indicates that imports of sugarcane ethanol reached just 54 million
gallons.

[GRAPHIC] [TIFF OMITTED] TR06FE20.001

    Data for 2019 through August indicate that advanced ethanol imports
reached 95 million gallons. While we cannot project precisely what
total import volumes will be by the end of 2019, as a first
approximation is may be reasonable to assume that the monthly rate of
import is consistent throughout the year. If so, then total 2019
imports could be 143 million gallons.
    However, there is little evidence that the increase potentially
exhibited in 2019 would continue into 2020 as there is no consistent
upward or downward trend after 2013. Moreover, several factors create
disincentives for increasing imports above the levels in recent years,
including the E10 blendwall, the potential existence of a recurring tax
credit for biodiesel and renewable diesel with which sugarcane ethanol
competes within the advanced biofuel category, and the fact that
imported sugarcane ethanol typically costs more than corn ethanol.\76\
As a result of these factors and the lower levels that have occurred in
recent years, we believe it would be appropriate to reduce the expected
volume of imported sugarcane ethanol below 100 million gallons.
---------------------------------------------------------------------------

    \76\ The difference between D5 and D6 RIN prices can also
influence the relative attractiveness to consumers of advanced
ethanol compared to conventional ethanol. However, there has been
considerable variability in this particular RIN price difference
over the last few years.
---------------------------------------------------------------------------

    Imports of sugarcane ethanol appear to have stabilized in the 2014
to 2018 timeframe in comparison to previous years. The average for
these years is 67 million gallons. Due to the difficulty in precisely
projecting future import volumes as described further below, we believe
that a rounded value of 70 million gallons would be more appropriate
and thus we use 70 million gallons of imported sugarcane ethanol for
the purposes of projecting reasonably attainable volumes of advanced
biofuel for 2020. We believe the volume of fuel imported in previous
years is a reasonable way to project the reasonably attainable volume
of sugarcane ethanol in 2020.
    In the July 29 proposal, we projected that 60 million gallons of
imported sugarcane ethanol would be available in 2020. Our revised
estimate of 70 million gallons reflects updated data on 2018 imports as
well as a more robust quantitative approach to calculating recent
actual imports.
    We note that the future projection of imports of sugarcane ethanol
is inherently imprecise and that actual imports in 2020 could be lower
or higher than 70 million gallons. Factors that could affect import
volumes include uncertainty in the Brazilian political climate, weather
and harvests in Brazil, world ethanol demand and prices, constraints
associated with the E10 blendwall in the U.S., the status of the
biodiesel tax credit which affects the economic attractiveness of
sugarcane ethanol's primary competitor, world demand for and prices of
sugar, and the cost of sugarcane ethanol relative to that of corn
ethanol. After considering these factors, and in light of the high
degree of variability in historical imports of sugarcane ethanol, we
believe that 70

million gallons is reasonably attainable for 2020.\77\
---------------------------------------------------------------------------

    \77\ Given the relatively small volumes of sugarcane ethanol we
are projecting (approximately 1 percent of the advanced biofuel
standard), even a significant deviation in its actual availability
would likely have negligible impact on the market's ability to meet
the advanced biofuel volumes.
---------------------------------------------------------------------------

2. Other Advanced Biofuel
    In addition to cellulosic biofuel, imported sugarcane ethanol, and
advanced biodiesel and renewable diesel, there are other advanced
biofuels that can be counted in the determination of reasonably
attainable volumes of advanced biofuel for 2020. These other advanced
biofuels include non-cellulosic CNG, naphtha, heating oil, and
domestically produced advanced ethanol. However, the supply of these
fuels has been relatively low in the last several years.

                          Table IV.B.2-1--Historical Supply of Other Advanced Biofuels
                                      [Million ethanol-equivalent gallons]
----------------------------------------------------------------------------------------------------------------
                                                                                Domestic
                                      CNG/LNG       Heating oil       Naphtha         ethanol        Total \a\
----------------------------------------------------------------------------------------------------------------
2013............................              26               0               3              23              52
2014............................              20               0              18              26              64
2015............................               0               1              24              25              50
2016............................               0               2              27              27              56
2017............................               2               2              32              26              62
2018............................               0               1              18              27              46
----------------------------------------------------------------------------------------------------------------
\a\ Excludes consideration of D5 renewable diesel, as this category of renewable fuel is considered as part of
  biodiesel and renewable diesel as discussed in Section IV.B.3.

    The significant decrease after 2014 in CNG/LNG from biogas as
advanced biofuel with a D code of 5 is due to the re-categorization in
2014 of landfill biogas from advanced (D code 5) to cellulosic (D code
3).\78\ Subsequently, total supply of these other advanced biofuels has
exhibited no consistent trend during 2015 to 2018. The average during
those four years was 54 million gallons. However, due to the high
variability, and consistent with the approach we are taking for
estimating volumes of imported sugarcane ethanol, we believe that this
average should be rounded to the nearest 10 million gallons. As a
result, we have used 50 million gallons to represent other advanced
biofuels in the context of estimating attainable volumes of advanced
biofuel.\79\ As with sugarcane ethanol, we have not conducted an in-
depth assessment of the volume of other advanced biofuels that could be
made available to the U.S. without diverting this fuel from other
markets. We believe the volume of fuel supplied in previous years is a
reasonable way to project the reasonably attainable volume of other
advanced biofuels in 2020.
---------------------------------------------------------------------------

