the
regulated parties with adequate lead-time to meet such volume requirements.

       As discussed below, there is significant productive capacity for the production and use of
biomass-based diesel, a large amount of which is not currently used because of inadequate
demand.  Productive capacity is currently estimated at over 2.8 billion gallons, far beyond the
2009 and 2010 volumes set by Congress in EISA.  Clearly productive capacity of biomass-based
diesel is not a limiting factor  as far as the feasibility of the EISA volume requirements or lead
time for obligated parties. As discussed below it is also relatively  straightforward for much of
the current  unused capacity to be brought on line, something we believe will occur once
sufficient incentive is put  in place, such as the combined 2009-10 volume requirement in this
rule.

       In these circumstances, EPA believes it is appropriate to establish a volume obligation on
refiners and importers that amounts to using 1.15 billion gallons by the end of  2010.  This should
not be seen as just a 2010  obligation. It is an obligation that must be met by the end of 2010, and
that reflects the use of biomass-based diesel over both 2009 and 2010.  In effect, EPA believes
that given the amount of biomass-based diesel that was already used in 2009, obligated parties
have adequate lead time such that by the end of 2010 their use of biomass-based diesel over both
2009 and 2010 can quite feasibly and practicably amount to 1.15 billion gallons. This recognizes
that approximately 300 million gallons have already been used in 2009, calling for the use of
approximately 815 million additional gallons by the end of 2010.  Less volume may actually be
called for, as obligated parties can also use 2008 RFS1  RINs that are not used for other
compliance purposes.

       As discussed above and in more detail later and in Section  IV.B.4 of the preamble and
Section 1.5.4 of the RIA, there is adequate lead time to accomplish this given the large excess
current capacity for production of biomass-based diesel.  In addition, this approach  maximizes
the ability to meet the volume goals established by Congress in EISA.  Recognizing that, in light
of the fact that we are issuing the final RFS2  regulations over a year later than  specified in the
statute, no program established by EPA will match the specific structure envisioned by Congress
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in EISA, this approach comes closest to meeting both the content and purpose of EISA. It is
built on and achieves the same volume levels envisioned by Congress. It also functions very
similar to the compliance carryover provisions adopted by Congress.  Section 211 (o) (2) (A) uses
broad language giving EPA authority to "revise the regulations under this paragraph to ensure
that transportation fuel sold or introduced into commerce in the Untied States .... on an annual
average basis, contains at least the applicable volume of ... biomass-based diesel determined in
accordance with subparagraph (B)." This generally broad grant of authority reasonably is
construed to include the authority to adopt this kind of transition from RFS1 to RFS2
requirements, that best promotes the purposes of the  EISA biomass-based diesel provisions,
given all of the circumstances noted above and best matches the 2009 transition from RFS1 to
RFS2 envisioned in EISA.

       The alternative approach, suggested by some commenters, would be for EPA to establish
solely a 2010 volume requirement, based on the 0.65 billion gallons.  This would lead to less use
of biomass-based diesel over the two calendar years than envisioned by Congress.

       This approach of a combined 2009 and 2010 volume requirement, achieved by the end of
2010, does not impose any retroactive requirements.  The obligation that is imposed under the
RFS2 regulations is forward-looking - by February 28, 2011, when compliance is determined,
obligated parties must satisfy a certain biomass-based diesel volume obligation. This is a future
requirement and can be satisfied by biodiesel produced and used in 2009 in addition to 2010, and
to some extent biodiesel produced and used in 2008.  However the RFS2 regulations do not
change in any way the legal obligations or requirements that apply for conduct or action
occurring prior to the effective date of the RFS2 regulations. Instead, the RFS2 requirements
impose new biomass-based diesel requirements that must be met in the future.  While they take
into account and give credit for past actions, they do  not regulate or change in any way the legal
obligations applicable to past conduct.

       Some commenters stated that this approach would make them in noncompliance as of the
issuance of the regulations. That is not accurate.  Compliance by refiners or importers is not
determined until February 28, 2011. No one can be in noncompliance with this volume
obligation prior to that date. As of the effective date of the RFS2 regulations, refiners and
importers will have new obligations that they will have to meet by a future compliance date, but
the regulations do not mean that they are in noncompliance upon issuance of the regulations.

       Sufficient capacity exists for producing the entire biomass-based diesel needed in 2010 to
comply with the combined 1.15 billion gallon requirement. As discussed in section IV.B.4 in the
preamble, biodiesel production capacity has continued to grow and is currently estimated at over
2.8 billion gallons; also 75 million gal/yr of renewable diesel production capacity is expected to
come online in 2010 as well.

       As a benchmark,  U.S. biodiesel production in 2008 reached an estimated 776 million
gallons, demonstrating that not only does the U.S. have ample production capacity, but also the
feedstock and distribution infrastructure to produce very large volumes.  For various economic
reasons, production fell in 2009, but despite this fact, we have seen that approximately 600
million gal/yr of capacity was built or purchased between fall of 2008 and fall of 2009
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(determined by comparing lists of operating plants maintained by National Biodiesel Board).
This suggests continued interest and available production capacity to enable obligated parties to
meet the standard.

       As an additional metric, we see that for July-September of 2009 (the latest EIA data
available as of this writing), biodiesel was produced at an annualized rate of 570 million gal/yr.
Many of these plants are operating below their full capacities, so simply increasing utilization
will likely be sufficient to meet the required volume for 2010.  In reviewing biodiesel production
over time, it is clear that wide swings in production can occur extremely rapidly. Thus,
increasing production at plants currently operating is entirely feasible, with the main issues
limited to purchase and transport logistics for the increased volumes of feedstock. Meanwhile, a
portion of the large amount of idle capacity could also be brought online once operators receive
the signal that will be provided by publication of this final rulemaking.  Biodiesel plants have the
ability to restart rapidly as evidenced by the long history of facilities shutting down temporarily
and then starting back up again when economic conditions improve.
3.6.2.3 Request for Interim Rulemaking

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2510
Organization:       Iowa Renewable Energy, LLC
Comment:
The commenter (2510) says EPA should implement interim rules to ensure the volume
requirements for biomass-based diesel are met and not further delayed. Delaying the effective
date is not consistent to the stated goal to reduce U.S. dependence of foreign sources of
petroleum by increasing domestic sources of energy. [[Docket number 2510.1, p. 2]]

The commenter concludes that the final rules as they are today will destroy business, investors
will lose their equity, and employees will lose jobs and benefits. Delaying the implementation of
a good RFS proposal encourages the use of more foreign oil, and that should not be the goal of
EPA's proposal. [[Docket number 2510.1, p. 8]]

Document No.:      EPA-HQ-OAR-2005-0161-1051
Organization:       Aberdeen Development Corp.
Comment:
The commenter (1051) supports having the RFS2 regulations enforceable beginning January 1,
2010 but adds that delayed implementation of the biomass-based diesel requirement has
adversely affected the biodiesel industry and the commenter specifically.  Recognizing that
EPA's proposed rule may not be finalized until the end of 2009 and may have an effective date
beyond January 1, 2010, EPA must act now to effectuate Congressional intent and implement the
2009 volume mandate for biomass-based diesel (and, if necessary, the 2010 requirement).
[[Docket number 1051.1, p.l]]

Document No.:      EPA-HQ-OAR-2005-0161-1005
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Organization:       Cotner Consulting Services
Comment:
The commenter (1005.1) noted that the Energy Independence and Security Act (EISA) of 2007
added a specific mandate for biomass-based diesel as part of the program's Advanced Biofuels
schedule. The biomass-based diesel requirement was to begin in 2009 with 500 million gallons.
EISA required EPA to revise the current RFS regulations to ensure these new mandates are
implemented. Unfortunately, EPA has yet to issue final rules largely due to the complicated and
controversial lifecycle analysis being conducted as part of the RFS2  regulations.  This has
delayed implementation of the biomass-based diesel requirement, which has adversely affected
the biodiesel industry. The commenter believes that EPA must act now to effectuate
Congressional intent and implement the 2009 volume mandate for biomass-based diesel (and, if
necessary, the 2010 requirement).  (1005.1, p.l)

The commenter believes that existing biodiesel facilities, which are able to meet the RFS2
requirements with existing feedstock sources, should not be unfairly penalized for assumptions
related to international land use changes. EPA has already indicated that obligated parties will
be able to use 2009 biodiesel and renewable diesel to meet the RFS2 requirements. The
commenter believes that EPA should grant this relief in the form of an interim final rule that
codifies this finding and that would ensure the biomass-based diesel requirement is being met
until the entire RFS2 program is finalized and becomes effective. At a minimum, EPA must
provide notice that 2009 biodiesel  RINs are valid and will be required to show compliance with
the RFS2 to fulfill Congressional intent and provide legal certainty to the industry.  (1005.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-1052
Organization:       Pennsylvania Energy Resources Group (ERG)
Comment:
The commenter (1052) states that existing biodiesel facilities which are able to meet the RFS2
requirements with existing feedstock sources should not be unfairly penalized for assumptions
related to international land use changes. Since EPA has already indicated that 2009 biodiesel
and renewable diesel can be used to meet the RFS2 requirements, an interim rule will support
stability for the industry. [[Docket number 1052.1, pp.  1-2]]

Document No.:      EPA-HQ-OAR-2005-0161-2079
Organization:       AE  Biofuels, Inc.
Comment:
The commenter (2079.1) requests that EPA publish a rule that will implement the Biomass-based
Diesel requirement for 2009 (and until final regulations become effective) or,  at a minimum,
provide notice that 2009 biodiesel  and renewable diesel will be valid and required to be in
compliance with the RFS2 program. (2079.1, p. 3)

Document No.:      EPA-HQ-OAR-2005-0161-2360
Organization:       Archer Daniels Midland Company (ADM)
Comment:
The commenter (2360.1) requests that EPA publish a rule that will implement the Biomass-based
Diesel requirement for 2009 and 2010 (and until final regulations become  effective) or, at a
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minimum, provide notice that 2009 and 2010 biodiesel and renewable diesel will be valid and
required to be in compliance with the RFS2 program. (2360.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-1051
Organization:       Aberdeen Development Corp.
Comment:
The commenter (1051) states that EPA has already indicated that obligated parties will be able to
use 2009 biodiesel and renewable diesel to meet the RFS2 requirements. If EPA does not issue
an interim final rule that codified this finding then, at a minimum, EPA must provide notice that
2009 biodiesel RINs are valid and will be required to show compliance with the RFS2 to fulfill
Congressional intent and provide legal certainty to the industry. [[Docket number 1051.1, p, 1]]

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (2249.2) believes that EPA must implement the volume mandates for biomass-
based diesel. The commenter is concerned about delays due to the ongoing work needed to
complete the lifecycle analysis and urges EPA to issue RVOs this year for the 2010 required
volumes for renewable fuel, advanced biofuels, and biomass-based diesel. Issuing RVOs this
year for each of these mandates would provide certainty for stakeholders and ensure that the
mandated volumes are meted. The commenter suggests that until EPA can finalize the RFS2
regulation, the current RFS regulations can be used to implement the volume requirements.
[[Docket number 2249.1, pp. 2-3]

Document No.:      EPA-HQ-OAR-2005-0161-1001
Organization:       Kurzman Clean Tech Research & Kurzman Capital, LLC
Comment:
The commenter (1001.1) looks forward to working with EPA to address the proposal's
shortcomings and implement a final rule prior to January 1, 2010. The commenter recognizes,
however, that a final rule may not be issued until the end of 2009 and/or may not be made
effective until after January 1, 2010. The commenter urges EPA to issue an interim rule to
effectuate Congressional intent and address the adverse impacts any further delay of
implementing the RFS2 requirements will have on the biodiesel industry. (1001.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-1015
Organization:       Renewable Energy Group
Comment:
The commenter also says EPA should implement interim rules to ensure the required volume
requirements biomass-based diesel to the regulated parties are met and not further delayed.
Delaying the effective date is not consistent to the stated goal to reduce U.S. dependence of
foreign sources of petroleum by increasing domestic sources of energy.  Recognizing the
complexity of this task and that never before has a regulatory  program assessed greenhouse gas
emissions of fuels. [[Docket number 2123.1, pp. 3-4]]

Document No.:      EPA-HQ-OAR-2005-0161-1049
Organization:       Prairie Pride, Inc.
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Comment:
The commenter (1049) states that delayed implementation of the biomass-based diesel
requirement has adversely affected their business and believes that EPA should act now to
implement the 2009 volume mandate for biomass-based diesel. Also, EPA should grant this
relief in the form of an interim final rule that codifies the biomass-based diesel requirement is
met until the entire RFS2 program is finalized and becomes effective. [[Docket number 1049, p.
1]]

Document No.:      EPA-HQ-OAR-2005-0161-1051
Organization:       Aberdeen Development Corp.
Comment:
Since EPA has already indicated that obligated parties will be able to use 2009 biodiesel and
renewable diesel to meet the RFS2 requirements, the commenter believes that EPA should grant
this relief in the form of an interim final rule that codifies this finding and that would ensure the
biomass-based diesel requirement is being met until the entire RFS2 program is finalized and
becomes effective. [[Docket number 1051.1, p.l]]

Document No.:      EPA-HQ-OAR-2005-0161-1052
Organization:       Pennsylvania Energy Resources Group (ERG)
Comment:
The commenter (1052) strongly believes that an interim rule is critical to ensure that the 2009
and 2010 volumes are met, as required by the Energy Independence and Security Act of 2007.
The two month extension to the comment period for the new regulations further delays
implementation, creating additional difficulties for biodiesel plants, refineries and terminal
facilities that are spending hundreds of millions of dollars in Pennsylvania alone to meet the
volume goals under RFS2. The commenter states that the Pennsylvania biodiesel industry
cannot afford a significant further delay in implementation of the volume requirements mandated
by EISA 2007. [[Docket number 1052.1, p.  1]]

Document No.:      EPA-HQ-OAR-2005-0161-2010, EPA-HQ-OAR-2005-0161-2011, EPA-
HQ-OAR-2005-0161-2013, etal.
Organization:       SoyMor  Biodiesel, LLC, Western Dubuque Biodiesel LLC, Central Iowa
Energy, LLC, et al.
Comment:
The commenters stated that EPA should implement interim rules to ensure the required volume
requirements biomass-based diesel to the regulated parties are met and not further delayed.
Delaying the effective date is not consistent to the stated goal to reduce U.S. dependence of
foreign sources of petroleum by increasing domestic sources of energy. Recognizing the
complexity of this task and that never before has a regulatory program assessed greenhouse gas
emissions of fuels.

Document No.:      EPA-HQ-OAR-2005-0161-2300
Organization:       Dow AgroSciences
Comment:
The commenter (2300) requests that due to the tight timing and possibilities that the rule may not
be made effective until after January 1, 2010, EPA should issue an interim rule to effectively
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state Congressional intent which the commenter believes is different from that currently
proposed. (2300, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2435
Organization:       R.W. Heiden Associates LLC
Comment:
The commenter (2435) recognizes that a final rule may not be issued until the end of 2009 and/or
may not be made effective until after January 1, 2010. As such, they urge EPA to issue an
interim rule to effectuate Congressional intent and address the adverse impacts any further delay
of implementing the RFS2 requirements will have on the biodiesel industry. The lack of
implementation of the RFS2 adds greatly to business uncertainty in an already stressed market
place. [[Docket number 2435.1, pp. 1-2 and 6-7]]

Document No.:      EPA-HQ-OAR-2005-0161-2464, 2537
Organization:       Musket Corporation
Comment:
The commenter (2464.1) believes that EPA should issue an interim version of RFS2 in time to
enforce the 2009 volumes in the EISA no later than January 1, 2010 unless a final version can be
issued at that time. (2464.1, p.2) (See Docket Number 2464.1, pp.1-2 for a detailed discussion of
this issue)

Our Response:

      An interim rulemaking that put in place the 2009 volume requirement for biomass-based
diesel without also putting in place EISA's new definition for biomass-based diesel, renewable
fuel, and renewable biomass, would have raised significant legal and policy issues that would
necessarily have required a new proposal with its own public notice and comment process. After
analyzing our available authorities, we determined that a rulemaking addressing these issues
without allowing for public participation would ultimately not be successful.  Additionally,
because of the significant time required for notice and comment rulemaking, the need to provide
industry with adequate lead time for new requirements, and the fact that we were already well
into calendar year 2009 when the request for an interim rulemaking was received, it was unlikely
that any interim rule could impact biodiesel demand in 2009. Resources applied to the interim
rulemaking would also have been unavailable for development of the final RFS2 rulemaking. As
a result, developing an interim rule could easily have undermined EPA's ability to complete the
full RFS2 program regulations in time for 2010 implementation. Therefore, we believed that the
most prudent course of action was to continue development of the final RFS2 rulemaking rather
than to divert resources to an interim rulemaking that would not likely have had a significant
impact on 2009 biodiesel demand.
3.6.2.4 Treatment of 2008 and 2009 Biodiesel RINs

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994



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Organization:       Griffin Industries
Comment:
The commenter is against the proposal of allowing 2008 Biodiesel and Renewable Diesel excess
RINs for compliance of the 2009/2010 Biomass-based Diesel requirements. This can work
against the purchase of Biodiesel and Renewable Diesel in 2009 and 2010.  Per the RFS1
regulations,  excess 2008 RINs no matter what type are permitted to meet the 2009 RFS1 volume
obligation, but should not be permitted to meet the 2009/2010 Biomass-based Diesel Obligation.
This eliminates any possible confusion about when 2008 RINs are to be retired. (0994.1, p.8)

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
The commenter (1044) supports this proposed option, allowance of 2008 RINs for compliance
subjected to the 20% carryover provisions, because it demonstrates a common sense approach of
the intended actions of RFS1 and identified the issue caused by the delayed implementation of
RFS 2. The  commenter asks for an immediate notice or technical amendment on this issue.
(1044.1, p. 2)

Document No.:      EPA-HQ-OAR-2005-0161-2130
Organization:       ExxonMobil  Refining & Supply Company (ExxonMobil)
Comment:
The commenter states that current holders of biodiesel RINs for 2008 and 2009 (and potentially
2010)  should be able to carry those  RINs forward for use in demonstrating compliance for 2011
if EPA carries any of the biodiesel requirements  for 2009 and 2010 forward to 2011. [[Docket
number 2130.1, p. 17]]

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers and  Convenience Stores of Iowa (PMCI)
Comment:
The commenter (2155.1) believes that it is important for the EPA to set guidance stating that
2009 generated biodiesel RINs be used for biodiesel compliance purposes and be allowed to
carry over into 2010.

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
Referring to the November 2008 notice of the 2009 mandated volumes, the commenter believes
that it  is extremely unfair for EPA to now finalize rules that cause economic harm to the
obligated parties who attempted to comply with  EPA's earlier guidance. The  commenter
recommends that EPA allow 2008 and 2009 biodiesel RINs to comply with either a partial 2010
or a 2011 biomass based diesel obligation. [[Docket number 2233.2, p. 39]]

Document No.:      EPA-HQ-OAR-2005-0161-2384
Organization:       BP America  (BP)
Comment:
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The commenter (2384) recommends commencement of a biodiesel requirement on January 1,
2011 and a volume requirement of 800 million gallons for 2011 as was legislated in EISA.  The
commenter also recommends that any biodiesel blended in 2009 and 2010 be allowed to be
applied to the 2011 obligations. [[Docket number 2384.1, p. 3]]

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
In particular, EPA has proposed to allow 2008 RINs be used to meet the joint 2009/2010
Biomass-based Diesel volume. The commenter states that this proposal would violate the  12
month limit on the life of a credit, as such RIN should have been applied in 2008  and could have
been applied to meet the overall standard in 2009.  Moreover, there is more than sufficient
supply in 2009, and expected in 2010, to meet the Biomass-based Diesel requirement. Indeed,
obligated parties have refused to purchase biodiesel in 2009, making it unlikely that the 2009
volume mandate will be met in actual volumes, despite availability of biodiesel. Obligated
parties should not be able to make up for their own inaction by using 2008 RINs.  There is
simply no justification for allowing 2008 RINs to be used to show compliance in  2010. [[Docket
number 2249.2, pp. 31-32]]

Our Response:

      Since the 2010 compliance demonstration will include the obligation that would have
applied in 2009, and 2008 RINs would be valid for 2009 compliance, we are  allowing excess
2008 biodiesel and renewable diesel RINs that were not used for compliance purposes in 2008 to
be used for compliance purposes in 2009 or 2010.  This is  consistent with the requirement  that
RINs are valid in the year they are generated and in the following calendar year. Moreover, all
2009 RINs for biodiesel and renewable diesel are valid for complying with this combined
2009/2010 standard, consistent with our intention as described in the November 2008 notice
setting the 2009 standard for total renewable fuel.  Roll-over provisions apply when using  prior-
year RINs, as discussed in the preamble.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2132
Organization:       Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) disagrees with EPA's proposal to allow 2009 biodiesel and renewable
diesel RINs to be used for the 2010 biomass-based diesel standard.  The commenter noted that
EPA is trying to apply the statutory RFS2 standard in 2009 even before implementing the RFS2
program, on the assumption that soy-based biodiesel could satisfy EISA's GHG lifecycle test.
Since EPA's analysis ultimately showed biodiesel did not qualify as biomass-based diesel, this
assumption is no longer valid.  If EPA could legally justify extending the allowance program to
biomass-based diesel, this would help the market function better when EPA's volume estimates
prove significantly off the mark. (2132.1, p. 17)
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Our Response:

       Our updated lifecycle analysis for the RFS2 final rule determined that soy-based
biodiesel meets the 50% GHG threshold for biomass-based diesel. We note, however, that
biodiesel RINs generated in 2009 are valid to demonstrate compliance with the 2010 RFS2
biomass-based diesel standard as a transition measure, reflecting the fact that RINs are valid in
the year they are generated and the following calendar year.  Thus, the 2009 biodiesel RINs
would be valid for use in complying with the 2010 standards even if the fuel for which the RINs
were generated did not meet the 50% RFS2 GHG reduction threshold or if that fuel was not
made with renewable biomass.  Therefore, biodiesel RINs generated in 2009 are valid for
meeting the appropriate RFS2 standards. Our analysis of the biomass-based diesel market
indicates that sufficient production capacity exists to meet the combined 2009/2010 volume
requirement of 1.15 bill gal, taking into account biodiesel produced in 2009.
3.7    Fuels that are Subject to the Standards

3.7.1   Coverage Expanded to Transportation Fuels

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2396
Organization:       CVR Energy
Comment:
The commenter (2396.1) supports the long-range goal of diversifying America's transportation
fuels and do not oppose the development and use of biofuels.

Document No.:      EPA-HQ-OAR-2005-0161-2369
Organization:       New Generation Biofuels (NGBF)
Comment:
The commenter (2369) states that given that EISA expanded the RFS program to include
transportation fuel other than gasoline, EPA proposes to include motor vehicle, nonroad,
locomotive, and marine (MVNRLM) diesel fuel in the required volume obligation (RVO)
calculation. The commenter argues that biofuels that may be used in non-road, locomotive
applications would qualify for RINs as well.  If there is a larger pool of RVO required by
including the total MVNRLM volumes, biofuels should be able to be used in those applications
as well. Further, reducing the emissions in the nonroad and locomotive applications is just as
valid as reducing emission in motor vehicle applications. [[Docket number 2369.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
The commenter (2358) supports EPA's extension of the RFS to all transportation fuels, including
diesel and nonroad fuels. [[Docket number 2358.1, p. 2]]
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Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
It is the commenter's (2233) position that EPA cannot lawfully establish renewable fuel
standards (either general or fuel-type-specific) based on the volumes set forth in EISA without
completing the rulemaking specified in the final sentence of CAA 211 (o) (2) (A) (I), nor can EPA
lawfully extend the RFS program to fuels other than gasoline.

Our Response:

       We appreciate the comments received on this topic. With respect to comments related to
the expansion of the RFS program to include "transportation fuels", EISA clearly stated that the
renewable fuels standards apply to transportation fuels—and such fuels are to include fuels for
use in "motor vehicles, motor vehicle engines, nonroad vehicles, and nonroad vehicle engines.
Accordingly, we are applying the standards to transportation fuels in the RFS2 rule.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
The commenter (1044) believes the definitions at §80.1401 are incomplete and offered the
following recommendations:
Diesel—The definition for diesel refers to any and all products listed in §80.1407. So, in
§80.1407 the fuels Gasoline, RBOB, CBOB, and Biomass-Based Diesels and others are listed
thereby capturing gasoline products as diesel. We are certain this is an error. The commenter
proposes the definition of Diesel to codify 40 CFR 80.2 and requests Diesel to be defined as
MVNRLM (petroleum derived) as discussed in the preamble. As it is written, the term diesel
would also imply that the renewable fuel producers (Biomass-Based Diesel) would become
obligated parties since the federal definition of diesel 40 CFR Part 80 (80.2(x)(2)) includes
biodiesel.

This further identifies the need and use of MVNRLM as discussed in the preamble as a definition
for diesel in RFS 2 and absolves the renewable biomass based diesel producers from compliance
issues associated with obligated parties. The commenter believes this is an unintended
consequence and would promote the intent of the RFS for compliance purposes between parties.
[[Docket number 1044.1, pp. 3-4]]

Our Response:

       The final regulations at §80.1407(d) specify that diesel fuel which is subject to the
standards must be non-renewable, and meet the definition of MVNRLM diesel fuel at
§80.2 (qqq).
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3.7.2   Treatment of Heating Oil and Jet Fuel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2314
Organization:       The New England Fuel Institute
Comment:
While the commenter (2134.1) supports including heating oil and jet fuel into the RIN program,
the commenter opposes any effort to subject these fuels to the RVO mandate. The problem with
calculating obligated party RVOs for heating oil is that it is difficult to predict with any
reliability the volumes needed for a particular heating season due to fluctuating winter weather
conditions. Previous year consumption data provides little evidence with which to predict
current year demand.  (2134.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter requests that EPA clarify whether aviation fuel will be included in determining
the renewable volume obligation if RINs are generated.  The commenter believes that aviation
fuel should be included in the definition of transportation fuel as defined in EISA, and counted in
determining obligated parties RVOs. The commenter finds aviation to be a mode of
transportation and more specifically a nonroad vehicle, and thus it would be appropriate to
categorize aviation fuel as a type of transportation fuel in calculating the RVOs. [[Docket
number 2249.2, pp. 38-39]]

Our Response:

       While we are not requiring heating oil and jet fuel to be included in the fuel used by a
refiner or importer to calculate their RVOs, we are allowing renewable fuels used as or in
heating oil and jet fuel to generate RINs. Similarly,  RINs associated with a renewable fuel, such
as biodiesel, that is blended into heating oil will continue to be valid for compliance purposes.

       As mentioned above, EISA clearly stated that the renewable fuels standards apply to
transportation fuels.  However, the statute did not expressly define  all terms in the definition of
"transportation fuel", so we are interpreting this to mean that Congress defers to the Agency's
definitions in this respect. We are interpreting the "diesel" portion of transportation fuel to be
MVNRLM diesel fuel (as defined at §80.2(qqq)), and jet fuel is not an MVNRLM diesel fuel.
As such, we are not considering jet fuel (or heating oil) to be a transportation fuel under the RFS
program.
3.7.3   Treatment of Fuels for Use in Ocean-Going Vessels

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1044



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Organization:       GEN-X Energy Group Inc.
Comment:
The commenter supports the definition of an Oceangoing Vessel to include Category 3 engines
only, and opposes the inclusion of Category 2 engines. [[Docket number 1044.1, p. 4]] [[See
Docket number 1044.1, pp 4-5 for further discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter (2393) is opposed to expanding the definition of "ocean-going vessel" to include
C2 engines.  To help with the success of the RFS, EPA should allow every possible outlet for
renewable fuel. [[Docket number 2393.1, p. 78]]

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (2249.2) believes that EPA should revise its definition of "ocean going" vessels.
While the commenter supports excluding Category 3 marine engines, as provided by the statute,
it believes that EPA should clarify that the definition does not include any Category 1 and
Category 2 marine engines. [[Docket number 2249.2, p. 36-37]] [[See pp. 36-38 for additional
discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter is opposed to the expansion of the term "ocean-going vessel" to include those
powered by C2 engines. [[Docket number 2233.2, p. 69]]

Our Response:

      To avoid confusion with the recently finalized Category 3 Marine Rule (Control of
Emissions from New Marine Compression Ignition Engines at or Above 30 Liters per Cylinder,
signed December, 18, 2009), we have instead finalized a definition of "fuels for use in ocean-
going vessels."  We believe that "fuels for use in ocean-going vessels" is a more appropriate
definition because it is based on the fuel supply system.  Under this definition, those heavy
distillate and residual fuels that are intended for use in ocean-going vessels are not considered
transportation fuels and thus will not be subject to the RVOs.

      For this definition, we interpret the term "ocean-going vessels" to mean, primarily,
Category 3 marine vessels (vessels propelled by the largest category of marine engines—those
with a displacement of 30 liters per cylinder or more).  Since these vessels use residual fuels
most of  the time, and  almost no other marine vessels use residual fuel, our definition deems
marine residual fuel to be a fuel used in ocean-going vessels. The definition also recognizes that
these vessels may sometimes use other fuels. In particular, the definition states that Emission
Control  Area (EGA) marine fuel is also deemed to be a fuel used in ocean-going vessels.
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(Recently adopted regulations specify that fuel used by these vessels near the U.S. coast will be
EGA marine fuel that is generally subject to a 1,000 ppm sulfur cap beginning June 1, 2014.)

       With respect to the comments that EPA should not allow the term "ocean-going vessel"
to include Category 2 engines, we note that Category 1 and Category 2 engines/vessels are
generally subject to the NRLM diesel fuel standards.  Since NRLM diesel fuel would not be
considered part of "fuels for use in ocean-going vessels", this means that the vast majority of fuel
used by Category 1 and Category 2 engines would be considered part of "transportation fuels".
However, our recent rulemaking to establish new standards for Category 3 engines included a
provision that would effectively allow Category 1 and 2 auxiliary engines installed on Category
3 vessels (i.e., those vessels powered by Category 3 engines) to utilize fuels other than NRLM.
This allowance is to reduce burden that could potentially be caused by requiring that these
Category 1 and 2 auxiliary engines burn 15 ppm diesel fuel—which could result in a Category 3
vessel needing to carry three different types of fuel  onboard. Thus, to the extent that these
engines use residual fuel or EGA marine fuel, their  fuel would also not be considered
"transportation fuels".
3.8    Renewable Volume Obligations (RVOs)

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2014
Organization:       Clean Fuels Clearinghouse
Comment:
The commenter (2014.1) provided specific comments regarding regulatory text responding to
RVOs. [[See Docket Number 2014.1, pp.1-2 for these detailed comments]]

Our Response:

       We have modified the language in §80.1427 to be clearer with regard to compliance with
RVOs.


What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:       ConocoPhillips
Comment:
The commenter (2154.1) believes that EPA should apply any expired RINs to reducing the next
year's total volume obligation. (2154.1, p.6)

Our Response:

       While we took comment on this alternative in the NPRM, there was little support for it
among stakeholders. We do not believe it would be appropriate to apply expired RINs to the
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next year's volume requirements since it would have the effect of making the valid life of RINs
meaningless on a nationwide basis.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2364
Organization:       Tyson Foods, Inc.
Comment:
The commenter (2364.1) has serious concerns with the renewable fuels volumes mandated in the
Energy Independence and Security Act of 2007 (EISA), particularly the increased mandate for
corn-based ethanol. A sustainable and successful biofuels program will promote high
performance products that do not rely primarily on food-based feedstocks. The commenter urges
EPA to make this transition to the next generation of biofuels its primary focus as it finalizes this
rule. (2364.1, p.l)

Our Response:

       Since the volume mandates were specified in EISA, EPA has very little authority to
change them. Aside from the waiver provisions, we cannot promote advanced biofuels over
general renewable fuels.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
It is the commenter's (2393) view that if "RIN-less" renewables enter the marketplace suitable
for use in motor vehicles, they are, for the purpose of the RFS, motor vehicle fuels and,
consequently, incur a renewable volume obligation (RVO). To avoid future misunderstandings,
EPA should include a clear statement to this effect in the final rule and its preamble. [[Docket
number 2393.1, p. 8]]

Our Response:

      We agree that biofuel may be produced or imported under RFS2 for which no RINs are
generated. If this biofuel is used as transportation fuel, it might be reasonable to treat it as
obligated fuel subject to the standards. However, we do not believe that it would be appropriate
at this time to finalize a requirement that RIN-less biofuel be considered an obligated fuel. We
did not propose such an approach in the NPRM, and as a result many renewable fuel producers
who could be affected did not have  an opportunity to consider and comment on it. Moreover, the
volume of RIN-less biofuel is likely to be small compared to the volume of renewable fuel with
RINs since RINs have value and producers currently have an incentive to generate them.  See
further discussion in preamble Section III.D.7.
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3.8.1  Treatment of RFS1 RINs under RFS2

Document No.:  EPA-HQ-OAR-2005-0161-1033
Organization:   Poet Ethanol Products
Comment:
The commenter believes the EPA's suggestion of allowing any appropriately generated RINs
with a D-Code of 1 that exist prior to the effective date of RFS2 to also be treated as cellulosic
biofuel under RFS2 and be used to meet up to 20% of the current year Renewable Volume
Obligations for Obligated Parties. (1033.1, p.2)

Document No.:     EPA-HQ-OAR-2005-0161-2132
Organization:      Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) disagrees with EPA's proposal to allow 2009 cellulosic biomass
ethanol RINs to be used for the  2010 cellulosic biofuel standard. (2132.1, p. 17)

Our Response:

   We believe that RFS1 RINs with a D code of 1 should be treated as RFS2 RINs with a D
code of 3, as described more fully in Section III.G.3 of the preamble. However, RFS1 RINs
generated in 2010 will not be subject to the 20% rollover cap in the context of 2010 compliance
demonstrations.
What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-0952
Organization:      Renewable Fuels Association
Comment:
With regards to EPA's transition rules for RFS1 RINs, the commenter agrees with EPA that
RFS1 RINs for ethanol would meet new requirements for RFS2, including the renewable
biomass and 20 percent requirement.  Although the commenter supports EPA's proposed
transition rules, these rules will not be necessary if the effective date is January 1, 2011. (2329.1,
p. 19)

If EPA continues to allow for some rollover of credits into the next year, the commenter supports
EPA's proposed treatment of RINs generated under RFS1 to show compliance with RFS2
requirements. (2329.1, p.91)

Document No.:     EPA-HQ-OAR-2005-0161-1044
Organization:      GEN-X Energy Group Inc.
Comment:
The commenter (1044) supports the use of excess 2009 RINs for 2010 compliance, as this
represents a responsible approach to the smooth transition to the new program. In addition, it is
the commenter's opinion this action supports all renewable fuels producers and would alleviate
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concerns of the obligated parties regarding compliance.  The commenter asks for an immediate
notice or technical amendment on this issue. (1044.1, p.  2)

Document No.:     EPA-HQ-OAR-2005-0161-2130
Organization:      ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) supports the proposed read-across from the RFS1 biodiesel and cellulosic
ethanol RINs for use in RFS2. Using RIN "D" code for cellulosic ethanol is appropriate.
[[Docket number 2130.1, p. 4]]

Document No.:     EPA-HQ-OAR-2005-0161-2130
Organization:      ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) supports the proposed read-across from the RFS1 biodiesel and
Cellulosic ethanol RINs for use in RFS2. Using RIN "RR" code for ester and non-ester based
biodiesel to biomass-based diesel is appropriate. [[Docket number 2130.1, p. 4]]

Document No.:  EPA-HQ-OAR-2005-0161-2233
Organization:   Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) urges EPA to carefully review the final rule to ensure that it has
completely translated the single RIN concepts from RFS1 to the four different types of RINs in
RFS2.  For example when RINs are retired, it should be  made clear that the type of RIN which is
retired should match the type of RIN generated. [[Docket number 2233.2, p.  10]]

Document No.:     EPA-HQ-OAR-2005-0161-2419
Organization:      Cargill Incorporated
Comment:
To avoid double counting, RINs that have been retired, previously used for compliance or used
in an off-road application shall not be eligible for use or eligible to be "unretired."  Only RINs
which have not been previously used for compliance should be allowed to be used as credit
against Renewable Volume Obligations (RVOs). (2511.1, p.7) [[See Docket Number 2511.1,
pp.7-8 for a detailed discussion of this issue]]

Document No.:     EPA-HQ-OAR-2005-0161-2249
Organization:      National Biodiesel Board (NBB)
Comment:
The commenter (2249.2) notes that the Proposed Rule states that RINs previously retired in
nonroad applications may be reinstated under the RFS2. The commenter agrees with this
language and asks the EPA to provide a workable time frame for such reinstatement. The
commenter also asks EPA to clarify that RIN ownership for reinstated RINs belong to the party
that retired the RIN. Additionally, the commenter asks EPA to clarify specific treatment of
nonroad RINs in 2010 or later provided the RFS2 does not commence on January 1, 2010.
[[Docket number 2249.2, p. 36]]

Document No.:     EPA-HQ-OAR-2005-0161-2471
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Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) supports EPA's position that RINs generated under RFS1 should be
grandfathered under RFS2. In particular, we agree that biodiesel RINs with an "RR" code of
"15" or "17" should be considered "Biomass-Based Diesel" RINs under RFS2, and that RINs
with an RFS1 D-code of 1 should be treated as "Cellulosic Biofuel" RINs.  We also suggest
allowing RINs for waste-derived ethanol (RFS1 D-code of 2, "RR" code of "25") to qualify as
"Advanced Biofuel" RINs. (2471.1, P.12)

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter supports the proposal documented in III.E.3.a that provides for 2009 RFS1 RINs
with a D code of 15 or 17 to be equivalent to 2010 RINs with a D code of 2 (or D code of 4 if the
six D code option is approved).  This will allow all excess 2009 Biodiesel RINs to meet up to
20% of the 2010 Biomass-based Diesel obligation (after the 2009 volume obligation is
subtracted from the total 2010 obligation). (0994.1, p.8)

Our Response:

      We agree that  RFS1 RINs should be valid for compliance with the RFS2 standards, and
have finalized the transition provisions as proposed.  These provisions ensure that the two-year
valid life of RINs is maintained during the transition from RFS1 to RFS2.  Our final regulations
at §80.1427(a) (4) describe the treatment of  RFS1 RINs for compliance purposes under RFS2.
According to this protocol, all RFS1  RINs can be used for compliance purposes under RFS2 and
are correlated according to their RR and D codes.

