Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

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2. Who Is Required To Meet The Renewable Fuels Obligation? Under the proposed rule, persons who meet the definition of refiner, which includes blenders who produce gasoline by combining blendstocks or blending blendstocks into finished gasoline, and persons who meet the definition of importer under the fuels regulations would be subject to the renewable fuel obligation. As noted above, blenders who only blend renewable fuels downstream from the refinery or importer would not be subject to the renewable fuel obligation. Any person that is required to meet the renewable fuels obligation is called an “obligated party.” We generally refer to all of the obligated parties as refiners and importers, as the covered blenders are all refiners under the regulations. A refiner or importer located in a noncontiguous state or U.S. territory would not be subject to the renewable fuel obligation and thus would not be an obligated party (unless the noncontiguous state or territory opts-in to the RFS program). A party located within the contiguous 48 states that “imports” into the 48 states gasoline produced or imported by a refiner or importer located in a noncontiguous state or territory would be an obligated party and must meet the renewable fuel obligation for such gasoline. 3. What Exemptions Are Available Under The RFS Program? a. Small Refinery and Small Refiner Exemption The Act provides an exemption from the RFS standard for small refineries during the first five years of the program. The Act defines small refinery as “a refinery for which the average aggregate daily crude oil throughput for a calendar year (as determined by dividing the aggregate throughput for the calendar year by the number of days in the calendar year) does not exceed 75,000 barrels.” 24 Under the proposed rule, any gasoline produced at a refinery that qualifies as a small refinery under this definition is not counted in determining the renewable fuel obligation of a refiner until January 1, 2011. Where a refiner complies with the renewable fuel obligation on an aggregate basis for multiple refineries, the refiner may exclude from its compliance calculations gasoline produced at any refinery that qualifies as a small refinery under the RFS program. Beginning in 2011, small refineries would be required to meet the same renewable fuel obligation as all other refineries. This exemption would apply to any refinery that meets the definition of small refinery stated above regardless of the size of the refining company that owns the refinery. Based on information currently available to us we expect 42 small refineries to qualify for this exemption. In addition to small refineries as defined in the Act, we are proposing to extend this relief to refiners who meet the proposed criteria for small refiner status. Under the proposal, a small refiner is defined as any refiner who, during 2004: 1) produces gasoline at a refinery by processing crude oil through refinery processing units; 2) employs an average of no more than 1,500 people, including all employees of the small refiner, any parent company and its subsidiary companies; and 3) has a total crude oil processing 24 CAA Section 211(o)(a)(9), as added by Section 1501(a) of the Energy Policy Act of 2005. - 56 -
capability for all of the small refiner’s refineries of 155,000 barrels per calendar year (bpcd). These size requirements were established in prior rulemakings and were the result of our analysis of small refiner impacts. We do not believe that there are more than three gasoline refineries owned by small refiners that meet these criteria and that currently exceed the 75,000 bpcd crude oil processing capability defined by the Act. We request comment on whether a refiner who has a refinery which exceeds the 75,000 bpcd criteria should be eligible to apply for a small refiner exemption under the RFS program. EPA believes it has this discretion in determining an appropriate lead-time for the startup of this program, as well as discretion to determine the regulated refiners, blenders and importers, “as appropriate.” We are also proposing to allow foreign refiners to apply for a small refinery or small refiner exemption under the RFS program. This would apply to foreign refiners that apply for refineries under the 75,000 bpcd criteria or foreign refiners that apply for small refiner status. Under the anti-dumping, MSAT and gasoline sulfur rules, foreign refiners are allowed to comply with certain regulations separately from any importer. Additional requirements applicable to such foreign refiners are included in these rules to ensure that enforcement of the regulations at the foreign refinery would not be compromised. We are proposing similar enforcement-related requirements that would apply to foreign refiners that apply for a small refinery or small refiner exemption. Under the existing fuels regulations, few foreign refiners have chosen to undertake these additional requirements, and almost all gasoline produced at foreign refineries is included in the importers’ compliance determinations. We invite comment on the value of extending the small refinery and small refiner exemptions to foreign refiners under the RFS program. Under the proposed rule, applications for a small refinery exemption must be received by EPA by September 1, 2007 for the exemption to be effective in 2007 and subsequent calendar years. The application must include documentation that the small refinery’s average aggregate daily crude oil throughput for calendar year 2004 did not exceed 75,000 barrels. As long as the refinery met the criteria in 2004, it would have the exemption through 2010 regardless of changes in crude throughput or ownership. A small refinery exemption would be effective 60 days after receipt of the application by EPA unless EPA notifies the applicant that the application was not approved or that additional documentation is required. We are proposing to base eligibility on 2004 data rather than on 2005 data, since it was the first full year prior to passage of the Energy Act. In addition, some refineries’ production may have been affected by Hurricane Katrina in 2005. We request comment on whether multiple-year average should be the basis for eligibility. As discussed above, refiners that do not qualify for a small refinery exemption under the 75,000 bpcd criteria, but nevertheless meet the criteria of a small refiner may apply for small refiner status under the RFS rule. The application must be received by EPA by September 1, 2007 for the exemption to be effective in 2007 and subsequent calendar years. Like the exemption for small refineries, small refiner status would be determined based on documentation submitted in the application which demonstrates that - 57 -
Page 1 and 2:
The Administrator signed the follow
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Ave., NW, Washington DC. This Docke
Page 5 and 6: Table of contents: I. Background A.