    \78\ 79 FR 42128 (July 18, 2014).
    \79\ As with sugarcane ethanol, given the relatively small
volumes of other advanced biofuels we are projecting (approximately
1% of the advanced biofuel standard), even a significant deviation
in its actual availability would likely have negligible impact on
the market's ability to meet the advanced biofuel volumes.
---------------------------------------------------------------------------

    We acknowledge that, in the July 29 proposal, we proposed using 60
million gallons of other advanced biofuel in estimating attainable
volumes of advanced biofuel. This value was based on the same data
shown in Table IV.B.2-1, but using a more qualitative approach wherein
60 million gallons was deemed representative of both historical volumes
and those that could be attained in 2020. For this final rule we have
chosen to use a mathematical approach that is consistent with the
approach we have taken for imported sugarcane ethanol, and which we
believe represents a more robust methodology for making future
projections. As the change in the projected 2020 volume of other
advanced biofuel is very small, we do not believe this change in
approach meaningfully affects the broader assessment of advanced
biofuel volumes. Moreover, we note that this final action uses a volume
of imported sugarcane ethanol that is 10 million gallons higher than
that proposed, while simultaneously using a volume of other advanced
that is 10 million gallons lower than that proposed. The net effect on
projections of advanced biofuel for both of these changes combined is
zero.
    We recognize that the potential exists for additional volumes of
advanced biofuel from sources such as jet fuel, liquefied petroleum gas
(LPG), butanol, and liquefied natural gas (as distinct from CNG), as
well as non-cellulosic CNG from biogas produced in digesters. However,
since they have been produced, if at all, in only de minimis and
sporadic amounts in the past, we do not have a reasonable basis for
projecting substantial volumes from these sources in 2020.\80\
---------------------------------------------------------------------------

    \80\ No RIN-generating volumes of these other advanced biofuels
were produced in 2018, and less than 1 million gallons total in
prior years.
---------------------------------------------------------------------------

3. Biodiesel and Renewable Diesel
    Having projected the available volume of cellulosic biofuel, and
the reasonably attainable volumes of imported sugarcane ethanol and
``other'' advanced biofuels, we next assess the availability of
advanced biodiesel and renewable diesel by considering a wide range of
factors. First, we calculate the amount of advanced biodiesel and
renewable diesel that would be needed to meet the 5.09 billion ethanol-
equivalent gallon advanced requirement were we to exercise our maximum
discretion under the cellulosic waiver authority discussed in Section
IV.A. This calculation, shown in Table IV.B.3-1, helps inform the
exercise of our waiver authorities. Second, we consider the historical
availability of these fuels, including the impacts of biodiesel tax
policy and tariffs. Third, we consider other factors that could
potentially limit the availability of these fuels including the
production capacity of advanced biodiesel and renewable diesel
production facilities, and the ability for the market to distribute and
use these fuels. Fourth, we assess the availability of advanced
feedstocks. As part of this analysis, we consider the volume of
advanced biodiesel and renewable diesel that can be made available with
minimal diversions of advanced feedstocks and biofuels from existing
uses, i.e., the reasonably attainable volume of advanced biodiesel and
renewable diesel. We calculate this volume based on our projection of
growth in qualifying feedstocks and on the reasonably attainable volume
calculated in the 2019 final rule. Fifth, we consider how changes to
the import and export of advanced biodiesel and

renewable diesel could impact the available volume of these fuels.
    These analyses support three key findings. First, were EPA to
exercise the cellulosic waiver authority to the maximum extent, we
would require an advanced biofuel volume of 5.09 billion ethanol-
equivalent gallons, of which we estimate 4.37 billion ethanol-
equivalent gallons (2.83 billion actual gallons of biodiesel and
renewable diesel) would be met by advanced biodiesel and renewable
diesel. Second, the reasonably attainable volume of advanced biodiesel
and renewable diesel, which can be achieved with minimal diversions of
advanced feedstocks and biofuels (2.77 billion gallons) is slightly
lower than this volume. This finding, together with the high cost of
advanced biofuels, supports our decision to exercise the cellulosic
waiver authority to the maximum extent and not to permit backfilling of
missing cellulosic volumes with additional advanced biofuels. Third,
2.83 billion gallons of advanced biodiesel and renewable diesel are
attainable by the market. These findings, together with additional
discussions in the RTC document and docket memoranda, supports our
decisions to neither require the use of additional volumes of advanced
biofuel to backfill for the shortfall in cellulosic biofuel nor to
further waive volumes under the general waiver authority.\81\
---------------------------------------------------------------------------

    \81\ We note that we have not attempted to determine the maximum
achievable volume of these fuels. While the maximum achievable
volume of advanced biodiesel and renewable diesel in 2020 is likely
greater than 2.83 billion gallons we do not believe it would be
appropriate to require a greater volume of these fuels due to the
high cost and increased likelihood of adverse unintended impacts
associated with these fuels.
---------------------------------------------------------------------------