      We do not believe that it would be appropriate to allow RFS1 RINs  representing waste-
derived ethanol to qualify as advanced biofuel RINs under RFS2. Although such RFS1 RINs
could be identified by a D code of 2 and an  RR code of 25, waste-derived ethanol is not
explicitly defined in the RFS1 regulations at §80.1101. As a result, we do not have confidence
that such renewable fuel would meet the requirements for advanced biofuel under RFS2.  Thus,
RFS1 RINs representing waste-derived ethanol will be treated as renewable fuel RINs under
RFS2. However, in 2010 there will be no need for RINs categorized as advanced biofuel since
the advanced biofuel standard will be automatically met with biomass-based diesel RINs
generated to meet the  biomass-based diesel  standard.

      Retirement of  RINs for renewable fuels used in nonroad or heating oil applications is
governed by RFS1 regulations at §80.1129 (e).  We believe that a specific RIN which is retired
under these circumstances should be allowed to be reinstated and used for compliance purposes
under RFS2, since RINs have a valid life of 2 years, and an RFS1 RIN generated in 2009 or 2010
should be valid for RFS2 compliance purposes in 2010 or 2011, respectively, if it has not
previously been used for compliance. The protocol for RIN reinstatement is described at
§80.1429(g).  Since the same specific RIN that was retired would be reinstated, the type of RIN
which is retired will always match the type  of RIN generated.  RIN ownership for reinstated
RINs belongs to the party that owned the RIN at the time it was retired.
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3.8.2  RINs Eligible to Meet Each RVO

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2118
Organization:      CountryMark Cooperative, LLP
Comment:
The commenter (2118.1) believes that consideration should be given to allowing RINs to be
interchangeable to meet individual obligation of each category.

Document No.:     EPA-HQ-OAR-2005-0161-2400
Organization:      Murphy Oil USA, Inc.
Comment:
The commenter recommends the substitution of corn RINs for all or part of cellulosic obligation
be allowed.  (2400.2, p. 1)

Our Response:

      EISA intended that specified categories of renewable fuels would be used to meet
specified volume mandates.  The substitution of one type of RIN for another would make the
four separate standards  meaningless.
3.8.3  Deficit Carryovers

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2345
Organization:       Independent Fuel Terminal Operators Association (IFTOA)
Comment:
Regarding the "deficit carry over" provision, EPA says that the excessive 2009 RINs could not
be traded to another party. The commenter (2345) believes this approach is appropriate because
it approximates the manner in which the statute had assumed compliance would have been
demonstrated if the RFS2 regulations had been issued by the end of 2008. [[Docket number
2345.1, p. 5]]

Our Response:

      The commenter refers specifically to the proposed approach to the biomass-based diesel
standard in which the number of 2009 biodiesel RINs used by an obligated party for compliance
in 2009 can be subtracted off that party's RVO for the biomass-based diesel standard in 2010,
prior to determining compliance with that RVO.  In this context, such RINs could not be traded
to another party. We agree with the commenter that this approach is designed to approximate the
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intent of EISA given that RFS2 was not effective in 2009, and we have finalized this approach as
proposed.


What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2102
Organization:       RENTECH, INC
Comment:
The commenter (2102.1)  encourages EPA to allow obligated parties to run negative credit
balances for longer periods of time in the early years of the program, consistent with EPA's
statutory obligations to determine available volumes each year. (2102.1, p.6)

Our Response:

       CAA 211 (o) explicitly allows a deficit carryover of no more than one year at a time. As
a result, obligated parties cannot carry a deficit for two or more years in a row.  The statute does
not provide EPA the authority to  change this provision.
3.8.4   Obligated Volumes

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil USA, Inc.
Comment:
The commenter (2400.2)  believes that exported fuels should be excluded from a company's
RVO.  EISA requires EPA to exclude fuel from an obligated party's obligation because EISA is
limited to the transportation fuels used in the United States. The commenter recommends that
language be put in similar to §80.1407 (d) (5) to include exported distillate fuels as well. Just as
the provisions apply to gasoline fuels, the same provisions should apply to distillate fuels and
should be excluded from  the obligation. EPA should also be clear that both gasoline and distillate
volumes produced at transmix facilities  do not incur an obligation since these fuels are
previously accounted for and are already part of the obligation of refiners and importers. (2400.2,
p. 12)

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter believes  that EPA should include provisions in this section specifying which
types of distillate fuels are included, and excluded from the obligation. EPA should also clarify
that gasoline and distillate volumes produced at transmix facilities do not incur an obligation
since such fuel was already accounted for and is part of the obligation of refiners and  importers.
(2505.2, p.5)
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Our Response:

       In the list of exclusions for exported gasoline in the proposed regulations at §80.1407(d),
we inadvertently failed to list corresponding exclusions for exported diesel. This has been
corrected for the final rule.  The correction includes an explicit reference to diesel in transmix.
3.8.5   Exported Renewable Fuel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) believes that EPA should amend the RFS2 regulations to better
recognize certain commercial realities of the renewable fuel export industry. The commenter
believes that modest changes to the regulations can enhance exporters' flexibility. Specifically,
EPA should allow exporters to demonstrate that the product exported was actually produced or
acquired in the preceding year. The commenter noted that the requested change would not in
any way reduce accountability for renewable fuel exports. Instead it would merely correct an
inequity that arises during the transition between compliance years. (2471.1, Section 3.6, pp.12-
13)

Our Response:

       The provisions at §80.1430 that require an exporter to determine an RVO based on
exported volumes of renewable fuel are designed to ensure that only renewable fuel actually
consumed within the 48 contiguous states or Hawaii is counted towards meeting the volume
mandates in EISA.  Since the statutory volume consumption mandates are annual, the regulations
are designed to account for exported renewable fuel at the time it is exported, when it is removed
from the pool of renewable fuel being consumed in the U.S. In this context, the year of
production of the exported renewable fuel is not as important as the year of exportation.
Moreover, exporters are unlikely to have access to information about the production date of the
renewable fuel they are exporting. Any RINs assigned to the exported renewable fuel may not
have been generated to represent that fuel, since assigned RINs are fungible and can be moved
from one batch of renewable to another.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter also supports an approach where an exporter assumes all ethanol is renewable
fuel and biodiesel is biomass based diesel.  The incentives to import cellulosic and advanced
biofuels in the RIN market will encourage companies to import cellulosic and advanced fuels.
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The commenter is aware of several biodiesel exporters who have apparently failed to retire the
RINs associated with biodiesel produced in the U.S. and shipped to Europe. The commenter
urges EPA to enforce these provisions. [[Docket number 2233.2, p. 9]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter also supports the approach where exported ethanol is assumed to be renewable
fuel and exported biodiesel is presumed to be biomass-based diesel. The commenter believes
incentives to import cellulosic and advanced biofuels in the RIN market will encourage
companies to import cellulosic and advanced fuels. Thus, it is highly likely that exported
renewable fuels will not meet the cellulosic and advanced biofuel criteria.  [[Docket number
2393.1, pp.  10-11]]

Our Response:

      We agree that it is more likely that cellulosic and advanced biofuels will be imported
rather than exported, minimizing any potential misrepresentation of exported volumes when an
exporter determines its RVOs. We also agree that exported volumes of biodiesel and renewable
diesel should in most cases be used to determine an RVO for biomass-based diesel.  However,
we have determined that the approach we proposed in the NPRM could provide an opportunity
for some parties to gain an inappropriate advantage in the RIN market. For instance, a party
could import ethanol with advanced biofuel RINs, separate those RINs, export the ethanol, and
be subject to only  a total renewable RVO.  They would then be able to sell the advanced biofuel
RINs and purchase lower value renewable fuels RINs to satisfy their RVO. A similar situation
could arise when a producer of cellulosic biofuel is also an exporter. Therefore, we have
modified §80.1430 so that if an exporter knows  or has reason to know that the renewable fuel
that it is exporting is advanced biofuel or cellulosic biofuel, the exporter must determine an RVO
for the advanced biofuel or cellulosic biofuel rather than simply assuming  it is general renewable
fuel.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2096
Organization:       Beveridge & Diamond, PC
Comment:
The commenter (2096) notes that a party may receive a biodiesel blend containing volumes of
biodiesel without attached RINs. As currently proposed, EPA's RFS2 regulations do not appear
to place any express requirement on the transferors of such a blend to identify the volume
percentage of biodiesel included in that blend.  This ambiguity may become problematic when a
party that subsequently receives the biodiesel blend seeks to export the blend. [[Docket number
2096.1, p.  2]]

The commenter explains that without a requirement that the transferor of a biodiesel blend
disclose to subsequent parties the volume percentage of biodiesel in the blend, an exporter may
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acquire a quantity of blended biodiesel for which the specific volume percentage of biodiesel is
unknown. The exporter would thus be blocked from an ability to make the determination of its
own export RVO. [[Docket number 2096.1, p. 2]]

For this reason, the commenter believes that with regard to every transfer of biodiesel, whether
for export or domestic use, EPA should require that the volume of biodiesel being transferred by
any party be identified in PTDs used to transfer ownership of the blend.  At a minimum, the
commenter asks that EPA clarify the obligation of every party that transfers a blend containing
biodiesel from which RINs have been separated to disclose to the transferee the volume of
biodiesel in the transferred blend. [[Docket number 2096.1, p. 2]]

The commenter also points out that EPA's proposal does not identify any test method for use by
exporters making the required volume determination. They respectfully ask that EPA include in
its final RFS2 regulations the specific method, whether ASTM or otherwise, that exporters must
use to determine the amount of renewable fuel or biodiesel in a blend, including the degree of
accuracy to which the Agency requires such a determination to  meet. In addition, the commenter
asks EPA to indicate whether there is a de minimis volume percentage of renewable fuel and/or
biodiesel in a blend below which EPA  does not require consideration by an exporter determining
its RVO and, if so, the method by which such de minimis  amount must be identified. [[Docket
number 2096.1, pp. 2-3]]

Our Response:

       We agree that exporters require more specific direction on how to determine the
concentration of renewable fuel in blends that they export. To this end, we have added a
provision to §80.1430(b) (4) that gives exporters the option of obtaining this information from
their supplier, using a radiocarbon dating test method such as ASTM D-6866 to determine the
renewable content of the exported fuel, or by assuming the maximum concentration of the
renewable fuel in the blend as allowed by law and/or regulation.

       We do not believe that such direction is necessary  for domestic use of biodiesel blends,
since such blending is generally the basis for separation of any assigned RINs. As a result,
downstream parties taking ownership of such blends will not have a need to know the specific
concentration of renewable fuel in the blend under RFS2 regulations.
3.9    Designation of Obligated Parties

3.9.1   Supports Existing Approach

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
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The commenter (2329.1) supports retaining the obligated parties as defined under the current
system.  The RFS program has been in place for two years, and the parties understand their
obligations and the requirements. The commenter agrees that the alternatives "would result in a
significant change in the number of obligated parties and the movement of RINs." (74 FR
24963.)  (2329.1, p.86)

Document No.:      EPA-HQ-OAR-2005-0161-2017
Organization:       Aloha Petroleum, Ltd.
Comment:
The commenter (2017.1) believes that the current definition of Obligated Party and the definition
included in the proposed RFS2 regulations under §80.1406 are adequate and should not be
changed. The current approach, where importers and refiners are Obligated Parties, is the most
effective way to enforce the requirements of the RFS.  (2017.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2110
Organization:       Chevron
Comment:
The commenter (2110.1) believes that EPA should not change the current obligated parties or
shift the point of regulation downstream in the supply  chain.  The commenter believes this
threatens the ability of the program to reach mandated goals and will result EPA having to delay
the program even further or risk having to take remedial action midstream, a very disruptive
prospect at a time when the program faces several serious challenges as it is. The proposal
appears  to create more problems than it solves. (2110.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers and Convenience Stores of Iowa (PMCI)
Comment:
The commenter (2155.1) noted that the concept of moving a federal obligation from major oil
companies to small businesses is not practical nor will it generate the outcome as described in
this preamble.  Furthermore,  the EISA does not imply nor does it suggest that any party other
than fuel reformulators, importers, and refiners are obligated under the law. The commenter
believes that the suggestion to move the RFS obligation to the renewable fuel blender is
premature and will only increase energy costs to the end consumer further. (2155.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2217
Organization:       Petro-Diamond Incorporated
Comment:
The commenter (2217) opposes modifying the current definition of "obligated party" as
primarily refiners and importers to include "blenders". (2217, p.l) (See Docket Number 2217.1,
p.l for more  discussion on this issue)

Document No.:      EPA-HQ-OAR-2005-0161-2314
Organization:       The New England Fuel Institute
Comment:
The commenter (2134.1) opposes any changes in the RFS program that would extend obligated
party status to downstream blenders.  The commenter  believes it is premature to  assess the status
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of the RINs market until the agency deploys its Moderated Tracking System MTS for RINs
transactions. The MTS will produce a much more accurate snapshot of the RINs market because
it creates a central transaction point for all RINs separations, including buy, sell, and retire
transactions. MTS will also have the capability to track detailed transaction history on a
company by company basis and identify invalid or incomplete RIN report filings.  (2134.1, pp.2-
3)

The commenter believes that EPA must consider alternative regulatory approaches to minimize
the significant economic impact that redefining obligated parties would have on small businesses
petroleum marketers and fuel dealers. Alternatives should include renewable fuel blending
thresholds for transportation fuels below which obligated party status is not imposed. If done
properly, the thresholds would protect small business petroleum marketers and fuel dealers from
the crushing compliance burdens that shifting obligated party status would inflict while at the
same time helping to achieve the ambitious RVO schedule under EISA. EPA must also conduct
a new, thorough and comprehensive regulatory flexibility  analysis on the costs and associated
compliance burdens such a change would impose on small business petroleum marketers and
fuel dealers. 2134.1,p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2328
Organization:       Petroleum Marketers Association of America (PMAA)
Comment:
The commenter (2328.1) opposes any changes in the RFS program that would extend obligated
party status to downstream blender.  The commenter noted that if EPA should continue to weigh
such options, it must consider alternative regulatory approaches to minimize the significant
economic impact that redefining obligated parties would have on small business petroleum
marketers. Alternatives should include renewable fuel blending thresholds for transportation
fuels below which obligated party status is not imposed. If done properly, the thresholds would
protect small business petroleum marketers from the crushing compliance burdens that shifting
obligated party status would inflict while helping to achieve ambitious RVOs under EISA.
(2328.1, p.2)

If EPA was to consider redefining obligated parties, the commenter would expect the agency to
conduct a new and comprehensive regulatory flexibility analysis pursuant to Title  5 U.S.C. Sec.
601-612 on the costs and associated compliance burdens such a change would impose on small
business petroleum  marketers. (2105.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
The commenter (2358) believes the proposal to alter the designation of obligated parties by
assigning RVOs based solely on the volume of finished gasoline produced or imported is badly
misguided and also believes EPA's scenario where large refiners hoard RINs is unlikely.  In
addition, EPA's proposal to more closely align a party's obligation to acquire RIN with a party's
access to RINs relies on false assumptions. The commenter believes that the method for
assigning RVOs should remain unchanged and RBOB and CBOB should remain on the list of
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fuels subject to the standard. [[Docket number 2358.1, pp. 5-8]] [[See docket number 2358.1, pp.
5-8 for a detailed discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2374
Organization:       Amyris Biotechnologies, Inc. (Amyris)
Comment:
The commenter (2374) notes that in RFS, the renewable volume obligation applied to refiners,
blenders, and importers of motor vehicle or non-road gasoline or diesel.  The commenter
believes this system should be extended to RFS 2 to promote blending of renewable fuels with
traditional petroleum fuels. [[Docket number 2374.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2384
Organization:       BP America (BP)
Comment:
The commenter (2384) believes that changing the obligated parties under RFS2 to include
blenders of RBOB and CBOB provides minimal benefits while requiring a higher cost of
administration for both market participants and for EPA. The RFS1 approach to obligated
parties was well designed; there is no need to change it. [[Docket number 2384.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil USA, Inc.
Comment:
The commenter (2400.1) opposes the potential shift of obligated party "downstream"  to the
terminal operator.  The commenter hopes that EPA will consider the financial implications and
investments used to meet the current compliance measures as an obligated part and the resulting
impact of more than doubling  the number of obligated parties in the marketplace by moving the
responsibility  "downstream."  (2400.1, p.l)

The commenter recommends that EPA keep the obligated party at the current refiner level. The
reporting requirements and time taken to ensure RVO is met would become even more difficult
should EPA change the obligated party.  Shifting the obligation further downstream would likely
cause confusion in reporting and inject a high degree of instability in the RIN marketplace. If the
obligated party were change, EPA may have to delay the program in order to address myriad of
unforeseen variables, complexities in monitoring and enforcement, and training of scores of new
obligated parties. (2400.2,  pp.3-4)

Document No.:      EPA-HQ-OAR-2005-0161-2464
Organization:       Musket Corporation
Comment:
The commenter (2464.1) requests that EPA continue to define obligated parties in RFS2 as the
refiners and importers of petroleum-based fuels.  (2464.1, p.2)

Document No.:  EPA-HQ-OAR-2005-0161-2322
Organization:   Illinois Petroleum Marketers Association
Comment:
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The commenter [[2322]] number of consequences will flow from designating downstream
blenders as "obligated parties."  First, if blenders have no control over the volume of blended
gasoline they can acquire in any given year, how can they be sanctioned for failing to meet a
goal? We recommend that downstream blenders who are not producers, refiners or exporters
should not be designated obligated parties. [[#2322.1 p.2]]

Our Response:

      We agree in general that the existing designation of obligated parties has been effective
and should be retained under RFS2.
3.9.2   Blenders or Other Downstream Parties Become Obligated Parties

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2118
Organization:       CountryMark Cooperative, LLP
Comment:
The commenter (2118.1) believes that the Renewable Volume Obligation calculation should be
adjusted so products that rely on ethanol blending to make a final product not be included in the
calculation for those volumes that said blending is not under control of the obligated party.  For
product sold as 84 CBOB, the ethanol blending obligation should be shifted to the downstream
blender of the final product.  (2118.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2130
Organization:       ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
Regarding EPA's request for comment on a possible change in the definition of the parties
subject to the renewable volume obligation, the commenter (2130) believes that the parties
obligated under the RFS should be those parties that have control of the decision regarding
whether to blend or not to  blend biofuels to make a finished fuel blend for retail or wholesale
purchaser consumer sales. The commenter believes that in the absence of this change, it will
become increasingly difficult for refiners and importers to secure the requisite number of RINs to
demonstrate  compliance, particularly if their refinery production levels of gasoline or diesel
exceed their  downstream marketing volumes. [[Docket number 2130.1, pp.1-2]]

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter (2472) supports changing the designation of obligated parties to the party that
has title of the gasoline and diesel at the truck rack before it is loaded into trucks for delivery to
retail outlets and wholesale purchaser-consumer facilities as the EPA proposed in the RFS2
preamble.  [[Docket number 2072, p. 2]] [[See docket number 2072, pp 2-4 for discussion of the
impact of this change.]]
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Document No.:      EPA-HQ-OAR-2005-0161-1002
Organization:       Fuel Marketing Corporation
Comment:
The commenter (1002) supports eliminating RBOB and CBOB from the list of fuels that are
subjected to the standard, as such making blenders of these fuels obligated parties. (1002/1002.1,
p.D

Document No.:      EPA-HQ-OAR-2005-0161-1033
Organization:       Poet Ethanol Products
Comment:
The commenter (1033.1) endorses altering the definition of an Obligated Party/Renewable
Volume Obligations to say that the RVO is placed upon the party blending the finished gasoline
or diesel fuel. This modification would correct a fundamental weakness in the alignment of
incentives for how RVOs were calculated under RFS1.  (1033.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) approves the second alternative which is to move the obligations for all
gasoline and diesel downstream to parties who supply finished transportation fuels. The
commenter noted that there are numerous problems with the current RFS1 regulations that will
be magnified under the RFS2 regulations if the obligated party remains the refiner/importer.  The
current form of the regulation does not: maximize benefits and minimize costs, treat all regulated
parties equally, or minimize costs to the consumer.  The commenter noted that the current
definition of obligated party has the following issues:
1. Creates an uneven playing field among refiners/importers
2. Creates an uneven playing field between refiners and renewable fuel blenders
3. Does not address issue of state clear gasoline regulations
4. Does not address the issue of RIN-less renewable fuel. (2124.1, p. 16)

The commenter stated that EPA's primary reason for making refiners and importers the obligated
party instead of renewable fuel blenders or those parties that hold title to the fuel at the truck rack
was to minimize the number of parties impacted by the regulations. With ethanol now
approaching 100% penetration in the gasoline pool  (at least at 10% or lower blends), all of these
parties will be reporting under the current RFS1 regulations. The commenter believes that
changing the definition of obligated party to providers of finished transportation fuels will not
significantly increase the number of parties reporting to the EPA. (2124.1, p. 17)

Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The commenter (2145.1) supports moving the Renewable Volume Obligation (RVO) to the
producer of the finished fuel.  The commenter recommends that a party's RVO be based on the
volumes of non-renewable finished gasoline or diesel that it produces or imports.  (2145.1, p.2)
[[See Docket Number 2145.1, p.2 for a detailed discussion on this issue.]]
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Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:       ConocoPhillips
Comment:
The commenter (2154.1) believes that a change in the obligated party designation is imperative
to the workability of the RFS2 program and parity amongst market participants. The commenter
support shifting the obligation to the provider of finished transportation fuels. (2154.1, p.2)
[[See Docket Number 2154.1 pp.2-4 for a detailed discussion on this issue]]

Document No.:      EPA-HQ-OAR-2005-0161-2345
Organization:       Independent Fuel Terminal Operators Association (IFTOA)
Comment:
Referring to EPA's proposed alternates to the current designation, including a suggested
alternate that EPA change the designation to the entity that owns the renewable fuel and the
petroleum product immediately prior to blending above the rack, while not endorsing the
suggestion, the commenter (2345) stresses that if the Agency makes such a change in the
designation, it should only apply to lenders operating above the rack. These blenders tend to be
larger companies that greater ability to ensure compliance. [[Docket number 2345.1, pp. 1-2]]

Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) believes that EPA can dramatically ease the flow of RINs and reduce
the costs associated with compliance by re-defining "Obligated Parties" as solely renewable fuel
blenders, thus moving the point of compliance downstream to the terminal rack or  other point
where renewable and petroleum-based fuels are blended to produce a retail-grade product.
(2471.1, p.4) (See Docket Number 2471.1, pp.4-5 for a detailed discussion on this  issue)

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter (2472) does not support any of EPA's alternative approaches related to the
designation of obligated parties. Rather, the commenter supports a hybrid of the two alternative
approaches proposed by EPA. The commenter says that the RFS2 obligated party  should be the
ethanol blender for RBOB and CBOB, and the party that holds title to finished conventional,
RFC and diesel at the truck rack before it is loaded into trucks for supply to retail outlets or
wholesale purchaser-consumer facilities.  [[Docket number 2472.1, p. 3]] [[See docket number
2472.1, pp. 3-5 for extensive discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) believes that EPA should move the obligation downstream to blenders
who have control over the amount and type of biofuel blended. Shifting the burden downstream
is appropriate in light of the complicated four mandate structure of EISA, since it is only the
downstream blender that has the ability to decide which biofuels to blend. Shifting the
obligation downstream also addresses the issue of state ethanol blending laws, which have the
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potential to interfere with the ability of obligated parties to comply.  The commenter
recommends that the obligated party be the party that has title to gasoline or diesel fuel at the
time that it enters the truck at a terminal rack (the typical point of taxation).  To the extent that a
party downstream of that point adds ethanol or biodiesel to the gasoline or diesel, the obligation
for that volume of gasoline or diesel fuel should transfer to the party that blended the ethanol or
biodiesel and be subtracted from the obligation of the party that held title to the gasoline or diesel
fuel as it enters the truck at a terminal rack. (2505.2, pp.4-5)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
Referring to the three alternatives for obligated parties, the commenter believes that all the
alternatives have serious problems, such as requiring obligated parties to blend more than the
marketplace can absorb, which are likely to eventually cause the obligated parties to be unable to
comply or for EPA to be unable to effectively enforce the  RFS2.  The commenter does indicate
that the "Finished transportation fuel supplier" option is the best of the three. In addition, the
commenter states that obligated parties cannot be held responsible for activities outside of their
control, and urges EPA to create reasonable boundaries each year to ensure the market acts
rationally. [[Docket number 2233.2, pp. 2-3]]  [[See docket number 2233.2, pp. 2-6 for a detailed
discussion of each EPA-proposed alternative.]]

Our Response:

      We do not believe that the concerns expressed about the existing designation of obligated
parties, or the perceived benefits of alternative schemes, warrant a change for the RFS2 program
at this time. We continue to believe that the market will provide opportunities for parties who
are in need of RINs to acquire them from parties who have excess.  This has been the case in
RFS1, and we believe that it will continue  to be true under RFS2.  Moreover, a change in the
designation of obligated parties would result in a significant change in the number of obligated
parties and the movement of RINs.  Such changes could disrupt the operation of the RFS
program during the transition from RFS1 to RFS2 and be administratively burdensome in the
long term for the many blenders who are small businesses. Further discussion of this issue can
be found in Section II.G.I of the preamble.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2322
Organization:       Illinois Petroleum Marketers Association
Comment:
The commenter [[2322]] states that IPMA members have traditionally purchased ethanol at the
best price from an independent ethanol producer. They receive Renewable Identification
Numbers (RINs) as a result of this process.  Many oil companies now no longer sell pure,
unblended gasoline at the terminal rack and will only sell pre-blended gasoline.  This removes
independent marketers' ability to purchase gasoline and ethanol separately.  The new RIN rules
eliminate this competition by removing the financial incentive to blend and discouraging
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blending below the terminal rack will have an impact on the wholesale and retail price of
gasoline that could also create opportunities to manipulate the market. [[#2322.1 p.1-2]]

Our Response:

       The RFS program is intended only to ensure that certain mandated volumes of renewable
fuel are used in transportation fuel, heating oil, or jet fuel in the U.S. each year.  The program
leaves to the market the choice of which party blends renewable fuels into gasoline and diesel.
However, since we have determined that RINs should continue to be transferred with volumes of
renewable fuel through the  distribution system until renewable fuel is purchased by an obligated
party or blended into conventional fuels, consistent with the RFS1 program, there remains an
incentive for blenders to purchase ethanol and gasoline separately and blend them to produce
transportation fuel.
3.9.3   Expired RINs Used to Reduce Nationwide Obligation for the Following Year

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter believes that EPA should reject its proposed alternative to reduce the overall
volume based on excess RINs. The mandated volumes are a minimum, and EPA should not take
actions that may otherwise reduce the volumes in any year. Moreover, while EPA claims this
approach would prevent "hoarding" from driving up demand for renewable fuel, it, in fact, may
provide incentives for obligated parties to hoard RINs.  (2329.1, p.90)

Our Response:

       We agree with this comment.  While the use of expired RINs to reduce the  next year's
volume could help ensure that the obligation applied to each refiner and importer of gasoline and
diesel is more closely aligned with their access to RINs, we recognize that this alternative
approach would reduce the volumes mandated by EISA. We do not believe this would be
appropriate, and therefore are not finalizing this approach.


3.9.4   Other

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
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While the commenter (2249) believes that EPA does not intend for biodiesel producers to
become obligated parties with RVOs, the commenter requests clarification on the application of
the definition of producers and importers of diesel fuel. [[Docket number 2249.2, p. 29]]

Our Response:

       As provided in §80.1407(d) and (f), diesel fuel that is subject to the standards and incurs
an RVO must be non-renewable. Thus, producers that produce only biodiesel and do not export
would not have an RVO.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2370
Organization:       NGVAmerica
Comment:
The commenter (2370.1) supports the decision to not include natural gas and other alternative
fuel providers as regulated entities. While it is laudable to encourage alternative fuels to include
a renewable component, there is no indication that Congress intended such a requirement to be
mandatory for alternative fuels such as natural gas, propane or electricity. (2370.1, p.8)

Our Response:

       While we have excluded natural gas, propane and electricity from the list of obligated
fuels subject to the standards, we are allowing producers of such fuels to generate RINs if they
can demonstrate that their fuels are made from renewable biomass and are actually used as
transportation fuel in the U.S.  If in the future these fuels become a more significant portion of
the transportation fuel pool, we may consider making them subject to the standards.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter (2393) states that none of the three alternatives proposed by EPA eliminates the
future compliance difficulties of obligated parties or the future enforcement issues that will face
EPA with the RFS2 four-tier renewable fuels mandates.  Nor will any of them solve the problem
that the commenter believes is the fundamental driver causing this discussion to intensify at this
time, i.e., the approaching E10 blend wall and, consequently, a potential RIN shortage that will
send obligated parties scrambling to try to find a way to comply with the RFS. [[Docket number
2393.1, p. 4]]

Regardless of where the obligation lies, the commenter believes that EPA must ensure that all
annual biofuels mandates are in fact achievable. EPA needs to err on the side of being certain
that the next year's production of the mandated biofuels will occur.  [[Docket number 2393.1, p.
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5]] [[Also see Docket number 2393.1, pp. 4-7 for further discussion of the alternatives for
obligated parties.]]

Our Response:

       In the annual rulemaking that we intend to promulgate to set the standards for the
following year, we will be evaluating both production and import potential under the provisions
of CAA 211 (o) (7) (D) as well as issues related to consumption potential, such as storage,
distribution, and dispensing capacity.  In this context we will be evaluating the E85 market and
the potential for FFVs to consume it. The annual standard for cellulosic biofuel will be based
directly on the projected volume of cellulosic biofuel production in the following year. EPA will
use similar information in considering whether waivers are appropriate for the other renewable
fuel standards.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1041
Organization:       DSI Fabrication, Inc.
Comment:
The commenter's (1041) specifically relates to whether county, state, or local governments that
produce their own biodiesel from waste vegetable oil (WVO) or yellow grease and use it in their
fleet vehicles are subject to this proposed rulemaking. The commenter is aware of several
county governments that produce high quality biodiesel  (B100) from WVO for use in their own
fleet vehicles. The counties do not distribute or sell the biodiesel but use a blend of B20 in their
fleet vehicles. The commenter questions if this means they are not subject to the requirements of
this proposed rulemaking. (1041, p.l)

The commenter believes that the benefits of counties, states, or local governments producing
biodiesel from WVO and using it in-their fleet vehicles should be supported, encouraged and
promoted. In addition, biodiesel produced from WVO has a GHG performance of 80%
reduction from the conventional diesel baseline. Therefore, it would not be appropriate to reduce
the threshold to 40% to allow biodiesel producers to average their emissions to meet the one
billion gallon volumetric requirements by 2012 unless every effort is made to encourage and
promote the production of biodiesel from WVO. (1041, p.l)

The commenter's other comment relates to whether a county, state, or local government that
produces ASTM quality biodiesel from WVO which is used strictly in their fleet vehicles (not
distributed or sold) would be eligible to participate in any future carbon trading efforts to reduce
GHG. (1041, p.2)

Our Response:

       The RFS program does not distinguish between renewable fuels used by the party that
produced them, or sold for use by another party. Renewable fuels that are valid under RFS are
those that are used to replace or reduce the quantity of fossil fuel present in a transportation fuel,
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heating oil, or jet fuel.  Any party producing renewable fuel that meets these requirements is a
regulated party.

      The RFS program does not currently provide a means for generating carbon credits for
trading.  Any provision for carbon credits generated for renewable fuels must await a future
regulatory action allow it.
3.10   Separation of RINs

Note: Comments addressing the alternative approach to RIN transfers presented in the NPRM in
which producers would have been allowed to separate RINs from batches (Section III.H.4 of
NPRM) are addressed in Section 3.11
3.10.1  Nonroad Diesel Fuel, Heating Oil, and Jet Fuel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2369
Organization:       New Generation Biofuels (NGBF)
Comment:
The commenter (2369) questions the logic of retiring RINs if a renewable fuel is used in a
commercial or industrial boiler or ocean-going vessel. If a renewable fuel is sold on the market
and blended in all fuel oil #2 and sold on the retail level it is not clear why a RIN would be
retired  as the renewable fuel in principle reduces greenhouse gas emissions and is better for the
environment.  If RINs are separated from the fuel and the distributor blends biofuel in most of
the gallons of fuel sold,  the commenter believes that determining a customer's use  of the fuel
places an unnecessary burden on the biofuel providers and distributors. [[Docket number
23369.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2549
Organization:       Triton Energy LLC
Comment:
The commenter (2549.1) question the logic of retiring RINs if a renewable fuel is used in a
commercial or industrial boiler or oceangoing vessel.  If RINs are separated from the fuel and the
distributor blends biofuel in most of the gallons of fuel sold, determining a customer's use of the
fuel places an unnecessary burden on the biofuel providers and distributors. (2549.1, pp.6-7)

Our Response:

       EISA's definition of "additional renewable fuel" includes renewable fuel that is used to
replace or reduce the quantity of fossil fuel present in home heating oil and jet fuel, and in the
NPRM we proposed that RINs could be generated and used for compliance purposes for all such
renewable fuels.  However, in the NPRM we distinguished between heating oil used for
residential heating from that used for commercial or industrial heating purposes. Based on
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further evaluation of industry practices and comments from stakeholders, we have determined
that such a distinction is not appropriate. First, the term home heating oil is used interchangeably
in the marketplace with heating oil to refer to the type of fuel used in home, commercial, and
industrial applications, not to refer to its place of use.  Second, by using the broader industry
interpretation of the term "home heating oil" to refer to all heating oil that could be used in
homes, whether or not it ultimately does, the RFS2 program will be greatly simplified for both
regulated parties and EPA enforcement personnel, and appropriate credit will be provided for the
use of renewable fuels that displace fossil fuels. This is in keeping both with the GHG reduction
and energy security goals of EISA. Therefore, for the final rule we are eliminating the
requirement that RINs be retired for renewable fuel present in heating oil that is used in a
commercial or industrial boiler, and are allowing RINs to be generated and used for RFS2
compliance purposes for all renewable fuels designated as or used in heating oil.  The term
"heating oil" is defined for RFS2 purposes consistent with existing EPA regulations at 40 CFR
80.2(ccc).  See additional responses to comments on the subject of heating oil in Section 3.2.6.

