[Federal Register Volume 73, Number 226 (Friday, November 21, 2008)]
[Notices]
[Pages 70643-70645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-27613]


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ENVIRONMENTAL PROTECTION AGENCY

[FRL-8742-5]


Renewable Fuel Standard for 2009, Issued Pursuant to Section 
211(o) of the Clean Air Act

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: Section 211(o) of the Clean Air Act (CAA or the Act) requires 
the Administrator of the Environmental Protection Agency (EPA) to 
annually determine a renewable fuel standard (RFS) which is applicable 
to refiners, importers and certain blenders of gasoline, and publish 
the standard in the Federal Register. On the basis of this standard, 
each obligated party determines the volume of renewable fuel that it 
must ensure is consumed as motor vehicle fuel. This standard is 
calculated as a percentage, by dividing the amount of renewable fuel 
that the Act requires to be used in a given year by the amount of 
gasoline expected to be used during that year, including certain 
adjustments specified by the Act. In this notice we are publishing an 
RFS of 10.21% for 2009. This standard is intended to lead to the use of 
11.1 billion gallons of renewable fuel in 2009, as required by the 
Energy Independence and Security Act of 2007 (EISA). As discussed 
below, we expect the 11.1 billion gallons of renewable fuel required in 
2009 to include approximately 0.5 billion gallons of biodiesel and 
renewable diesel.

FOR FURTHER INFORMATION CONTACT: Chris McKenna, Environmental 
Protection Agency, MC 6406J, 1200 Pennsylvania Ave., NW., Washington, 
DC 20460; telephone number: 202-343-9037; fax number: 202-343-2801; e-
mail address: [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Energy Policy Act of 2005 (EPAct) established a new section 
211(o) of the Clean Air Act, creating the Renewable Fuel Standard (RFS) 
program. This program was implemented through rulemakings promulgated 
on May 1, 2007 (72 FR 23900) and October 2, 2008 (73 FR 57248). The 
regulatory program began on September 1, 2007.
    On December 19, 2007, President Bush signed into law the Energy 
Independence and Security Act of 2007 (EISA), which amended Clean Air 
Act section 211(o) governing the RFS program. Some of the major changes 
enacted include:
    (1) Expansion of the applicable volumes of renewable fuel.
    (2) Separation of the renewable fuel volume requirements into four 
categories: cellulosic biofuel, biomass-based diesel, advanced biofuel, 
and total renewable fuel.
    (3) Changes to the definition of renewable fuels and criteria (e.g. 
life cycle greenhouse gas (GHG) emission performance) for determining 
which if any of the four renewable fuel categories a given renewable 
fuel is eligible to meet.
    (4) Expansion of the fuel pool subject to the standards to include 
diesel and certain nonroad fuels and expansion of the obligated parties 
to include refiners, certain blenders, and importers of those fuels.
    (5) Inclusion of specific types of waivers and EPA-generated 
credits for cellulosic biofuel.
    EPA is developing a Notice of Proposed Rulemaking that will 
describe our proposed approach to all these changes to the RFS program 
(hereafter referred to as the ``RFS2'' program). With very few 
exceptions, the new EISA requirements are not effective until such time 
as EPA issues final regulations to implement them. Therefore, until the 
RFS2 rulemaking is finalized and implemented, the changes required by 
EISA will generally not be applicable, and the current RFS regulations 
(hereafter referred to as the ``RFS1'' regulations) will continue to 
apply. Therefore, for the 2009 compliance period regulated parties will 
continue to be subject to the existing RFS1 regulations at 40 CFR part 
80, Subpart K.
    Under the RFS1 program the annual standard that is applicable to 
obligated parties is determined by a formula specified in the 
regulations. The formula uses gasoline volume projections from the 
Energy Information Administration (EIA) and the required volume of 
renewable fuel provided in Clean Air Act section 211(o)(2)(B). Since 
EISA modified the required volumes in this section of the Clean Air 
Act, the new statutory renewable fuel volume must be used under the 
RFS1 regulations to generate the standard for 2009. Therefore, we are 
using the new total renewable fuel volume of 11.1 billion gallons as 
the basis for the 2009 standard, and not the 6.1 billion gallons that 
was required by EPAct. Furthermore, the RFS program in 2009 will 
continue to be applicable to producers and importers of gasoline only.
    While this approach ensures that the total renewable fuel volume 
required by EISA for 2009 will be used, the RFS1 regulatory structure 
does not provide a mechanism for implementing the EISA requirement for 
use of 0.5 billion gallons of biomass-based diesel. In our forthcoming 
Notice of Proposed Rulemaking for the RFS2 program, we currently intend 
to propose options to address this issue. The primary approach for 
proposal that we have identified to date would be to increase the 2010 
biomass-based diesel requirement by 0.5 billion gallons and allow 2009 
biodiesel and renewable diesel RINs to be used to meet this combined 
2009/2010 requirement. Such an approach to biomass-based diesel would 
provide a similar incentive for biomass-based diesel use in 2009 as 
would have occurred had we been able to implement the standard for 
2009. While obligated parties would not need to demonstrate compliance 
with the combined 2009/2010 biomass-based diesel standard until the end 
of the 2010 compliance period under this approach, it would behoove 
them to acquire the necessary RINs representing biodiesel and renewable 
diesel in 2009 in preparation for their 2010 compliance demonstration. 
As a result, we expect the 11.1 billion gallons of renewable fuel 
required in 2009 to include approximately 0.5 billion gallons of 
biodiesel and renewable diesel. Obligated parties that delayed their 
efforts to acquire these RINs until 2010 could find that they would be 
unable to acquire a sufficient number for compliance purposes.
    EISA also includes a self-implementing provision regarding the life 
cycle GHG performance of renewable fuel that is produced after EISA 
enactment, but prior to EPA issuance of implementing regulations. EISA 
section 210(a)(1) states that, ``[f]or