a. Volume of Advanced Biodiesel and Renewable Diesel To Achieve
Advanced Biofuel Volume
    We begin by calculating the volume of advanced biodiesel and
renewable diesel that would be needed to meet the 2020 advanced biofuel
volume were EPA to exercise the cellulosic waiver authority to the
maximum extent. This important benchmark informs EPA's consideration of
our waiver authorities, albeit as only one factor among many.
Specifically, in past annual rules where the reasonably attainable
volume of biodiesel and renewable diesel has exceeded this benchmark,
as was the case in 2017 and 2018, EPA has considered whether or not to
allow additional volumes of these fuels to backfill for missing
cellulosic biofuel volumes. By contrast, where the reasonably
attainable volume of advanced biodiesel and renewable diesel has been
less than this benchmark, as was the case in 2019, this weighs in favor
of exercising the cellulosic waiver authority to the maximum extent so
as to minimize diversions of advanced biofuels and feedstocks and the
associated harms and the need for additional volumes of high cost
advanced biofuel. Relatedly, were EPA to find that volume of advanced
biodiesel and renewable diesel needed to meet this benchmark is not
attainable, that would weigh in favor of EPA exercising its discretion
under additional waiver authorities, to the extent available, to make
further reductions to the advanced biofuel volume.
    As shown in Table IV.B.3-1, were EPA to exercise the cellulosic
waiver authority to the maximum extent, the required volume of advanced
biofuel  would be 5.09 billion ethanol-equivalent gallons. After
subtracting from this volume the available volume of cellulosic biofuel
and reasonably attainable volumes of imported sugarcane ethanol and
``other'' advanced biofuels, we estimate that approximately 2.83
billion gallons of advanced biodiesel and renewable diesel would be
needed to meet the 2020 advanced biofuel volume.
---------------------------------------------------------------------------

    \82\ To calculate the volume of advanced biodiesel and renewable
diesel that would generate the 4.37 billion RINs needed to meet the
advanced biofuel volume EPA divided the 4.37 billion RINs by 1.55,
which is the approximate average (weighted by the volume of these
fuels expected to be produced in 2020) of the equivalence values for
biodiesel (generally 1.5) and renewable diesel (generally 1.7).

   Table IV.B.3-1--Determination of Volume of Biodiesel and Renewable
    Diesel Needed in 2020 To Achieve 5.09 Billion Gallons of Advanced
                                 Biofuel
          [Million ethanol-equivalent gallons except as noted]
------------------------------------------------------------------------

------------------------------------------------------------------------
Target 2020 advanced biofuel volume requirement absent             5,090
 any backfilling of missing cellulosic biofuel..........
Cellulosic biofuel......................................             590
Imported sugarcane ethanol..............................              70
Other advanced..........................................              50
Calculated advanced biodiesel and renewable diesel           4,380\2,826
 needed (ethanol-equivalent gallons/physical gallons)
 \82\...................................................
------------------------------------------------------------------------

b. Historical Supply of Biodiesel and Renewable Diesel
    We next consider the volumes of advanced biodiesel and renewable
diesel supplied in previous years, as well as the impacts of biodiesel
tax policy and tariffs on these volumes. A review of the volumes of
advanced biodiesel and renewable diesel used in previous years is
especially useful in projecting the potential availability of these
fuels, since there are a number of complex and inter-related factors
beyond simply total production capacity (including the availability of
advanced biodiesel and renewable diesel feedstocks,\83\ the expiration
of the biodiesel tax credit, changes to tariffs on biodiesel from
Argentina and Indonesia, import and distribution infrastructure, and
other market-based factors) that could affect the supply of advanced
biodiesel and renewable diesel. While historic data and trends alone
are insufficient to project the volumes of biodiesel and renewable
diesel that could be provided in future years, historic data can serve
as a useful reference in considering future volumes.
---------------------------------------------------------------------------

    \83\ Throughout this section we refer to advanced biodiesel and
renewable diesel as well as advanced biodiesel and renewable diesel
feedstocks. In this context, advanced biodiesel and renewable diesel
refer to any biodiesel or renewable diesel for which RINs can be
generated that satisfy an obligated party's advanced biofuel
obligation (i.e., D4 or D5 RINs). While cellulosic diesel (D7) can
also contribute towards an obligated party's advanced biofuel
obligation, these fuels are discussed in Section III rather than in
this section. An advanced biodiesel or renewable feedstock refers to
any of the biodiesel, renewable diesel, jet fuel, and heating oil
feedstocks listed in Table 1 to 40 CFR 80.1426 or in petition
approvals issued pursuant to section 80.1416, that can be used to
produce fuel that qualifies for D4 or D5 RINs. These feedstocks
include, for example, soy bean oil; oil from annual cover crops; oil
from algae grown photosynthetically; biogenic waste oils/fats/
greases; non-food grade corn oil; camelina sativa oil; and canola/
rapeseed oil (See pathways F, G, and H of Table 1 to section
80.1426).
---------------------------------------------------------------------------

    Past experience suggests that a high percentage of the biodiesel
and renewable diesel used in the U.S. (from both domestic production
and imports) qualifies as advanced biofuel.\84\ In

previous years, biodiesel and renewable diesel produced in the U.S.
have been almost exclusively advanced biofuel.\85\ Volumes of imported
biodiesel and renewable diesel, which include both advanced and
conventional biodiesel and renewable diesel, have varied significantly
from year to year, as they are impacted both by domestic and foreign
policies, as well as many economic factors. Production, import, export,
and total volumes of advanced biodiesel and renewable diesel are shown
in Table IV.B.3-2, while volumes of conventional biodiesel and
renewable diesel are shown in the following Table IV.B.3-3.
---------------------------------------------------------------------------

    \84\ From 2011 through 2018 approximately 96 percent of all
biodiesel and renewable diesel supplied to the U.S. (including
domestically produced and imported biodiesel and renewable diesel)
qualified as advanced biodiesel and renewable diesel (14,214 million
gallons of the 14,869 million gallons) according to EMTS data. This
section focuses on the availability of advanced biodiesel and
renewable diesel to meet the advanced biofuel volume. For a
discussion of the availability of all biodiesel and renewable diesel
that could be used to meet the total renewable fuel volume see
``Updated market impacts of biofuels in 2020,'' memorandum from
David Korotney to docket EPA-HQ-OAR-2019-0136.
    \85\ From 2011 through 2018 over 99.9 percent of all the
domestically produced biodiesel and renewable diesel supplied to the
U.S. qualified as advanced biodiesel and renewable diesel (12,268
million gallons of the 12,275 million gallons) according to EMTS
data.
    \86\ For this final rule EPA reviewed the data available in EMTS
and updated historical renewable fuel production and RIN generation
data. This updated data can be found in ``Historical RIN supply as
of 8-12-19,'' memorandum from David Korotney to EPA docket EPA-HQ-
OAR-2019-0136. Tables in this final rule that contain historical
data (such as Tables IV.B.3-2, IV.B.3-3, VI.B.1-1 and VI.B.1-2) have
been updated accordingly.