       EISA explicitly excludes renewable fuels used in ocean-going vessels from the definition
of transportation fuel, and makes no other allowances for including such fuels in the RFS2
program. Therefore, we are requiring RINs assigned to renewable fuel that is used in an ocean-
going vessel to be retired.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2549
Organization:       Triton Energy LLC
Comment:
The commenter believes that a similar system in the fuels market whereby the RINs are
separated from the fuel sold in the market managed by the EPA through an EPA Moderated
Transaction System appears to be logical especially if the participants are limited to those who
generate and sell RINs and those who need to purchase RINs. (2549.1., p.7)

Our Response:

       The EPA Moderated Transaction System (EMTS) will streamline much of the RIN
transfers and RIN separations that are currently recorded separately in each party's IT system,
and will significantly reduce many of the errors in RINs. However, we do not believe that the
benefits of EMTS warrant a change in which parties can own RINs or separate RINs from
volumes of renewable fuel.  In the RFS1 program we designed the regulatory program such that
RINs must be assigned to renewable fuel by the producer or importer, and must be transferred
with the renewable fuel until it is owned by an obligated party or is blended into gasoline or
diesel. This approach was designed to ensure that RINs make their way to the parties that need
them for compliance. While we did take comment on alternative approaches to RIN transfers,
we have determined that these alternatives should not be implemented as discussed more fully in
Section 3.11.
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What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2155
Organization:      Petroleum Marketers and Convenience Stores of Iowa (PMCI)
Comment:
Written guidance on how to handle 2009 biodiesel RINs, previously retired due to nonroad
applications, is needed so that those RINs may be pulled out of retirement and made valid for
meeting RVOs. (2155.1, p. 1)

Our Response:

       In the NPRM we proposed that certain RINs retired under the RFS1 regulations at
§80.1129 (e), including those retired because of ultimate use in a nonroad application, could be
reinstated for use in complying with the 2010 RFS2 standards. We have finalized this provision
at §80.1429(g). Reinstatement can be made through EMTS.
3.10.2 Exporters

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-0952
Organization:      Renewable Fuels Association
Comment:
The commenter believes that the current treatment of exports and imports of renewable fuels is
appropriate. (2329.1, p.87)

Document No.:     EPA-HQ-OAR-2005-0161-2471
Organization:      Sutherland Asbill & Brennan LLP
Comment:
The commenter noted that RFS1 expressly allows RF producers, importers and marketers to
transfer up to 2.5 assigned RINs per gallon, and likewise authorizes RF blenders to separate up to
2.5 RINs per gallon blended. The regulations, however, do not specifically authorize RF
exporters to separate up to 2.5 RINs per gallon exported (although we have been advised by EPA
that it has informally adopted this position).  The commenter requests that EPA formally adopt
this change as part of RFS2. (2471.1, p. 17)

Our Response:

      The regulations at §80.1429 (b) have been modified to allow exporters to separate up to
2.5 RINs for each gallon of renewable fuel exported, consistent with the treatment of blenders.
3.10.3 Neat Renewable Fuels

What Commenters Said:


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Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) noted that if the Producer RIN separation proposal does not become
law, then the commenter agrees that sections 80.1429(b)(2) and 80.1429(b)(5) be eliminated and
section 80.1429(b) (4) be expanded to allow RINs to be separated from neat fuel or blends under
the restrictions cited by the EPA.

Our Response:

       We have retained the proposed provisions for neat renewable fuel or blends designated as
transportation fuel, heating oil, or jet fuel in the final rule. These provisions are designed to
ensure that RINs can be separated from any renewable fuel, whether in neat or blended form
when the fuel is designated and used as transportation fuel, heating oil or jet fuel without further
blending.  However, we do not believe that the RIN separation provisions applicable to blenders
should be eliminated since the blender is not required to ensure that the blend is used as a
transportation fuel, heating oil, or jet fuel in its blended form without further blending.
Moreover, we do not believe that the RIN separation restrictions on biodiesel, which require that
biodiesel be blended at 80 percent biodiesel or less to activate RIN separation, in instances where
the fuel is not designated for use as  transportation fuel, heating oil or jet fuel without further
blending, should be eliminated since biodiesel producers often add small amounts of fossil-based
diesel to their biodiesel for tax credit purposes, but do not designate the resulting blend as a
transportation fuel, heating oil, or jet fuel. As described in Section 3.4.10 below, RINs can be
separated from biodiesel blends with greater than 80 percent biodiesel if such blends are
designated and used as transportation fuel, heating oil,  or jet fuel at that blend level.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
Regarding "Neat Renewable Fuels and Blends-Transportation and Home Heating Oil and Jet
Fuel" the commenter (1044) believes that requiring a blending event is misguided. The
commenter states that biomass-based diesel must conform to recognized ASTM standards that
allow the fuels to be used in any fashion similar to diesel. The commenter further states that the
notion that biomass-based diesels must be blended with baseline or non-baseline diesel is
nonsense. The commenter believes that a review of this action, and the subsequent removal of
this item, would relinquish the requirement and burden of support documentation for blenders
and support statements of use as discussed in this proposed rule and streamline the ability of
producers to generate, separate and distribute RINs more effectively. (1044.1, p. 2)

Our Response:
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       The provisions at §80.1429 regarding separation of RINs do not require blending of
renewable fuel with conventional gasoline or diesel prior to the separation of RINs. However,
due to concerns that producers could exercise market power by separating and retaining RINs
from renewable fuels that they produce, we have included a requirement that RINs can only be
separated from neat renewable fuels if a party designates the neat renewable fuel as
transportation fuel, heating oil, or jet fuel and demonstrates that it is used as such in its neat
form.
What Commenters Said:

Document No.:       EPA-HQ-OAR-2005-0161-2081
Organization:        Novogy, Inc.
Comment:
The commenter (2081) seeks to confirm their interpretation of the proposed approach to RIN
separation for a fungible renewable fuel such as methane molecules derived from cellulosic
biomass that are produced and sold as biogas in "neat" form under RFS2.  Specifically, the
commenter would like to confirm that the regulation allows producers who can produce and sell
cellulosic biogas for an intended transportation fuel use under RFS2 (and potentially as a fossil
gas replacement in a home heating application) to be eligible to separate the RINs generated for
that batch of fuel at the time the fuel is sold for its designated purpose. Successful
documentation would include verification that the amount of cellulosic biogas produced and sold
was used either: (a) as produced for a designated on-site transportation user; (b) injected into a
pipeline network serving multiple end users drawing on this supply for transportation; or, (c)
directly by  industrial entities connected into that same pipeline network, where their direct usage
of cellulosic biogas would effectively displace quantities of fossil derived natural gas from that
network. Designated use would be verified in an off-setting sales contract. Producers generating
and separating RINs would track the credits on the EPA monitored trading system.  Annual attest
requirements will use Btu equivalence measures from RFS2 tied to cu ft of biogas sold on
required PTD documents to ensure producers are not able to separate more RINs than correspond
to the volume of fuels they produce. Mirroring proposed compliance mechanisms would allow
cellulosic biogas producers  flexibility to scale new distribution by selling directly to
transportation users, into pipelines or to large industrial natural gas users drawing off natural gas
pipeline networks that serve transportation (and potentially home heating) users. The commenter
requests confirmation that a producer of cellulosic biogas can separate an appropriate RIN at the
time the cellulosic biogas product is sold in "neat" form for an approved use as designated use
under RFS2. [[Docket number 2081.1,  p. 7]] [[See docket number 2081.1, pp. 7-11 for detailed
discussion of this issue.]]

Our Response:

       Our final regulations allow biogas producers to generate RINs and separate them if they
designate it as transportation fuel, and demonstrate its use as transportation fuel. The regulations
specify conditions and procedures applicable to producers introducing biogas into a fungible
natural gas pipeline to ensure that a similar quantity of fungible fuel is ultimately used for
transportation purposes. See also the discussion of biogas in Section  3.2.  Biogas used as
transportation fuel  could only be considered cellulosic biofuel if it is made from cellulosic


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RFS2 Summary and Analysis of Comments
renewable biomass, and could only be assigned cellulosic biofuel RINs if a D code is approved
by EPA in §80.1426(f) or pursuant to §80.1416.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter agrees with and supports allowing RINs associated with neat renewable fuels to
be separated and traded as EPA has proposed as long as such renewable fuels are not further
blended. [[Docket number 2393.1, p. 11]]

Our Response:

       We agree that parties designating neat renewable fuels as transportation fuel, heating oil,
or jet fuel for use without further blending can separate the RINs.
3.10.4  Biodiesel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
If the Producer RIN separation proposal does not become law, then the commenter agrees with
the EPA proposal to allow RIN separation for blends above B80 when the fuel is specified for
transportation fuel, heating oil or jet fuel and no further blending is allowed.

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter supports allowing RINs associated with neat renewable fuels to be separated and
traded and supports altering the definition of a neat renewable fuel to allow biodiesel blenders
creating a blend of B80 or higher to separate RINs. [[Docket number 2233.2, p. 9]]

Our Response:

       In order to account for situations in which biodiesel blends of 81 percent or greater may
be used as transportation fuel, heating oil, or jet fuel without ever having been owned by an
obligated party, EPA proposed, and is finalizing a change to the applicability of the RIN
separation provisions for RFS2. Regulation Section 80.1429(b) (4) will allow for separation of
RINs for neat renewable fuel  or blends of renewable fuel and diesel fuel that the party designates
as transportation fuel, heating oil, or jet fuel, provided the neat renewable fuel or blend is used in
the designated form, without further blending, as transportation fuel, heating oil, or jet fuel.
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Those parties that blend renewable fuel with gasoline or diesel fuel (in a blend containing 80
percent or less biodiesel) must separate RINs pursuant to §80.1429(b) (2).


3.10.5 Other

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil USA, Inc.
Comment:
The commenter (2400.2) recommends that RINs associated with any renewable fuel blended into
any distillate be allowed to be separated and then used for compliance purposes. Using RINs for
compliance that were blended into any distillate outside of MVNRLM will not change an
obligated parties RVO, and still allows for the use of renewable fuel into the distillate supply.
(2400.2, p.5)

Our Response:

      EISA  defines renewable fuels that are valid under RFS2 as those that are used to replace
or reduce fossil fuel present in transportation fuel, heating oil, or jet fuel. Under most
circumstances this means that renewable fuels that can be blended into fossil-based distillate will
be valid for RFS compliance purposes.  However, the resulting blend  must be used as
transportation fuel,  heating oil, or jet fuel.  For instance, renewable fuel blended with distillate
for use in ocean-going vessels would not be valid under RFS 2, since EISA explicitly excludes
such fuels.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter believes that EPA should revise the rules to limit the ability to separate RINs to
obligated parties.  Since the time that EPA promulgated the RFS1 rules several states have
passed laws that could interfere with the ability of obligated parties to comply with the RFS
rules. EPA could facilitate compliance with the RFS by re-aligning the obligated parties and
limiting the ability to separate RINs to such parties. (2505.2, p.9)

Our Response:

      While obligated parties can separate RINs for any renewable fuel batches that they own,
not all renewable fuel is owned by an obligated party prior to being used as transportation fuel,
heating oil, or jet fuel.  Therefore, we must provide opportunities for other parties to separate
RINs from renewable fuel. In most cases, RIN separation by a non-obligated party will occur
because the renewable fuel has been blended with gasoline or diesel to produce transportation
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RFS2 Summary and Analysis of Comments
fuel, heating oil, or jet fuel. Exporters can also separate RINs for volumes of renewable fuel that
they export, but such exporters will also incur an RVO to which those RINs can be applied.
Other parties can also separate RINs without blending if they designate the renewable fuel as
transportation fuel, heating oil, or jet fuel in its neat form, and they demonstrate that the neat
renewable fuel is actually used in its designated form.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) requests that RIN Marketers be permitted to own RINs and to function
under the RFS2 program.  (0994.1, p. 13)

Our Response:

       Any party that registers under the RFS2 program can own RINs. A marketer that
assumes ownership of renewable fuel with assigned RINs cannot separate those RINs unless they
blend the renewable fuel into gasoline or diesel for use as transportation fuel, heating oil, or jet
fuel. However, once separated, RINs can be owned by any party.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers and Convenience Stores of Iowa (PMCI)
Comment:
The commenter (2155.1) also believes that the original intent of the RFS must be upheld and that
those desiring to take title to the RINs on neat product, being purchased downstream, must be
allowed to do so without interference or pressures from other EPA-registered parties. (2155.1,
p.3)

Our Response:

       A party who takes ownership of neat renewable fuel can also take ownership of any RINs
assigned to that neat renewable fuel if it is registered with EPA under the RFS2 program. If an
upstream party has already separated the RINs from the neat renewable fuel by designating it as
transportation fuel, heating oil, or jet fuel in its neat form, then no RINs will be assigned to it
when a downstream party takes ownership of it.
3.11   Alternative Approaches to RIN Transfers

3.11.1  Opposes Allowing Producers and Importers to Separate RINs
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What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers and Convenience Stores of Iowa (PMCI)
Comment:
The commenter (2155.1) noted that EPA proposes alternate methods for the separating and
selling of RINs. One such proposal would lead renewable fuel producers down the path of pre-
designating their product as transportation fuel, home heating oil, or jet fuel, yielding a
marketable RIN. The subsequently separated RINs could then be sold to obligated parties by the
Producer or Importer. The commenter believes that not only would this remove any potential
incentive for the actual (true) blender on record to continue purchasing renewable fuels but it is
also wrought with tracking and end-use verification issues. If such language were to be adopted,
renewable fuel blenders would be left with a strict compliance burden with zero financial
incentive to absorb the costs of compliance.  The  commenter also wanted to point out to EPA
that if adopted, this provision would be subject to the Regulatory Flexibility Act and as amended
by the Business Regulatory Enforcement Fairness Act of 1996. (2155.1, P.2)

Document No.:      EPA-HQ-OAR-2005-0161-2384
Organization:       BP America (BP)
Comment:
The commenter (2384) states that since the inception of RFS2, obligated parties and blenders
have made investments and divestments contemplating RIN separation fuels consistent with
RFS1. A policy shift 4 years later would likely reward those companies who chose not to invest
and penalize those who have made investments in biofuel blending based on RIN separation. In
addition linking RIN separation with blending, more directly aligns the economic incentive with
the business decision to blend more biofuels. [[docket number 2384.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter (2393.1) believes EPA has not provided justification for allowing producers to
separate RINs and does not support allowing renewable fuel producers and importers to separate
RINs. The concerns for market manipulation are equally, if not more valid in the RFS2 program.
Also, the approach does not correct the inefficient markets that result from obligated parties
being only at the refinery gate. If however, EPA decides to allow producers to separate RINs the
commenter believes that significant safeguards are needed. These safeguards must include, at a
minimum: obligated party only trading, establishment of the EMTS, controls to prevent RIN
hoarding by producers and RFS 1-type trading limits on the number of RINs bought and sold.
[[Docket number 2393.1]]

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil USA, Inc.
Comment:
The commenter also believes that renewable producers should not have the ability to separate
RINs and pass them along as they feel necessary. The commenter recommends that the EPA
only allows a producer to separate RINs if they are selling to an obligated party to allow for
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fewer bulk transfers. RINs should continue to be passed as stated in RFS1 if the buyer is not an
obligated party. (2400.2, p.6)

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) believes that allowing the renewable fuel producers to separate the
RINs could result in hoarding of RINs by the producers and take away the economic incentive
for the blender (who could either use or sell the RIN) to blend the renewable fuel. (2505.2, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2537
Organization:       Musket Corporation
Comment:
The commenter (2537) opposes a change in the process of separating a RIN from the fuel. To
the extent that EPA continues to be conceded about RIN transfers, a reduction of the rollover  cap
would suffice. The commenter notes that in one of EPA's alternate proposals a renewable fuel
producer would be allowed to separate RINs from the fuel. In another proposal renewable fuel
producers would only be allowed  to transfer RINs to  obligated parties. Both of the proposals
ignore the incentives that were created for non-obligated parties to participate in and improve the
economic efficiency of the RFS. This vibrant sector has the capability of "filling in the gaps" in
regions where obligated parties are unwilling or unable to invest in the infrastructure required to
bring renewable fuels into the motor fuel supply chain.  Changing the  RIN transfer system as
EPA proposes would create the high likelihood of failing to meet the volume goals in EISA,
since the opportunity to detach and resell the RIN is in many cases the only incentive for non-
obligated parties to blend renewable fuels.  Although many obligated parties have their own
facilities for distribution and handling of renewable fuels and can chose whether to purchase the
renewable fuel or the RIN, the likelihood that a non-obligated party would invest capital would
decline without the assurance of a forward  RIN market in which to hedge their  risk. The EPA-
stated goal of a gain in efficiency  in the "tracking and trading of RINs" would be offset by the
real risk of a shortfall in the consumption of renewable fuels  by non obligated parties which
would raise the total cost to the motoring public. [[Docket number 2537, pp. 2-3]]

Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter (2472) notes that  EPA proposes allowing renewable fuel producers to separate
and sell RINs to obligated parties  as a "solution" to the issue of an uneven playing field.  The
commenter strongly opposes this option. This option would not address the issue of state clear
gasoline regulations and RIN-less renewable fuel working against the  goals of the RFS2
program. In addition, as EPA stated in section HI.B.4.b of the preamble (74 FR 24936),  "... this
approach could potentially place obligated  parties at greater risk of market manipulation by
renewable fuel producers..." While EPA may favor this approach because it simplifies the
regulations, the commenter believes that EPA acknowledged risks are unacceptable. Especially
when the hybrid approach to obligated parties is a valid workable solution. [[Docket number
2472.1, p. 5]]
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Referring to EPA's request for comments on alternative approaches to RIN transfers as an
alternative to changing the designation of obligated party, the commenter does not support this
approach.  The alternative approaches to RIN transfers will not minimize cost, treat all regulated
parties equally, minimize cost to the consumer, and would be potentially un-workable and
definitely have unintended consequences. [[Docket number 2072, pp. 4-5]]

Document No.:      EPA-HQ-OAR-2005-0161-2464
Organization:       Musket Corporation
Comment:
The commenter (2464.1) believes that changing the RIN transfer system as the EPA proposes
would create the high likelihood of failing to meet the volume goals in EISA,  since the
opportunity to detach and resell the RIN is in many cases the only incentive for non-obligated
parties to blend renewable fuels. The commenter opposes  a change in the process of separating a
RIN from the fuel. To the extent that EPA continues to be concerned about RIN transfers, a
reduction of the rollover cap would suffice. (2464.1, pp.2-3)

Document No.:      EPA-HQ-OAR-2005-0161-2384
Organization:       BP America (BP)
Comment:
The commenter (2384) believes that the current approach developed for RFS1 is an effective
system that avoids pitfalls that may emerge in the alternate RIN transfer approaches considered.
[[docket number 2384.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-1033
Organization:       Poet Ethanol Products
Comment:
The commenter (1033.1) believes the majority of complications associated with RIN Transfers
will be addressed through the implementation of EMTS. By making changes  to the area of
separating or transferring RINs, it seems it would be adding complexity to an  area that is already
working fairly effectively or where plans are already in place to address shortcomings. The
commenter feels that it would be best to implement the Proposed Rulemaking and see how that is
functioning before making further modifications to this process. (1033.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2118
Organization:       CountryMark Cooperative, LLP
Comment:
The commenter (2118.1) believes that RINs should be separated from renewable fuels from the
Blender who is or will be an obligated party. The commenter does not agree with the alternative
approaches on the transfer of RINs. If renewable fuel producers are allowed to separate all RINs
and either transfer them separately or sell them to obligated parties, obligated  parties would be at
the mercy of the renewable fuels producers. The intent of  the standard is to blend renewable
fuels into existing gasoline and diesel production. (2118.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
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RFS2 Summary and Analysis of Comments
The commenter (2124.1) opposes EPA's proposal allowing renewable fuel producers to separate
and sell RINs to obligated parties as a "solution" to the issue of an uneven playing field. The
commenter believes that this "direct transfer" approach would just change the location of the
uneven playing field to between refiner/importers and renewable fuel producers. This option
would not address the issue of state clear gasoline regulations and RIN-less renewable fuel
working against the goals of the RFS2 program.  The commenter noted that while EPA may
favor this approach because it simplifies the regulations, the EPA-acknowledged risks are
unacceptable, especially when the hybrid approach to obligated parties is a valid workable
solution. (2124.1, p.18)

Document No.:      EPA-HQ-OAR-2005-0161-2135
Organization:       Ad Hoc Coalition of Small Business Refiners (SBR)
Comment:
The commenter (2135) does not agree with the alternative approach of allowing renewable fuel
producers  to separate RINS from renewable fuels. If renewable fuel producers are allowed to
separate RINs and either transfer them separately or sell  them to obligated parties,  obligated
parties could be at increased risk of market volatility/manipulation by the renewable fuels
producers.  The current system of having the blender or the obligated party separate the RIN
from the renewable fuel provides a check and balance on the system that ensures that the intent
of the standard is met. The few SBRs now participating in the RFS  RIN program spend a
significant amount of time verifying and ensuring that the volume of RINs received are correct
for the volume of renewable fuels they purchase  for introduction into the market place.
Allowing the renewable fuels producer to separate the RIN and transfer or sell them separately
may not promote entry of the same levels of renewable fuels into the marketplace,  the
overarching goal of the RFS program. [[Docket number  2135, p. 21]]

Document No.:      EPA-HQ-OAR-2005-0161-2130
Organization:       ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
Regarding EPA's request for comment on the separation of RINs by biofuel producers, the
commenter (2130) states that while this change could simplify RIN reporting and verification, it
would necessitate other  changes to safeguard against RIN market manipulation. [[Docket number
2130.1 pp. 2-3]]

Our Response:

       We agree that allowing producers to separate RINs from renewable fuels that they
produce would have significant impacts on the RIN distribution system, potentially allowing
producers  to hoard RINs.  Blenders may also have less incentive to purchase renewable fuels for
bending if they will not  receive RINs with those  renewable fuels that they can separate and sell.
Therefore, the RFS2 program requires that producers assign RINs to batches and transfer those
RINs with batches to downstream parties, consistent with the RFS1 program.  The only
exception is that a producer can separate RINs if they designate their renewable fuel as
transportation fuel, heating oil, or jet fuel in its neat form, and the fuel is ultimately used in its
designated form without further blending. EPA believes that this exception is appropriate, since
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there will be no downstream blending event at which RINs would be separated, and the fuel may
never be owned by an obligated party (who would separate it).


3.11.2  Supports Allowing Producers and  Importers to Separate RINs

What Commenters Said:

Document No.:       EPA-HQ-OAR-2005-0161-2172
Organization:       Minnesota Soybean Processors
Comment:
MnSP strongly supports EPA's proposal to allow renewable fuel producers to separate and sell
RINs apart from renewable fuel gallons.  MnSP's experience with RIN assignment has  been
extremely negative in that it has reduced the MnSP customer list from 200 plus to less than 10.
In Minnesota, a state with a 5 percent biodiesel requirement, most petroleum wholesalers
("jobbers") simply cannot afford the cost of complying with the RIN regulations and as a result
MnSP has seen nearly a complete loss of biodiesel demand from petroleum jobbers. The
enactment of RFS1 and its attending RIN program has been the single largest disincentive for
petroleum jobbers to perform biodiesel blending in the history of biodiesel.

Document No.:       EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter supports the proposal to make all RIN separating activities the responsibility of
the Producer (Section III.H. 4) which would simplify the RIN management process.  If this were
adopted, it would not be necessary to consider the proposals in IV.A or IV.C.I. (0994.1, p. 15)

Document No.:       EPA-HQ-OAR-2005-0161-2146
Organization:       DuPont Applied BioSciences
Comment:
The commenter (2146.1) supports allowing RINs to trade separately from volume, as it will
foster greater RIN market simplicity and liquidity.  Separating RINs and volume will avoid
imposing the significant inefficiencies and cost burdens of physical segregation of the different
fuels along the value chain. (2146.1, p.2)

Document No.:       EPA-HQ-OAR-2005-0161-1015
Organization:       Renewable Energy Group
Comment:
The commenter (1015) believes allowing a renewable fuel producer to separate the RIN at
production will not only streamline the tracking and trading of RINs, but will be effective
because our biodiesel company works with a significant number of small jobbers in the
marketplace. (1015, p.l)

Document No.:       EPA-HQ-OAR-2005-0161-1975
Organization:       Canadian Bioenergy Corporation
Comment:
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RFS2 Summary and Analysis of Comments
The commenter (1975) believes that EPA should allow RINs to be separated by biodiesel
producers in order to offer value. Allowing a renewable fuel producer to separate the RIN at
production will not only streamline the tracking and trading of RINs, but will be effective
because our biodiesel company works with a significant number of small jobbers in the
marketplace. Allowing the biodiesel producer to take ownership and separate these RINs gives
producers the ability to transfer/sell RINs to third parties.  This also removes compliance burdens
from the small petroleum jobbers which, in turn, will increase availability of biodiesel in the
marketplace  and provide an additional revenue stream to the biodiesel industry which is already
under duress. [[Docket number 1975, p. 1]]

Document No.:      EPA-HQ-OAR-2005-0161-2010
Organization:       SoyMor Biodiesel, LLC
Comment:
The commenter (2010) believes that allowing a renewable fuel producer to separate the RIN at
production (with a K code of 2 rather than 1) will streamline the tracking and trading of RINs.
This will also be effective because REG works with a significant number of small jobbers in the
marketplace  who, although they are proponents and supporters of the renewable fuel industry, do
not have the  financial ability to comply with the reporting requirements being placed on them as
part of the RFS. If the EPA requires absolute compliance with the RFS standard as written, the
commenter believes this group will remove themselves from the biodiesel marketplace. This
represents approximately 30% of our market.  By allowing the producer to take ownership and
separate these RINs and achieve the ability to transfer/sell them to third parties while removing
compliance burdens from the small operators will increase  availability of biodiesel in the
marketplace  and provide an additional revenue stream to an industry already under duress.
[[Docket number 2010.2, p. 7]]

Document No.:      EPA-HQ-OAR-2005-0161-2011
Organization:       Western Dubuque Biodiesel  LLC
Comment:
The commenter (2011) believes that allowing a renewable fuel producer to separate the RIN at
production (with a K code of 2 rather than 1) will streamline the tracking and trading of RINs.
This will also be effective because REG works with a significant number of small jobbers in the
marketplace  who, although they are proponents and supporters of the renewable fuel industry, do
not have the  financial ability to comply with the reporting requirements being placed on them as
part of the RFS. If the EPA requires absolute compliance with the RFS standard as written, the
commenter believes this group will remove themselves from the biodiesel marketplace. This
represents approximately 30% of our market.  By allowing the producer to take ownership and
separate these RINs and achieve the ability to transfer/sell them to third parties while removing
compliance burdens from the small operators will increase  availability of biodiesel in the
marketplace  and provide an additional revenue stream to an industry already under duress.
[[Docket number 2011.1, p. 7]]

Document No.:      EPA-HQ-OAR-2005-0161-2013
Organization:       Central Iowa Energy, LLC
Comment:
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The commenter (2013) believes that allowing a renewable fuel producer to separate the RIN at
production (with a K code of 2 rather than 1) will streamline the tracking and trading of RINs.
This will also be effective because REG works with a significant number of small jobbers in the
marketplace who, although they are proponents and supporters of the renewable fuel industry, do
not have the financial ability to comply with the reporting requirements being placed on them as
part of the RFS. If the EPA requires absolute compliance with the RFS standard as written, the
commenter believes this group will remove themselves from the biodiesel  marketplace. This
represents approximately 30% of our market.  By allowing the producer to take ownership and
separate these RINs and achieve the ability to transfer/sell them to third parties while removing
compliance burdens from the small operators will increase availability of biodiesel in the
marketplace and provide an additional revenue stream to an industry already under duress.
[[Docket number 2013.1, p. 7]]

Document No.:      EPA-HQ-OAR-2005-0161-2248
Organization:       logen Corporation
Comment:
The commenter (2248.1) believes that EPA should  allow CE RINs to be separated from the
associated fuel by CE producers. This will allow CE producers to more directly control how
they are able to profit from both of the commodities they produce. (2248.1, p.9)

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (docket number 2249.2) supports the proposal to allow renewable fuel producers
to separate and sell RINs apart from gallons. Allowing biodiesel producers to separate all RINs
will reduce some of the burdens involved in tracking the use of the biodiesel.  EPA initially
imposed this requirement to avoid RIN hoarding by renewable fuel producers. However, such
has not been the case. Moreover, it is in the interest of biodiesel producers to ensure that the
biodiesel is sold, but provides more flexibility in the sale of the RINs.  In addition, the
commenter opposes EPA's other proposals to ensure access to RINs and believes there is ample
capacity for biodiesel production to meet the RFS2  requirements. [[Docket number 2249.2, pp.
29-30]]

Document No.:      EPA-HQ-OAR-2005-0161-2502
Organization:       Verenium Corporation
Comment:
The commenter (2502.1) sees merit in permitting separation of RINs to make various attributes
of fuels  tradable. This greater flexibility will enhance market operations and simplify the
logistics of fuel transportation and delivery and, as EPA noted, enable the  creation of a single
RIN marketplace.  The commenter recommends that EPA adopt its proposed alternative
approach of permitting producers to sell RINs separate from volumes of fuel, to  any party.
(2502.1, p.7) (See Docket Number 2502.1, p.7 for a detailed discussion of this issue)

Document No.:      EPA-HQ-OAR-2005-0161-2510
Organization:       Iowa Renewable Energy,  LLC
Comment:
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RFS2 Summary and Analysis of Comments
The commenter (2510) states that much of their business is with local and regional companies
that are established oil jobbers and believes that it is logical to include the biodiesel fuel
distribution in their business as they have existing infrastructure to handle the products and a
customer base that desires fuels requiring less foreign oils. With the way the current RIN
program is written, these local jobbers may elect to not participate. This defeats the purpose of
the RFS2 proposals and will again delay the goals of the program. [[Docket number 2510.1, p.
4]]

The commenter adds that allowing the producer to take ownership and separate these RINs and
achieve the ability to transfer/sell them to third parties while removing compliance burdens from
the small jobbers will increase availability of biodiesel in the marketplace and provide an
additional revenue stream to an industry already under duress. [[Docket number 2510.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2408
Organization:       Advanced Biofuels Association
Comment:
The commenter believes the RIN credits should be able to be sold separately from the fuel.  This
will provide a larger pool of purchasers  and also make it easier on a regional basis to distribute
some of the local renewable gallons. (2408.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2149
Organization:       Dynamic Fuels, LLC
Comment:
The commenter (2149.1) supports removing the restriction requiring that RINs be strictly
assigned to fuel, and therefore  do not support the direct transfer alternative.  The commenter
agrees with EPA that this approach streamlines compliance, and provides greater incentives to
demonstrate compliance. The commenter disagrees, however, with the notion there is somehow
any greater possibility for market manipulation by renewable fuel producers than obligated
parties. The commenter also believes that removing the assignment would reduce industry-wide
spending on transportation and logistics costs.  (214 9.1, pp. 1 - 2)

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) supports the alternative of Producers separating RINs  and not
transferring them with renewable fuel purchases.  This will result in more small volumes of
biofuel being distributed, and RIN tracking will be much simpler. The commenter believes  that
§80.1429(4) addresses the RIN transfer  issues that were not clear in RFS1. The commenter also
supports the situation  where RIN Marketers are permitted to participate in the RFS2 program, to
own RINs and have access to the information in the EMTS in order to make buy or sell decisions
on RINs. The commenter believes that the inclusion of RIN Marketers will reduce the potential
for manipulation of the RIN value in the marketplace by either RIN Generators or Obligated
Parties. (0994.1, pp.8-9)

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X  Energy Group Inc.
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Comment:
The commenter (1044) supports allowing the renewable fuel producer to sell the RIN to any
registered party.  The commenter, as a producer, sees the need to streamline the RIN transfer
process or transactions responsibly. Similarly, the thought process represents other diesel
programs. The commenter also agrees this would spare the entire distribution system issues of
reporting and compliance that are causing a direct restriction of trade.  It would also allow the
parties that wish to conduct transactions with RINs the "option" to participate. (1044.1, p. 2)

Document No.:      EPA-HQ-OAR-2005-0161-2084
Organization:       Syntroleum
Comment:
We support [[2324]] removing the restriction requiring that RINs be strictly assigned to fuel, and
therefore do not support the direct transfer alternative.  However, we disagree with the  notion
that there is somehow any greater possibility for market manipulation by renewable fuel
producers than obligated parties.  There  is one key reason why removing the assignment makes
sense: It will reduce industry-wide spending on transportation and logistics costs. [[2324.1 p.l]]

The commenter [[2324]] states that for an example, assuming conventional diesel sells for
$2.00/gal and biomass-based diesel RINs are worth $0.20/gal, most non-obligated parties would
be willing to pay $2.00/gal for the biomass-based diesel, because at that point the costs of both
fuels are identical.  However, an obligated party would be willing to pay a greater amount for the
fuel, $2.20/gal. As such, even if the cost to transport the fuel to an obligated party was $0.15
more than a non-obligated party, the producer would be incented to send the fuel a longer
distance to make more on a per gallon basis [[2324.1 p.2]]

Document No.:      EPA-HQ-OAR-2005-0161-2364
Organization:       Tyson  Foods, Inc.
Comment:
The commenter (2364.1) supports removing the restriction requiring that RINs be strictly
assigned to fuel, and therefore do not support the direct transfer alternative.

The commenter agrees with EPA that this approach streamlines compliance, and provides greater
incentives to demonstrate compliance. The commenter disagrees with the notion there is
somehow any greater possibility for market manipulation by renewable fuel producers  than
obligated parties. (2364.1, p.2)

The commenter noted that the ability of a producer to separate the RIN from the fuel would
enable producers to sell the fuel to the closest buyer, without regard to whether or not the buyer
is an obligated party. Under the current system, where RINs are attached to batches of fuel,
producers are incentivized to sell the fuel to obligated parties so long as the  RIN value  is greater
than the transportation cost to send the fuel to a more distant obligated party. The commenter
believes that a preferable system would  enable the producer to separate the RIN, and therefore
sell the fuel to the closest user. Also, because the RINs have value, there is  an economic
incentive for the renewable fuel producer to transfer the RINs to the obligated party. (2364.1,  2)

Our Response:
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       In general we disagree with these comments.  We believe that the advantages of this
alternative approach are significantly outweighed by the disadvantages.  For instance, while
allowing producers to separate RINs from batches of renewable fuel they produce would likely
simplify the distribution of RINs, it also creates the potential for RIN hoarding on the part of
producers.  The commenters did not provide compelling arguments that this potential hoarding
was unlikely to occur.  The fact that this alternative approach would be a significant deviation
from the RFS1 program structure could also adversely impact the transition from RFS1 to RFS2.
Both RIN hoarding and adverse impacts on program transition could increase RIN prices and
ultimately fuel prices for consumers.