[[Page 70644]]

calendar year 2008, transportation fuel sold or introduced into 
commerce in the United States (except in noncontiguous States or 
territories), that is produced from facilities that commence 
construction after the date of enactment of this Act shall be treated 
as renewable fuel within the meaning of section 211(o) of the Clean Air 
Act only if it achieves at least a 20 percent reduction in life cycle 
greenhouse gas emissions compared to baseline life cycle greenhouse gas 
emissions.'' EISA further provides that for 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 life cycle 
GHG reduction requirement. Based on the text of this section, which is 
not an amendment to section 211(o) of the CAA and is not covered by the 
rulemaking provision in EISA section 202(a)(1) (amending section 
211(o)(2)(A)(i)), EPA stated in the context of its Notice of the 2008 
RFS that these requirements are self-implementing, and therefore 
effective prior to issuance of the RFS2 regulations. The statute 
clearly provides that ``in 2008'' fuel from a facility that commenced 
construction after enactment of EISA, and which is not fired with 
natural gas, biomass or a combination thereof, must meet the 20% GHG 
reduction requirement, even in the absence of a final RFS2 rulemaking. 
The statute is less clear regarding the situation in 2009, prior to EPA 
issuance of final RFS2 rules. EPA is not interpreting this provision at 
this time, because EPA believes there will be no fuel sold in 2009 from 
a facility that was constructed after EISA enactment, and which is not 
fired with natural gas, biomass or a combination thereof. If EPA learns 
of such fuel being sold, we will interpret the above-referenced 
statutory provisions at that time.

II. Calculation of the 2009 RFS

A. Formula

    In today's notice we are using the calculational procedure set 
forth in the final rulemaking for the Renewable Fuel Standard Program 
at 40 CFR part 80 Section 1105. The formula includes a variable 
representing the volume of renewable fuel required by CAA section 
211(o), and EPA is today using that formula with the renewable fuel 
volume for 2009 required by the EISA amendments to CAA section 211(o) 
to calculate the RFS for 2009. Since the RFS1 rule established clear 
legal criteria for deriving the standard (including specification of 
the formula used in today's notice, and all data sources), EPA is 
simply applying facts to pre-established law in issuing the 2009 RFS. 
EPA is advising the regulated community of the standard through this 
Federal Register Notice, without prior notice and comment, in 
accordance with the Clean Air Act and EPA regulations.
    The 2009 RFS is calculated by dividing the volume of renewable fuel 
required by CAA section 211(o) to be blended into gasoline in 2009, by 
the volume of gasoline projected by the Energy Information 
Administration (EIA) to be consumed in 2009 (including certain 
adjustments specified by the Act). The following equation from the 
final RFS1 regulations summarizes all of the variables that must be 
considered in the calculation.
[GRAPHIC] [TIFF OMITTED] TN21NO08.000