                               Table IV.B.3-2 \86\--Advanced (D4 and D5) Biodiesel and Renewable Diesel From 2011 to 2019
                                                                  [Million gallons] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          2011       2012       2013     2014 \b\   2015 \b\     2016       2017       2018     2019 \c\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic Biodiesel...................................        969        984      1,364      1,296      1,245      1,581      1,530      1,843       1825
(Annual Change)......................................      (N/A)      (+15)     (+380)      (-68)      (-51)     (+336)      (-51)     (+313)      (-18)
Domestic Renewable Diesel............................         59         50        112        158        174        236        251        306        531
(Annual Change)......................................      (N/A)       (-9)      (+62)      (+46)      (+16)      (+62)      (+15)      (+55)     (+225)
Imported Biodiesel...................................         43         39        153        130        261        562        462        175        246
(Annual Change)......................................      (N/A)       (-4)     (+114)      (-23)     (+131)     (+301)     (-100)     (-287)      (+71)
Imported Renewable Diesel............................          0         28        145        130        120        165        191        178        256
(Annual Change)......................................      (N/A)      (+28)     (+117)      (-15)      (-10)      (+45)      (+26)      (-13)      (+78)
Exported Biodiesel and Renewable Diesel..............         32         68         84         87         94        129        166        154        122
(Annual Change)......................................      (N/A)      (+36)      (+16)       (+3)       (+7)      (+35)      (+37)      (-12)      (-32)
                                                      --------------------------------------------------------------------------------------------------
    Total \d\........................................      1,039      1,033      1,690      1,627      1,706      2,415      2,268      2,348      2,736
    (Annual Change)..................................      (N/A)       (-6)     (+657)      (-63)      (+79)     (+709)     (-147)      (+80)     (+388)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ All data from EMTS. EPA reviewed all advanced biodiesel and renewable diesel RINs retired for reasons other than demonstrating compliance with the
  RFS standards and subtracted these RINs from the RIN generation totals for each category in the table above to calculate the volume in each year.
\b\ RFS required volumes for these years were not established until December 2015.
\c\ Data for 2019 is based on actual production and import data through September 2019, and a projection for October-December 2019. For more information
  on how the volumes for 2019 were determined see ``Projecting Advanced Biofuel Production and Imports for 2019 (November 2019),'' Memorandum from
  Dallas Burkholder to EPA Docket EPA-HQ-OAR-2019-0136.
\d\ Total is equal to domestic production of biodiesel and renewable plus imported biodiesel and renewable diesel minus exports.

                                   Table IV.B.3-3--Conventional (D6) Biodiesel and Renewable Diesel From 2011 to 2019
                                                                  [Million gallons] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          2011       2012       2013     2014 \b\   2015 \b\     2016       2017       2018     2019 \c\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic Biodiesel...................................          2          0          1          1          0          0          0          0          0
(Annual Change)......................................      (N/A)       (-2)       (+1)       (+0)       (-1)       (+0)       (+0)       (+0)       (+0)
Domestic Renewable Diesel............................          0          0          0          0          0          0          0          0          0
(Annual Change)......................................      (N/A)       (+0)       (+0)       (+0)       (+0)       (+0)       (+0)       (+0)       (+0)
Imported Biodiesel...................................          0          0         31         52         74        113          0          0          0
(Annual Change)......................................      (N/A)       (+0)      (+31)      (+21)      (+22)      (+39)     (-113)       (+0)       (+0)
Imported Renewable Diesel............................          0          0         70          2         87         45          2          1          0
(Annual Change)......................................      (N/A)       (+0)      (+70)      (-68)      (+85)      (-42)      (-43)       (-1)       (-1)
Exported Biodiesel and Renewable Diesel..............          0          0          0          0          1          1          0          0          0
(Annual Change)......................................      (N/A)       (+0)       (+0)       (+0)       (+1)       (+0)       (-1)       (+0)       (+0)
                                                      --------------------------------------------------------------------------------------------------
    Total \d\........................................          2          0        102         55        160        157          2          1          0
    (Annual Change)..................................      (N/A)       (-2)     (+102)      (-47)     (+105)       (-3)     (-155)       (-1)       (-1)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ All data from EMTS. EPA reviewed all conventional biodiesel and renewable diesel RINs retired for reasons other than demonstrating compliance with
  the RFS standards and subtracted these RINs from the RIN generation totals for each category in the table above to calculate the volume in each year.
\b\ RFS required volumes for these years were not established until December 2015.
\c\ While a significant number of D6 RINs have been generated for biodiesel and renewable diesel in 2019 in recent years nearly all of these RINs have
  later been retired for reasons other than compliance with the volume obligations. Since D6 RIN prices have been relatively low in 2019 and the
  biodiesel tax credit is currently not available we are not projecting any production or import of D6 biodiesel or renewable diesel in 2019.
\d\ Total is equal to domestic production of biodiesel and renewable plus imported biodiesel and renewable diesel minus exports.