       With the exception of potential simplification to information included on PTDs, we do
not believe  that allowing producers to separate RINs would simplify the distribution of fuels, as
physical segregation of the different fuels within the distribution system  is not required by the
RFS2 program. Producers can transfer anywhere between zero and 2.5 gallon-RINs with each
gallon of renewable fuel, and are not required to maintain the assignment of a specific RIN to the
gallon of renewable fuel that it was generated to represent. These provisions provide  producers
the flexibility to sell some renewable fuel without RINs for downstream parties who prefer it.
The introduction of EMTS is  also expected to ease compliance  burdens for parties who buy and
sell renewable fuel with assigned RINs.
3.11.3  Direct Transfer Approach

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter agrees that RINs attached to renewable fuel sold directly to Obligated Parties
should also be transferred to Obligated Parties.  However, based on the regulations that RINs
need to be retired when renewable fuel is exported, Exporters must also receive RINs with their
fuel purchase so that they can meet their export RVO. The commenter also agrees that for all
other sales, the Producer  (or RIN Generator) should separate and keep the RINs. (0994.1, p.10)

The commenter does not agree that Producers (RIN generators) must sell their RINs to Obligated
Parties on a quarterly basis.  The Producer, if a direct exporter, will need to retain some RINs to
meet his direct export RVO. The commenter believes that Renewable fuel Exporters must also
be allowed to own RINs to meet direct export RVO.  (0994.1, p.10)

The commenter noted that sections 80.1426(e) and 80.1429 need to be changed to reflect the
proposal that RINs are assigned to volumes of renewable fuel and only transferred if the fuel is
sold directly to an Obligated Party or to an Exporter, otherwise the RINs are separated from the
fuel and retained by the Producer or RIN Generator. (0994.1, p.10)

Document No.:      EPA-HQ-OAR-2005-0161-2472
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Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter states that if the Agency does select the direct transfer option, EPA should
restrict the sale of RINs to obligated parties, as proposed in the NPRM.  However, the
commenter does not support the proposed auction approach for RINs that a renewable fuel
producer does not sell. Instead, EPA should require that by the 15th of every month, the
renewable fuel producer must have sold all of its RINs from the previous month's production.
There will always be a market clearing price that renewable fuel producers will be able to sell
their RINs at to meet their sales requirement. [[Docket number 2472.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233.2)  does not support allowing producers and importing parties to separate
RINs with no further safeguards, citing concerns for market manipulation. The commenter
would support this approach only if tied to "obligated party only" trading and establishment of
EMTS and controls to prevent RIN inventory builds by producers. [[Docket number 2233.2, p.
7]]

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter believes that if EPA selects the direct transfer option, then EPA should restrict
the sale of RINs to obligated parties, as proposed in the NPRM. The commenter though does not
support the proposed auction approach for RINs that a renewable fuel producer does not sell.
Instead, the commenter believes that EPA should require that by the 15th of every month, the
renewable fuel producer must have sold all of it RINs from the previous month's production.
Introducing an auction mechanism is an unnecessary complication. The commenter also does
not support using the proposed EPA-moderated RIN trading system as a vehicle to facilitate RIN
purchases and sales beyond the voluntary listing of contact information only by buyers and
sellers. (2124.1, p. 18)

Our Response:

       The direct transfer approach had the potential to alleviate some of the concerns with
allowing producers to separate RINs as expressed in comments summarized in Section 3.11.1
above. However, we continue to believe it would be difficult to ensure that producers are
actually selling their RINs in a timely manner without imposing excessive prices on those RINs.
Moreover, this change to the RIN distribution system could significantly disrupt the functioning
of the RIN market during the transition from RFS1 to RFS2, as some RINs would be required to
be transferred with volume whole others would not.  Therefore, as discussed in Section II.H.4 of
the preamble, we are not finalizing such an approach.
3.11.4  Other
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RFS2 Summary and Analysis of Comments
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
If the Producer RIN separation proposal does not become law, then the commenter requests that
the regulations for section 80.1429 be expanded to clarify the three fuel sales situations discussed
in Section III.H.4 so that RIN separation in these cases is well defined. (0994.1, p.10)

Our Response:

       Modifications have been made to §80.1429 to clarify the conditions under which RINs
may or must be separated from renewable fuel.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1002
Organization:       Fuel Marketing Corporation
Comment:
The commenter (1002) has concerns over the two proposed methods of distributing RINs, either
allowing producers complete separation of RINs or allowing producers to sell directly to
obligated parties.  Both scenarios pose a serious risk to the distribution of renewable fuel that is
going to be required, especially true if blenders who may not buy directly from producers are
made into obligated parties with the above mentioned changes. The commenter sees both
methods limiting the ability to push current and new renewable fuel types through the supply
chain, limiting or even eliminating the ability of marketers to sell product without RINs to
obligated parties since such product is not needed for obligation.  The commenter also feels that
giving producers the ability to separate RINs completely or sell directly to obligated parties gives
too much control to single group of stakeholders.  (1002/1002.1, p.2)

The commenter proposes that RINs be separated by marketers and producers for the two
following circumstances:
-Product is shipped by railcar
-Product is placed in a terminal or pipeline for blending purposes

Separating RINs for fuel transported by railcar would eliminate the need of tracking railcar
movement for the purposes of transferring RINs.  RIN separation for renewable fuel placed in
terminals and pipelines for blending will allow producers and marketers the ability to assign
RINs based on volumes purchased instead of individual transactions.  (1002/1002.1, pp.2-3)

Our Response:

       As described in our responses to comments in Section 3.11.2 above, we agree that
producers should generally not be allowed to separate RINs from batches of renewable fuel that
they produce.  (One exception being where a producer designates neat renewable fuel as
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transportation fuel, heating oil or jet fuel, and the fuel is used in that manner without further
blending.  See Section 3.10).  However, we also do not believe that RIN separation should be
allowed for renewable fuel shipped by railcar or pipelines. The RFS2 program is based on
ownership of renewable fuel with assigned RINs, not the mode of transport. Moreover, the IT
systems required for tracking renewable fuel with assigned RINs should be the same regardless
of mode of transport. The RFS2 program includes a variety of flexibilities that can address the
commenter's concerns, including the flexibility  to assign batch numbers on the basis  of
individual transactions or total volumes purchased, up to 30 days worth of volume.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
If EPA retains the general prohibition on renewable fuel producers being able to separate RINs,
the commenter (2249.2) requests EPA to change the transfer rate of RINs with associated gallons
of biodiesel. Under RFS1 RINs may be transferred accompanying gallons of renewable fuel in
the range of 0-2.5 RINs per gallon of fuel.  Since a gallon of biodiesel generates 1.5 RINs, the
commenter requests that a gallon of biodiesel be transferred with between 0 and 3 RINs.  The
commenter believes this would greatly simplify the math and result in fewer calculation errors.
[[Docket number 2249.2, p. 33]]

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) believes that EPA should clarify that the 2.5 gal transfer limit in (a) (4),
which was a feature of RFS1, should not apply to RFS2, since there is no longer a 2.5
equivalence value for cellulosic ethanol. (2505.2, p.9)

Our Response:

       The regulatory provision allowing 0-2.5 gallon-RINs to be transferred with each gallon of
renewable fuel was established under RFS1. The upper limit of 2.5 was determined from the
maximum number of gallon-RINs that could be generated for any gallon of renewable fuel,
based on the statutory requirement that cellulosic biomass ethanol and waste-derived ethanol
each count as 2.5 gallons of renewable fuel for compliance purposes.  However, this higher limit
also served to provide flexibility in RIN transactions, allowing more or fewer RINs to be
transferred with volume depending on the needs are desires of the trading partners.

       Although EISA eliminated this provision from CAA 211 (o), the RFS2 NPRM did not
propose changing the upper limit of 2.5 for gallon-RINs transferred with each gallon of
renewable fuel in order to maintain the flexibility for RIN transactions. We believe that the 2.5
limit provides sufficient flexibility for all renewable fuels, including biodiesel.  Moreover,
maintaining this provision for RFS2 helps to ensure a smooth transition from RFS1.
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RFS2 Summary and Analysis of Comments
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2345
Organization:       Independent Fuel Terminal Operators Association (IFTOA)
Comment:
The commenter (2345) believes that only parties within the petroleum business should be
engaged in the purchase and sale of RINs. The participation of brokers and traders is detrimental
to the market and should not be permitted under RFS2. The commenter also suggests that at the
end of the year, all regulated parties own no more than a specific percentage of expired RINs. In
this way, each party will have an incentive either to use the RINs or sell those that are expiring.
Thus, a greater number of RINs will be on the market and obligated parties can meet their
obligation more easily [[Docket number 2345.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter supports restricting the purchase of separated RINs to only obligated parties
regardless of the approach adopted in the final regulations. First, allowing non obligated parties
to purchase RINs creates an un-level playing field.  Second, allowing non obligated parties to
purchase RINs may lead to higher prices and increased price volatility. Finally, allowing non
obligated parties to purchase RINs will lead to higher costs to the consumer and act as another
hidden tax. The commenter strongly noted they do not support EPA acting as a broker, buyer or
seller of RINs beyond the statutory requirement for EPA to offer cellulosic credits for cellulosic
biofuel when a waiver is necessary. (2124.1, p.30)

Our Response:

      The regulatory provisions established during the RFS1 rulemaking process allowing any
party to own RINs were intended to maximize the avenues through which blenders can sell the
RINs they have acquired. We continue to believe that this is an important element of the
program. Moreover, we do not believe it would be appropriate to limit the number of RINs that
any party can own, and either of these changes could significantly alter the operation of the RIN
market.  Therefore, we have not made these changes for the RFS2 final rule.

      Under the RFS2 program, EPA does not act as a broker, buyer, or seller of RINs beyond
the statutory requirement that we offer cellulosic biofuel waiver credits under specific
circumstances.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
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The commenter (2358) believes that the proposal regarding RIN transfer should be altered, but
not in the way EPA suggests. The commenter urges EPA to consider an alternative that would
have RINs generated at the time the renewable fuel is actually either blended with fossil fuels or
used in its "neat" form as a transportation fuel or heating fuel. [[Docket number 2358.1, pp. 7-8]]
[[See docket number 2358.1, pp. 7-10 for an extensive discussion of this issue.]]

Our Response:

       We considered a variety of approaches to designing the RIN program in the RFS1
rulemaking, including that raised by this commenter. We evaluated comments received in
response to the RFS1 NPRM and promulgated a program structure in which the renewable fuel
producer generates the RINs.  The reasons we did not select the approach recommended by the
commenter are described in the preamble to the final RFS1 rule, and remain applicable under
RFS2.
3.12   Treatment of Cellulosic Biofuel

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2408
Organization:       Advanced Biofuels Association
Comment:
The commenter also believes that at this point in time, the credits should be issued on a wet
barrel basis and that the Agency resist the inclination to issue paper credits. EPA should make
adjustments to volume at the end of each mandated period, not at the beginning.  This approach
will help create  an atmosphere for financial support moving forward for the industry. (2408.1,
p.5)

Our Response:

       EISA requires that we make cellulosic biofuel waiver credits available if we waive a
portion of the statutory volume for cellulosic biofuel. These credits represent an  alternative
means of compliance for obligated parties in the event that cellulosic biofuel RINs are  either
unavailable or available at excessive prices. Therefore, the waiver credits are not issued on the
basis of wet barrels.

       EISA directs EPA to publish the RFS2 standards by November 30 of the previous year.
As a result, we must determine what the required volumes of renewable fuel will be prior to the
beginning of a compliance period, not at the end.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2345
Organization:       Independent Fuel Terminal Operators Association (IFTOA)
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Comment:
The commenter (2345) supports the proposal to calculate the price of cellulosic allowances using
the 12-month average wholesale price of a gallon of gasoline from the refinery gate. The price
should remain constant for the entire calendar year the waiver is in place.  In addition, the
allowances program needs stability—a constant annual price, not quarterly changes. To provide
for a transparent predictable and stable allowance market, the price of allowances should be
based on the higher of 25 cents per gallon or the amount by which $3.00 per exceeds the average
wholesale price of a gallon of gasoline measured from the refinery gate. This approach will
provide the program with a more accurate measure of wholesale gasoline prices. [[Docket
number 2345.1, pp. 6-7]]

Our Response:

       We have finalized using a 12 month average price per gallon based on EIA's monthly
refinery gate price data.  We have also finalized that the price will be set annually.
3.12.1  Approach to Cellulosic Biofuel Credits

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (0952.1, 0970.1) believes that the proposal does not provide sufficient certainty
to investors in cellulosic biofuels. The price cap on EPA's allowances may also result in placing
cellulosic biofuels at a price disadvantage, affecting investments and creating disincentives to
develop cellulosic biofuels.  The commenter feels that the proposal also goes against
Congressional intent to promote investment in cellulosic biofuel. (0970.1, p.2)

The commenter believes that EPA should limit waivers of the RFS.  For the cellulosic biofuel
waiver, EPA indicated that it believed it would be appropriate to allow excess advanced biofuels
to make up some or  all of the shortfall in cellulosic biofuel. The commenter supports this
interpretation, and agrees that if other advanced biofuels are available they should be allowed to
make up the waived amount of cellulosic biofuel. This would ensure that the GHG emission
reductions sought by Congress are still met, and the mandated volumes are sold. (2329.1, p.92)

The commenter also believes that EPA should limit the ability of obligated parties to use
cellulosic allowances.  The commenter supports the proposed limits on the use of cellulosic
biofuel allowances, but believes that they are not sufficient. The commenter also believes that
EPA should implement the dual RIN system to ensure the sale of cellulosic ethanol and ensure
the volume mandates are met. (2329.1, p. 93-94)  [[See Docket Number 2329.1, pp.93-95 for a
detailed discussion of these issues]]

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
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Comment:
The commenter (0952.1, 0970.1) would like to work with EPA to ensure that the final version of
the RIN system is designed to ensure that it does not undermine the main thrust of RFS program:
namely to increase the use of all renewable fuels and, in particular, cellulosic ethanol. (0970.1,
p.2)

Document No.:      EPA-HQ-OAR-2005-0161-1033
Organization:       Poet Ethanol Products
Comment:
The commenter (1033.1) agrees in principal with EPA's theory for issuing Cellulosic
Allowances. Because there are still a number of avenues though that would exist in the proposed
methodology for market manipulation, the commenter encourages EPA to be flexible in its
implementation approach and be ready to make modifications as warranted to ensure the intent
of the program is carried out. (1033.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-1050
Organization:       American Council for Ethanol (ACE)
Comment:
The commenter (1050.1) is concerned about the provisions that address the treatment of
cellulosic biofuel within this revised RIN system, which they believe may have the effect of
inhibiting cellulosic biofuels commercialization. (1050.1, p.l)

The commenter noted that EPA credits equal to the reduced volumetric target would not only be
allowed to show compliance with the cellulosic biofuel volumetric mandate, but also with the
advanced biofuel and renewable fuel mandates. This is not what Congress intended.  The
commenter noted that the EISA requires that EPA develop rules with respect to cellulosic
biofuels that do not "reduce the use of other renewable fuels."  But as currently proposed, EPA
issued credits could be used by obligated parties to reduce the overall volumetric consumption
requirements of the RFS. As the commenter indicated during the rulemaking for the first RFS
program, they have serious concerns about actions EPA may propose to permit the use of a paper
credit or allowance to satisfy the Act's requirement to use a physical gallon of fuel, because
doing so could result in  a reduction in the overall volume of renewable fuel used under the
program. (0150.1, pp. 1-2)

The commenter is also concerned that the proposed price cap on EPA's allowances could lead to
cellulosic biofuels being put at a price disadvantage, which would have a negative impact on
cellulosic biofuels investment. (1050.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that EPA's assessment of the statutory requirements of the
cellulosic biofuel waiver provision is appropriate. In the event that a waiver is required by the
annual assessment of cellulosic biofuel capability, the commenter believes that EPA must make
available to obligated parties at their discretion allowances up to the  amount of the revised
cellulosic biofuel requirement. The commenter also supports EPA's proposal that such
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allowances cannot be traded or banked for future use, but would be allowed to meet the
cellulosic biofuel requirement, the advanced biofuel requirement, and the total renewables
requirement. Use to meet all three requirements must be allowed due to the nested nature of the
mandates.  (2124.1, p. 19)

The commenter also strongly supports EPA's proposal that if it reduces the cellulosic biofuel
mandate, then cellulosic biofuel allowances bought from EPA may also be used to meet the
obligated party's  RVOs for Advanced Biofuels and the general RFS. (2124.1, p.20)

Document No.:      EPA-HQ-OAR-2005-0161-2130
Organization:       ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) believes that EPA must make available to obligated parties allowances up
to the amount of the revised cellulosic biofuel requirement and supports the proposal that such
allowances cannot be traded or banked for future use, but used to meet the requirements. In
addition, in making its annual assessment of cellulosic biofuel capability, the commenter urges
EPA to adjust the advanced biofuel and total renewables requirements by the same volume as
cellulosic adjustment. [[Docket number 2130, pp 4-5]]

Document No.:      EPA-HQ-OAR-2005-0161-2132
Organization:       Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) noted that some have expressed concern that if EPA issues RIN credits
for cellulosic fuels, retailers might be  able to avoid buying the fuel, which could result in
cellulosic ethanol prices below ethanol made from other feedstocks. The commenter wants to
ensure that the cellulosic fuel industry is able to quickly expand to meet the RFS requirements,
and this will mean avoiding the use of credits and waivers. The commenter also noted that EPA
had proposed to allow obligated parties to purchase cellulosic credits from EPA as a way to
discharge their obligation to purchase advanced biofuel. This arrangement could cause
significant market disruptions anytime the market price for conventional RINs was above the
EISA-dictated price for EPA-supplied cellulosic credits. The commenter noted that one fix to
this potential problem would be to not exempt any obligated party using EPA-supplied credits
for compliance with the cellulosic standard from the obligation to purchase its full share of
advanced biofuels. (2132.1, pp.23-24)

Document No.:      EPA-HQ-OAR-2005-0161-2146
Organization:       DuPont Applied BioSciences
Comment:
The commenter (2146.1) believes that EPA should make available for sale a number of cellulosic
biofuel credits that is no more than the volumetric requirement. Each credit will sell at the
higher of $0.25 per gallon or the amount by which $3.00 per gallon exceeds the average U.S.
wholesale price of a gallon of gasoline. The commenter supports the process as outlined in the
RFS2 proposed rulemaking, with the exception that the cellulosic allowances should not be
applicable  to meeting other renewable fuel categories. (2146.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2146
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Organization:       DuPont Applied BioSciences
Comment:
The commenter (2146.1) support the process proposed by EPA for conducting a yearly review
and rulemaking process to determine cellulosic ethanol volumes, thereby both ensuring an outlet
for the early cellulosic volumes produced and eliminating the requirement for the fuel industry to
purchase volumes larger than those anticipated to be available for their purchase. (2146.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2171
Organization:       Mascoma Corporation
Comment:
The commenter (2171) urges EPA to limit the number of cellulosic allowances that EPA will
offer for sale in years that it reduces the cellulosic biofuels mandate to better ensure a market
demand for cellulosic ethanol that will spur investment in cellulosic production. [[Docket
number 2171.1, p. 5]]

The commenter states that the specific volume requirements for cellulosic biofuels in the RFS2
are critical to fostering investment confidence in developing new projects; therefore, it is
essential that EPA not undermine confidence via the rules establishing EPA's waiver authority
and the resulting sale of cellulosic allowances.  The proposal envisions the issuance of
allowances equal to the amount of the reduced cellulosic biofuel requirement and allows them to
be used to show compliance for not only the cellulosic biofuel requirement, but also the
advanced biofuel and renewable fuel requirements.  The commenter believes that this proposal
has two significant shortcomings. First, by choosing to issue an equal number of cellulosic
allowances as the cellulosic volume mandate (instead of a smaller percentage of the total
volume) the  rule artificially caps cellulosic ethanol prices.  While conventional ethanol RINs are
allowed to be priced in the marketplace, cellulosic RINs would be capped based upon the price
that EPA sells the cellulosic allowance. Second, this proposal could also result in EPA-issued
cellulosic  allowances reducing the overall number of actual gallons of renewable fuels sold in the
United States.  As a result of these two deficiencies, the RFS2 rule does not provide sufficient
certainty to cellulosic biofuels investors and creates a potential disincentive to developing
cellulosic  biofuels. The commenter appreciates EPA's efforts to restrict cellulosic allowances to
ensure obligated parties do not misuse them, and believes the final rule should correct these
deficiencies  to ensure that the RFS2 truly drives demand and spurs investment in cellulosic
biofuel production. [[Docket number 2171.1, p. 4]]  [[See docket number 2171.1, pp.3-4 for
further discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2248
Organization:       logen Corporation
Comment:
The commenter (2248.1) noted that if implemented properly, the availability of EPA-issued
cellulosic  biofuel credits will:
1)     Ensure competition/deny market-  or monopoly-power for parties that hold CE RINs in
       excess of their RVO for CE
2)     Ensure, as a result of that market competition, that cost of CE is  capped at the prevailing
       market price for ethanol, plus the price for an EPA-issued cellulosic biofuel credit or a
       CERIN
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3)     Ensure a smooth process exists for compliance in the event that either
       a.      EPA overestimates the available volume of CE, or
       b.      Parties holding excess CE RINs choose to use them for additional compliance
              purposes rather than sell them to other obligated parties
4)     Enable the credit price formula set in law to create transparency and certainty on CE RIN
       prices
5)     Create certainty for regulated entities through availability of EPA-issued cellulosic
       biofuel credits for all who seek them for compliance
6)     Creates market liquidity through the option for obligated parties to purchase as many
       EPA-issued cellulosic biofuel credits from EPA  as are sought for compliance
7)     Create certainty for renewable fuel producers by ensuring that the market rewards CE for
       its additional policy benefits by pricing it at a slight premium

The commenter believes that this provision is deserving of especially careful and thoughtful
implementation. The multiple functions of this provision underscore and at the same time solve
the challenges created for the market players needing to comply with the CE portion of the RFS.
(2248.1, p.4)

The commenter also believes that the ability of EPA to sell cellulosic biofuel credits both
eliminates the prospect of any party establishing market- or monopoly-power over CE RIN
markets and limits what can be charged for those RINs.  It is necessary that EPA make as many
cellulosic biofuel credits available as are sought for compliance in any given year.  Failure to do
so would reconstitute the opportunity for obligated parties to be subjected to monopoly pricing
whenever the market lacks willing sellers offering reasonable prices.  (2248.1, p.5)

The commenter noted that EPA's proposed implementation of the provisions of Sec. 202
(e) (2) (D) would allow an EPA-issued credit - or allowance - to excuse obligated parties from
purchasing the full applicable volume for Advanced Biofuel or renewable fuel. This is in direct
contravention of the provision in EISA that states that the Administrator must  "limit any
potential misuse of cellulosic biofuel credits to reduce the use of other renewable fuels". (2248.1,
p.6) (See Docket Number 2248.1, pp.6-7 for a detailed discussion of this issue)

The commenter noted that the proposed rule suggests obligated parties would be forced to
purchase EPA-issued cellulosic biofuel credits to cover  a volume of CE that the EPA is certain
the industry will not produce.  Should this occur, it could undermine public and political support
for the RFS, which in turn would dampen investment in next generation renewable fuel
technology. The NPRM also suggests that EPA would not reduce the CE applicable volume to a
level at which it can be reasonably confident will be available to obligated parties.  The
commenter urges EPA to adhere to Congressional direction and set the applicable volume each
year at a level that EPA can reasonably expect will be available. (2248.1, pp.7-8) (See Docket
Number 2248.1, pp.7-8 for a detailed discussion of this  issue)

Document No.:      EPA-HQ-OAR-2005-0161-2248
Organization:       logen Corporation
Comment:
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The commenter (2248.1) recommends that EPA maximize the benefits of the RFS by reducing
the applicable volume for CE based on EPA's best assessment of available CE, and limit the use
of EPA-issued cellulosic biofuel credits to satisfying compliance with an obligated party's RVO
for CE, but not for Advanced Biofuel or Renewable Fuel. The result will be a more favorable
and predictable environment for businesses looking to commercialize CE. (2248.1, p.2) (See
Docket Number 2248.1, pp.2-3 for a detailed discussion of this issue)

The commenter believes that it is essential  that the Administrator follow Congressional direction
and reduce the applicable volume to a level agency assessments suggest will be available.  This
serves two purposes. First, it will relieve the petroleum industry of any obligation to purchase
those volumes of fuel that the CE industry is not yet able to produce.  Secondly, it will  serve the
larger Congressional objective of ensuring  that, to the  extent the CE industry can  produce fuel; it
will have a market for that fuel. In taking this approach, the Administrator will promote
confidence in the political stability behind the policy.  If EPA were to require obligated parties to
purchase EPA-issued cellulosic biofuel credits for every gallon between actual production and
the ambitious target volumes in EISA, it is  highly likely that the CE mandate will come under
attack from the petroleum industry as equivalent to a tax that will have no effect on accelerating
CE deployment. (2248.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (224932) noted that for the Cellulosic Biofuel waiver, EPA indicated that it
believed it would be appropriate to allow other excess advanced biofuels to make up some or the
entire shortfall in cellulosic biofuel. The commenter supports this  interpretation,  and agrees that
if other advanced biofuels are available they should be allowed to make up the waived  amount of
cellulosic biofuel. [[Docket number 2249.2, p. 49]]

The commenter also has concerns that EPA's cellulosic biofuel allowance provisions may work
to  reduce the actual volumes of advanced biofuels or renewable fuels sold each year. While the
commenter supports EPA's limitations on purchasing and trading such allowances, EPA also
proposes to permit these allowances to be used to show compliance with the Cellulosic Biofuel,
Advanced Biofuel and Renewable Fuel obligations. As EPA recognizes, its proposal still runs
the risk of affecting the overall volumes sold.  As such, the commenter supports EPA's
alternative approach to limit the application of allowances to the Cellulosic Biofuel volume only
to  limit the potential adverse impacts on the purchase of other renewable fuels. [[Docket number
2249.2, pp. 49-50]]

Document No.:      EPA-HQ-OAR-2005-0161-2384
Organization:       BP America (BP)
Comment:
The commenter supports EPA's proposals to allow obligated parties to purchase allowances up
to  the level of their  cellulosic biofuel RVO  less the number of cellulosic biofuel RINs they own;
to  allow an obligated party to use such allowances  to meet its total renewable and advanced
biofuel standards, if it used the allowance to meet its cellulosic biofuel standard; and
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recommends that EPA provide obligated parties the flexibility to meet their revised cellulosic
requirement with cellulosic RINs and/or cellulosic allowances, [[docket number 2384.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:

Where EPA adjusts the cellulosic biofuel requirement due to inadequate production capacity,
EPA proposes to make allowances available to obligated parties up to the level of the adjusted
cellulosic biofuel standard. The commenter agrees that this is required by EISA. EPA also states
that "Because cellulosic biofuel RINs can be used to meet the advanced biofuel and total
renewable fuel standards in addition to the cellulosic biofuel standard, we propose that cellulosic
biofuel allowances also be available for use in meeting those three standards."  Section 80.1427
should be clarified to make clear that allowances used to comply with the cellulosic renewable
fuel mandate also  count towards the advanced and general renewable fuel obligations. [[Docket
number 2393.1, p. 40]]

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil USA, Inc.
Comment:
The commenter noted that should EPA over-estimate the amount of cellulosic gallons that will
be available for a particular year, obligated parties will need other means to meet their
obligation.  The commenter recommends that the EPA offer cellulosic allowances to obligated
parties only when they need additional RIN credits to meet their annual obligation. The number
of credits purchased needs to be limited to the remaining amount of credits needed to meet the
obligation, with no excess.  (2400.2, pp. 7-8)

The commenter also noted that EPA indicated interest in restricting obligated parties from
purchasing extra allowances and to use cellulosic RINs for other compliance categories. EPA
must carefully consider the timing and availability of allowances before advancing such a
change. The commenter recommends that the EPA only allow obligated parties to purchase
cellulosic allowances after the year-end RFS0300 reports are completed and obligation has been
calculated. (2400.2, p.8)

Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) supports EPA's proposal to place certain restrictions on Cellulosic
Biofuel credits that EPA must issue, per statute, if it waives a portion of the Cellulosic Biofuel
mandate. It could be very difficult to obtain Cellulosic Biofuel RINs, even when there is not a
waiver, given the relatively small volume of Cellulosic Biofuel required initially and the fact that
every Obligated Party, no matter how small their obligation, must obtain these  RINs.  If part of
the mandate is waived, securing Cellulosic Biofuel RINs could be especially difficult. The
commenter also supports EPA's proposal that Cellulosic Biofuel "allowances"  issued by EPA
pursuant to a waiver should be limited in terms of who can buy, sell or  trade them. The
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commenter requests that EPA clarify that it will not issue allowances in instances where the
entire Cellulosic Biofuel mandate is waived. (2471.1, p.11)

Document No.:      EPA-HQ-OAR-2005-0161-2502
Organization:       Verenium Corporation
Comment:
The commenter (2502.1) recommends that EPA require that obligated parties demonstrate actual
progress toward fulfilling their annual RVOs through periodic, e.g., quarterly reports on volumes
actually acquired during each period.  (2502.1, p.6) (See Docket Number 2502.1, p.5 for a
detailed discussion of this issue)

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) agrees with EPA's proposal to make allowances available to obligated
parties up to the level of the adjusted cellulosic biofuel standard.  Whenever EPA adjusts the
cellulosic biofuel mandate due to inadequate production capacity, the commenter believes that
EPA should reduce the overhanging advanced and general renewable fuel mandates by an equal
amount. If EPA does not reduce the overhanging mandates, EPA will be merely creating an
incentive to increase use of the least performing biofuels and exacerbating the El0 blend wall
problem and the de facto E85 mandate imposed by EISA. (2505.2, p. 13)

The commenter also believes that section 80.1427 should also be clarified to make clear that
allowances used to comply with the cellulosic renewable fuel mandate also count towards the
advanced and general renewable fuel obligations. (2505.2, p. 13)

Document No.:      EPA-HQ-OAR-2005-0161-2526
Organization:       Coskata
Comment:
The commenter (2526) believes that the EPA must set a clear and strong precedent for allowing
the waiver and cellulosic RIN allowance to perform as Congress intended, which is to spur
deployment of cellulosic technologies that can have meaningful reductions  in transportation
related greenhouse gas emissions.  The commenter believes that RIN allowances should not
displace volumetric requirements for blending all biofuels and RINs should trade separately from
volume. [[Docket number 2526.1, p. 1]] [[See docket number 2526.1, pp. 2-9 for a detailed
discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2047
Organization:       Terrabon
Comment:
The commenter [[2071]] also states because of regional demand disparities caused by
transportation costs. The result is that certain regions of the country may have an oversupply of
biofuels because distant Obligated Parties  choose to purchase allowances rather than wet gallons
while those Obligated Parties that are near sources of biofuels would only purchase sufficient
wet gallons to satisfy their applicable  RVOs.  This would leave producers with gallons of
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cellulosic biofuel that cannot be sold for an economical price even while satisfying
Congressional intent under the EISA. [[#2071.1 p.8]]

Document No.:      EPA-HQ-OAR-2005-0161-2389
Organization:       BlueFire et al.
Comment:
The commenter (2389) wants EPA to have transparent pricing and to ensure renewable fuel is
actually purchased.

Our Response:

       Based on the comments provided, EPA has finalized the Cellulosic Biofuel Waiver
Credits (waiver credits) provision slightly differently than as proposed. We agree that waiver
credits should not replace consumption of renewable fuel.  Our final rules provide that waiver
credits may only be used for the cellulosic biofuel standard. Companies purchasing waiver
credits will need to purchase biomass based diesel, advanced biofuel and total renewable RINs to
meet their obligations for those standards in the same way as if they had purchased cellulosic
biofuel RINs. In order to ensure every obligated party has access to the waiver credits we are
setting the quantity of waiver credits for a given compliance year to the volume of the reduced
cellulosic biofuel standard for that year.

       Some parties commented about the price of waiver credits stating that the price could
affect market dynamics.  The pricing formula was set in the Act and EPA is finalizing what we
proposed based on the instructions provided in the Act. We took comment on how often we
should set the price for credits. Based on comment, EPA will only set the price annually when
we finalize the cellulosic biofuel standard for the next compliance period. This approach will
provide regulatory certainty for obligated parties and producers of cellulosic biofuels.
3.12.2  Adjustments to Other Standards in the Event of a Cellulosic Waiver

What the Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that if EPA determines that a cellulosic biofuel waiver is
needed, the commenter urges EPA to also adjust the advanced biofuel and total renewables
requirements by the same volume as the cellulosic adjustment.  If EPA adopts a 30 year
averaging and zero discount rate for Lifecycle Analysis, it is unlikely there will be any advanced
biofuel to make up the cellulosic shortfall. The commenter stated that EPA should not ever
adjust only the advanced biofuel requirement and leave the total renewable requirement
unchanged.  Such an action would allow the use of grandfathered biofuels that need not provide
any GHG reduction to replace cellulosic biofuels that are required to achieve at least a 60%
lifecycle  GHG emissions reduction.  (2124.1, p. 19)
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Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (224932) believes that, as long as other renewable fuels are available, the
renewable fuel standard should not be reduced.  While it may not present the same GHG
reductions as cellulosic biofuel, other renewable fuels would still provide GHG emission
reduction benefits over petroleum. [[Docket number 2249.2, p. 49]]

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
For the Cellulosic Biofuel waiver, EPA indicated that it believed it would be appropriate  to allow
other excess advanced biofuels to make up some or the entire shortfall in cellulosic biofuel. The
commenter supports this interpretation, and agrees that if other advanced biofuels are available
they should be allowed to make up the waived amount of cellulosic biofuel. [[Docket number
2249.2, p. 49]]

EPA further noted that, if the advanced biofuel requirement were also lowered, the total
renewable fuel volume would be  lowered to the same degree.  The commenter believes that, as
long as other renewable fuels are available, the renewable fuel standard should not be reduced.
While it may not present the same GHG reductions as cellulosic biofuel, other renewable fuels
would still provide GHG emission reduction benefits over petroleum. [[Docket number 2249.2,
p. 49]]

The commenter also has concerns that  EPA's cellulosic biofuel allowance provisions may work
to reduce the actual volumes of advanced biofuels or renewable fuels sold each year. While the
commenter supports EPA's limitations on purchasing and trading such allowances, EPA  also
proposes to permit these allowances to be used to show  compliance with the Cellulosic Biofuel,
Advanced Biofuel and Renewable Fuel obligations.  As EPA recognizes, its proposal still runs
the risk of affecting the overall volumes sold. As such,  the commenter supports EPA's
alternative approach to limit the application of allowances to the Cellulosic Biofuel volume only
to limit the potential adverse impacts on the purchase of other renewable fuels. [[Docket number
2249.2, pp. 49-50]]

Document No.:      EPA-HQ-OAR-2005-0161-2337
Organization:       California  Air Resources Board
Comment:
The commenter (2337.1) believes that a policy which allows the substitution of biodiesel or
sugarcane ethanol for cellulosic biofuel would significantly reduce incentive for investment in
cellulosic and other second and third generation biofuels. Therefore, they recommend  U.S. EPA
only allow other second and third generation biofuels that do not compete  with food for arable
land to be substituted  for cellulosic ethanol should the projected volume of cellulosic ethanol not
meet the minimum applicable volume required by statute. This restriction will help preserve the
incentive for investment in truly sustainable biofuels. (Page 4)

Document No.:      EPA-HQ-OAR-2005-0161-2384
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Organization:       BP America (BP)
Comment:
The commenter recommends that if EPA determines a shortfall in cellulosic biofuel production
capacity for the following year and subsequently reduces the following year's requirements for
cellulosic biofuel, the EPA should also reduce the advanced and total renewable fuel volume
requirements by the same amount that the cellulosic requirements were reduced, [[docket
number 2384.1, p. 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
Regarding the impact of the cellulosic mandate on other mandates, the commenter (2393.1)
believes that both the advanced and total mandates should be reduced by the same amount as the
cellulosic waiver—this will have no material adverse impact on any producing entity and will
serve to slow the approach of the E10 blend wall. The commenter adds that if EPA does not
reduce the overhanging mandates, EPA will (a) create an incentive to increase use of the least
performing biofuels that Congress clearly sought to limit and (b) exacerbate the E10 blend wall
problem and the de facto E85 mandate imposed by EISA. [[Docket number 2393.1, p. 40]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter adds that the mandates for both the advanced biofuels and total renewable fuels
should be reduced by the same amount as the cellulosic biofuels waiver.  This will have no
material adverse impact on any producing entity and will serve to slow the approach of the E10
blend wall. [[Docket number 2523.1, p. 2]]

Document No.:      EPA-HQ-OAR-2005-0161-2364
Organization:       Tyson Foods, Inc.
Comment:
The commenter agrees with EPA's view that EISA effectively sets a limit for participation in the
RFS program of 15 billion gallons of corn-based ethanol by 2022.  The commenter also agrees
with EPA's position that any reduction to the advanced biofuels standard in a given year should
be accompanied by a corresponding reduction in the overall renewable standard.  This will
ensure that corn-based ethanol cannot be used to meet volume levels that Congress clearly
intended be met by next generation biofuels. (2364.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
Regarding where "EPA determines that the projected volume of cellulosic biofuels is not
sufficient to meet the levels in EISA we will consider the availability of other advanced biofuels
in deciding whether to lower the advanced biofuel standard as well." The commenter believes
that both the advanced and total mandates should be reduced by the same  amount as the
cellulosic waiver. [[Docket number  2233.2,  p. 42]]
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                        Chapter 3: Major Elements of the Program As Required By EISA


The commenter also supports the approach that EPA has proposed for the issuance and use of
EPA-issued cellulosic RINS.  [[Docket number 2233.2, p. 43]]

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (0952.1, 0970.1) is concerned that the provisions in the proposed rule that
address cellulosic biofuel may undermine, rather than advance, Congress' intent.  (0970.1, p.l)

The new program could have some important shortcomings with respect to how RINs are issued
and applied for cellulosic biofuel in the event EPA waives all or part of the cellulosic biofuel
requirement. Under the Act, EPA must reduce the cellulosic biofuel requirement to the extent
projections indicate that the volume expected to be produced in the next year will be less than the
minimum applicable volume required. If such is the case, EPA must issue allowances up to the
reduced volume for sale at a price  capped by the statute.  Under the proposal, EPA would issue
such allowances in the amount of the reduced cellulosic biofuel requirement and allow them to
be used to show compliance not only with the cellulosic biofuel requirement, but also the
advanced biofuel and renewable fuel requirements. While the commenter appreciates the limits
EPA has proposed to restrict the ability of obligated parties to misuse these allowances, these
limits are not adequate to protect against reduction in the amount of renewable fuel sold or to
ensure continued investments being made in the industry—two clear goals of Congress. (0970.1,
pp.1-2)

The commenter noted that EISA requires that EPA promulgate regulations governing cellulosic
biofuel credits in a manner that does not inappropriately "reduce the use of other renewable
fuels" and that provides certainty to renewable fuel producers. Obligated parties utilizing
cellulosic allowances purchased directly from the EPA may not be required to purchase a volume
of renewable fuel equal to the number of cellulosic credits that it retires. These paper credits,
rather than actual volumes, then will be used to meet these requirements. Thus, EPA-issued
credits could be used to reduce the overall volume requirements of the RFS.  If EPA reduces the
RFS commensurate with the reduction in the cellulosic biofuel requirement, this reduction in
actual volumes sold is even more pronounced. (0970.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club,  Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters (2129.1) believe that EPA should exercise its authority under Section 202(e) of
EISA to reduce the total volume required under the renewable fuel standard if it determines that
reduced volumes of cellulosic biofuel are projected to be available, so as to match the required
volume to the projected volume available.  The commenters suggest that the EPA adjust the total
renewable standard,  and not only the advanced biofuel standard, downwards in every event of
projected shortfall in the volumes of cellulosic biofuels, and to make that downward adjustment
of equal or greater amount.  EPA must not allow for a fuel that achieves less GHG emissions
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RFS2 Summary and Analysis of Comments
reductions below baseline levels than the cellulosic or advanced biofuel that has fallen short of
projected volume levels to be allowed to fill the deficit left by this shortfall. (2129.1, p.14)

Document No.:      EPA-HQ-OAR-2005-0161-2137
Organization:       Brazilian Sugarcane Industry Association (UNICA)
Comment:
The commenter (2137.1) notes that it is likely that there will not be enough cellulosic biofuels
available to meet the RFS2 volume targets for 2010 and beyond.  And concurs with EPA's
interpretation of the EISA that "it would be appropriate to allow excess advanced biofuels to
make up some or all of the shortfall in cellulosic biofuel."  The commenter believes that in any
given year, if there is an insufficient volume of cellulosic biofuel available but an ample volume
of other advanced biofuels available with GHG emissions equal or better than the cellulosic
threshold, EPA should not lower the required volumes for advanced biofuel but instead shift the
requirement from cellulosic to the other advanced biofuel categories. To ignore this option
would be to encourage the use of fossil fuels. [[Docket number 2137.1, pp. 14-15]]

The commenter (2137.1) also concurs with EPA's assertion that "we do not believe it would be
appropriate to lower the advanced biofuel standard but not the total renewable standard", as  this
would allow conventional biofuels to effectively be used to meet the standards that Congress
specifically set for cellulosic and advanced biofuels. [[Docket number 2137.1, p. 15]]

Our Response:

       We appreciate the varying perspectives of the different commenters on future
adjustments to the advanced and total renewable fuel standards in the event of a waiver of the
cellulosic biofuel standard. For 2010, while we are waiving a portion of the cellulosic biofuel
standard, we are not adjusting the other standards.  The relative magnitude of the biomass-based
diesel standard in 2010 made any adjustment to the advanced biofuel and total renewable
standard unnecessary. The approach for any adjustments to the standards in future years will be
decided when those standards are finalized.
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1, p.11) believes combining standards for the cellulosic biofuel mandate
would exceed EPA's authority. (2124.1, p.11)

Our Response:

       EPA is not combining standards for the cellulosic biofuel mandate in the final rule.