Where:

RFStdi = Renewable Fuel Standard in year i, in percent
RFVi = Annual volume of renewable fuels required by 
section 211(o)(2)(B) of the Act for year i, in gallons
Gi = Amount of gasoline projected to be used in the 48 
contiguous states, in year i, in gallons
Ri = Amount of renewable fuel blended into gasoline that 
is projected to be consumed in the 48 contiguous states, in year i, 
in gallons
GSi = Amount of gasoline projected to be used in Alaska, 
Hawaii, or a U.S. territory in year i if the state or territory 
opts-in, in gallons
RSi = Amount of renewable fuel blended into gasoline that 
is projected to be consumed in Alaska, Hawaii, or a U.S. territory 
in year i if the state or territory opts-in, in gallons
GEi = Amount of gasoline projected to be produced by 
exempt small refineries and small refiners in year i, in gallons 
(through 2010 only unless exemption extended under Sec. Sec.  
211(o)(9)(A)(ii) or (B))
Celli = Beginning in 2013, the amount of renewable fuel 
that is required to come from cellulosic sources, in year i, in 
gallons (250,000,000 gallons minimum)

B. Data Sources for 2009 RFS Calculation

    The following discussion describes the sources of data for the 
variables in the above equation. For ease of calculation, this 
discussion regroups the terms (Gi-Ri) + 
(GSi-RSi) in the denominator of the above 
equation into the terms (Gi + GSi)-(Ri 
+ RSi).
Calculation of (RFVi-Celli), Total Amount of Renewable Fuels From Non-
Cellulosic Sources That Must Be Blended Into Gasoline in 2009
    The EISA amended CAA section 211(o) to require 11.1 billion gallons 
of renewable fuels to be blended into gasoline in 2009. The amount of 
renewable fuel required to be produced from cellulosic sources in 2009 
(Celli) is zero. Thus the total amount of renewable fuels that must be 
blended into gasoline in 2009 is 11.1 billion gallons.
Calculation of (Gi + GSi), Total Amount of Gasoline Projected To Be 
Used in the 48 Contiguous States Plus Opt-In States/Territories, in 
Year i, in Gallons
    CAA section 211(o) requires the Administrator of the EIA by October 
31 of each year to provide EPA with an estimate of the volumes of 
gasoline projected to be sold or introduced into commerce in the United 
States for the following year. During the development of the RFS1 
Program, EIA informed EPA that the projected gasoline consumption in 
``Table 4a: U.S. Petroleum Supply, Consumption, and Inventories'' 
(formerly ``Table 5a. U.S. Petroleum Supply and Demand: Base Case'') of 
the October issue of the monthly Short-Term Energy Outlook (STEO) 
should be used to calculate the RFS for the coming year. The October 
2008 STEO projects that an average of 9.05 million barrels/day (or 
380.1 million gallons/day) of gasoline will be consumed in all of the 
United States in 2009. Multiplying this average consumption rate by 365 
days produces a total consumption of 138.74 billion gallons of gasoline 
in 2009.
    Only one non-contiguous state or territory has petitioned EPA to 
opt into the RFS Program beginning in 2008. Hawaii petitioned EPA on 
June 22, 2007, to opt into the RFS program, and EPA approved their 
request.\1\ Thus, Alaska is the only one of the 50 states that is not 
included in the RFS Program.
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    \1\ Letter to the Honorable Linda Lingle, Governor of Hawaii, 
from Stephen Johnson of EPA dated July 30, 2007.
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    In order to calculate gasoline consumption in the 48 contiguous 
states plus Hawaii, we subtracted Alaska's projected gasoline 
consumption from the projected nationwide gasoline