    As we explained above, to meet an advanced biofuel volume of 5.09
billion ethanol-equivalent gallons we project that the market would
supply 2.83 billion gallons of advanced biodiesel and renewable diesel.
This volume (2.83 billion gallons) is approximately 90 million gallons
greater than the volume of these fuels projected to be supplied in 2019
based on data through September 2019. Since 2011, the year-over-year
changes in the volume of advanced biodiesel and renewable diesel used
in the U.S. have varied greatly, from a low of 147 million fewer
gallons from 2016 to 2017 to a high of 709 million additional gallons
from 2015 to 2016. These changes were likely influenced by multiple
factors such as the cost of biodiesel feedstocks and petroleum diesel,
the status of the biodiesel blenders tax credit, growth in marketing of
biodiesel at high volume truck stops and centrally fueled fleet
locations, demand for biodiesel and renewable diesel in other
countries, biofuel policies in both the U.S. and foreign countries, and
the volumes of renewable fuels (particularly advanced biofuels)
required by the RFS. This historical information does not indicate that
the maximum previously observed increase of 709 million gallons of
advanced biodiesel and renewable diesel would be reasonable to expect
in 2020, nor does it indicate that the low (or negative) growth rates
observed in other years would recur. Rather, these data illustrate both
the magnitude of the changes in advanced biodiesel and renewable diesel
in previous years and the significant variability in these changes.
    The historic data indicates that the biodiesel tax policy in the
U.S. can have a significant impact on the volume of biodiesel and
renewable diesel used in the U.S. in any given year.\87\ While the
biodiesel blenders tax credit has applied in each year from 2010 to
2017, it has only been prospectively in effect during the calendar year
in 2011, 2013, and 2016, while other years it has been applied
retroactively. Each of the years in which the biodiesel blenders tax
credit was in effect during the calendar year (2013 and 2016) resulted
in significant increases in the volume of advanced biodiesel and
renewable diesel used in the U.S. over the previous year (656 million
gallons and 742 million gallons respectively). However, following these
large increases in 2013 and 2016, there was little to no growth in the
use of advanced biodiesel and renewable diesel in the following years.
More recent data from 2019 suggests that while the availability of the
tax credit certainly incentivizes an increasing supply of biodiesel and
renewable diesel, supply increases can also occur in the absence of the
tax credit, likely as the result of the incentives provided by the RFS
program and other economic factors. The availability of this tax credit
also provides biodiesel and renewable diesel with a competitive
advantage relative to other advanced biofuels that do not qualify for
the tax credit.\88\
---------------------------------------------------------------------------

    \87\ We note that the status of the tax credit does not impact
our assessment of the reasonably attainable volume of advanced
biodiesel and renewable diesel in 2020 as that assessment is
primarily based on feedstock availability. The status of the tax
credit could potentially affect the maximum achievable volume of
these fuels, but our assessment demonstrates that 2.83 billion
gallons of advanced biodiesel and renewable diesel is attainable
whether or not the tax credit is renewed prospectively (or
retrospectively) for 2020.
    \88\ For a further discussion of the impact of the tax credit on
the supply of biodiesel and renewable diesel, see the discussion
from the proposed rule (84 FR 36783, July 29, 2019).
---------------------------------------------------------------------------

    Another important factor highlighted by the historic data is the
tariffs imposed by the U.S. on biodiesel imported from Argentina and
Indonesia. In December 2017 the U.S. International Trade Commission
adopted tariffs on biodiesel imported from Argentina and Indonesia.\89\
According to data from EIA,\90\ no biodiesel was imported from
Argentina or Indonesia since September 2017, after a preliminary
decision to impose tariffs on biodiesel imported from these countries
was announced in August 2017. As a result of these tariffs, total
imports of biodiesel into the U.S. were significantly lower in 2018
than they had been in 2016 and 2017. The decrease in imported biodiesel
did not, however, result in a decrease in the volume of advanced
biodiesel and renewable diesel supplied to the U.S. in 2018. Instead,
higher domestic production of advanced biodiesel and renewable diesel,
in combination with lower exported volumes of domestically produced
biodiesel, resulted in an overall increase in the volume of advanced
biodiesel and renewable diesel supplied in 2018. On July 9, 2019, the
Department of Commerce published a preliminary determination to reduce
the countervailing duty on biodiesel imported from Argentina.\91\ If
finalized this could result in increasing volumes of biodiesel imports
from Argentina in future years.
---------------------------------------------------------------------------

    \89\ ``Biodiesel from Argentina and Indonesia Injures U.S.
Industry, says USITC,'' Available online at: https://www.usitc.gov/press_room/news_release/2017/er1205ll876.htm.
    \90\ See ``EIA Biomass-Based Diesel Import Data'' available in
docket EPA-HQ-OAR-2019-0136.
    \91\ 84 FR 32714 (July 9, 2019).
---------------------------------------------------------------------------