3.13   Production Outlook Reports
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                        Chapter 3: Major Elements of the Program As Required By EISA
What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
If Production Outlook Reports can be captured by the EMTS system, the commenter (1044)
would fully endorse the requirement based upon their live attendance at the EMTS Seminar. The
commenter finds this provision similar to other agency fuel programs; therefore, they would
support it provided the EMTS system will capture the data. (1044.1, p. 3)

Document No.:      EPA-HQ-OAR-2005-0161-2130
Organization:       ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) believes that Production Outlook Reports by biofuel producers should be
required, but not overly relied upon, particularly for new biofuel technologies. [[Docket number
2130.1, p. 17]]

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) believes that EPA provides no reasonable explanation to require the
information being requested for the outlook reports, and such information is not needed to assist
parties to come into compliance. (2329.1, p. 105) [[See Docket Number 2329.1, pp.104-105 for a
detailed discussion of this issue]]

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) rejects the proposal for an annual outlook report required for each
regulated party. With so many unknowns and no previous history of renewable fuels mandate,
and no sense of continued tax rebate, the renewable fuels industry cannot confidently project
what will happen in year 2010,  let alone  2022. Until the industry operates a few years under the
RFS2 carve-outs and the issues on tax rebate for renewables are resolved, the industry cannot
develop a meaningful outlook forecast. EPA would be better off hiring a consultant who can
look at the big picture and provide a much more  meaningful evaluation than could be provided
by the individual members of the biofuels industry. (0994.1, pp. 14-15)

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers and Convenience Stores of Iowa (PMCI)
Comment:
The commenter (2155.1) believes that EPA would be grossly duplicating regulatory efforts by
requiring renewable fuel marketers and terminals to report on an annual basis as to volumes,
type, and projections. These regulated parties already submit quarterly and annual (sometimes
monthly) reports for blending credit purposes. This information is readily available to the EPA
and should not be duplicated. (2155.1, p.3)
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RFS2 Summary and Analysis of Comments
Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (2249.2) opposes requiring annual production reports. This proposal would be
another burden for the renewable fuels industry. Moreover, the requirement is wholly
unnecessary. EPA has sufficient information available to track production and future plans for
production from El A and from the National Biodiesel Board for the industry as a whole.  EPA
provides no valid justification to require annual production reports from individual facilities.
[[Docket number 2249.2, pp. 43-44 and docket number 2249.1, p. 5]]

Document No.:      EPA-HQ-OAR-2005-0161-2345
Organization:       Independent Fuel Terminal Operators Association (IFTOA)
Comment:
The commenter (2345) believes that additional terminal reporting is unnecessary and
burdensome. EPA can base its decision regarding terminals on information from EIA and from
private publications that provide data on individual facilities, tankage, and products they handle.
[[Docket number 2345.1, p. 7]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute  (API)
Comment:
The commenter (2393) notes that EPA is considering whether to require the annual submission
of data to facilitate its evaluation of the ability of the distribution system to deliver projected
volumes of biofuels to petroleum terminals.  Currently, EIA's Petroleum Supply Monthly reports
data on a monthly basis for the supply, disposition, and inventory of renewable fuels for each
PADD. The commenter suggests that EPA use these EIA data and not place any additional
reporting burden on terminal operators and others in the distribution system. [[Docket number
2393.1, p.  14]]

Regarding the fuel producers annual "Production Outlook Report", because cellulosic
technologies are unproven, and based on past experience with projected timelines for completion
of cellulosic projects,  it would seem likely that there may be a tendency for producers to
overestimate their production capacity. EPA does not appear to provide guidelines to producers
regarding their predictions of next year production, nor provisions for penalties to producers who
submit information that does not prove to be accurate. The commenter believes that accuracy in
mandated producer reports should be enforced just as vigorously  as accuracy in mandated
obligated party compliance demonstration reports. [[Docket number 2393.1, pp 38-39]]

Document No.:      EPA-HQ-OAR-2005-0161-2419
Organization:       Cargill Incorporated
Comment:
The commenter (2511.1) is opposed to submitting such confidential and strategic information
even under a CBI submission.  The commenter believes that any forward looking information to
2022 seems excessive and somewhat useless given the nature of such long-term predictions.
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                        Chapter 3: Major Elements of the Program As Required By EISA
Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) believes that EPA should limit these reports to producers of renewable
fuel (both domestic and foreign) and not require such reports from importers. Importers will
tend to import renewable fuels based on variable economic conditions and will likely not be able
to reliably predict the amount of renewable fuels that they may import in future years. (2505.2,
p.10)

Document No.:      EPA-HQ-OAR-2005-0161-2172
Organization:       Minnesota Soybean Producers (MnSP)
Comment:
MnSP also objects to EPA's proposal that annual renewable fuel production outlook reports be
required of all domestic renewable fuel producers. This proposal is burdensome and duplicative
for the domestic biodiesel industry.  The Energy Information Administration currently collects
significant and detailed monthly biodiesel production, by-product production, pricing, production
forecasts and other information from biodiesel producers. This information already exists in the
public domain. MnSP urges EPA to utilize the information already being generated and not
implement duplicate reporting requirements that are already required by other agencies.

Our Response:

       As discussed in section ILK  of the preamble, we are finalizing the requirement for
production outlook reports from renewable fuel producers. The information required for the
reports will be in a simple spreadsheet format, similar to the diesel fuel pre-compliance reports,
and we may also utilize information reported to EMTS as well. The information submitted in the
reports will be used to evaluate the progress that the industry is making towards the renewable
fuels volume goals mandated by EISA. They will help EPA set the annual cellulosic biofuel
standard and consider whether waivers would be appropriate with respect to the advanced
biofuel, biomass-based diesel,  and total renewable fuel standards.  Without this information we
would be unable  to reliably set the renewable fuel standards each year and appropriately respond
to waiver applications. While we understand that the types of projections we request in the
Outlook Reports could be somewhat speculative in nature, we believe that the projections will
provide us with the most reliable information possible to inform the annual RFS standards and
waiver considerations. Further, we believe this information will be more useful to us than other
public information that is released in other contexts (e.g., announcements for marketing
purposes). It will provide the most accurate information available for setting the cellulosic
biofuel and biomass-based diesel standards, and any adjustments to the advanced biofuel and
total renewable fuel standards.

       We recognize concerns of some commenters with respect to submission of confidential
business plans and forecasts. All information submitted to EPA will be treated as confidential
business information (CBI), and if used by EPA in a regulatory context will only be reported out
in very general terms. As with our Diesel Pre-compliance Reports, we fully expect that the
information will be somewhat speculative in the early reports, and we will weight it accordingly.
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RFS2 Summary and Analysis of Comments
As the program progresses, however, information submitted for the reports will continue to
improve. We believe that any information, whether speculative or concrete, will be helpful for
the purposes described above. Thus we are finalizing Production Outlook Reports, and the
required elements at §80.1449.

       We appreciate that some commenters expressed concern that the Production Outlook
Reports may contain too many unknowns or might not provide meaningful information.
However, as discussed above, while these reports will have their limitations, we believe they will
provide the best and most up to date information available for us to use in setting the standards
and considering any waiver requests. We will of course also look to other publicly available
information, and may consider using contractors to help out in this regard, but it cannot replace
the need for the production outlook report data.

       A commenter noted that this provision is similar to reports required under the diesel
program, and further stated that if the required information can be captured by EMTS, the
commenter fully supports this requirement.  However, the commenter stated that it is opposed to
some of the required elements of the reports for planned expanded or new production (strategic
planning, planning and front-end engineering, detailed engineering  and permitting, procurement
and construction, and commissioning and start-up); these  are an aspect of financial planning that
the commenter believes EPA has no jurisdiction over and cannot derive basis from EISA in any
form regardless of interpretation. As explained  above, this information will be used by EPA  to
inform us for setting the standards on an annual basis and in responding to any waiver petitions.
It will not be used to assess compliance with the program. The other provisions for registration,
recordkeeping, and reporting serve that purpose.

       We note that the information that currently exists from other sources mentioned by the
commenters is generally either current or historical information. For the  purposes of setting
future standards, we need to have information on future plans and projections. We understand
that reality will always be different from the projections, but they will still give  us the best
possible source of information. Furthermore, by having projections five years out into the future,
and then obtaining new reports every year, we will be able to assess the trends in the data and
reports to better utilize them over time.
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               Renewable Fuel Standard Program
                (RFS2) Summary and Analysis of
                            Comments

                             Chapter 4
                            Compliance
            (Registration, Recordkeeping, Reporting)
                         Assessment and Standards Division
                        Office of Transportation and Air Quality
                        U.S. Environmental Protection Agency
v>EPA
United States                               EPA-420-R-10-003
Environmental Protection                          r ,   „„.„
Agency                                  February 2010

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4.     COMPLIANCE (REGISTRATION, RECORDKEEPING, REPORTING)

4.1    Registration                                                                4-3
4.2    RIN Tracking and Price Reporting                                            4-14
4.3    Reporting and Attest Engagements                                            4-21
4.3.1  EMTS                                                                    4-21
4.3.2  Monthly Reporting                                                         4-23
4.3.3  Additional Reporting Information                                            4-26
4.3.4  Attest Engagements                                                        4-30
4.4    Product Transfer Documents (PTDs)                                          4-31
4.5    Recordkeeping                                                             4-33
4.6    EPA Moderated Transaction System (EMTS)                                   4-33
4.6.1  General Comments                                                         4-33
4.6.2  PTD and Attest Engagements Under RFS2                                     4-36
4.6.3  Start-up of EMTS                                                          4-37
4.6.4  Timing of Transaction Reporting                                             4-39
4.6.5  Technical  Elements of EMTS                                                4-40
4.6.6  Batch Reporting Via EMTS                                                  4-41
4.7    Prohibited Acts and Liability for Violations                                    4-42
4.8    Retail Dispenser Labeling for Gasoline with Greater than 10 Percent Ethanol       4-43

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RFS2 Summary and Analysis of Comments
4.     COMPLIANCE (REGISTRATION, RECORDKEEPING, REPORTING)

What We Proposed:

       The comments in this section correspond to Section IV of the preamble to the proposed
rule and address registration, recordkeeping, reporting. A summary of the comments received
and our response to those comments are located below (and in section III of the preamble to the
final rule).


What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
The commenter (1044) offers the following remarks related to proposed regulation §80.1427:
§80.1427(7) (i) and  (7) (iii) (How are RINs used to demonstrate compliance?) The language
contradicts itself. In §1427(7) (i) the word "all" is used referring to 2008 and 2009 RINs for 2010
compliance purposes and in §1427(7) (iii) the wording limits the use to 2008 and 2009 RINs that
were not used for prior compliance. Which is it? Clearly the preamble discusses all 2008 and
2009 excess RINs that were not used for compliance purposes will move forward. Therefore the
commenter requests the wording to reflect that position. [[Docket number 1044.1, p. 6]]

Document No.:      EPA-HQ-OAR-2005-0161-2312
Organization:       LyondellBasell Industries
Comment:
The commenter (2312.1) noted that the revised RFS2 definition of "renewable  fuels" will likely
exclude or block much of the current foreign biofuels as well as future expansions from entering
U.S. commerce and thereby being used to satisfy non-RFS2 markets.  EPA is essentially
applying the same costly and extensive supply chain record-keeping and segregation
(verification) requirements on any biofuel trade in the U.S. even if that trade is not intended for
satisfying RFS2 obligations. Unless modified, these additional requirements will economically
penalize any future  biofuels trade in the U.S. that is not intended for meeting the RFS2 fuels
requirements in the U.S., and will unfairly and unnecessarily disadvantage a U.S. producer's
ability to compete in supplying either fuel blends with biofuels or bio-component intermediates
to the global markets. (2312.1, p.4-5)

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) believes that EPA should revise the registration, recordkeeping and
reporting requirements for the renewable biomass definition to simply require registrants to
identify the types of feedstock they use, to keep verifiable records of the amount and type of
feedstocks used in producing the renewable fuel. (2329.1, p. 102)
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


Document No.:      EPA-HQ-OAR-2005-0161-2079
Organization:       AE Biofuels, Inc.
Comment:
The commenter (2079.1) noted that the proposal includes a multitude of new registration,
recordkeeping, and reporting requirements for biodiesel producers, including possible onsite
engineering reviews by a certified Professional Engineer. Many of these new requirements
(which also include renewable biomass verification records and submission of RIN pricing
information to EPA) appear to offer little or no regulatory benefit and are not thoroughly
justified in the proposal. (2079.1, p.10)

Document No.:      EPA-HQ-OAR-2005-0161-2099
Organization:       Honeywell International, Inc.
Comment:
The commenter (2099.1) supports EPA's proposed approach that importers of renewable fuels
should be subject to the same  reporting, registration, recordkeeping, and attest engagement
regimes.  (2099.1, p.25)

Document No.:      EPA-HQ-OAR-2005-0161-2149
Organization:       Dynamic Fuels, LLC
Comment:
The commenter (2149.1) believes that it is important that EPA works to keep the regulatory
compliance burdens to a minimum. The benefits of regulations should be carefully balanced with
the costs  they create. This is perhaps most important in the emerging renewable fuels industry
where the typical competitor is relatively small and therefore lacks the scale that can help it
absorb such costs. (2149.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
The commenter (2383) believes EPA should eliminate recordkeeping, reporting, and registration
requirements that are unnecessary or overly burdensome or expensive. [[Docket number 2380.1,
p. 3]]

Document No.:      EPA-HQ-OAR-2005-0161-2474
Organization:       North Carolina Department of Transportation
Comment:
The commenter (2474) believes that registration,  certification, and reporting requirements that
are impractical and burdensome should be eliminated. (2474, p.2)

Our Response:

       RFS2 is inherently more complicated than RFS1 due to additional requirements imposed
by Congress in EISA. As such, the registration, recordkeeping and reporting requirements have
necessarily become more burdensome to ensure the requirements of EISA are being fulfilled. In
Section II of the FRM preamble, we have addressed concerns over burdens associated with
specific topics such as Registration requirements, third party engineering reviews, and
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RFS2 Summary and Analysis of Comments
Production Outlook reports.  While additional burdens are a fact of new RFS2 requirements, we
are sensitive to the burdens placed on the regulated community and have made significant
improvements to the mechanisms associated with some of these functions. We have revised our
registration system via EPA's Central Data Exchange (CDX) enabling regulated parties to apply
for registration IDs and make corrections online.  We have also introduced the EPA Moderated
Transaction System (EMTS) to manage the generation and tracking of RINs in a less
burdensome manner than was used in RFS1. EPA staff continues to make improvements to the
registration and reporting infrastructure in order to reduce burdens on the regulated community
and EPA, as well as to insure confidence  and compliance with RFS2.
4.1    Registration

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2157
Organization:       World Energy Alternatives, LLC.
Notes:
The same comment has been submitted and posted multiple times under the following docket
numbers: 2157-2157.1, 2294-2294.1, 2295-2295.1, 2296-2296.1, 2297-2297.1, 2298-2298.1,
2340-2340.1, 2226-2226.1, 2227-2227.1, 2293-2293.1, 2170-2170.1, 2159-2159.1.
Comment:
The commenter (2157) is concerned with additional registration, certification, and reporting
requirements that EPA is proposing. The commenter finds these are impractical, burdensome
and unnecessary. Generally the current RFS RIN program has been working, and EPA should
not add undue burdens that may be cost prohibitive and, in fact, may result in having the
opposite of the intended effect.  Specifically, EPA should presume the existing agricultural lands
are met, and not require certification and, at most,  should utilize an approach similar to the
baseline production approach identified in the Proposed Rule (taking into account increased
yields). Additionally, price information, on-site engineering reviews, and production outlook
reports are unnecessary and burdensome, may require release of confidential business
information, and should not be required. (2157 p. iv-v).

Document No.:      EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
EPA should impose regulatory requirements of foreign producers in a way that facilitates their
participation, for example, allowing engineers based in and licensed by foreign countries to
perform reviews. [[Docket number 2358.1, pp. 4-5]]

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1)  generally supports using a one-time registration requirement to identify
grandfather status and identify pathways to generate RINs. The commenter does not agree with
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the on-site engineering review requirements. (2329.1, p. 102) [See Docket Number 2329.1, p.
102 for a detailed discussion of this issue]]

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) believes that EPA should eliminate the re-registration process because
the only purpose it served is to allow EPA to obtain confidential business information that is not
necessary for the success of the RFS2 program. Requiring re- registration and engineering
inspection will delay the Jan 1, 2010 launch of the RFS2 which will have significant negative
economic impact on the Biodiesel industry. (0994.1, p.6)

The commenter also believes that since feedstock usage is the critical element in establishing the
proper Biofuel categories, the requirement for a professional engineering inspection of all
renewable fuel facilities is not necessary and should be eliminated. If a biofuel facility is
expecting to get grandfathered into the system then a formal request form should be required.
This form should require the details about the facility such as the existing production capacity at
the time of the grandfathering. However  this form is not needed for all other biomass Producers
who are not to be grandfathered.  (0994.1, p.6)

Document No.:      EPA-HQ-OAR-2005-0161-1033
Organization:       Poet Ethanol Products
Comment:
The commenter (1033.1) suggest that the requirement of an  Independent Professional Engineer
review places a undue burden and expense on facilities, not  to mention being impractical to
accomplish given what is likely to be a very narrow window for registration after the final rule is
published. Since most producers  have licensed engineers on-site or individuals who are very
knowledgeable of the design and operation of the facilities,  the  commenter believes that at least
for all of the Grandfathered facilities, but preferably all Producers, that the requirement of the
analysis to be done by an "Independent Professional Engineer"  be stricken and allow it to be
performed by a "knowledgeable employee of the Producer". (1033.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
Referring to proposed §80.1450,  the commenter (1044) vehemently opposes these additional
requirements and this section! Their opposition is based upon the reality of Biomass-Based
Diesel production (Biodiesel)-producers must undergo the exact requirements for permitting
under the guidelines of the National  Environmental Policy Act as adopted by each State.
[[Docket number 1044.1, pp.  7-8]]

Document No.:      EPA-HQ-OAR-2005-0161-1051
Organization:       Aberdeen Development Corp.
Comment:
The commenter (1051.1) states that the proposed rule includes many new requirements which
appear to offer little or no regulatory benefit while adding significantly to biodiesel producers"
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RFS2 Summary and Analysis of Comments
compliance burdens.  Since most producers are small businesses, many are incapable of
complying with these extremely complex regulations. Therefore, we recommend working with
the National Biodiesel Board to simplify or eliminate registration, certification, and reporting
requirements that are impractical and burdensome. [[Docket number 1051.1, p, 4]]

Document No.:      EPA-HQ-OAR-2005-0161-2110
Organization:       Chevron
Comment:
The commenter (2110.1) is hopeful that the registration and reporting system could be
simplified.  Eventually any system should include an internationally accepted certification
system applied by accredited organizations that cover the fuel life cycle (as required by EISA
and presumably other sustainability measures if and when they are developed) and provisions for
a consistent global certification system. A preferred system would take advantage of existing or
developing third-party efforts and ultimately provide a single certificate establishing the
sustainability credentials of the biofuel, its GHG saving percentage, and all the information
needed to establish a D code or, better yet, assign the D code itself.  (2110.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter believes that the only option is for implementation of the program is January 1,
2011 or later. Even if EPA is able to promulgate a final rule before January 2010, it will take
until 2011 to accomplish the registrations that are required and to put in place the systems and
plans that are necessary for compliance (assuming that EPA can issue the final  rule by January
2010).  (2124.1, p. 9).

The commenter (2124.1) noted that registration will be a burdensome process for renewable fuel
producers and that it will take considerable time for all renewable fuel producers to complete the
registration process. The commenter believes that it is imperative that EPA provide sufficient
lead time at the beginning of this program to allow these registrations to occur. If sufficient time
is not provided, it could limit the availability of RINs. (2124.1, p.22-23)

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter (2393) supports an engineering review to verify the appropriate D code  is being
generated and believes that EPA should clarify the kinds of production changes that would
trigger a review by a professional engineer. However, the commenter believes that the
requirements that EPA envisions are far too complex and time consuming which is  one of the
reasons they believe a start date before 1/1/2011 will be disruptive.

Document No.:      EPA-HQ-OAR-2005-0161-2125
Organization:       Mercedes Benz
Comment:
With respect to the registration of new biomass-diesel manufacturers, including biodiesel
manufacturers under 40 CFR. Part 79, and the regulation of fuel production quality under 40
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


CFR Part 80, the commenter (2125.10 believes that the existing regulatory mechanisms need to
be made more stringent and effective. (2125.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The commenter (2145.1) noted that in §80.1450, there are several references to providing EPA
with registration "information specified under §80.76."  Some of the §80.76 registration
information does not make strict sense in the context of '80.1450. The commenter suggests that
EPA address these inconsistencies with changes to either §80.76 or §80.1450, or both. (2145.1,
P-8)

Document No.:      EPA-HQ-OAR-2005-0161-2146
Organization:       DuPont Applied BioSciences
Comment:
The commenter (2146.1) supports extending the RIN registration requirements to all domestic
renewable fuel producers, importers, and foreign renewable fuel producers in an equitable
manner. While it is appropriate for EPA to request information about a producer's products,
feedstocks and facilities in order to allow proper classification of the fuel, the commenter is
concerned about the potential compliance burden and additional costs a new verification or
certification process would create. (2146.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2157
Organization:       World Energy Alternatives, LLC.
Notes:
The same comment has been submitted and posted multiple times under the following docket
numbers: 2157-2157.1, 2294-2294.1, 2295-2295.1, 2296-2296.1, 2297-2297.1, 2298-2298.1,
2340-2340.1, 2226-2226.1, 2227-2227.1, 2293-2293.1, 2170-2170.1, 2159-2159.1.
Comment:
The commenter (2157) is concerned with additional registration, certification, and reporting
requirements that EPA is proposing. The commenter finds these are impractical, burdensome
and unnecessary. Generally the current RFS RIN program has been working, and EPA should
not add undue burdens that may be cost prohibitive and, in fact, may result in having the
opposite of the intended effect.  Specifically, EPA should presume the existing agricultural lands
are met, and not require certification and, at most, should utilize an approach similar to the
baseline production approach identified in the Proposed Rule (taking into account increased
yields). (2157 p. iv).

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) supports an engineering review to verify the appropriate D code is being
generated. EPA should make clear what kinds of production changes would trigger a P.E.
review. [[Docket number 2233.2, p. 45]]

Document No.:      EPA-HQ-OAR-2005-0161-2249
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RFS2 Summary and Analysis of Comments
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter (2249.2) supports a streamlined registration process. In particular the commenter
generally supports the proposed revisions to the registration process, but opposes the requirement
for an on-site engineering review as unnecessary and overly burdensome. The commenter agrees
that it made sense to require on-site inspection of the facility for foreign producers where EPA
does not have the same access to records or ability to inspect, but such is not the case for U.S.
facilities. The commenter notes that EPA already requires substantial recordkeeping and
reporting, including attest engagement requirements that are sufficient to meet any enforcement
needs.  The on-site  engineering review also seems counter to EPA's decision to use lookup tables
to identify general pathways to ease administrative burdens, rather than allow those facilities to
establish a source-specific pathway. If EPA believes there is a question regarding a particular
facility, it retains authority to request and review additional records, and to inspect the facility.
The commenter believes that EPA should remove this requirement for on-site engineering
reviews of U.S.  facilities. [[Docket number 2249.2, pp. 39-40]]

In addition the commenter asks EPA to clarify how to register facilities that use
multiple/aggregated feedstocks. Although the commenter opposes an on-site review
requirement, they seek clarification to ensure that EPA's proposal to require an update of facility
registration does not include a change in feedstock that was already identified and documented
under the list of "capable" feedstocks for renewable fuel production. If EPA intends every
feedstock change to require an on-site engineering review, this requirement would be costly and
unnecessary. Docket number 2249.2, p. 40]] [[See docket number 2249.2, pp. 40-42 and docket
number 2249.1,  pp  4-5 for additional discussion of this issue. ]]

Document No.:      EPA-HQ-OAR-2005-0161-2341
Organization:       Noble Americas
Comment:
The commenter (2341) believes that re-registration should not be required and would contribute
to delays in the implementation of RFS2.  The commenter asks that the inconsistency be
reconciled and feels that re-registration is not justified. (2341,  p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
The commenter (2358) believes EPA should impose regulatory requirements of foreign
producers in a way  that facilitates their participation, for example, allowing engineers base in and
licensed by foreign countries to perform reviews. [[Docket number 2358.1, pp. 4-5]]

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
In Section 80.1450, EPA proposes expanded registration requirements applicable to renewable
fuel producers.  The commenter (2383) requests that EPA eliminate from the registration
requirements information under section 80.1450(b) (1) (v)  regarding facilities that commenced
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                         Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


construction prior to December 19, 2007. EPA further proposes that as part of the re-registration
process, each producer must include an "independent third-party engineering review" of
information regarding each facility's fuel and feedstock production, feedstocks, production
processes, and energy sources. The commenter believes such an independent review will
produce no new information, will only confirm information the facility has already certified is
accurate, and will be expensive. [[Docket number 2383.1, pp. 59-60]]

The commenter believes there is no basis or need for EPA to require the types of records
specified under section 80.1450(b)(l)(v) (records of costs of additions, repairs, replacements,
estimated life of facility, economic and technical limitations to meeting 20 percent GHG
performance standard) from ethanol production facilities that commenced construction before
December 19, 2007. The commenter requests that EPA eliminate the requirements from the final
rule. [[Docket number 2383.1, p. 59]]

The commenter also believes that EPA's suggestion that renewable fuel producers must
reregister every three years is too frequent.  Given the burden and cost of re-registering, the
commenter recommends that producers should not have to re-register more frequently than every
five years.  Further, the commenter believes EPA should eliminate its proposed section
80.1450(d) (2) that requires producers to update registration within seven days for any changes to
a renewable fuel facility "not affecting the renewable fuel category for which the producer is
registered."  Such requirement serves no regulatory purpose and is unnecessarily burdensome.
[[Docket number 2383.1, p. 60]]

Document No.:       EPA-HQ-OAR-2005-0161-2419
Organization:       Cargill Incorporated
Comment:
The commenter (2511.1) noted that EPA proposes that every facility complete an on-site
engineering review of their facility performed in conjunction with his or her initial registration
for the new RFS program in order to establish the proper basis for RIN generation, and every
three years thereafter to verify that the fuel pathways established in their initial registration are
still applicable. The commenter believes that grandfathered and deemed compliant facilities
should not be subject to such a requirement. The commenter points out that EPA is requiring
every facility to complete such an engineering review, but is advocating a "generic" fuel
pathway in lieu of individual plant carbon footprints.  (2511.1,p .6)

Document No.:       EPA-HQ-OAR-2005-0161-2435
Organization:       R.W. Heiden Associates LLC
Comment:
The commenter (2435) notes that EPA's proposal requires a number of new compliance and
certification provisions that will place a significant regulatory compliance burden on the
industry, the majority of which is comprised of small businesses.  Many of the proposed
compliance provisions do not have practical application and will not work in practice as part of
the day-to-day operation of producing biodiesel, nor do they offer regulatory benefit and are not
justified in the proposal. The commenter recommends that the agency work with the National
Biodiesel Board to simplify or eliminate registration, certification, and reporting requirements
that are impractical and overly burdensome. [[Docket number 2435.1,  p. 6]]
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RFS2 Summary and Analysis of Comments
Document No.:      EPA-HQ-OAR-2005-0161-2472
Organization:       Valero Energy Corporation (Valero)
Comment:
The commenter (2472) notes that as proposed, all renewable fuel producers would be required to
make a showing to EPA, certified by an independent 3rd party, to establish the pathway for the
renewable fuels produced at each facility so that the renewable fuels produced at each facility
can be classified appropriately under the RIN system.  Clearly, this will be a burdensome process
for renewable fuel producers and it will take considerable time for all renewable fuel producers
to complete the registration process. The commenter believes it is imperative that EPA provide
sufficient lead time at the beginning of this program to allow these registrations to occur. If
sufficient time is not provided, it could limit the availability of RINs. [[Docket number  2472.1, p.
7]]

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter noted that there is not sufficient time before January 1, 2010, for foreign and
domestic renewable fuel producers to satisfy the requirements for registration under proposed
section 80.1450.  (2505.2, pp.1-3) (See Docket Number 2505.2, pp.1-3 for a detailed discussion
of this issue)

The commenter (2505.2) believes that it is imperative that EPA provide sufficient lead time at
the beginning of this program to allow these registrations to occur. If sufficient time is  not
provided, it could result in a shortage of RINs, because renewable fuel producers will not be able
to assign RINs to the fuels that they produce unless they are registered under the new rules.
(2505.2, pp.10-11)

Document No.:      EPA-HQ-OAR-2005-0161-1001
Organization:       Kurzman Clean Tech Research & Kurzman Capital, LLC
Comment:
The commenter (1001.1) noted that the proposal includes a multitude of new registration,
recordkeeping, and reporting requirements for biodiesel producers, including possible on-site
engineering reviews by a certified Professional Engineer. Many of these new requirements
appear to offer little or no regulatory benefit and are not thoroughly justified in the proposal.
The commenter recommends that the agency work with the National Biodiesel Board to simplify
or eliminate registration, certification, and reporting requirements that are impractical and overly
burdensome. (1001.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-1005
Organization:       Cotner Consulting Services
Comment:
The commenter (1005.1) noted that the proposed rule includes many new requirements  which
appear to offer little or no regulatory benefit while adding significantly to biodiesel producers'
compliance burdens. Since most producers are small businesses, many are incapable of
complying with these extremely complex regulations.  The commenter recommends working
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


with the National Biodiesel Board to simplify or eliminate registration, certification, and
reporting requirements that are impractical and burdensome. (1005.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-1010
Organization:       CC Gas Systems, LLC
Comment:
The commenter (1010.1) noted that the proposal includes a multitude of new registration,
recordkeeping, and reporting requirements for biodiesel producers, including possible on-site
engineering reviews by a certified Professional Engineer. Many of these new requirements
appear to offer little or no regulatory benefit and are not thoroughly justified in the proposal.
The commenter recommends that the Agency work with the National Biodiesel Board to
simplify or eliminate registration, certification, and reporting requirements that are impractical
and overly burdensome. (1010.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-1011
Organization:       Atlantic BioFuels
Comment:
The commenter (1011.1) noted that the proposed rule includes many new requirements which
appear to offer little or no regulatory benefit while adding significantly to biodiesel producers'
compliance burdens. Since most producers are small businesses, many are incapable of
complying with these extremely complex regulations. The  commenter recommends working
with the National Biodiesel Board to simplify or eliminate registration, certification, and
reporting requirements that are impractical and burdensome. (1011.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-1012
Organization:       Glenwood Farms
Comment:
The commenter (1012.1) noted that the proposed rule includes many new requirements which
appear to offer little or no regulatory benefit while adding significantly to biodiesel producers'
compliance burdens. Since most producers are small businesses, many are incapable of
complying with these extremely complex regulations. The  commenter recommends working
with the National Biodiesel Board to simplify or eliminate registration, certification, and
reporting requirements that are impractical and burdensome. (1012.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-1025
Organization:       Law Offices of David Wilcox
Comment:
The commenter (1025) noted that the proposed rule includes many new requirements which
appear to offer little or no regulatory benefit while adding significantly to biodiesel producers'
compliance burdens. Since most producers are small businesses, many are incapable of
complying with these extremely complex regulations. The  commenter recommends working
with the National Biodiesel Board to simplify or eliminate registration, certification, and
reporting requirements that are impractical and burdensome. (1025, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-1028
Organization:       Citizen
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RFS2 Summary and Analysis of Comments
Comment:
The commenter (1028) noted that the proposed rule includes many new requirements which
appear to offer little or no regulatory benefit while adding significantly to biodiesel producers'
compliance burdens. Since most producers are small businesses, many are incapable of
complying with these extremely complex regulations. The commenter recommends working
with the National Biodiesel Board to simplify or eliminate registration, certification, and
reporting requirements that are impractical and burdensome. (1028, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-1029
Organization:       C.I.B.
Comment:
The commenter (1029) noted that the proposed rule includes many new requirements which
appear to offer little or no regulatory benefit while adding significantly to biodiesel producers'
compliance burdens. Since most producers are small businesses, many are incapable of
complying with these extremely complex regulations. The commenter recommends working
with the National Biodiesel Board to simplify or eliminate registration, certification, and
reporting requirements that are impractical and burdensome. (1029, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-1043
Organization:       University of Georgia Engineering Outreach Service
Comment:
The commenter (1043.1) noted that the proposal includes a multitude of new registration,
recordkeeping, and reporting requirements for biodiesel producers, including possible on-site
engineering reviews by a certified Professional Engineer. Many of these new requirements
appear to offer little or no regulatory benefit and are not thoroughly justified in the proposal.
The commenter recommends that the Agency work with the National Biodiesel Board to
simplify or eliminate registration, certification, and reporting requirements that are impractical
and overly burdensome. (1043.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2016
Organization:       Malaysian Palm Oil Board (MPOB)
Comment:
The commenter believes that for  overseas  installations, independent engineering review, if ever
required, should also be allowed to be conducted by a professional engineer recognized by the
country in which the installation is located. (2016.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2172
Organization:       Minnesota Soybean Processors
Comment:
MnSP is extremely opposed to the portions of this proposed EPA rulemaking that contains
numerous and burdensome registration, recordkeeping and reporting requirements that outweigh
any benefit.  This rulemaking includes a multitude of new registration, recordkeeping, and
reporting requirements for biodiesel producers including proposed on-site engineering reviews
by a licensed Professional Engineer.