[[Page 70645]]

consumption of 138.74 billion gallons. Alaska's projected gasoline 
consumption was calculated by multiplying the projected nationwide 
gasoline consumption in 2009 by the ratio of Alaska's gasoline 
consumption in 2007 to the total U.S. consumption in 2007, based on 
Table 45, ``Prime Supplier Sales Volumes of Motor Gasoline by Grade 
Formulation, PAD District, and State'' gasoline data from EIA's 
Petroleum Marketing Annual 2007 (the final rulemaking used data from 
Petroleum Marketing Annual 2005). According to EIA, Prime Supplier data 
reflects where gasoline is used, rather than where it is produced.\2\ 
Alaska's projected gasoline consumption in 2009 is 0.27 billion 
gallons. Subtracting this consumption from the projected nationwide 
consumption of 138.74 billion gallons in 2009 produces a total 
consumption of 138.47 billion gallons of gasoline in 2009 in the 48 
contiguous states plus Hawaii.
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    \2\ Energy Information Administration, Petroleum Marketing 
Annual 2007, Explanatory Notes, Relationship of Refiner and Prime 
Supplier Sales Volumes'' (p. 393).
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Calculation of (Ri + RSi), Total Amount of Renewable Fuel Blended Into 
Gasoline That Is Projected To Be Consumed in the 48 Contiguous States 
Plus Opt-In States/Territories, in Year i, in Gallons
    The projected gasoline consumption in the October 2008 STEO 
includes renewable fuel that is blended into gasoline. This volume of 
renewable fuel must be subtracted from the total volume of gasoline in 
order to calculate the total consumption of non-renewable gasoline. In 
Table 8 of the October 2008 STEO, EIA estimates that 0.929 quadrillion 
Btu of ethanol will be used as transportation fuel in all of the United 
States in 2009. Dividing this energy usage by the high heating value of 
ethanol (3.539 million Btu/barrel), and multiplying by 42 gallons/
barrel produces a total projected ethanol usage of 11.03 billion 
gallons nationwide in 2009.
    Since Hawaii has opted in, but Alaska has not opted in, to the RFS 
program for 2009, Alaska's renewable fuels consumption must be 
subtracted from the nationwide renewable fuels consumption to calculate 
renewable consumption in the 48 contiguous states plus Hawaii. In 
Chapter 2 of the Regulatory Impact Analysis for the RFS1 program 
rulemaking, EPA estimated that ethanol consumption in Alaska would be 
negligible prior to 2012.\3\ Thus, calculated projected renewable fuels 
consumption in the 48 contiguous states plus Hawaii is 11.03 billion 
gallons in 2009, slightly lower than the RFS for 2009.
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    \3\ Table 2.2-21 ``2012 Forecasted Ethanol Consumption by 
State,'' Regulatory Impact Analysis: Renewable Fuel Standard 
Program, April 2007.
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Calculation of GEi, Amount of Gasoline Projected To Be Produced by 
Exempt Small Refineries and Small Refiners in Year i, in Gallons \4\
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    \4\ Through 2010 only, unless the exemption is extended under 
211(o)(9)(A)(ii) or (B) of the Act.
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    In the final rulemaking establishing the RFS1 program regulations, 
we stated that we would estimate the combined small refinery and small 
refiner gasoline volume using a constant percentage of national 
consumption. Using information from gasoline batch reports submitted to 
EPA, EIA data and input from the California Air Resources Board 
regarding California small refiners, we estimated this percentage to be 
13.5%.\5\
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    \5\ ``Calculation of the Small Refiner/Small Refinery Fraction 
for the Renewable Fuel Program,'' memo to the docket from Christine 
Brunner, ASD, OTAQ, EPA, September 2006.
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    Multiplying the projected nationwide consumption of gasoline in 
2009 (138.74 billion gallons) by 13.5% results in a total projected 
production of 18.73 billion gallons of gasoline from small refiners and 
small refineries in 2009.
Calculation of RFStdi, Renewable Fuel Standard in Year i, in Percent
    Substituting all of the terms calculated above into the equation 
for RFStdi results in the following RFS for 2009,
[GRAPHIC] [TIFF OMITTED] TN21NO08.001

    Therefore, the RFS for 2009 is 10.21%. This is the standard 
referenced in 40 CFR 80.1105(b) through (d) and which obligated parties 
apply to determine their renewable volume obligation under 40 CFR 
80.1107.

    Dated: November 14, 2008.
Robert J. Meyers,
Principal Deputy Assistant Administrator, Office of Air and Radiation.
[FR Doc. E8-27613 Filed 11-20-08; 8:45 am]
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