    The historical data suggests that the 2.83 billion gallons of
advanced biodiesel and renewable diesel projected to be used to meet an
advanced biofuel volume of 5.09 billion ethanol-equivalent gallons is
attainable. This would represent a projected increase of approximately
90 million gallons from 2019 to 2020. This increase is less than the
average increase in the volume of advanced biodiesel and renewable
diesel used in the U.S. from 2011 through 2019 (212 million gallons per
year) and significantly less than the highest annual increase during
this time (742 million gallons from 2015 to 2016). We note, however,
that this assessment does not consider the sources of feedstock that
would be used to meet this increase, or the potential impacts of
supplying 2.83 billion gallons of advanced biodiesel and renewable
diesel, which are discussed in greater detail in the following
sections.
c. Consideration of Production Capacity and Distribution Infrastructure
    After reviewing the historical volume of advanced biodiesel and
renewable diesel used in the U.S., EPA next considers other factors
that may impact the production, import, and use of advanced biodiesel
and renewable diesel in 2020. The production capacity of registered
advanced biodiesel and renewable diesel production facilities is highly
unlikely to limit the production of these fuels, as the total
production capacity for biodiesel and renewable diesel at registered
facilities in the U.S. (4.1 billion gallons) exceeds the volume of
these fuels that are projected to be needed to meet the advanced
biofuel volume for 2020 after exercising the cellulosic waiver
authority (2.83 billion gallons).\92\ Significant registered production
also exists internationally. Similarly, the ability for the market to
distribute and use advanced biodiesel and renewable diesel appears
unlikely constrain the growth of these fuels to a volume lower than
2.83 billion gallons. The investments required to distribute and use
this volume of biodiesel and renewable diesel are expected to be
manageable by the marketplace given the RIN value incentive, as this
volume is approximately 90 million gallons greater than the volume of
biodiesel and renewable diesel produced, imported, and used in the U.S.
in 2019. The magnitude of the increase projected

from 2019 to 2020 (90 million gallons) is much smaller than the
increases observed in previous years. These factors further support our
finding that 2.83 billion gallons of advanced biodiesel and renewable
diesel is attainable.
---------------------------------------------------------------------------

    \92\ The production capacity of the sub-set of biodiesel and
renewable diesel producers that generated RINs in 2018 is
approximately 2.9 billion gallons. See ``Biodiesel and Renewable
Diesel Registered Capacity (March 2019)'' Memorandum from Dallas
Burkholder to EPA Docket EPA-HQ-OAR-2019-0136.
---------------------------------------------------------------------------

d. Consideration of the Availability of Advanced Feedstocks
    We next consider the availability of advanced feedstocks that can
be used to produce advanced biodiesel and renewable diesel. This
assessment has two parts. First, we assess whether there are sufficient
advanced feedstocks to produce 2.83 billion gallons of advanced
biodiesel and renewable diesel. We find that the quantity of feedstocks
exceeds the amount needed to do so, further supporting our conclusion
that 2.83 billion gallons of advanced biodiesel and renewable diesel is
attainable. Second, we assess whether the growth in advanced feedstocks
suffices to produce 2.83 billion gallons of advanced biodiesel and
renewable diesel without diverting advanced feedstocks or biofuels from
existing uses, i.e., the reasonably attainable volume. We find that the
reasonably attainable volume falls slightly short at 2.77 billion
gallons.
    We believe the most reliable source for projecting the expected
increase in virgin vegetable oils in the U.S. is USDA's World
Agricultural Supply and Demand Estimates (WASDE). At the time of our
assessment for this rule, the October 2019 version was the most current
version of the WASDE report. The October 2019 WASDE projects that
production of vegetable oil in the U.S. in the 2019/2020 market year
will be sufficient to produce approximately 3.6 billion gallons of
biodiesel and renewable diesel (including both advanced and
conventional biofuels) if the entire volume of vegetable oil was used
to produce these fuels. Additional advanced biodiesel and renewable
diesel could also be produced from waste fats, oils, and greases as
they have been in past years.\93\ Thus, the availability of domestic
vegetable oils, in combination the potential to source additional
feedstocks from waste fats, oils, and greases, supports our conclusion
that 2.83 billion gallons of advanced biodiesel and renewable diesel is
attainable.
---------------------------------------------------------------------------

    \93\ See ``Projections of FOG biodiesel and renewable diesel
2015-2018,'' memorandum from David Korotney to EPA Docket, EPA-HQ-
OAR-2019-0136.
---------------------------------------------------------------------------

    In addition, the global production of vegetable oil projected in
the 2019/2020 marketing year in the October 2019 WASDE would be
sufficient to produce approximately 59.3 billion gallons of biodiesel
and renewable diesel (including both advanced and conventional
biofuels).\94\ While it would not be reasonable to assume that all, or
even a significant portion, of global vegetable oil production globally
or domestically could be available to produce biodiesel or renewable
diesel supplied to the U.S. for a number of reasons,\95\ the large
global supply of vegetable oil further indicates that 2.83 billion
gallons of advanced biodiesel and renewable diesel is attainable in
2020.
---------------------------------------------------------------------------

    \94\ The October 2019 WASDE projects production of vegetable
oils in 2019/2020 in the U.S. and the World to be 12.58 and 207.50
million metric tons respectively. To convert projected vegetable oil
production to potential biodiesel and renewable diesel production we
have used a conversion of 7.7 pounds of feedstock per gallon of
biodiesel or renewable diesel (World Agricultural Supply and Demand
Estimates. United States Department of Agriculture, Office of the
Chief Economist. October 10, 2019. ISSN 1554-9089). In addition,
global production of biodiesel is projected to be 44.2 billion
liters (11.7 billion gallons) in 2020 according to the July 2019
OECD-FAO Agricultural Outlook. Based on the projected production of
biodiesel by country we estimate that over 80% of this biodiesel
(all biodiesel except that produced in Columbia, Indonesia,
Malaysia, and Thailand) could qualify as advanced biofuel if the
feedstocks meet the definition of renewable biomass.
    \95\ These reasons include the demand for vegetable oil in the
food, feed, and industrial markets both domestically and globally;
constraints related to the production, import, distribution, and use
of significantly higher volumes of biodiesel and renewable diesel;
and the fact that biodiesel and renewable diesel produced from much
of the vegetable oil available globally would not qualify as an
advanced biofuel under the RFS program.
---------------------------------------------------------------------------