Our Response:
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       Registration Info

       In order to implement and enforce the new restrictions on qualifying renewable fuel
under RFS2, we are revising the registration process for renewable fuel producers and importers.
Many commenters argue that the expanded registration requirement is unnecessary and
burdensome.  EPA disagrees and believes that the information to be collected through the
expanded registration process is essential to generating and assigning a certain category of RIN
to a volume of fuel. Additionally, the information collected is essential to determining whether
the feedstock used to produce the fuel meets the definition of renewable biomass, whether the
lifecycle greenhouse gas emissions of the fuel meets a certain GHG reduction threshold and, in
some cases, whether the renewable fuel production facility is considered to be grandfathered into
the program.  Therefore, we are requiring producers, including foreign producers, and importers
that generate RINs to provide us with information on their feedstocks, facilities, and products, in
order to implement and enforce the program and have confidence that producers and importers
are properly categorizing their fuel and generating RINs.

       Re-registration

       Several commenters argue that they should not be required to update their RFS1
registration for purposes of RFS2.  EPA believes that re-registration is necessary because the
information being collected for purposes of RFS2 is greatly  expanded from that collected under
RFS1 due to the additional requirements imposed by EISA.  More detailed information on
feedstocks, processes and energy sources is necessary under RFS2 to ensure the proper RIN type
is generated.  This type of information was not necessary or required under RFS1, so even if a
party is already registered under the RFS1 program, that party will need to re-register for
purposes of RFS2 to provide the additional information.

       Registration for Grandfathered Facilities

       Several commenters argue that those facilities that are grandfathered under RFS2 should
not be subject to the registration and engineering review requirements proposed for RFS2.
However, EPA believes that producers of renewable fuel from grandfathered facilities must
confirm their eligibility to be grandfathered and must provide information that demonstrates
when the facility commenced construction, and that establishes the baseline volume of the fuel.
However, in response to comments and to reduce demand on engineering resources, EPA is
allowing grandfathered facilities an additional six months to register and submit their
engineering review.

       Registration for Foreign Producers and Importers

       EPA proposed that foreign producers of renewable fuel meet the same requirements as
domestic producers, including registering information about their feedstocks, facilities, and
products, as well as submitting an on-site independent engineering review of their facilities at the
time of registration for the program and every three years thereafter.  These proposed
requirements apply to all foreign renewable fuel producers who plan to export their products to
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RFS2 Summary and Analysis of Comments
the U.S. as part of the RFS2 program, whether the foreign producer generates RINs for their fuel
or an importer does.  NBB argues that facilities located in the U.S. should not have to conduct
the engineering review of the facility as it is unnecessary since EPA has the authority to inspect
the facilities at any time and conduct their own review, but that foreign facilities should be
required to conduct third-party engineering reviews.  In contrast, DuPont Applied BioSciences
argues that domestic  and foreign facilities should be subject to the same engineering review
requirements.  EPA believes that the application of the facility registration and engineering
review requirement should be consistently applied to both domestic and foreign producers so that
EPA has the information necessary ensure from the beginning of the RFS2 program that the
correct types of RINs are being generated by facilities. Without the registration information,
RINs will not properly generated from the beginning of the program by both domestic and
foreign producers and EPA will have to take remedial action and invalidate many RINs, which
will hinder the program as a whole.

       Engineering Reviews

       A number of commenters argue that engineering reviews are not necessary. EPA is
finalizing the proposed requirement for an on-site engineering review of facilities producing
renewable fuel due to the variability of production facilities, the increase in the number of
categories of renewable fuels, and the importance of ensuring that that RINs are generated in the
correct category. Without these engineering reviews, we do not believe it would be possible to
implement the RFS2  program in a manner that ensured the requirements of EISA were being
fulfilled. Additionally, the engineering review provides a check against fraudulent RIN
generation.  In order to establish the proper basis for RIN generation, we are requiring that every
renewable fuel producer have the on-site engineering review of their facility performed in
conjunction  with his or her initial registration for the new RFS program.  Additionally, the on-
site engineering review must be conducted every three years thereafter to verify that the fuel
pathways established in the initial registration are still applicable.  Producers are required to
submit a copy of their independent engineering review to EPA, for verification and enforcement
purposes.

       Independent Third Party Engineer

       Commenters argue that having the facility engineering review conducted by an
independent third party is unnecessary since most facilities could have their review conducted by
on-site engineers who have in-depth knowledge of the facility and its processes, heat sources and
feedstocks.  EPA argues that it is necessary to have an independent party conduct the engineering
review because an independent party can maintain impartiality and objectivity in evaluating the
facilities and their processes.  The independent party must be a licensed professional engineer
(P.E.), or foreign equivalent who works in the chemical engineering field. The independent third
party must provide to EPA documentation of his or her qualifications as part of the engineering
review, including proof of appropriate P.E. license or foreign equivalent.
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       Many commenters argue that completing the registration and third-party engineering
requirements will take a significant amount of time, and that EPA would need to provide ample
time for regulated parties to complete these requirements prior to the start of the RFS2 program.
The agency recognizes that there are significant concerns involving timing necessary and ability
to produce a completed engineering review to satisfy registration requirements.  Since the
publication of the RFS2 NPRM, we have delivered consistently a message stating that advanced
planning and preparation was necessary from all parties, EPA and the regulated community
inclusive, for successful implementation of this program.  Furthermore, in an effort to reduce
demand on engineering resources, we are allowing grandfathered facilities an additional six
months to submit their engineering review. This will direct the focus of engineering review
resources on producers of advanced, cellulosic and biomass based diesel.  EPA fully expects
these producers of advanced renewable fuels to meet the engineering review requirement;
however, if they are having difficulties producing engineer's reports prior to July 1, we ask that
they contact us.

       Registration Updates

       Commenters argue that registration updates every three years are unnecessary and that
the registration should be a one-time occurrence.  However, since operations change over time
EPA believes that updates are necessary to confirm that the producer is continuing to generate
the proper RIN type based on its feedstocks, processes and product. Additionally, registration
updates must be submitted if a producer makes changes at his facility that are not included in his
original registration.

       Handling of Information Claimed as Confidential Business Information  (CBI)

       EPA acknowledges that some information required to be submitted under the RFS2
regulation may be claimed as CBI by the submitter. EPA is required to treat such information in
accordance with our regulations at 40 CFR part 2.  In addition, EPA has issued guidelines and
policies for handling of information claimed as CBI in order to implement these regulations.
4.2    RIN Tracking and Price Reporting

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
With regards to Part (e) (3) (x), the commenter (2505.2) strongly disagrees with this proposal.
EPA does not need this information for compliance purposes, and it is highly sensitive
confidential business information that EPA should not require parties to submit unless it is
absolutely necessary for compliance.  (2505.2, p.12)

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers  and Convenience Stores of Iowa (PMCI)
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RFS2 Summary and Analysis of Comments
Comment:
The commenter (2155.1) believes that in the event that a RIN generator inadvertently attaches an
invalid RIN (incorrect batch number, duplicated RIN, typo, etc.) to valid gallons sold, and said
generator subsequently goes out of business, EPA shall regenerate or replace those RINs in order
to maintain the intent of the law.  The commenter also believes that the RIN generator should be
allowed to generate RINs on a point of sale and/or point of import basis until such time allows
for the implementation of EPA's EMTS RIN verification and tracking tools. This will limit the
negative impacts and disincentives created by RINs generated at the end of calendar years but
not sold until the following year. (2155.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
The commenter (1044) strongly opposes the requirement to provide pricing information with
transactions. They feel this type of information gathering is the responsibility of the SEC. In
their review of the EISA, they were unable to identify the provisions that require the gathering  of
this information from any party. (1044, p. 3)
Document No.:      EPA-HQ-OAR-2005-0161-2129
Organization:       Clean Air Task Force, Environment America, Environmental Working
Group, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council,
Sierra Club, Union of Concerned Scientists, The Wilderness Society and World Resources
Institute
Comment:
The commenters (2129.1) believe that the RIN and pathway system as proposed by EPA will
make it virtually impossible to track the emissions of specific gallons. This will greatly reduce
the usefulness of the RIN system in encouraging market differentiation.  EPA should strive to
incorporate more specificity in the RIN system, aiming to assign more refined point-assessments
of emissions associated with each batch of renewables fuels and tracking that rather than just
pathways in the RIN. Simply expanding the number of digits in the RIN code will remove the
current constraint, which limits tracking to just pathway letters.  Second, the pathway system
needs to include a better way for novel and better pathways to be recognized in a timely fashion.
(2129.1, p. 15)

Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:       ConocoPhillips
Comment:
With regards to EPA requiring reporting of RIN prices, the commenter (2154.1) considers this
information to be Business  Confidential and object to its inclusion in the RIN reporting
requirements. EPA should eliminate this when promulgating the final rule. (2154.1, p.6)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
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The commenter (2233) notes that as the RFS2 program is currently proposed, RIN costs can
infinitely increase and at some point a very high RIN price will have a negative impact on the
program. The commenter suggests that EPA consider establishing a RIN cap or ceiling.  EPA
would make paper RINs available at this value and thus RIN prices would not rise above this
ceiling price. [[Docket number 2233.2, pp.  13-14]]

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
The commenter believes that EPA provides no evidence that the RIN market is not working, and
requires EPA to "assess the general health and direction of the market and overall liquidity of
RINs." The commenter states that the RIN market is already transparent, and parties should not
be required to submit pricing information to EPA, which may then be available to the public.
Price information is considered confidential business information and the disclosure of this
sensitive information should not be required. None of EPA's asserted benefits justifies requiring
this information. [[Docket number 2249.2, p. 42]]

The commenter adds that there is ample information in the marketplace as to the supply of
renewable fuels, the prices of those fuels, and obligated parties are well aware of RIN pricing in
the marketplace. There  is simply no support to claim that RIN prices will provide any additional
information of which the regulated entities  are not already aware.  In sum, the commenter
believes that the price of RINs is confidential business information and EPA should remove the
requirement to report RIN prices. [[Docket number 2249.2, pp. 42-43]]  [[See docket number
2249.1, p. 5 for  additional discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil USA, Inc.
Comment:
The commenter (2400.2) recommends that  all RIN information pertaining to value or financial
position of the company be kept confidential. The commenter believes the EPA can obtain
enough RIN market perspective without requiring companies to give specific company pricing
information. (2400.2, p. 10)

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:

The commenter rejects EPA's proposal to include RIN pricing on  the RIN Transaction Reports.
RIN values are not necessarily known at the time of a renewable fuel sale; and RIN values are
not a strong measure of industry health. Feedstock prices, and diesel and gasoline prices are a
much stronger indicator of industry health and these items are published in readily accessible
forms.  EPA should develop the expertise of using the feedstock and petroleum fuels prices to
gauge the health of the renewable fuels industry and for setting renewable fuel standards.
(0994.1, p. 13)

Document No.:      EPA-HQ-OAR-2005-0161-1002
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RFS2 Summary and Analysis of Comments
Organization:       Fuel Marketing Corporation
Comment:
The commenter (1002) has concerns over the requirement that price information be submitted
with each transaction. The commenter strongly feels this is strictly private information, and such
information is not needed to access the market conditions as there are reporting services the
industry uses to evaluate pricing that the EPA can access as well.  The commenter also questions
the security of such information, especially the quantities of such information being stored; make
it more of a target for intrusion for those seeking such information. (1002/1002.1, p.3)

The commenter also feels that including pricing information by transaction basis will
dramatically impact the technical requirements needed to implement the EMTS system for the
user, increasing the amount of data entry for those that cannot automate, and prevents the ability
to send volume reporting as stated above which will have the positive effect of reducing the
amount of transaction the EMTS system will handle. (1002/1002.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) opposes EPA's proposal to require that RIN prices be reported to EPA.
The commenter recommends that EPA should follow the same RIN pricing reporting
requirement as set in RFS1. Reporting RIN pricing, in general, could have an adverse affect on
Confidential Business Information  (CBI) and Corporate Intelligence (CI). (2124.1, p.30)

The commenter also noted that that the EPA lacks specific statutory authority to require
burdensome and intrusive reporting of RIN price information with regard to the price of RINs in
transactions (whether purchases, trades or sales). (2124.1,  p.31) [See more detailed information
on this issue in Docket Number 2124.1, pp.31-32]

The commenter noted that a downstream party should not  be required to adjust records, reports
and compliance calculations because an upstream party made a mistake and distributed invalid
RINs. The proposed regulation should be edited such that the upstream party makes peace with
EPA and EMTS when an invalid RIN is discovered and downstream parties will not be bothered.
(2124.1, pp.34-35)

Document No.:      EPA-HQ-OAR-2005-0161-2135
Organization:       Ad Hoc Coalition of Small Business Refiners (SBR)
Comment:
The commenter (2135) opposes the proposal to include requirements for RIN price reporting to
EPA as a result of RIN purchases, sales or trades. Public disclosure of company-specific RIN
pricing data could lead to unintended market manipulation and price volatility. Moreover, the
prices of RINs do not ensure that the applicable level of renewable fuel has been added to a
transportation fuel nor are they needed to ensure that the requirements of the RFS program are
satisfied. [[Docket number 2135.1,  p. 22]]

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers and Convenience Stores of Iowa (PMCI)
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


Comment:

The commenter strongly disagrees with the EPA's position on the need to capture RIN values for
separated and assigned RINs. This is not the function of the EPA to gather market (pricing)
information and to then hold that information publicly. (2155.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2341
Organization:       Noble Americas
Comment:
The commenter also believes that pricing information is of significant commercial value and
could disrupt markets if inadvertently disclosed, and EPA should not require price reporting.
Since price errors are the most common reason for invoice corrections, including pricing
information in the data required for each renewable fuel and RIN transaction managed through
the EMTS will not only increase the quantity of data being processed by the EMTS system, it
will create unintentional RIN errors which will further increase the burden on EMTS.  (2341, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2419
Organization:       Cargill Incorporated
Comment:
The commenter is opposed to submitting the price information for assigned RINs. The RIN
value is not a line item on the invoice when selling volumes of renewable fuels with RINs.  The
commenter proposes that EPA source RIN pricing information from publicly available RIN
trading groups on a stated periodic basis. (2511.1, p.6)

Document No.:      EPA-HQ-OAR-2005-0161-2464
Organization:       Musket Corporation
Comment:
The commenter (2464.1) opposes a requirement for the reporting of confidential RIN prices to
EPA. (2464.1,p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2537
Organization:       Musket Corporation
Comment:
The commenter also opposes a requirement for the reporting of confidential RIN prices to EPA.
The commenter believes that the inclusion of RIN prices in the regular reports is unnecessary if
EPA's intent is solely to monitor market disruptions, since several industry-standard reporting
services publish RIN prices daily.  The quality of that price data is good enough for major firms
to accept for marked-to-market treatment.  For individuals to report price transactions to EPA is
burdensome, unnecessary and creates the risk of the loss of confidential business information.
[[Docket number 2537, p. 3]]

Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter disagrees with EPA's proposal to compel parties to report their RIN transaction
prices. 18 RIN price data is currently available from a variety of sources, including several trade
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RFS2 Summary and Analysis of Comments
publications such as OPIS Ethanol and Biodiesel Information Service and Platt's Oilgram
Report, and published price data from the Chicago Board of Trade and NYMEX. (2471.1, p. 15)

Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The commenter (2145.1) does not support reporting RIN prices through the EMTS system.
Pricing information is not required or needed to implement the objectives of EISA. If EPA
needs this type of information to make decisions around such things as waiver requests, there are
commercial services  (e.g., Biofuelsconnect.com, OPIS, Platts) that can satisfy this need. (2145.1,
pp.6-7)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) opposes reporting RIN prices as business confidential information that
could be subject to FOIA. The commenter also opposes the requirement for renewable fuel
prices and volumes. [[Docket number 2233.2, p. 11]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter strongly opposes the requirement to report RIN prices. RIN prices are business
confidential information that could be subject to Freedom of Information Act requests.  In
addition,  RINs purchased with renewable fuel are often, if not always, not priced separately.
Thus for anything other than pure RIN transactions, RIN prices are not available. [[Docket
number 2393.1, p. 12]]

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter also opposes EPA's proposal to require reporting of RIN prices. This
requirement, as well as the requirement for production outlook reports, is unnecessary and raises
substantial business confidential issues that EPA does not address in the Proposed Rule. Price
information is considered confidential business information and should not be required  to be
disclosed. EPA should eliminate this requirement from  the final rule (2329.1, p. 103-104)

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter (2393) supports the EPA moderated transaction system that EPA has proposed
with one important exception. The commenter strongly opposes the requirement to report RIN
prices. RIN prices are business confidential information that could be subject to Freedom of
Information Act requests. In addition, RINs purchased with renewable fuel are often, if not
always, not priced separately. Thus for anything other than pure RIN transactions, RIN  prices are
not available. [[Docket number 2393.1, p. 12]]
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)
Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The commenter (2145.1) supports the development and implementation of the EMTS system.
The commenter does not support reporting RIN prices through the EMTS system. Pricing
information is not required or needed to implement the objectives of EISA.  If EPA needs this
type of information to make decisions around such things as waiver requests, there are
commercial services  (e.g., Biofuelsconnect.com, OPIS, Platts) that can satisfy this need. (2145.1,
pp.6-7)

Document No.:      EPA-HQ-OAR-2005-0161-1002
Organization:       Fuel Marketing Corporation
Comment:
The commenter (1002) has grave  concerns on recording pricing information on a transaction
basis. The commenter also has concerns of using a transaction based system instead of volumes.
(1002/1002.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2047
Organization:       Terrabon
Comment:
Commenter [[2071]]  proposes that quarterly pricing should be used rather than annual pricing,
given the volatility of the price. Within the past year, retail gas prices have ranged from nearly
$4 per gallon last summer to $1.80 in January 2009.More frequent pricing will come closer to
replicating market conditions. [[#2071.1 p.7]]

Document No.:      EPA-HQ-OAR-2005-0161-2172
Organization:       Minnesota  Soybean Processors
Comment:
The commenter (2172) is opposed to the submission of Confidential Businesses Information
regarding the pricing of Renewable Fuel Identification numbers (RINs).

Our Response:

       A group of commenters suggested that EPA track emissions of specific gallons of
renewable fuel and that the RIN number be increased to provide a means for expanding RIN
pathway information collected. The  RIN system has been developed to verify the production
(and presumed use) of the different categories of renewable fuels required by the RFS2
standards. Any additional use of the RIN for greater differentiation of environmental
performance of renewable fuels is beyond the scope of this rule.

       Another commenter suggested that EPA set a cap, or ceiling, on the price of RINs in
RFS2 and further suggested that EPA make paper RINs available  at the ceiling. The RIN
concept was developed as a market based system where RIN price has the potential to drive
desirable outcome through the economic incentives associated with supply and demand. That is,
a higher RIN price would foster development of the renewable product that is associated with
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RFS2 Summary and Analysis of Comments
that RIN. Additionally, EISA only provides for EPA generated credits for use with the cellulosic
biofuel standard and only for the situation where EPA has determined that a given year's
cellulosic standard will not be met and sets an adjusted cellulosic standard. There are general
waiver provisions that may be used in cases of localized, State, or national economic hardship
should conditions warrant such an action.

       A majority of commenters stated their opposition to the collection of RIN price data with
transaction submissions, due to Confidential Business Information (CBI) concerns,  other services
being able to provide this information, marketplace delays and undue stress on the EMTS from
disagreements in RIN Price.  EPA decided that the price information has great programmatic
value because it will help us anticipate and appropriately react to market disruptions and other
compliance challenges, assess and develop responses to potential waivers, and assist in setting
future renewable standards.  In addition, EPA decided that highly summarized price information
(e.g., the average price of RINs traded nationwide) may be valuable to regulated parties, as well,
and may help them to anticipate and avoid market disruptions. Also, EPA will not require the
matching of the exact RIN price to alleviate the burden of resubmission due to price mistakes.
However, the price information must be accurate rounded to the  nearest cent (US Dollar) at the
time of sending the transactional information to EMTS. With regard to concerns about handling
of information claimed as CBI, EPA acknowledges that some information required  to be
submitted under the RFS2 regulation, including individual price  information and certain other
aspects of RIN transactions, may be claimed as CBI by the submitter.  EPA is required to treat
such information in accordance with our regulations at 40 CFR part 2.  In addition,  EPA has
issued guidelines and policies for handling of information claimed as CBI in order to implement
these regulations.
4.3    Reporting and Attest Engagements

4.3.1   EMTS

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) notes that the proposed rule requires a list of all RINs used for
compliance and that Section 80.1452(c) (1) (iii) (E) also requires this list.  The commenter
recommends that this redundancy be removed by restating §80.1452(a)(l)(x) to reference the list
provided in §80.1452(c)(l) (iii) (E).  [[Docket number 2233.2, p. 14]]

The commenter recommends that EMTS be designed with the capability to accept and
requirement to submit the obligation report information within its framework. The obligated
parties transportation fuel production volume, resulting RVOs,  and deficit RVOs are all that
remain for EMTS to capture so that all RFS reporting information is in a common system.
[[Docket number 2233.2, p.  14]]
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Document No.:      EPA-HQ-OAR-2005-0161-2135
Organization:       Ad Hoc Coalition of Small Business Refiners (SBR)
Comment:
The commenter (2135) adds that they would support a RIN transaction environment in which a
sophisticated, well-managed and enforced EMTS became the central distribution point for
Producer/Importer RINs mandatorily transferred directly into it for subsequent distribution/sale
only to Obligated Parties. SBRs agree that the purchase of separated RINs should be restricted
to obligated parties only. Allowing non-obligated parties to purchase segregated RINs can lead
to increased market price volatility, speculation and perceived market longs/shorts, none of
which furthers compliance with the Reformulated Fuels Standard. [[Docket number 2135.1, p.
22]]

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
The commenter (1044) opposes the provision for a Federally run trading platform and believes
this is a responsibility of private business and not that of government.  The commenter points out
that there are no other government run trading boards. (1044, p. 3)

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) believes that Part (e) (3), which requires that after EMTS starts,
obligated parties will have to report within 3 days to the transaction, is unworkable.

Document No.:      EPA-HQ-OAR-2005-0161-2172
Organization:       Minnesota Soybean Processors
Comment:
The commenter (2172) believes EPA could allow for a greater time period, 10 days, before a
renewable fuel producer has to transfer RINs thus allowing time for payment to occur.

Our Response:

       A commenter suggested that we eliminate the requirement of listing RINs used for
compliance and that we build the capability to accept obligated party information into the EMTS
framework. The Agency is adopting EMTS for RFS2 RIN generation activities and for
transactions involving RFS2 RINs. While the use of EMTS will reduce the burdens on most
regulated parties, including obligated parties, it does not replace all functions of quarterly and
annual reports submitted through CDX.  EMTS will eliminate the need to list RFS2 RINs used
for compliance,  but it will not manage deficits and RVO calculations.

       Regarding the comment that EMTS be the basis for a direct RIN transfer system, EPA
addressed a number of alternative options in the FRM preamble. It was determined that given
the significant challenges associated with a change to the requirement that RINs be transferred
with volume and the opposing views among stakeholders, we would not make any changes.
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RFS2 Summary and Analysis of Comments
       A commenter opposes a federally run trading platform pointing out that this is a function
for the private sector.  The characterization of EMTS as a trading platform is a misconception.
Implementation of EMTS incorporates requirements necessary to confirm RIN  generating
activities and transactions, thus ensuring overall compliance with RFS2. EMTS does not broker
transactions, nor does it post holdings of RIN accounts; the information submitted to EMTS is
based on commercial transactions that have been completed and are documented by PTDs.

       EPA has concluded that five days, or a business week, is an appropriate amount of time
for both parties to receive or provide necessary documentation in order to interact with EMTS
accurately and timely.  "Real time" will be defined as within five (5) business days of a
reportable event (e.g., generation and assignment of RINs, transfer of RINs).
4.3.2   Monthly Reporting

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) believes that reporting should remain quarterly.  Monthly reporting will
not provide adequate time for obligated parties to complete RIN tracking/reconciliation with
counterparties - it barely works with quarterly reporting now.

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
If, as the commenter (2393) recommends, EMTS is implemented concurrently with RFS2
startup, no increased reporting frequency is justified. RFS2 should not start up without EMTS to
avoid having to create a temporary, interim RFS2 system that will be wasteful of resources, both
those of industry and of EPA. [[Docket number 2393.1, pp. 13-14]]

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil USA, Inc.
Comment:
The commenter (2400.2) prefers to keep the reporting on a quarterly basis to ensure accuracy and
preciseness of reports submitted to the EPA.  If the EPA were  to need any data for statistical
purposes, they will have real-time information, especially with EMTS which should eliminate
the need for monthly reporting. (2400.2, p.9 and p.l 1)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) opposes increasing the reporting frequency from quarterly to monthly.
EPA should strive to align the roll  out of the EMTS system with the implementation of the RFS2
regulations. There is no justification to increase the reporting  requirements simply because EPA
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


has failed to both finalize the RFS2 regulations and to roll out the EMTS in a timely manner.
[[Docket number 2233.2, p. 14]]

Document No.:     EPA-HQ-OAR-2005-0161-2341
Organization:      Noble Americas
Comment:
The commenter (2341) believes that monthly reporting substantially increases the cost of
reporting and should not be required. If it is required, the deadline for reporting should be 60
days after the end of the month (rather than 30 days) to allow sufficient time to reconcile and
perfect the data.  The commenter believes that EPA should also consider elimination of quarterly
transaction reporting (RFS0200) once the EMTS system is fully operational in year two. (2341,
p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:      ConocoPhillips
Comment:
The commenter (2154.1) noted that even if there ends up being a timing disconnect between the
implementation of the rule requirements and the initiation of the EMTS, monthly reporting is not
warranted. At a minimum, monthly reporting should only apply to renewable producers as the
accuracy of the RIN information is critical to the system. (2154.1, p.7)

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:      Petroleum Marketers and Convenience Stores of Iowa  (PMCI)
Comment:
The commenter (2155.1) believes that given the relatively short period of time until  the
implementation of the EMTS, EPA should continue with quarterly reporting. Monthly reporting
will not solve RIN validation issues. (2155.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2130
Organization:      ExxonMobil Refining & Supply Company  (ExxonMobil)
Comment:
The commenter (2130) does not support a monthly reporting requirement for 2010 as a lead in to
the EMTS. [[Docket number 2130.1, p. 9]]

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:      National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that monthly reporting should not be required in 2010 for all
RIN-owning parties. The RFS2 regulations will be effective when the EMTS is activated,
probably 1/1/11. Therefore, there is no need to submit monthly reports when EMTS  is
operational. (2124.1, p.34)

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:      Renewable  Fuels Association
Comment:
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RFS2 Summary and Analysis of Comments
The commenter agrees with EPA's proposal to provide faster and more efficient validation of
RINs. Although the commenter does not believe EPA can implement the RFS2 for an effective
date of January 1, 2010, the commenter does not oppose requiring monthly transaction reports
until the EMTS is operational.  Parties should be able to adjust their reporting from quarterly to
monthly without significant burden, and it would provide EPA with information sooner to
validate RINs to avoid the problems with finding potential problems down the road. (2329.1, p.
103)

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
The commenter (1044) states that the increased frequency of reporting is a change that would
invoke a financial burden; however, in the big picture, realizes this important aspect to the EISA
needs support. The commenter hopes the implementation and use of the proposed EMTS system
would shift reporting to an issue of data query by the agency and relieve them of the reporting
issues including attestation. (1044.1,  p. 2)

Document No.:      EPA-HQ-OAR-2005-0161-2014
Organization:       Clean Fuels Clearinghouse
Comment:
The commenter (2018.1) noted that RFS2 will increase reporting frequency from a quarterly time
cycle to monthly in that period of time between RFS2 going into effect and EMTS becoming
operational.  Once EMTS is operational, reporting frequency increases to "near real-time", or no
less than every 3 days. The commenter supports such modifications and encourages EPA to
adopt the rule as proposed in these areas. The commenter believes that the proposed increased
reporting frequency does not address the demand side of the economic balance, leaving obligated
parties to an annual reporting frequency.  The commenter recommends that EPA increase the
reporting frequency for obligated parties.

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that monthly reporting should not be required in 2010 for all
RIN-owning parties. The RFS2 regulations will be effective when the EMTS is activated,
probably 1/1/11. Therefore, there is no need to submit monthly reports when EMTS is
operational. (2124.1, p.34)

Document No.:      EPA-HQ-OAR-2005-0161-2172
Organization:       Minnesota Soybean Processors
Comment:
The commenter (2172) believes that producer of renewable fuel  be required to submit batch RIN
transaction reports on a monthly basis for 2010 is extremely burdensome for MnSP and other
regulated parties, EPA states that the reason for these reports is to assist parties in indentifying
errors before the errors result in violations(s). MnSP does not believe that an increased
frequency in reporting is needed or warranted and suggests that any RINs generated prior to
EMTS implementation could trade under a separate category and disclosure since RIN traders
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


using EMTS has the ability to instantly determine if the RINs being traded were created before
EMTS and thus poses a greater risk.

Our Response:

      The NPRM discussed changing the frequency of reporting for RFS2 RIN generation
activity and transactions from quarterly to monthly, in the event that EMTS would not be
available for use at the start of the program. EMTS will be available and its use will coincide
with the start of the RFS2 program.

      EPA  acknowledges that some information required to be submitted under the RFS2
regulation may be claimed as CBI by the submitter. EPA is required to treat such information in
accordance with our regulations at 40 CFR Part 2.  In addition,  EPA has issued guidelines and
policies for handling of information claimed as CBI in order to  implement these regulations.
4.3.3   Additional Reporting Information

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) questions EPA's proposal to further burden terminal operators and others
in the distribution system with new reporting requirements. It is unclear what information these
parties  could give the EPA that would provide useful or new information not already available to
EPA through EIA's Petroleum Supply Monthly data. [[Docket number 2233.2, p. 15]]

Document No.:      EPA-HQ-OAR-2005-0161-2014
Organization:       Clean Fuels Clearinghouse
Comment:
The commenter (2018.1) suggests that EPA should consider requiring an "estimated" RFS0300
report each quarter with the accompanying RFS0200 and associated "USE" records.  A final
RFS0300 report would be made then on an annual basis. This could be set up similar to the
quarterly estimated tax approach utilized by the IRS and required of corporations where prior
year obligations would serve as the quarterly basis. (2018.1, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2014
Organization:       Clean Fuels Clearinghouse
Comment:
The commenter (2018.1) recommends that EPA require a reporting of the last batch number used
by either a producer or importer of renewable fuel during the first interim period (RFS1). This
last batch number would then be made publicly available on the transition date and would be
utilized by industry to self monitor and assure that subsequent batches under RFS2 were
generated at a batch number greater than that reported.  (2083.1, p.l)
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RFS2 Summary and Analysis of Comments
Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) believes that EPA should provide clear guidance to producers that
propose certain documentation or records to demonstrate that their fuel meets the qualifying
criteria. There are likely various existing forms of documentation upon which EPA can rely and,
thus, limit the potential documentation burden created by EISA and the proposed RFS2
regulations. (2471.1, p. 13)

The commenter also believes that EPA should use reports under RFS2 both to ensure parties'
compliance and to monitor the overall health of the program. While the commenter does not
endorse the establishment of position limits or caps on the total number of unassigned RINs that
a party may buy or hold, they do believe that, in a tight RIN market, EPA should scrutinize
reports to prevent obvious attempts to hoard RINs or to manipulate the market. (2471.1, p. 15)

The commenter noted that regulated parties generally have struggled to identify the correct
"transaction date"  for RIN Transaction Reports under RFS1. This issue is not inconsequential,
as the choice of transaction date can influence whether a party maintains compliance with the
quarterly balancing requirements for assigned RINs.  The commenter believes that EPA should
clarify this ambiguity by adopting as a default position that the "transaction date" is the date of
the product transfer document or other document (e.g., invoice) that conveys RINs from buyer to
seller. (2471.1, p. 17)

Document No.:      EPA-HQ-OAR-2005-0161-2383
Organization:       Growth Energy
Comment:
The commenter (2383) is concerned about EPA's proposed section 80.1452(e)(2)(xi) that
renewable fuel producers must now report "the type and volume of co-products produced" with
each batch of renewable fuel. This proposed requirement is burdensome, costly, and
unnecessary D-code classification is not linked to the level of co-product produced at a facility
and reporting the quantity of co-product production serves no regulatory purpose under EISA.
[[Docket number 2383.1, p. 59]]

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1) believes that EPA needs to  rethink the concept of the Batch Report.
The supposition that every gallon of renewable fuel in a tank with assigned RIN numbers will be
sold or will be sold as renewable fuel is faulty. Having to assign a batch RIN number for the
total batch volume will create extra work, requiring facilities to assign RIN numbers and then
retire RIN numbers for non fuel sales and for  tank heel volumes. Under RFSI, assigning RIN
numbers prior to a renewable fuel sale was simple and avoided having to generate and  retire RIN
numbers for fuel volumes that were not part of the renewable fuel program. (0994.1, p. 11)

The commenter noted that EPA will have to create a new RIN Retire code to deal with the
circumstance when RINs are retired because a heel volume is not sold from a tank, and that heel
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becomes part of the next batch created in that tank.  While the commenter sees many advantages
of the EMTS, the Batch Report causes facilities to generate more transactions to retire RINs than
in RFS1. If retiring RINs becomes a significant burden, facilities will generate a Batch Report
for each single sale in which the batch volume and RIN number are tied to that single sale.  The
commenter also noted that Producers will have to have two accounts in the EMTS RIN Bank:
one account will be for valid Generated RINs (from Batch Reports) and one account for
Separated RINs.  (0994.1, pp.11-12)

The commenter rejects the idea of requiring all the additional information on the RIN Generation
Report.  These results can always be verified by examining the feedstock purchase orders and the
test results from the biofuel made from these purchases as part of the attest engagement. The
request for additional information such as co-products produced have nothing directly to do with
verification that the feedstock is qualified to produce the specified  category of biofuel.  The RFS
reports need to be kept as simple as possible. (0994.1,  p. 12)

The commenter rejects the requirement that feedstocks need to be certified that they are the
proper feedstocks for the specified category of biofuel product.  The commenter also rejects the
statement that a renewable fuel producer who makes renewable fuel that does not qualify under
RFS2 must report this fuel and state why it does not qualify.  If a producer makes a product that
does not use approved feedstocks and does not produce a fuel that  qualifies under one of the four
(or 6) D codes, then the product is not renewable fuel.  Therefore this product does not need to
be reported at all to the EPA. (0994.1, pp.12-13)

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter noted that EPA should clarify the rules for retiring RINs. The rules do not
address the situation where a party exports cellulosic renewable fuel, or advanced renewable
fuel. (2505.2, p.9)

Document No.:      EPA-HQ-OAR-2005-0161-1969
Organization:       SeQuential-Pacific Biodiesel
Comment:
The commenter (1969) states that as a  Renewable Fuel Producer committed to sustainable
Biodiesel production from renewable resources, they have been fortunate to survive this
economic contraction.  A huge piece has been the added value of the Renewable Identification
Numbers (RINs). The small but steady RIN revenue stream allowed the commenter to keep our
doors open and prevent a complete plant shut down and lay offs. In recent months they have
seen the value of the RINs decrease sharply. One of those factors is the rule that obligated
parties are only required to report RINs on an annual basis. This creates an uneven demand for
RINs throughout the year. The commenter strongly encourages EPA to change the reporting
requirements of obligated parties so they are identical with the responsibilities of renewable fuel
producers.  Quarterly reporting would create a level playing field for both obligated parties and
renewable fuel producers thus smoothing the volatile market prices. [[Docket numbers 1969.1, p.
1 and 2027, p.  1]]
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RFS2 Summary and Analysis of Comments
Document No.:      EPA-HQ-OAR-2005-0161-1033
Organization:       Poet Ethanol Products
Comment:
The commenter (1033.1) finds that the reporting of the volume and type of co-products produced
with the renewable fuel to be ancillary to the determination of the fuel pathway the renewable
fuel qualifies for and poses an additional layer of complexity to the reporting process for
Producers which is unnecessary. The commenter respectfully submits that this item be removed
from the Recordkeeping Requirements for Renewable Fuel Producers. (1033.1, p.3)

Our Response:

       Several commenters expressed concern for additional reporting burdens associated with
RFS2.  Some referenced alternate means of collecting data such as EIA's monthly data reports.
However, in order to enforce the requirements of EISA and RFS2, EPA must be able to confirm
claims  of individual renewable producers for the products they make, the feedstocks they use and
the processes employed.  Part of the assessment includes reviewing co-products generated which
were considered during EPA's life cycle assessment.  We are requiring that co-product
production be identified for each batch of renewable produced, and that each quarter the volumes
of co-product produced at a facility be reported by co-product type.