Page 7 and 8: C. Requirements for Producers and I
Page 9 and 10: G. Executive Order 13045: Protectio
Page 11 and 12: The increased use of renewable fuel
Page 13 and 14: establish the applicable national v
Page 15 and 16: Today's proposal outlines the full
Page 17 and 18: enewable fuel feedstock market pric
Page 19 and 20: Unlike VOC and NOx, emissions of CO
Page 21 and 22: These renewable feedstocks are then
Page 23 and 24: 5. Potential Water Quality Impacts
Page 25 and 26: enewable fuel volume which each par
Page 27 and 28: certain volume of renewable fuel. E
Page 29 and 30: est practices would have the option
Page 31 and 32: As stated, the renewable fuel stand
Page 33 and 34: enewable fuel volumes in the calcul
Page 35 and 36: For illustrative purposes, we have
Page 37 and 38: These credit provisions have meanin
Page 39 and 40: Stdi = The RFS program standard for
Page 41 and 42: gasoline. The Act is unclear on whe
Page 43 and 44: . Ethanol Made From Any Feedstock I
Page 45 and 46: generate thermal energy used to pro
Page 47 and 48: animal wastes, including poultry fa
Page 49 and 50: limit this program solely to a stra
Page 51 and 52: presence of the denaturant. For ins
Page 53 and 54: First, doing so could create an inc
Page 55: For purposes of this preamble, the
Page 59 and 60: trading program, without any per ga
Page 61 and 62: obligated parties. However, there i
Page 63 and 64: particular importance for 2013 and
Page 65 and 66: have to significantly change their
Page 67 and 68: The D code would identify cellulosi
Page 69 and 70: Another case in which a RIN may not
Page 71 and 72: Section IV. In the context of demon
Page 73 and 74: equired volumes shown in Table I.B-
Page 75 and 76: We request comment on the valid lif
Page 77 and 78: e used for current year compliance.
Page 79 and 80: equirements by roughly 10 to 30 per
Page 81 and 82: 4. Provisions For Exporters Of Rene
Page 83 and 84: Previous-year RINs: RINs that came
Page 85 and 86: a. Responsibilities Of Renewable Fu
Page 87 and 88: another, in electronic or paper for
Page 89 and 90: e a one-to-one correspondence betwe
Page 91 and 92: Parent batch Actual volume (gal) Ba
Page 93 and 94: should also have the right to separ
Page 95 and 96: 3. Distribution Of Separated RINs O
Page 97 and 98: obligated parties to exercise marke
Page 99 and 100: Our proposed program is designed to
Page 101 and 102: As discussed in Section III.D, it i
Page 103 and 104: additional enforcement burdens plac
Page 105 and 106: B. Requirements for Obligated Parti
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fuel and containing identifying inf
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We request comment on our proposed
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We also request comment on our prop
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The refiner or importer would be li
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Plant Feedstock Corn a Table VI.A.1
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Leading the Midwest in ethanol prod
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EPA forecasts ethanol production to
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As shown in Table VI.A.2-1 and Figu
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3. Current Ethanol and MTBE Consump
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Oxygenate Use (Bgal) 4.5 4.0 3.5 3.
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change from the 2004 base case. 53
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per gallon to biodiesel produced fr
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ased on the assumption that the ble
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Modifications to the rail, barge, t
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other waste materials as discussed
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elatively small fraction of the tot
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production costs using prices for s
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the capital cost of making the nece
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information on biodiesel freight co
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For further details on RVP reductio
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assuming only that blending of etha
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costs). At a $70 per barrel crude o
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gasoline use scenarios will cost th
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the incentive to blend in ethanol b
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supporting this rulemaking. We hope
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We base our estimates of fuel quali
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Table VIII.A.1.b-2 Effect of MTBE a
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pre-1998 model year onroad diesel e
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1. Primary Analysis The national em
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Table VIII.B.1-4 Annual Emissions N
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RFG due to the absence of an RVP wa
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increase in ambient ozone levels is
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developing a model of secondary org
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IX. Impacts On Fossil Fuel Consumpt
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intended to help fuel producers est
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efficiency and to reduce air emissi
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combined those displacement indexes
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3. Displacement Indexes (DI) The di
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Table IX.C.1-1 Fossil fuel impacts
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as on the exports of agricultural p
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which may change in response to an
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X. Agricultural Sector Economic Imp
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XI. Public Participation We request
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ways to comply with any previously
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small refiner under this proposal.
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meet these criteria to be considere
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“economically significant” as d
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40 CFR Part 80 is proposed to be am
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(b) Renewable Fuel Standard for 200
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(2) The term “Renewable fuel” i
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RFStdi = Renewable Fuel Standard in
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a party’s renewable volume obliga
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(a) YYYY is the calendar year in wh
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(ii) The value for EEEEEE in an ext
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(2) A deficit is calculated accordi
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(a) (1) Any party that exports any
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(e) If a refiner is complying on an
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calendar year; however, disqualific
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§80.76, if such information has no
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(1) A summary report of the annual
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(4) Reports shall be submitted on f
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(1) Fail to acquire sufficient RINs
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(b) The following attest procedures
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(B) That the RFS-FRGAS remained seg
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EPA employees or EPA contractors, f
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(iv) Determine the date and time th
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(ii) Be licensed as a Certified Pub
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