    We now turn to the reasonably attainable volume of advanced
biodiesel and renewable diesel, which we find to be 2.77 billion
gallons. This volume represents the amount of advanced biodiesel and
renewable diesel that can be supplied without relying on the diversion
of advanced biofuels and feedstocks from existing uses and the
associated harms of such diversions. We calculate this volume by
summing the reasonable attainable volume from last year's final rule
(2.61 billion gallons) with the volume that can be produced from the
projected increase in advanced feedstocks from 2019 to 2020 (159
million gallons).\96\
---------------------------------------------------------------------------

    \96\ As discussed in more detail in this section, this 159
million gallons increase is projected to be comprised of 94 million
gallons from increased vegetable oil production, 17 million gallons
from distillers corn oil, and 48 million gallons from waste fats,
oils, and greases.
---------------------------------------------------------------------------

    We acknowledge that an increase in the required use of advanced
biodiesel and renewable diesel could be realized through the production
or collection of additional advanced feedstocks, a diversion of
advanced feedstocks from other uses, or a diversion of advanced
biodiesel and renewable diesel from existing markets in other
countries. As already explained, the volume of advanced biodiesel and
renewable diesel and their corresponding feedstocks projected to be
produced globally exceeds the volume projected to be required in 2020
(2.83 billion gallons of advanced biodiesel and renewable diesel and
the corresponding volume of advanced feedstocks) by a significant
margin. However, we expect that increases in advanced biofuel and
renewable fuel volumes beyond those that can be produced from the
projected growth in advanced feedstock production and/or consumption
(e.g., by diverting advanced feedstocks or advanced biodiesel and
renewable diesel from existing markets and uses) would be increasingly
likely to incur adverse unintended impacts.\97\
---------------------------------------------------------------------------

    \97\ The volume of advanced biodiesel and renewable diesel
projected to be used to meet the advanced biofuel volume (2.83
billion gallons) is approximately 1 billion gallons greater than the
volume of these fuels we projected would be used to meet the
advanced biofuel volume for 2022 in the 2010 RFS final rule analyses
(1.82 billion gallons). For a further discussion of this issue see
Section <IP_ADDRESS> of the RTC.
---------------------------------------------------------------------------

    This is because of several factors, notably the potential
disruption of the current biogenic fats, oils, and greases market, the
associated cost impacts to other industries resulting from feedstock
diversion, and the potential adverse effect on lifecycle GHG emissions
and energy security associated with feedstocks for biofuel production
that would have been used for other purposes and which must then be
backfilled with other feedstocks.\98\ Similarly, increasing the supply
of biodiesel and renewable diesel to the U.S. by diverting fuel that
would otherwise have been used in other countries results in higher
lifecycle GHG emissions than if the supply of these fuels was increased
by an increased collection of waste fats and oils or increased
production of feedstocks that are byproducts of other industries,
especially if this diversion results in increased consumption of
petroleum fuels in the countries that would have otherwise consumed the
biodiesel or renewable diesel. By assessing the expected growth in the
production of advanced feedstocks, we are attempting to minimize the
incentives for the RFS program to increase the supply of advanced

biodiesel and renewable diesel through feedstock switching or diverting
biodiesel and renewable diesel from foreign markets to the U.S.
---------------------------------------------------------------------------

    \98\ For instance, see the draft GHG assessment of palm oil
biodiesel and renewable diesel at 77 FR 4300 (January 27, 2012). We
believe palm or petroleum-derived products would likely be used to
replace advanced biodiesel and renewable diesel diverted to the U.S.
as these products are currently the lowest cost substitutes.
---------------------------------------------------------------------------

    Advanced biodiesel and renewable diesel feedstocks include both
waste oils, fats, and greases; and oils from planted crops. The
projected growth in these feedstocks is expected to be modest relative
to the volume of these feedstocks that is currently being used to
produce biodiesel and renewable diesel. Most of the waste oils, fats,
and greases that can be recovered economically are already being
recovered and used in biodiesel and renewable diesel production or for
other purposes. The availability of animal fats will likely increase
with beef, pork, and poultry production. Most of the vegetable oil used
to produce advanced biodiesel and renewable diesel that is sourced from
planted crops comes from crops primarily grown for purposes other than
providing feedstocks for biodiesel and renewable diesel, such as for
livestock feed, with the oil that is used as feedstock for renewable
fuel production a co-product.\99\ This is true for soybeans and corn,
which are the two largest sources of feedstock from planted crops used
for biodiesel production in the U.S.\100\ We do not believe that the
increased demand for soybean oil or corn oil caused by a higher 2020
advanced biofuel standard would result in an increase in soybean or
corn prices large enough to induce significant changes in agricultural
activity.\101\ However, production of these feedstocks is likely to
increase over time as crop yields, oil extraction rates, and demand for
the primary products increase.
---------------------------------------------------------------------------

    \99\ For example, corn oil is a co-product of corn grown
primarily for animal feed or ethanol production, while soy and
canola are primarily grown as livestock feed.
    \100\ According to EIA data 7,542 million pounds of soy bean oil
and 2,085 million pounds of corn oil were used to produce biodiesel
in the U.S. in 2018. Other significant sources of feedstock were
yellow grease (1,668 million pounds), canola oil (total volume
withheld, but monthly data suggests greater than 700 million
pounds), and white grease (618 million pounds).''Monthly Biodiesel
Production Report with Data for February 2019,'' U.S. Energy
Information Administration. April 2019.
    \101\ This position is supported by several commenters,
including the American Soybean Association (EPA-HQ-OAR-2019-0136-
0177) and the Nebraska Soybean Association (EPA-HQ-OAR-2019-0136-
0117).
---------------------------------------------------------------------------