       Some commenters suggested that EPA require obligated parties to demonstrate quarterly
use of RINs for compliance.  Such a requirement, while it may provide for more constant
demand for RINs, conflicts with the statutory requirement for an annual compliance program.

       The Clean Fuels Clearing House suggested that EPA require reporting of the last batch
number used by a producer or importer and that EPA publish this information for industry self
monitoring.  EPA understands the potential utility of such information, but after considering the
added burden of this one-time data collection and limitations for a practical implementation -
modifications of RFS1ICR,  conflicting collection methods with EMTS, and limited resources,
EPA chose not to pursue this idea.

       A comment regarding the use of EMTS data to monitor hoarding is being considered for
future development.  The same commenter suggested that EPA clarify the definition of
"transaction date." Just as with RFS1, the date of the commercial document (PTD) which
transfers ownership of RINs from one owner to another is the date that shall be used by both the
buyer and seller of RINs.

       A commenter suggested that EPA reconsider the concept of a batch. We believe that the
definition of a batch, as carried over from RFS1, provides RIN generators with a range  of
flexibility to accommodate a variety of process methods (i.e., generating RINs in a batch tank or
generating RINs as product is being shipped out of the facility.  The same commenter suggested
that new RIN retirement codes need to be incorporated into the EMTS system, however the
producer may want to examine whether or not it makes sense to align RIN generation with
volume that is leaving the facility. The commenter is also correct that a RIN owner with have
separate accounts for assigned and separated RINs. Finally, the commenter suggested that
feedstocks do not need to be certified.  The statutory requirements that are the basis for RFS2
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


require such certification.  EPA has taken steps to ease the burdens of certification where
practicable.

       A commenter suggested that EPA clarify rules for exporters separating RINs.
The FRM preamble discusses the requirements for exports given the fungible nature of RINs.
The exporter will determine its RVO based on the type of renewable and the volume being
exported.
4.3.4   Attest Engagements

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2124
Organization:       National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that the proposed attest engagement requirements should be
greatly minimized by EMTS, in particular noting the attest of the PTDs and transactions between
the transferor and transferee. The commenter believes that the RFS2 regulations should be
flexible when requiring information submission to EPA within a short period of time after a
renewable fuel is produced or imported. (2124.1, p.35)

Document No.:      EPA-HQ-OAR-2005-0161-1044
Organization:       GEN-X Energy Group Inc.
Comment:
The commenter also provided public testimony regarding the hopefulness that this system would
eventually become a data inquiry system and alleviate the burden of reporting and the attestation
audits.  Furthermore, the commenter suggests EPA consider a "vesting" program for data entry
to ensure future compliance with the renewable fuels producers and hopes this will build
relationships and foster a sense of trust between all regulated parties and the Agency.  (1044.1, p.
3)

Document No.:      EPA-HQ-OAR-2005-0161-2145
Organization:       Flint Hills Resources
Comment:
The commenter (2145.1) believes that the attest requirements as proposed in '80.1464 for an
obligated party should be modified to exclude the attestation of RIN transaction reports. The
commenter also noted that the attest requirements in §80.1464 say "The requirements regarding
annual  attest engagements in §§80.125 through 80.127, and 80.130, also apply" to these RFS2
attest procedures. Since §§80.125 and 80.130 are limited in scope to refiners and importers,
§80.1464 should be revised to account for that.  The lead-in sentence of §80.1464 could be
reworded: "As the requirements regarding annual attest engagements in §§80.125 through
80.127, and 80.130 apply to refiners  and importers in Subpart F, so do those requirements also
apply to obligated parties, exporters, renewable fuel producers, RIN-generating importers, and
other parties owning RINs with regard to any attest engagement procedures required under this
Subpart M."  (2145.1, pp.7-8)
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RFS2 Summary and Analysis of Comments
Document No.:     EPA-HQ-OAR-2005-0161-2505
Organization:      Shell Oil Products US
Comment:
The commenter (2505.2), with regards to EPA's proposal to require auditors to attest PTDs,
believes that it is duplicative and overly burdensome to require this for parties that receive PTDs.
In addition,  given the EMTS system, it appears that the attestation requirements will no longer be
necessary and should be eliminated. (2505.2, p. 13)

Our Response:

       Commenters suggested that with the use of EMTS, that Attest requirements could be
eliminated or greatly reduced. The purpose of the Attest is for EPA to receive third party
verification of information submitted to EPA as well confirmation that records required to be
retained by the regulated community are being kept. While the requirements for RFS2 reports
have changed from RFS1 and the introduction of EMTS will simplify some data transactions and
will result in data of better quality, the requirement for third party verification must still be met
through the  Attest process.
4.4   Product Transfer Documents (PTDs)

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2233
Organization:      Marathon Petroleum Company (Marathon)
Comment:
The commenter believes that EPA needs to drop its proposal that PTDs contain complete RINs.
[[Docket number 2233.2, p. 9]]

Document No.:     EPA-HQ-OAR-2005-0161-2124
Organization:      National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter (2124.1) believes that RIN numbers should not be required to appear on a PTD
in their entirety. PTDs should be required to show the number and type of gallon-RINs being
transferred, but not all 38 digits. The commenter believes that these proposed regulations could
cause problems when the PTD shows 38 digits that do not match the RINs transferred within
EMTS. (2124.1, p.34)

Document No.:     EPA-HQ-OAR-2005-0161-2145
Organization:      Flint Hills Resources
Comment:
The commenter (2145.1) believes that Renewable fuels PTDs should not be required to duplicate
information already entered into the EMTS. The proposed regulations require the 38-digit RIN
(reference §80.14538) and the number of RINs by type and RIN generation year (reference
§80.1453(d)). The renewable fuel PTD should only be required to show the quantity of RINs
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


being transferred.  A replication of any of the data contained in the EMTS is unnecessary
especially the 38-digit RIN as it will always be prone to error. One of the most significant
benefits of the EMTS is the elimination of transcription errors and this benefit should not be lost.
The commenter also believes that no additional PTD documentation for separated RIN
transactions should be required other than what is contained in the EMTS. (2145.1, p.7)

Document No.:     EPA-HQ-OAR-2005-0161-2400
Organization:      Murphy Oil USA, Inc.
Comment:
The commenter (2400.2) believes that with the implementation of EMTS, EPA should only
require the volume of RINs transferred to be stated. There is no need to continue to incorporate
the entire 38-digit  RIN on any invoice or PTD. Requiring the 38 digit number be present on the
PTD could create an issue if the number is incorrectly printed or does not match the RIN number
within the EMTS system.  Other than the number and  type of gallon-RINs being transferred, no
additional information is needed on the PTD.  The commenter recommends that the PTD or
invoice only contain the number of RINs being transferred as stated in the EMTS section (IV.
E.2). (2400.2, p.13)

Document No.:     EPA-HQ-OAR-2005-0161-2505
Organization:      Shell Oil Products US
Comment:
The commenter (2505.2) believes that EPA should eliminate the requirement for renewable fuel
producers to provide a PTD the  "same day"  as they transfer title to the renewable fuel.
Experience under the RFS1 program suggests that this is an unnecessary and impractical
requirement. This PTD requirement will be especially unworkable for foreign renewable fuel
producers. The commenter proposes that EPA require "timely" delivery of PTDs or "within 10
business days". (2505.2, p.9)

The commenter believes that once EMTS is in place, regulated parties should not be required to
send each other PTDs.  After EMTS, the rules should provide that all that is required to be sent
to a counter party is reference to the EMTS activity ID number. (2505.2, p.12)

Our Response:

       With the implementation of EMTS, EPA agrees that parties trading Renewable
Identification Numbers (RINs) will no longer need to include the RIN in its entirety on a Product
Transfer Document (PTD). However, in order to complete an EMTS RIN transfer, certain buy
and sell transaction elements must match. Therefore, a PTD must be used to transfer generic
RINs with identifying transactional information used for matching.  EPA has removed the
requirement for parties to include the RIN in its entirety on a PTD, but RIN identifying
information must be  included on a PTD, such as RIN type, generation year, and assignment.

       EPA maintains that a PTD must be used to transfer ownership of assigned and separated
RINs. A product transfer document is the physical document where renewable fuel and RIN
ownership are transferred between parties. While EMTS buy  and sell transactions contain an
optional PTD field for a user specified PTD number, EMTS does  not generate PTD numbers.
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RFS2 Summary and Analysis of Comments
The optional PTD number element can assist both trading parties match records with EMTS
transactional information and reports for annual attest engagements.

       EPA maintains that if assigned RINs are being transferred separately from the PTD
transferring a volume of renewable fuel, then the document listing the assigned RINs must be
provided to the same person on the same day as the PTD used to transfer ownership of the
volume of renewable fuel. Assigned RINs may not be transferred without simultaneously
transferring a volume of renewable fuel.
4.5    Recordkeeping

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2112
Organization:       Biomass Rules, LLC
Comment:
The commenter (2112.1) believes that producer record keeping requirements are not cost-
effective and are difficult to enforce. (2112.1, p. 13)

Our Response:

       EPA maintains that the recordkeeping requirements in RFS2 are necessary to support
enforcement of the proper generation and use of RINs for compliance purposes. Furthermore,
we believe that most parties would keep basic records regarding their products and RINs, and
records regarding transactions involving their products and RINs, in the normal course of
business.
4.6    EPA Moderated Transaction System (EMTS)

4.6.1   General Comments

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2014
Organization:       Clean Fuels Clearinghouse
Comment:
The commenter is in support of the EMTS concept and encourages EPA to take a much more
active role in the initial generation of RINs as well as the clearing of RIN transactions between
principal parties.  Without involvement and enforcement by EPA the number of erroneous and
fraudulent RINs will continue to propagate. (2019.1, p.l) [[See Docket Number 2019.1, pp.1-2
for additional specific comments regarding regulatory text responding to EMTS]]

The commenter provided detailed comments  on the issues related to the duplication of renewable
fuel credits, known as RINs, and their detrimental effect on the effectiveness of the renewable
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fuel standard. Such occurrences are frequent and have a very costly impact on legitimate biofuel
producers and considerable exposure to liability on behalf of the obligated parties under these
regulations. (2319.1, p.l) [[See Docket Number 2319.1, pp.1-2 for a discussion on this issue of
duplication of RIN credits]]

The commenter (2014.1) provided specific comments regarding regulatory text responding to the
EMTS and invalid RINs. [[See Docket Number 2319.1, pp.3-6 for these detailed comments]]

Document No.:     EPA-HQ-OAR-2005-0161-2135
Organization:      Ad Hoc Coalition of Small Business Refiners (SBR)
Comment:
The commenter (2135) supports EPA's recognition that improvement is needed in screening and
tracking RIN credits. The proposed EPA-Monitored Transaction System (EMTS)  offers a viable
approach that would maintain basic RIN handling requirements from RFS1 and presumably
bring greater integrity to the market. A strong policing system, of course, should be an essential
element of such a mechanism. [[Docket number 2135.1, pp. 21-22]]

Document No.:     EPA-HQ-OAR-2005-0161-2154
Organization:      ConocoPhillips
Comment:
The commenter (2154.1) supports EPA's development of the  EMTS.  This system, when
implemented, will help alleviate the burden of tracking RIN transactions and hopefully reduce
complication of non-legitimate RINs in the marketplace. However, it is imperative that the
EMTS recognize the time requirements to verify data and transactions. The commenter believes
the EMTS tool can reduce the perceived complications of placing the obligation with final fuel
providers.  EPA should be designing the EMTS to accommodate this approach. (2154.1, p.6)

Document No.:     EPA-HQ-OAR-2005-0161-2157
Organization:      World Energy Alternatives, LLC.
Notes:
The same comment has been submitted and posted multiple times under the following docket
numbers: 2157-2157.1, 2294-2294.1, 2295-2295.1, 2296-2296.1, 2297-2297.1, 2298-2298.1,
2340-2340.1, 2226-2226.1, 2227-2227.1, 2293-2293.1, 2170-2170.1, 2159-2159.1.
Comment:
The commenter (2157) supports EPA's decision to build on the current RFS1 program, as well as
to move toward an EPA moderated trading system. The commenter also supports various
proposals by EPA, which it believes would improve renewable fuel producers' ability to compete
in the  RIN market, but believes there is ample  access to RINs and rejects attempts  by EPA to
become  a market regulator. (2157 p. iv)

Organization:      Independent Fuel Terminal Operators Association (IFTOA).
Comment:
The commenter (2345) believes the EPA EMTS could be a system that would provide the
regulated community with the needed information and transparency regarding RIN transactions
to facilitate a more liquid RIN market. The commenter provides recommendation  to EPA for
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RFS2 Summary and Analysis of Comments
making EMTS as useful as possible. [[Docket number 2345.1, p. 2]] [[See docket number
2345.1, pp 2-3 for the EMTS recommendations.]]

Document No.:     EPA-HQ-OAR-2005-0161-2345
Document No.:     EPA-HQ-OAR-2005-0161-2369
Organization:      New Generation Biofuels (NGBF)
Comment:
Regarding the Renewable Identification Numbers questions and approaches outlined in the
preamble, the commenter (2369) supports separating RINs from the biofuel and an EPA
Moderated Transaction System.  In the electricity market, Independent System Operators (ISO)
frequently manage the renewable electricity credits (REC) trading.  Entities that participate in the
REC market through the ISOs, generated the credits or need them for compliance. Within such
systems, there are few speculators or marketers who may participate. The commenter believes
that a similar system in the fuels market whereby the RINs are separated from the fuel and sold
in the platform managed by the EPA through an EPA Moderated Transaction System appears to
be logical, especially if the participants are limited to those who generate and sell RINs and those
who need to purchase RINs. [[Docket number 2369.1, p. 5]]

Document No.:     EPA-HQ-OAR-2005-0161-2383
Organization:      Growth Energy
Comment:
The commenter (2383) supports EPA's proposed use of the EMTS for tracking RINs. The
commenter  believes use of EMTS will help eliminate certain errors related to using and tracking
individual RINs, eliminate administrative errors, and should help save time and resources.
Early-stage  screening will help ensure that RINs are valid, and EPA's proposal that RIN records
move toward generation in "real time," when renewable fuel is produced, would alleviate some
of the problems with delayed reporting under the current system. The commenter also supports
EPA's proposal to allow parties to opt-in to EMTS in 2010. [[Docket number 2383.1, p. 60]]

Document No.:     EPA-HQ-OAR-2005-0161-2472
Document No.:     EPA-HQ-OAR-2005-0161-2124
Organization:      National Petrochemical and Refiners Association (NPRA)
Comment:
The commenter fully supports continuation of the 38 digit RIN-structure.  This current
methodology can easily manage all expected changes associated with RFS2 (i.e., revising D
codes) and will minimize the cost to all users by avoiding costly IT infrastructure restructuring.
(2124.1, p.29)

Organization:      Valero Energy Corporation (Valero)
Comment:
The commenter (2472) does not support the proposed EPA-moderated RIN trading system as a
vehicle to facilitate RIN purchases and sales beyond the voluntary listing of contact information
by buyers and sellers. [[Docket number 2472.1, pp. 4-5]]

Document No.:     EPA-HQ-OAR-2005-0161-2105
Organization:      Small Business Administration, Office of Advocacy
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Comment:
The commenter (2105.1) believes that EPA should report on the feasibility of the RIN trading
system.  While the EPA plans to create an automated, real-time system, it does not yet exist.
Until such a system is in full operation, the incidence and cost of reporting error is likely to
increase as blending requirements increase dramatically under RFS2. The commenter requests
an analysis of the RIN system in order to better understand the market and its feasibility and
efficiency. (2105.1, p.5)

Our Response:

      We introduced the EPA Moderated Transaction System (EMTS) in the NPRM as a new
method for managing the generation of RINs and transactions involving RINs, designed to
resolve the RIN management issues of RFS1 that lead to widespread RIN errors, many times
resulting in invalid RINs and often tedious remedial procedures to resolve those errors.  In
response to the generally broad acceptance of the EMTS concept, we are instituting the use of
EMTS for all RFS2 RIN generation and transactions beginning July 1, 2010.

      We believe that EMTS will significantly reduce the number of invalid RINs that have
been generated - inadvertently, in many cases - under RFS1. In cases in which invalid RINs do
make their way into EMTS, we have designed the system in such a way as to enable EPA to take
corrective action swiftly, as several of the commenters have emphasized is necessary. We
disagree with the comment that EPA is attempting to act as a market regulator with the
institution of EMTS.  Rather, we view EMTS as offering a neutral platform through which RIN
transactions can be carried out with reduced burden on industry. While the 38-digit RIN
information will remain intact as the basis of EMTS transactions, the system will conduct these
transactions in a more generic, and therefore simpler, way than has been done under RFS1.
4.6.2   PTD and Attest Engagements Under RFS2

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:       ConocoPhillips
Comment:
The commenter (2154.1) believes that there should be no need for the entire 38 digit RIN to be
on the PTD. Also, the attestation requirements should be simplified due to the presence of
EMTS.  (2154.1, p.7)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) states that, under the EMTS environment, the RIN should not be required
on the PTD. [[Docket number 2233.2, p. 11]]

Our Response:
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RFS2 Summary and Analysis of Comments
       While we believe that EMTS will simplify and reduce burdens on the regulated
community, it is important to point out that EMTS is strictly a RIN tracking and managing tool
designed to facilitate reporting under the Renewable Fuel Standard program. Product transfer
documents are the commercial documents used to memorialize transactions of RINs between a
buyer and a seller in the market. The EMTS will rely on references to these documents, which
can take many forms, but it is not capable of replacing those documents.  In addition, the entire
38-digit RIN will not be required to be listed on the PTD as the generic RIN information is
sufficient as long as both parties accept the trading of RINs on a generic basis.  Attest
engagements are used to verify that the records required to be kept by regulated parties,
including information retained by a regulated party as well as information reported to EPA such
as laboratory test results, contracts between renewable fuel/RIN buyers and sellers, feedstock
documentation, etc. is correctly maintained or reported.  The information reported via EMTS is
but a subset of the information required to be maintained in a regulated party's  records, and both
PTDs and attest engagements are necessary to ensure that the information collected and tracked
in EMTS concurs with actual events.
4.6.3   Start-up of EMTS

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2393
Organization:      American Petroleum Institute (API)
Comment:
The commenter (2393) supports a mandatory start date for EMTS coincident with the rest of
RFS2 which they presume [per the commenter's comments in Chapter 2 of this Summary and
Analysis of Comments document] will be January 1, 2011.  [[Docket number 2393.1, p. 12]]

Document No.:     EPA-HQ-OAR-2005-0161-2130
Organization:      ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) supports the proposed Moderated Transaction System (EMTS) and urges
EPA to keep the program on schedule and to require its use as soon as possible by all parties who
hold or transact RINs. [[Docket number 2130.1, p. 4]]

Document No.:     EPA-HQ-OAR-2005-0161-2233
Organization:      Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) supports a January 1, 2011 start date for EMTS and the alignment of the
RFS2 implementation date with the EMTS start date. A fter EMTS has been in place for a year,
EPA should review the RFS and RFS2 regulations and drop any requirements that are no longer
warranted. The commenter also believes that once the EMTS is in place, EPA should review and
simplify the attest engagement requirements.  [[Docket number 2233.2, p. 11]]

Document No.:     EPA-HQ-OAR-2005-0161-2249
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


Organization:       National Biodiesel Board (NBB)
Comment:
While the commenter (2499.2) generally supports EPA's proposal to move toward an EPA
moderated transaction system, however they have concerns regarding the implementation. The
commenter would like EPA to be aware of the IRS requiring our members to become active
participants in the ExStars system, which is designed to report the sale of taxable biodiesel. To
reduce the implementation burden, the commenter asks EPA to consider EMTS implementation
alongside ExStars implementation.

Document No.:      EPA-HQ-OAR-2005-0161-2014
Organization:       Clean Fuels Clearinghouse
Comment:
The commenter (2014.1) recommends that in the event of a mid-year implementation of RFS2
that EPA take additional steps to accelerate the implementation of EMTS to  coincide with the
same date. In the event that the entire EMTS system could not be made active on the same date
as RFS2, then as a minimum the priority should be placed on making that portion of EMTS that
addresses renewable biomass and RIN batch generation active and fully functional on the RFS2
effective date. (2083.1, pp.1-2)

Document No.:      EPA-HQ-OAR-2005-0161-2017
Organization:       Aloha Petroleum, Ltd.
Comment:
The commenter (2017.1) endorses a "closed" system for RIN transactions and management as
the EPA proposes. The initiation of this new RIN management system should coincide with the
start of the RFS2  program. Sufficient time should be allotted for companies to purchase and
install new hardware and software programs,  train personnel and learn the new system. In fact,
starting the EMTS system prior to RFS2, even if only in "beta" mode, would be helpful in
making the transition from the current system to EMTS. (2017.1, p.2)

Document No.:      EPA-HQ-OAR-2005-0161-2471
Organization:       Sutherland Asbill & Brennan LLP
Comment:
The commenter (2471.1) noted that the Proposed Rule indicates that if EMTS is not in place  at
the start of RFS2, parties will be required to file reports similar to the current process under
RFS1, but on a monthly rather than a quarterly basis.  The commenter disagrees with this
proposed change in the reporting schedule. Monthly reporting frequency is impossible in the
present 38-digit code system due to on-going problems with invalid RINs and transfer delays,
which in turn have required parties to continuously revisit and re-file their RFS1 reports.  A
monthly reporting requirement will exacerbate these delays and re-filings and will not produce
any commensurate benefit of improvements to RIN integrity. Until EMTS is in place, the
current quarterly reporting timeframes should be maintained.  (2471.1, p. 15)

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
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RFS2 Summary and Analysis of Comments
The commenter (2505.2) noted that while the EMTS system will be a helpful new tool,
participation in the program should be voluntary.

Document No.:      EPA-HQ-OAR-2005-0161-2172
Organization:       Minnesota Soybean Processors
Comment:
The commenter (2172) noted that EPA needs to also be aware that IRS has indicated that
biodiesel producers will most likely be required to participate in the IRS ExStars tax reporting
system, a system using only IRS approved software, which may also place significant demands
on renewable fuel  producers IT staff.

Our Response:

       We are requiring the use of EMTS for all RFS2 RIN generation and transactions
beginning July 1, 2010. We  appreciate commenters' concerns over having sufficient time to
implement the new system, which is why EPA has utilized an open process for the development
of EMTS since it was first introduced in the NPRM, conducting workshops and webinars and
soliciting stakeholder participation in  its evaluation and testing.  EPA pledges to continue to
work with the regulated community, as a group and individually, to ensure EMTS is successfully
implemented. EPA anticipates that with this level of assistance, regulated parties will not
experience significant difficulties in transitioning to the new system, and EPA believes that the
many benefits of the new system warrant its immediate use. Due to limitations, EPA chose not
to integrate EMTS with IRS  ExStars tax reporting system at this time. However, EPA will look
for future integration opportunities.
4.6.4   Timing of Transaction Reporting

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2154
Organization:       ConocoPhillips
Comment:
The commenter (2154.1)  believes that three days to enter RIN transactional information into
EMTS is not feasible. The commenter thinks a more reasonable approach would be to require
sellers to enter data within 7 days and provide purchasers an additional 7 days (for a total of 14
days following the activity). Given the complexity of the 4 tiers of renewable fuels and
establishment of the new D code, this additional time will be particularly important at the start of
the program. (2154.1, pp.6-7)

Our Response:

       In order for  EMTS to be a "real time" system, we must require that the information
comes in a timely manner.  EPA has concluded that five days, or a business week, is an
appropriate amount of time for both parties to receive or provide necessary documentation in
order to interact with EMTS accurately and timely. "Real time" will be defined as within five
                                           4-39

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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


(5) business days of a reportable event (e.g., generation and assignment of RINs, transfer of
RINs).


4.6.5   Technical Elements of EMTS

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2081
Organization:      Novogy, Inc.
Comment:
The commenter (2081)  seeks to confirm that RINs generated and for the production and
separation of cellulosic biogas would be eligible to utilize the envisioned EPA monitored trading
system. [[Docket number 2081.1, p. 11]]

Document No.:     EPA-HQ-OAR-2005-0161-2249
Organization:      National Biodiesel Board (NBB)
Comment:
Although not included specifically in the Proposed Rule but a concern to the commenter (2249)
is the security of the EMTS system. Using node capability may place users at an increased risk
of data misplacement. The information being exchanged is sensitive, and as such the commenter
requests the EPA clarify the potential risks and  take steps  as necessary to ensure the security of
sensitive data provided in the EMTS system. [[Docket number 2249.2, p. 43]]

Document No.:     EPA-HQ-OAR-2005-0161-2233
Organization:      Marathon Petroleum Company (Marathon)
Comment:
The commenter recommends that EMTS generate a unique transactional ID for each transaction
that which the Transferor may reference in their commercial documentation sent to the
Transferee by which the Transferee will be able to readily match and reconcile with EMTS and
subsequently acknowledge the transaction.

Document No.:     EPA-HQ-OAR-2005-0161-2172
Organization:      Minnesota Soybean Processors
Comment:
The commenter (2172)  also has significant concerns about the security of the EMTS network.
As a large producer of biodiesel, it appears that because of the design of the MnSP computer
network, MnSP will most likely need to become a node on the EMTS network.  EPA needs to be
sensitive to the fact that any time a node is placed on a computer network, a potential door for
security breach is opened.  MnSP requests that EPA clearly and precisely document to users the
network safeguards that will be used to protect the sanctity of the system.

Our Response:

       Under the final RFS2 regulations, EMTS will be the platform for generation of and
transactions involving all RINs beginning with the effective date of the regulations.  Therefore,
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RFS2 Summary and Analysis of Comments
RINs associated with cellulosic biogas will indeed be eligible, in fact required, to be exclusively
generated and traded within EMTS.

       EPA acknowledges that some information required to be submitted under the RFS2
regulation may be claimed as CBI by the submitter and this includes some data that may be
submitted via EMTS. EPA is required to treat information claimed as CBI in accordance with
our regulations at 40 CFR Part 2. In addition, EPA has issued guidelines and policies for
handling of information claimed as CBI in order to implement these regulations.  EPA is
required to develop system security plans (SSPs)  that are compliant with our regulations and
with various standards, including the current version of NIST 800-53, related to government
information systems. We are also required to periodically review and update our technical
controls.

       We appreciate the comment on the need for a unique ID for each transaction that takes
place within EMTS. We have determined that such information should be part of the record for
each RIN transaction and have added it into the system design.
4.6.6   Batch Reporting Via EMTS

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter (0994.1)  believes that EPA needs to rethink the concept of the Batch Report.
The supposition that every gallon of renewable fuel in a tank with assigned RIN numbers will be
sold or will be sold as renewable fuel is faulty. Having to assign a batch RIN number for the
total batch volume will create extra work, requiring facilities to assign RIN numbers and then
retire RIN numbers for non fuel sales and for tank heel volumes.  Under RFSI, assigning RIN
numbers prior to a renewable fuel sale was simple and avoided having to generate and retire RIN
numbers for fuel volumes that were not part of the renewable fuel program. (0994.1, p.l 1)

The commenter noted that EPA will have to create a new RIN Retire code to deal with the
circumstance when RINs are retired because a heel volume is not sold from a tank, and that heel
becomes part  of the next batch  created in that  tank.  While the commenter sees many advantages
of the EMTS, the Batch Report causes facilities to generate more transactions to retire RINs than
in RFSI.  If retiring RINs becomes a significant burden,  facilities will generate a Batch Report
for each single sale in which the batch volume and RIN  number are tied to that single  sale.  The
commenter also noted that Producers will have to have two accounts in the EMTS RIN Bank:
one account will be for valid Generated RINs  (from Batch Reports) and one account for
Separated RINs.  (0994.1, pp.11-12)

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
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                         Chapter 4: Compliance (Registration, Recordkeeping, Reporting)


The commenter (2499.2) believes that the proposal requiring importers and producers of
renewable fuel to submit batch reports RIN transaction reports on a monthly basis for 2010, is
extraneous and onerous.  [[Docket number 2249.2, p. 43]]

Our Response:

       We are finalizing our proposed approach to screen and assign RINs at the point when
RINs are generated through production or importation of renewable fuel. However, we will
continue to allow producers and importers to generate RINs at the renewable fuel point of sale as
long as this practice, if adopted by a RIN generator, is applied consistently. We believe that this
allowance will obviate the need for a RIN generator to retire RINs associated with heel volumes
or other volumes of fuel that will not be subject to the regulations under Subpart M.

       As for the frequency of report submissions, given that participation in EMTS will be
required of all parties who own RINs beginning with  the effective date of the RFS2 regulations
(July 1, 2010), RIN generation ("batch reports") and transaction reports will be due on a
quarterly, not monthly, basis.
4.7    Prohibited Acts and Liability for Violations

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
Regarding the proposal to impose liability on parties that use or transfer invalid RINs, regardless
of whether the RIN was acquired in good faith, the commenter (2358) believes it is unfair to
impose liability on parties unless they knew or should have known that the RIN was invalid.
Strict liability will discourage parties from participating in the sale of renewable fuels. [[Docket
number 2358.1, p. 11]]

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers and Convenience Stores of Iowa (PMCI)
Comment:
The commenter (2155.1)  questions what type of enforcement actions can the EPA take against a
foreign producer? Even if a supply agreement between Importer and Foreign Producer states
that the Producer will comply and document RFS2 requirements, will not the Importer be  the
non-compliant and enforced upon entity by EPA, as opposed to an entity outside of EPA's
jurisdiction?  The commenter believes that if ILUC temporarily drops out of this rule-making,
then this issue would most likely be of a lesser concern. The Importer would have to document
that the Producer has complied with the FRARs fuel registration process and meets ASTM
standards. Both are easily done by EPA records review and physical testing of the product.
(2155.1, p.2)
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RFS2 Summary and Analysis of Comments
Document No.:   EPA-HQ-OAR-2005-0161-2341
Organization:    Noble Americas
Comment:
The commenter (2341) noted that the rules governing the assignment of the advanced categories
are complicated such that errors could result, which would invalidate the RIN. The commenter
believes that rather than invalidate the advanced RIN entirely, it should be instead downgraded
to category 4 (assuming that it meets those lesser requirements).  This would partially preserve
the economic value of the RIN and reduce disruptions to Obligated Parties. (2341, p.l)

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) noted that while the EMTS system will be a helpful new tool,
participation in the program should be voluntary. Where parties purchase RINs that have been
cleared through the EMTS system, they should be able to rely on those RINs and held harmless
if the RIN is later found to be invalid for some reason. The commenter believes that liability for
the invalid RIN should fall on the party that caused the RIN to be invalid, not a party that
innocently acquires an invalid RIN. (2505.2, p.)

Our Response:

       Shell Oil, SIGMA and NACS argue that parties should not be liable for invalid RINs that
they receive in good faith. However, EPA believes these enforcement provisions are necessary
to ensure the RFS2 program  goals are not compromised by illegal conduct in the creation and
transfer of RINs. As with RFS1, under RFS2 there is no "good faith" provision to RIN
ownership. An underlying principle of RIN ownership is still one of "buyer beware" and RINs
may be prohibited from use and retired at any time if they are found to be invalid. However,
because of the "buyer beware" nature of the program, EPA is offering the option, thought EMTS,
for a RIN buyer to protect themselves by accepting or rejecting RINs from specific RIN
generators or from specific classes of RIN generators.

       Commenter Noble Americas argues that improperly generated advanced RINs should not
be invalidated, but should instead be downgraded to a lower category of RIN.  EPA believes that
in order to maintain the  integrity of the RIN program, improperly generated RINs must be
considered invalid, and, therefore, must be retired. EPA believes that the registration process,
combined with the safeguards in EMTS will greatly limit situations in which a RIN is generated
in an incorrect category.

       PMCI questions EPA's jurisdiction over foreign producers of renewable fuel that is
imported into the U.S.  In order for a foreign producer to generate RINs under the RFS2, the
producer must commit to allow EPA inspections of their facilities and records, and are subject to
U.S. substantive and procedural laws for civil and criminal enforcement under the Clean Air Act.
If an importer plans to generate RINs for renewable fuel produced by a foreign producer, the
importer is responsible for ensuring that the RINs are properly generated and would be liable for
a violation if the RINs improperly generated.
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)



4.8   Retail Dispenser Labeling for Gasoline with Greater than 10 Percent Ethanol

What Commenters Said:

Document No.:     EPA-HQ-OAR-2005-0161-2130
Organization:       ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
Depending on the outcome of ongoing DOE/EPA/CRC testing for mid-level blend use in the
legacy fleet, the commenter (2130) states that stronger preventive measures may be needed, as
well as product liability relief to enable E10+ distribution and marketing, or widespread E85 use.
EPA's proposal to require labels on pumps that dispense gasoline with greater than 10% ethanol
content is the minimum mechanism necessary to prevent misfueling. [[Docket number 2130.1, p.
4]]

Document No.:     EPA-HQ-OAR-2005-0161-2132
Organization:       Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) supports the proposal to require a new warning label for marketers who
sell, dispense or offers for sale ethanol blends containing more than 10% v/v ethanol. This label
would advise consumers that such fuel is for use only in flexible fueled vehicles  (FFVs), may
damage non-FFVs and warns that putting such fuel into non-FFVs is against federal law. While
the commenter  opposes using the label as the sole mechanism to prevent misfueling should EPA
grant a partial waiver, a label is an important communication and educational tool. (2132.1, p.6)
[[See Docket Number 2132.1, pp.15-16 for a detailed discussion on Pump Labeling for E10+]]

Document No.:     EPA-HQ-OAR-2005-0161-2135
Organization:       Ad Hoc Coalition of Small Business Refiners (SBR)
Comment:
The commenter (2135) believes that refiners and blenders should be held harmless for claims of
damage to engines arising out of increasing ethanol content of gasoline above  10% by volume if
and when such  blends are approved for sale and the refiner or blender chooses to fulfill his
obligation for RINs by producing or marketing such product. [[Docket number 2135.1, p. 21]]

Document No.:     EPA-HQ-OAR-2005-0161-2143
Organization:       New York State Department of Environmental Conservation
Comment:
The commenter (2143) supports EPA's labeling provision and suggests that the exact wording
will have to depend on the outcome of E15 section 211 (f) waiver review. (2143.2, p.2)

Document No.:     EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) is concerned about rolling out large volumes of E85 or a mid level
ethanol gasoline and selling these  in the same market as E10.  All three fuels will be sold from
dispensers with the same size nozzles, which can be used to fuel either FFVs or standard
                                          4-44

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RFS2 Summary and Analysis of Comments
gasoline vehicles. E85 and mid level ethanol gasoline will have to be priced lower than E10, if
large volumes of these fuels are needed for mandate compliance.  This lower price will probably
encourage consumers to use E85 and mid level ethanol gasoline in vehicles that will be damaged
by these fuels. [[Docket number 2233.2, p. 19]]

The commenter believes that EPA must undertake a robust public information campaign to
educate the population about the potential effects of misfueling and supports an approach that
addresses misfueling using both methods-advisory and preventative. The commenter adds that
the fuel manufacturer (i.e., refiners, blenders, importers)  cannot and should not be held
responsible for ensuring that consumers choose compatible products when fueling their vehicle.
The commenter also believes that fuel retailers and suppliers cannot and should not be
responsible for customers  misfueling their vehicles in the presence of adequate, government
directed measures to advise/prevent against its occurrence. [[Docket number 2233.2, pp. 20-22]]
[[See docket number 2233.2, pp. 20-22  for further discussion of these issues.]]

The commenter urges EPA to drop the provisions covering E10+ labeling requirements when
finalizing the RFS2 rule. Since EPA is  not proposing to  approve an E10+ fuel  at this time, the
commenter believes it would be more appropriate and make more sense for EPA to  establish the
E10+ labeling requirements  after they have approved an  E10+ fuel. [[Docket number 2233.2, p.
38]]

Document No.:      EPA-HQ-OAR-2005-0161-2241
Organization:       Outdoor Power Equipment Institute (OPEI); Alliance for a Safe
Alternative Fuels Environment (A11SAFE)
Comment:
The commenter (2241.1) noted that labeling alone would not be a sufficient safeguard to prevent
widespread misfueling.  However, as an initial measure,  labeling should be required. To
improve the pump labeling provisions, EPA should adopt a single uniform and clear label  and
not allow for alternate labels. Second, the proposed pump label refers only to vehicles. EPA
must include strong language that indicates that (other than flex-fuel motor vehicles), vehicles,
portable gas containers,  boats, and nonroad vehicles and  equipment should not be fueled with
blends above E10. EPA must also strengthen language to ensure that labels are visible to
consumers. Rather than require that a label be in "the immediate area"  of the pump stand, the
commenter suggests that EPA explicitly require that pump labels be on each pump and in plain
view of the person operating the pump.  EPA should require that the label inform consumers that
ethanol blends contain less energy than  regular gasoline, and that vehicles and equipment
operating on them will not realize advertised fuel efficiency. (2241.1, pp.13-14)

Document No.:      EPA-HQ-OAR-2005-0161-2358
Organization:       Society of Independent Gasoline Marketers of America (SIGMA) and the
National Association of Convenience Stores (NACS)
Comment:
The commenter (2358) believes that believes EPA's proposed retail dispenser labeling is
sufficient to prevent most  retail customer misfueling. Imposing fines on retailers is unfair as
most retail sales are self-service sales. Additionally, it is unrealistic to expect store  personnel to
police motorists dispensing fuel. [[Docket number 2358.1, pp. 11-12]]
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                        Chapter 4: Compliance (Registration, Recordkeeping, Reporting)
Document No.:      EPA-HQ-OAR-2005-0161-2384
Organization:       BP America (BP)
Comment:
The commenter (2384) is concerned about misfueling and the distinct potential liabilities
involved.  The commenter believes EPA should clearly specify the steps that fuel suppliers and
marketers can take to minimize these liabilities and provide limited relief from liability.  [[Docket
number 2384.1, p. 12]]

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:       American Petroleum Institute (API)
Comment:
The commenter (2393) believes that EPA must undertake a robust public information campaign
to educate the population about the potential effects of misfueling. The commenter supports an
approach that addresses misfueling using both advisory and preventative methods. Whichever
method(s) are chosen, such measures must provide retailers and suppliers with liability
protection should misfueling take place. The commenter states that fuel retailers and suppliers
cannot and should not be responsible for customers misfueling their vehicles in the presence of
adequate, government directed measures to advise and prevent its occurrence. [[Docket number
2393.1, pp. 19-21]] [[See docket number 2393.1, pp.  19-21 for further discussion of the
misfueling issue.]]

The commenter further states that to ensure that consumers are aware of the presence of ethanol,
there will have to be a significant effort towards consumer  awareness. The commenter believes
that both the government and industry should be responsible for educating the consumer on the
options and benefits of ethanol. Where a retailer decides to sell E85, it is that retailer's
responsibility to advertise his specific product in his market. Additionally, automakers should
reach out to all FFV owners to ensure that those consumers are aware of the types of fuel that
their vehicle can use (including reminders on vehicle fill stems, etc.). [[Docket number 2393.1, p.
26]]

In addition, the commenter requests that EPA clarify  the legality of the use of retail blender
pumps for dispensing blends between E10 and E70. [[Docket number 2393.1, p. 70]] [[See
docket number 2393.1, pp.  69-70 for discussion of this issue.]]

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:       Shell Oil Products US
Comment:
The commenter (2505.2) noted that §80.1469 contains requirements for the labeling of gasoline
containing greater than 10 volume percent ethanol. The commenter agrees that under existing
law, such fuel can only be used in FFVs and that consumers should be advised that is the case
and that any misfueling is a violation by the consumer and  is a violation of federal law for which
the consumer would be liable. (2505.2, p.14)

Our Response:
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RFS2 Summary and Analysis of Comments
       Based on the public comments and the fact that EPA has not completed its evaluation of
the El 5 waiver petition, we believe that it is appropriate to defer finalizing labeling requirements
for >E10 blends at this time. This will afford us the opportunity to complete our analysis of what
measures might be appropriate to prevent misfueling with >E10 blends before this may become a
concern in the context of the RFS2 program.
                                           4-47

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                Renewable Fuel Standard Program
                (RFS2) Summary and Analysis of
                             Comments

                             Chapter 5
                Program Changes and Flexibilities
                         Assessment and Standards Division
                         Office of Transportation and Air Quality
                         U.S. Environmental Protection Agency
v>EPA
United States                                EPA-420-R-10-003
Environmental Protection                           r ,   „„.„
Agency                                   February 2010

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5.      PROGRAM CHANGES AND FLEXIBILITIES

5.1     Small Refinery and Small Refiner Flexibilities                                   5-1
5.1.1   Extension of the Temporary Exemption for Small Refineries and Small Refiners     5-1
5.1.2   Additional Small Refiner-specific Flexibilities                                   5-6
5.1.3   Other Small Refinery and Small Refiner Issues                                   5-9
5.2     Upward Delegation of RIN-Separating Responsibilities                          5-11
5.3     Small Producer Exemption                                                   5-16
5.4     20% Rollover Cap                                                          5-17
5.4.1   Level of the Rollover Cap                                                    5-17
5.4.2   Other Aspects of the Rollover Cap                                            5-22

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RFS2 Summary and Analysis of Comments
5      PROGRAM CHANGES AND FLEXIBILITIES

What We Proposed:

       The comments in this section correspond to Section IV of the preamble to the proposed
rule and address changes to the RFS program and flexibilities offered under the program. A
summary of the comments received and our response to those comments are located below (and
also in  section III of the preamble to the final rule).


5.1    Small Refinery and Small Refiner Flexibilities

5.1.1   Extension of the Temporary Exemption for Small Refineries and Small Refiners

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2105
Organization:      Small Business Administration, Office of Advocacy
Comment:
The commenter (2105.1) believes that EPA should institute a temporary delay of implementation
of the RFS2 rule for small refiners. The commenter believes that the statutory language in the
EISA does not interfere with EPA's ability, under the provisions of the Regulatory Flexibility
Act (RFA), to grant relief to regulated small entities upon which the rule will have a significant
economic impact. A delay in implementation for small refiners would also lessen the regulatory
burden of this rule. (2105.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2118
Organization:      CountryMark Cooperative, LLP
Comment:
The commenter (2118.1) believes that provisions should be provided to allow a delay or phase-in
for small refiners. The commenter is a member of an ad-hoc coalition of Small Business Refiners
(SBR) and agrees with  the comments provided by the group. The SBR Coalition believes that
EPA does have the legal discretion to allow small refiners and  small refineries owned by SBRs
to delay their entry in to the RFS2 program for as long as five years. The commenter
recommends that the RFS2 compliance date for small entities be delayed until at least 2014.
(2118.1, p.2)

The commenter takes issue with the Department of Energy (DOE) "Small Refinery Exemption
Study"  released in January of 2009 determining that small refineries would not face
disproportionate economic harm by their participation in the RFS Program. Such a limited
investigation into the impact on small refineries could not have resulted in any in-depth analysis
as to the financial impact.  Before EPA adopts the final RFS2 regulations that, DOE should
conduct another study which properly evaluates the impact on  small refineries. (2118.1, p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2135


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                                          Chapter 5: Program Changes and Flexibilities
Organization:       Ad Hoc Coalition of Small Business Refiners (SBR)
Comment:
The commenter states that EPA does have legal authority to permit a delay (or phase-in) of the
RFS2 program under the CAA. The SBR Coalition submits that EPA's legal concerns relative to
both the suggested delay and the phase-in are unsustainable in view of EPA's past exercises of
discretion under the RFS1 program and also in view of the extensive discretion afforded to EPA
under Section 211(o) of the CAA.  [[Docket number 2135.1, pp. 15-16]] [[See docket number
2135.1, pp 15-19 for extensive discussion of this issue.]]

The commenter makes the following specific comments/recommendations: that the Department
of Energy should be directed to reopen and reassess the Small Refineries Exemption Study by
June 30, 2010 as suggested by the Senate Appropriations Committee in January 2009; and that
the RFS2 effective date for small entities should be delayed at least until 2014.

Document No.:      EPA-HQ-OAR-2005-0161-2311
Organization:       Wyoming Refining Company
Comment:
The commenter (2311.1) urges EPA to review and exercise its legal authority to provide
additional flexibility and relief for  small refiners as recommended by the Small Advocacy
Review Panel.  (2311.1,p.5)

Document No.:      EPA-HQ-OAR-2005-0161-2498
Organization:       North Atlantic Refining Ltd.
Comment:
The commenter urges EPA to grant small refiners as much time to prepare for the burdens of
RFS2 as was provided under RFS1, thereby delaying small refiner compliance to January 2014.
This extension would  provide invaluable time for small refiners to adjust to the new
requirements and to take steps to mitigate their burdens.

The commenter also urges EPA to  finalize its proposal to allow small refiners to apply for future
extensions of their exemption based on case-by-case showings of economic hardship. The
commenter recommends that EPA  adopt a policy of liberally granting such extension requests.
Doing so would alleviate the significant burdens facing small refiners, and would be consistent
with U.S. small business relief policies. (2498.1, pp.4-5)

Document No.:      EPA-HQ-OAR-2005-0161-2396
Organization:       CVR Energy
Comment:
The commenter (2396.1) requests that EPA reopen and reassess the Small Refineries Exemption
Study by June 30, 2010 as suggested by the Senate Appropriations Committee in January 2009.
The commenter would also like EPA to delay the  effective date for SBRs until at least  2014
and/or grant an automatic exemption extension for those qualifying for an extension under the
original RFS rule.

Document No.:      EPA-HQ-OAR-2005-0161-2400
Organization:       Murphy Oil  USA, Inc.
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RFS2 Summary and Analysis of Comments
Comment:
The commenter (2400.2) recommends that EPA maintain the exemption set forth in RFS1 and
allow small refinery exemption through December 31, 2010.  (2400.2, p.10)

Document No.:      EPA-HQ-OAR-2005-0161-2130
Document No.:      EPA-HQ-OAR-2005-0161-2132
Organization:      Alliance of Automobile Manufacturers
Comment:
The commenter (2132.1) agree with EPA's continuance of the RFS1 temporary small
refiner/small refinery exemption through December 31, 2010, recognizing that RFS2 will
probably be implemented on or before this date for all obligated parties. The commenter urges
EPA to not extend the exemption beyond this date since all parties have been well aware of the
statute's timeline, including small refineries and qualified small refiners should have been
striving to achieve compliance by the end of 2010 since EISA passage.  (2132.1, pp.17-18)

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:      Renewable Fuels Association
Comment:
The commenter (2329.1) believes that the small refinery exemption should not be extended; and
the small refiner exemption should be eliminated. (2329.1,  p. 86) [[See Docket Number 2329.1,
pp.86-87 for a detailed discussion of this issue]]

Organization:      ExxonMobil Refining & Supply Company (ExxonMobil)
Comment:
The commenter (2130) supports EPA's intention not to extend the RFS1 small refiner
exemption. [[Docket number 2130.1, p. 11]]

Document No.:      EPA-HQ-OAR-2005-0161-2505
Organization:      Shell Oil Products US
Comment:
The commenter (2505.2) believes that EPA should not promulgate an exemption for small
refiners. The Energy Policy Act of 2005 very specifically provides an exemption for small
refineries. Nowhere does the Act provide a similar exemption for small refiners. EPA should not
extend the exemption for an additional two years. The law  includes a provision that allows an
extension of the small refinery exemption upon a showing  of undue economic hardship by
individual small refineries. The commenter believes that EPA should limit any exemption
extension to situations where the  party seeking the exemption qualifies as a small refinery and
can make such a showing. (2505.2, p. 10)

Document No.:      EPA-HQ-OAR-2005-0161-2393
Organization:      American Petroleum Institute (API)
Comment:
The commenter (2393) believes that EPA should not promulgate an exemption for "small
refiners."  EPAct 2005 very specifically provides an exemption for "small refineries." Nowhere
does the Act provide a similar exemption for "small refiners." Thus, EPA should never have
provided this small refiners' exemption. Now, EPA is proposing to extend the exemption for an


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                                           Chapter 5: Program Changes and Flexibilities
additional two years.  The commenter states that EPA should not extend this exemption.  The
law includes a provision that allows an extension of the small refinery exemption upon a
showing of undue economic hardship by individual small refineries.  EPA should limit any
exemption extension to situations where the party seeking the exemption qualifies as a small
refinery and can make such a showing.  Any exemption should only apply to the specific small
refinery that has petitioned for an extension, not the entire universe of small refineries. [[Docket
number 2393.1, pp. 12-13]]

Our Response:

       The RFS1 program regulations exempt gasoline produced by small refineries from the
renewable fuels standard through December 31, 2010 (at 40 CFR 80.1141), per EPAct.  As EISA
did not alter the small refinery exemption in any way, we are retaining this small refinery
temporary exemption in the RFS2 program; however, the exemption will now apply to all
transportation fuel produced by small refineries (including diesel and nonroad fuels), as EISA
also covers transportation fuels, not just gasoline. Likewise, as we extended under RFS1 the
small refinery 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), we are also finalizing a continuation of the small refiner temporary exemption
through December 31, 2010 for transportation fuels produced by these refiners.

       Some commenters mentioned the opportunity for relief based on a case-by-case hardship
demonstration, and we note (as discussed in Section III.E.2 of the preamble to the final rule) that
EPAct also authorizes EPA to grant an extension for a small refinery based upon
disproportionate economic hardship, on a case-by-case basis. We believe that these avenues of
relief can and should be fully explored by small refiners who are covered by the small refinery
provision. In addition, we believe that it is appropriate to allow petitions to EPA for an
extension of the temporary exemption based on disproportionate economic hardship for those
small refiners who are not covered by the small refinery provision (again, per our discretion
under section 211 (o) (3) (B)); this would ensure that all small refiners have the same relief
available to them as small refineries do.  Thus, we are finalizing a hardship provision for small
refineries in the RFS2 program, that any small refinery may apply for a case-by-case hardship at
any time on the basis  of disproportionate economic hardship per CAA section 211 (o) (9) (B). We
are also finalizing a case-by-case hardship provision  for those small refiners that do not operate
small refineries using our discretion under CAA section 211 (o) (3) (B). This provision will allow
those small refiners that do not operate small refineries to apply for the same kind of hardship
extension as a small refinery. In evaluating applications for this hardship provision EPA will
take into consideration information gathered from annual reports and RIN system progress
updates, as recommended by the SBAR Panel, as well as information provided by the petitioner
and through consultation with DOE.

       As discussed in Section III.E of the preamble to the final rule, EPAct required that DOE
perform a study by December 31, 2008 on the impact of the renewable fuel requirements on
small refineries (section 211 (o) (9) (A) (ii) (I)), and whether or not the requirements would impose
a disproportionate economic hardship on these refineries. In the small refinery study, "EPACT
2005 Section 1501 Small Refineries Exemption Study", DOE's finding was that there is no
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RFS2 Summary and Analysis of Comments
reason to believe that any small refinery would be disproportionately harmed by inclusion in the
proposed RFS2 program. Further, the finding was that there appeared to be no shortage of RINs
available under RFS1, and EISA has provided flexibility through waiver authority (per section
211 (o) (7)). Further, in the case of the cellulosic biofuel standard, cellulosic biofuel allowances
can be provided from EPA at prices established in EISA (see regulation section 80.1456). DOE
thus determined that small refineries would not be subject to disproportionate economic hardship
under the proposed RFS2 program, and that the exemption should not, on the basis of the study,
be extended for small refineries (including those small refiners who own refineries meeting the
small refinery definition) beyond December 31, 2010.  DOE noted in the study that, if
circumstances were to change and/or the RIN market were to become non-competitive  or
illiquid, individual small refineries have the ability to petition EPA for an extension of their
small refinery exemption (pursuant to Section 211 (o) (9) (B)).

       A number of commenters take issue with the DOE study, and we are also aware that there
have been expressions of concern from Congress regarding the DOE Study. Specifically, in
Senate Report 111-45, the Senate Appropriations Committee "directed [DOE] to reopen and
reassess the Small Refineries Exemption Study by June 30, 2010," noting a number of factors
that the Committee intended that DOE consider in the revised study. The Final Conference
Report 111-278 to the Energy & Water Development Appropriations Act (H.R. 3183),
referenced the language in the Senate Report, noting that the conferees "support the study
requested by the Senate on RFS and expect the Department to undertake the requested economic
review."  At the present time, however, the DOE study has not been revised.  If DOE prepares a
revised study and the revised study finds that there is a disproportionate economic impact, we
will revisit the exemption extension at that point in accordance with section 211 (o) (9) (A) (ii).

       With respect to the comments regarding extending the small refiner temporary exemption
past December 31, 2010 and EPA's legal authority, we note that (as described in the Final Panel
Report) EPA early-on identified limitations on its authority to issue additional flexibility and
exemptions to small refineries.  In section 211 (o) (9)  Congress specifically addressed the issue of
an extension of time for compliance for small refineries, temporarily exempting  them from
renewable fuel obligations through December 31, 2010. As discussed above, the statute also
includes two specific provisions describing the basis and manner in which further extensions of
this exemption can be provided.  In the RFS1 rulemaking, EPA considered whether it should
provide additional relief to the limited number of small refiners who were not covered by the
small refinery provision, by providing them a temporary exemption consistent with that provided
by Congress for small refineries. EPA exercised its discretion under section 211 (o) (3) and
provided such relief.  Thus, in RFS1, EPA did not modify the relief provided by Congress for
small refineries, but did exercise its  discretion to provide the same relief specified by statute to a
few additional parties.

       In RFS2 we are faced with a different issue—the extent to which EPA should provide
additional relief to small refineries beyond the relief specified by statute, and whether it should
provide such further relief to small refiners as well. There is considerable overlap between
entities that are small refineries and  those that are small refiners. Providing additional relief just
to small refiners would, therefore, also extend additional relief to at least a number of small
refineries.  Congress spoke directly to the relief that EPA may provide for small refineries,


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                                           Chapter 5: Program Changes and Flexibilities
including those small refineries operated by small refiners, and limited that relief to a blanket
exemption through December 31, 2010, with additional extensions if the criteria specified by
Congress are met. EPA believes that an additional or different extension, relying on a more
general provision in section 211 (o) (3) would be inconsistent with Congressional intent.  Further,
we do not believe that the statute allows us the discretion to give relief to small refiners only—as
this would result in a subset of small refineries (those that also qualify as small refiners)
receiving relief that is greater than the relief already given to all small refineries under EISA.

       EPA also notes that the criteria specified by statute for providing a further compliance
extension to small refineries is a demonstration of "disproportionate economic hardship." The
statute provides that such hardship can be identified through the DOE study, or in individual
petitions submitted to the Agency. However, the DOE study has concluded that no
disproportionate economic hardship exists, at least under current conditions and for the
foreseeable future under RFS2. Comments received by EPA on this matter also do not have the
data and information necessary for EPA to conclude that disproportionate economic hardship
exists.  Therefore, absent further information that may be provided through the petition process,
there does not currently appear to be a basis under the  statute for granting a blanket extension of
the exemption to small refineries at this time. If DOE  revises its study and comes to a different
conclusion, EPA can revisit this issue at that time.
5.1.2   Additional Small Refiner-specific Flexibilities

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2105
Organization:       Small Business Administration, Office of Advocacy
Comment:
The commenter (2105.1) believes that EPA should consider a phase-in for small refiners. By
phasing in compliance requirements over a brief time period, EPA could lessen the burden of
regulation and promote compliance. (2015.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2118
Organization:       CountryMark Cooperative, LLP
Comment:
The commenter (2118.1) believes that provisions should be provided to allow a phase-in for
small refiners.

Document No.:      EPA-HQ-OAR-2005-0161-2135
Organization:       Ad Hoc Coalition of Small Business Refiners (SBR)
Comment:
The commenter (2135) is concerned that EPA's proposed rule ignored or denied much of the
relief recommended in the Small Business Advocacy Review Panel (Panel).  The commenter
believes that EPA's tentative responses to concerns expressed by the  SERs orally and in written
comments were unsatisfactory. The commenter adds that it is clear that the Panel favored broad-
based relief for small business refiners.  [[Docket number 2135.1, pp.  14-15]]
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RFS2 Summary and Analysis of Comments
The commenter states that EPA does have legal authority to permit a delay or phase-in of the
RFS2 program under the CAA. The SBR Coalition submits that EPA's legal concerns relative to
both the suggested delay and the phase-in are unsustainable in view of EPA's past exercises of
discretion under the RFS1  program and also in view of the extensive discretion afforded to EPA
under Section 211(o) of the CAA. [[Docket number 2135.1, pp. 15-16]] [[See docket number
2135.1, pp 15-19 for extensive discussion of this issue.]]

The commenter adds that SBRs do not have the staff or systems to manage and account for four
different categories of RINs and rural SBRs will suffer economic hardship and disadvantage
because of the unavailability of biofuels.  The commenter believes that RINs should be
interchangeable for SBRs.  [[Docket number 2135.1, p. 21]

The commenter submits that EPA needs to recognize (i) the extent of potential harm of the
current RFS2 proposal to members of the SBR Coalition and similarly situated entities, (ii) the
need for corresponding relief, (iii) the inadequacy of the small refinery study conducted by DOE
on which many of EPA's recommendations are based and (iv) the legality of the alternatives
proposed by the SBR Coalition in connection with Congressional authority under the relevant
legislation and last year's Small Business Advocacy Review Panel process. By fully and actively
involving ourselves in a dialogue with EPA over the foregoing issues—issues which are of
critical importance to our industry—the commenter remains hopeful that judicial review of the
RFS2 rulemaking by our industry segment will not be necessary.[[Docket number 2135.1, p. 22]

The commenter makes the following specific comments/recommendations:
       When SBRs become obligated parties under RFS2, they should be provided critical
       flexibilities, including a phase-in of the standards, a higher rollover cap  (50% is
       recommended) and the ability to use RINs interchangeably.
       EPA should include a review of the RIN system in its annual review procedures and
       invite SBR participation in the development of the review process.

Document No.:      EPA-HQ-OAR-2005-0161-1397
Organization:       United Refining Company
Comment:
The commenter (1397) would like to see an exemption written in the rule excluding "Small
Business Refiners" from being required to blend renewable fuels  beyond the maximum levels of
E10 and B5, better known  as the  "blendwall".  (1397, p. 1)

Document No.:      EPA-HQ-OAR-2005-0161-2396
Organization:       CVR Energy
Comment:
The commenter (2396.1) stated that EPA should also provide the  SBRs with critically needed
flexibility by establishing a phase-in of the standards.  (2396.1, p. 1)

The commenter would also like EPA to perform an annual review of the RIN system and make
adjustments as necessary to mitigate adverse impacts to the refining industry with particular
focus on disproportionate SBR impact. EPA should also provide a general hardship exemption


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                                            Chapter 5: Program Changes and Flexibilities
for any SBRs meeting specified hardship criteria, which should be developed cooperatively with
SBR participation. (2396.1, p.l)

Document No.:       EPA-HQ-OAR-2005-0161-0952
Organization:        Renewable Fuels Association
Comment:
The commenter (2329.1) noted that EPA seeks comment on whether to provide a program
review as recommended by the Small Business Advocacy Review Panel. The commenter
believes that EPA should not interfere with markets. The commenter believes that the vast
majority, if not all, renewable fuel in the United States will be targeted for inclusion in the RFS
program, EPA's projections as to the availability of such fuel is sufficient information to assess
whether RINs will be available. There is no valid reason to include review of RIN trading
system. (2329.1, p. 104)

Our Response:

       With respect to a phase-in for  small refiners, we stated in the NPRM that we had serious
concerns about our legal authority to provide such a phase-in.  CAA section 211 (o) (3) (B) states
that the renewable fuel obligation shall "consist of a single applicable percentage that applies to
all categories of persons specified" as obligated parties. A phase-in approach would essentially
result in different  applicable percentages being applied to different obligated parties.  Further,
such a phase-in approach would provide more relief to small refineries operated by small refiners
than that provided under the statutory small refinery provisions.

       After considering the comments on this issue, we continue to believe that allowing a
phase-in of regulatory requirements for small refiners would be inconsistent with the statute, for
the same reasons we discussed in 5.1.1 for why we cannot grant an automatic extension of the
temporary exemption. Any individual entities that are experiencing hardship that could justify  a
phase-in of the standards have the ability to petition EPA for individualized relief. Thus, we did
not include a phase-in of standards for small refiners in the final rule.

       With respect to RIN-related flexibilities for small refiners (flexibilities in the RIN
rollover cap percentage and allowing small refiners only to use RINs interchangeably), we do not
believe it is appropriate to finalize such provisions.  In the RFS1 rule, up to 20% of a previous
year's RINs may be "rolled over" and used for compliance in the following year. In the
preamble to the proposed rule, we discussed the concept of allowing for flexibilities in the
rollover cap, such as a higher RIN rollover cap for small refiners for some period of time or for
at least some of the four standards. As the rollover cap is the means through which we are
implementing the  limited credit lifetime provisions in section 211 (o) of the CAA, and therefore
cannot simply be eliminated, we requested comment on the concept of increasing the RIN
rollover cap percentage for small refiners and an appropriate level of that percentage. In
response to the Panel's recommendation, we also sought comment on allowing small refiners to
use the four types of RINs interchangeably.  As highlighted in the NPRM, we continue to believe
that allowing the concept of interchangeable RINs for small refiners only, would fail to require
implementation of the four different standards mandated by Congress (e.g., conventional biofuel
could not be used  instead of cellulosic biofuel or biomass-based diesel), and is not consistent
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RFS2 Summary and Analysis of Comments
with section 211 (o) of the Clean Air Act.  Essentially, it would circumvent the explicit direction
of Congress in EISA to require that the four RFS2 standards be met separately and fully. An
additional and independent reason for not providing the relief requested is that, given the
findings from the DOE study that small refineries (and thus, most small refiners) do not currently
face disproportionate economic hardship,  and are not expected to do so as RFS2 is implemented,
and without the data and information necessary to conclude that disproportionate economic
hardship exists, we do not believe that a basis exists to justify providing small refiners with a
larger rollover cap than other regulated entities.  Thus, small refiners will be held to the same
RIN rollover cap as other obligated parties.

       Based on comments received on the proposed rule regarding an annual review, we
believe that such information could be helpful to industry, especially small businesses, to aid the
proper functioning  of the RIN market (particularly in the first years of the program). However,
during the development of the final rule, it became evident that there could be instances where
we would want to report out RIN system information on a more frequent  basis than just once a
year. Thus we will periodically report out elements of RIN system progress; but such
information will be reported via other means (e.g., the RFS  website
(www.epa.gov/otaq/renewablefuels/index.htm), EMTS homepage, etc.).
5.1.3   Other Small Refinery and Small Refiner Issues

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-2498
Organization:       North Atlantic Refining Ltd.
Comment:
The commenter (2498.1) noted that the proposed RFS2 small refiner provisions currently do not
require a "prior ownership" certification. The commenter urges EPA to finalize these provisions
as proposed. If, however, EPA elects to include a prior ownership requirement in the final rule,
EPA should not set a retroactive ownership date, to avoid disrupting parties' investment-backed
expectations and plans. (2498.1, p.3)  (See Docket Number 2498.1, pp.2-3 for a detailed
discussion of this issue).

The commenter also noted that the proposed RFS2 regulations provide that any small refiner that
subsequently fails to meet all of the qualifying criteria will be disqualified from  exemption "as of
the effective date of this subpart." The commenter believes that such retroactive application of
the RFS program is unnecessarily punitive and could inhibit ordinary growth and expansion.
The commenter strongly urges EPA to apply the RFS program's requirements only prospectively
in the event that an exempt small refiner subsequently fails to qualify.  (2498.1, p.3) (See Docket
Number 2498.1,  pp.3-4 for a detailed discussion of this issue)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
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                                           Chapter 5: Program Changes and Flexibilities
The commenter believes that EPA should not change the year used to establish a refinery's
qualification for the small refinery exemption in this manner. Changing the qualification year
will change which refineries are eligible for the small refinery exemption. Refineries have
already built their compliance strategies based on having received EPA recognition that they
qualify for the small refinery exemption under EPAct and the RFS1 regulations, using the
refinery's 2004  production to determine qualification.  Changing the rules at this point in the
program is unfair and is not authorized under EISA 07. [[Docket number 2233.2, p. 12]]

The commenter supports the extension of the small refinery exemption and believes that these
small refineries  should be grandfathered or should be granted a permanent exemption. [[Docket
number 2233.2, p. 12]]

Document No.:      EPA-HQ-OAR-2005-0161-2105
Organization:       Small Business Administration,  Office of Advocacy
Comment:
The commenter noted that there are issues with the availability of "exotic" renewable fuels, those
made using methods that are not yet commercially viable. This additional GHG reduction
requirement adds significant cost  and uncertainty to a rule that is already costly and filled with
uncertainty for small entities.

The commenter noted that given that the production, price, and availability of RINs are very
uncertain, further narrowing the types of renewable fuels acceptable for compliance will further
decrease the availability of RINs.  RFS2 was designed with a focus on the importance of energy
independence and security rather  than greenhouse gas emissions reductions. Areas within the
United States that currently grow  soybeans and produce soybean-based diesel will be drastically
affected by the elimination of this fuel from certification for blending.  The commenter believes
that EPA should consider waivers to assist these regions in compliance. (2105.1, p.6)

The commenter also believes that the approval and selection of renewable fuel technologies will
create limitations on innovation. These limitations would put restraints on potentially beneficial
and cost-effective improvements.  (2105.1, p.6)

Our Response:

       Due to the fact that the RFS1 rule only placed renewable fuel obligations on producers
and importers of gasoline, there may be new small refiners (or small refineries) that were not
covered by the RFS 1 exemption for small refineries and small refiners—such as refiners that
only produce diesel fuel.  Consequently, we have finalized such provisions for RFS2 to also
cover diesel and nonroad fuels. With regard to the comment that we are changing the
qualification date from 2004 to 2007, we would like to clarify that this is not the case. Any small
refinery or small refiner that is currently exempt under RFS1 will not need to reapply under
RFS2 for the temporary exemption. The verification letter for small refineries (§80.1441) or
RFS program small refiner status  (§80.1442) is for those refiners that are now newly covered by
the RFS program due to EISA's expansion to "transportation fuels" (which include diesel and
nonroad fuels).
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RFS2 Summary and Analysis of Comments
       Regarding the comment that EPA should not set a "retroactive ownership date", we note
first that the small refiner provisions for this rule are consistent with the small refiner provisions
in our other fuels programs (the small refinery provision under the RFS program was set out by
Congress in EPAct, thus there are elements of it that are not the same as our previous fuels
programs). We believe that a prior ownership requirement is necessary to ensure that we are
providing relief to those refiners that are truly at an inherent disadvantage due to their size, as
recognized by the Small Business Administration's small entity size standards.  Our intent in all
of our fuels programs has been, and continues to be, limiting the small refiner relief provisions to
a small subset of refiners that are generally inherently challenged, as discussed above. It would
be hard to understand how an entity with the ability to purchase a new refinery is inherently
challenged. At the same time, it is also our intent to avoid stifling normal business growth.
Therefore, a refiner will be disqualified as a small refiner if it exceeds the small refiner criteria
through its involvement in transactions such as purchasing or being acquired by another entity,
merging with a non-small refiner, or when it ceases to produce its transportation fuel from crude.
With respect to the commenter's concern regarding disqualification, we are finalizing that
refiners who qualify as small refiners and subsequently fail to meet all of the qualifying criteria
are  disqualified as small refiners as of January 1 of the next calendar year. However, a refiner
that is disqualified from its small refiner status due to providing false information in its small
refiner verification letter will be disqualified as a small refiner as of the effective date of the rule.

       With regard to the comments from Advocacy, we note that EISA put in place a number
of additional requirements for the RFS program, which we  are implementing with the RFS2 final
rule. This includes both the new cellulosic, advanced, and biomass-based diesel standards, as
well as the lifecycle  GHG performance thresholds for these fuels.
5.2    Upward Delegation of RIN-Separating Responsibilities

What Commenters Said:

Document No.:      EPA-HQ-OAR-2005-0161-0952
Organization:       Renewable Fuels Association
Comment:
The commenter (2329.1) supports the proposal to allow small blenders to delegate their
obligations. Experience with RFS1 shows that it is difficult for parties to transfer a small amount
of RINs. This proposal would also make it easier to track RINs, than would be requiring
numerous small entities to report RIN transactions.  (2329.1, pp.91-92)

Document No.:      EPA-HQ-OAR-2005-0161-0994
Organization:       Griffin Industries
Comment:
The commenter supports the proposal to make all RIN-separating activities the responsibility of
the Producer (Section III.Ft. 4) which would simplify the RIN management process. If this were
adopted, it would not be necessary to consider the proposals in IV.A or IV.C. 1. If the proposal
in III.Ft.4 is not adopted, then the commenter would support the option to have small blenders


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                                           Chapter 5: Program Changes and Flexibilities
(125,000 gal handled) delegate their RIN separating responsibilities to the Producer or fuel
provider. (0994.1, p. 15)

Document No.:      EPA-HQ-OAR-2005-0161-1002
Organization:       Fuel Marketing Corporation
Comment:
The commenter (1002) noted in Section 3.9 that they believe the threshold of 125,000 gallons
should be set at a minimum of 1,000,000 gallons blended or traded for upward delegation. The
commenter believes that the financial burden of anything below this point, especially in regards
to annual reporting and technical requirements to manage transactions either themselves or
through a third party, will have a tremendous impact on them. (1002/1002.1, p.4)

Document No.:      EPA-HQ-OAR-2005-0161-2155
Organization:       Petroleum Marketers and Convenience Stores of Iowa (PMCI)
Comment:
The commenter (2155.1)  agrees with EPA's proposed language to allow blenders handling less
than 125,000 gallons of renewable fuels per year to transfer those attached RINs upstream. The
commenter believes that this upward delegation exception should be limited to the small blender
and not allowed for any other parties regulated under the RFS program for fear of market
manipulation and erroneous supply agreements intended to coerce the buyer/blender to forfeit
RINs. The small blender must have the first right of refusal. (2155.1, p.3)

Document No.:      EPA-HQ-OAR-2005-0161-2233
Organization:       Marathon Petroleum Company (Marathon)
Comment:
The commenter (2233) supports allowing parties directly upstream from small biofuels blenders
to separate and trade RINs. Additionally, small biofuels blenders should be required to
specifically identify the upstream party which will be responsible for registering and reporting
their RIN activity. The commenter also supports EPA's proposed 125,000 total gallons per year
limit for defining these small biofuels blenders.

Document No.:      EPA-HQ-OAR-2005-0161-2249
Organization:       National Biodiesel Board (NBB)
Comment:
To the extent EPA does not generally allow separation of RINs by renewable fuel producers, the
commenter supports allowing upstream delegation of RINs by small blenders. In the Proposed
Rule, EPA indicated it believes it may be appropriate, under the current requirements limiting
separation of RINs to obligated parties, to permit blenders who only blend a small amount of
renewable fuel to allow the party directly upstream to separate RINs on their behalf. The
commenter agrees with this proposal as the cost of reporting and compliance is a tremendous
financial hardship for many small blenders. [[Docket number 2249.2,  p. 30]]

The commenter suggests  that a specific allotment be given for small blenders who blend
biodiesel and recommends that EPA increase this value  to 250,000 gallons of biodiesel.
Additionally, the commenter requests EPA to establish a specific carve out for biodiesel in the
small blender provisions and believes that this is necessary as the majority of the renewable fuel
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RFS2 Summary and Analysis of Comments
that will be blended by small blenders will be ethanol, as ethanol is easier to blend than
biodiesel. [[Docket number 2249.2, pp. 30-31]]

Document No.:      EPA-HQ-OAR-2005-0161-2314
Organization:       The New England Fuel Institute
Comment:
The commenter (2134.1) supports the proposal in the NPRM that would permit the upward
delegation of RIN separating responsibilities by small blenders who blend and sell less than
125,000 gallons of renewable fuel per year.  (2314.1, p.3)

The commenter proposes that two approaches to upward delegation transactions be adopted in
the final rulemaking; the first approach would allow the blender to enter into an annual
authorization that applies to  all volumes of renewable fuel transferred between the parties for a
given year, as proposed in the NPRM; the alternative approach would allow small blenders to
enter into arrangements with multiple suppliers on a transaction by transaction basis. The
adoption of both these approaches is essential to  ensure that small blenders, who have less
leverage with suppliers than the large blenders with regard to contractual terms, are guaranteed a
consistent supply of renewable fuel blendstock at