    Based on the October 2019 WASDE report the projected increase in
vegetable oil production in the U.S. from the 2018/2019 marketing year
to the 2019/2020 marketing year is 0.33 million metric tons per
year.\102\ This additional quantity of vegetable oils could be used to
produce approximately 94 million additional gallons of advanced
biodiesel or renewable diesel in 2020 relative to 2019.\103\
---------------------------------------------------------------------------

    \102\ U.S. vegetable oil production is projected to be 12.25
million metric tons in the 2018/2019 agricultural marketing year and
12.58 million metric tons in the 2019/2020 agricultural marketing
year.
    \103\ To calculate this volume, we have used a conversion of 7.7
pounds of feedstock per gallon of biodiesel or renewable diesel.
This is based on the expected conversion of soybean oil (http://extension.missouri.edu/p/G1990), which is the largest source of
feedstock used to produce advanced biodiesel and renewable diesel.
Conversion rates for other types of vegetable oils used to produce
biodiesel and renewable diesel are similar to those for soybean oil.
---------------------------------------------------------------------------

    In the 2019 final rule we also noted that the WASDE projected a
decrease in trade of both oilseeds and vegetable oils. The projected
decrease in oilseed trade was likely due to tariffs enacted by China on
soybean exports from the U.S. While the projected trade in oilseeds is
expected to increase slightly from 2018/2019 to 2019/2020, trade in
vegetable oils is projected to decrease by 0.12 million metric tons
from 2018/2019 to 2019/2020. If converted to biodiesel, this volume of
vegetable oils could be used to produce approximately 34 million
additional gallons of advanced biodiesel or renewable diesel in 2020
relative to 2019. As in the 2019 final rule, we did not include in our
projection of the reasonably attainable volumes the potential biodiesel
or renewable diesel that could theoretically be produced from the
oilseeds and vegetable oil projected to remain in the U.S. due to
changes in trade of these products. This is because any biodiesel and
renewable diesel produced from soybeans previously exported are
necessarily diverted from other uses (even if the reason for this
diversion is the tariffs, rather than the RFS program), and biodiesel
produced from these diverted feedstocks is therefore more likely to
have the adverse unintended effects as previously discussed.
    In addition to virgin vegetable oils, we also expect increasing
volumes of distillers corn oil \104\ to be available for use in 2020.
The WASDE report does not project distillers corn oil production, so
EPA must use an alternative source to project the growth in the
production of this feedstock. For this final rule we use results from
the World Agricultural Economic and Environmental Services (WAEES)
model to project the growth in the production of distillers corn
oil.\105\ In assessing the likely increase in the availability of
distillers corn oil from 2019 to 2020, the authors of the WAEES model
considered the effects of an increasing adoption rate of distillers
corn oil extraction technologies at domestic ethanol production
facilities, as well as increased corn oil extraction rates enabled by
advances in this technology. The WAEES model projects that production
of distillers corn oil will increase by approximately 130 million
pounds from the 2018/2019 to the 2019/2020 agricultural marketing year.
This quantity of feedstock could be used to produce approximately 17
million gallons of advanced biodiesel or renewable diesel. We believe
it is reasonable to use these estimates from the WAEES model for these
purposes based on the projected increase in the use of corn oil
extraction and corn oil yield increases.
---------------------------------------------------------------------------

    \104\ Distillers corn oil is non-food grade corn oil produced by
ethanol production facilities.
    \105\ For the purposes of this rule, EPA relied on WAEES
modeling results submitted as comments by the National Biodiesel
Board on the 2020 proposed rule (Kruse, J., ``Implications of an
Alternative 2021 Biomass Based Diesel Volume Obligation for Global
Agriculture and Biofuels,'' August 26, 2019, World Agricultural
Economic and Environmental Services (WAEES)).
---------------------------------------------------------------------------

    While much of the increase in advanced biodiesel and renewable
diesel feedstocks produced in the U.S. from 2019 to 2020 is expected to
come from virgin vegetable oils and distillers corn oil, increases in
the supply of other sources of advanced biodiesel and renewable diesel
feedstocks, such as biogenic waste fats, oils, and greases (FOG), could
also occur. In scenarios with increases to the advanced biofuel and
biomass-based diesel volume requirements in 2020 and 2021 the WAEES
model projects minimal increases in the volume of biodiesel produced
from total other fats and oils in the 2018/2019 and 2019/2020 marketing
years.\106\ Conversely, an assessment conducted by LMC International in
2017 and submitted in comments on our 2018 proposed rule projected that
the waste oil supply in the U.S. could increase by approximately 2.4
million metric tons from 2016 to 2022.\107\ This estimate represents a
growth rate of approximately 0.4 billion tons per year, or enough
feedstock to produce approximately 115 million gallons of biodiesel and
renewable diesel per year. This estimate, however, only accounts for
potential sources of feedstock and

not for the economic viability of recovering waste oils.
---------------------------------------------------------------------------

    \106\ The WAEES model projects a 7 million gallon increase in
2019/2020 and a 16 million gallon increase in 2020/2021. See Kruse,
J., ``Implications of an Alternative Biomass Based Diesel Volume
Obligation for Global Agriculture and Biofuels,'' August 26, 2019,
World Agricultural Economic and Environmental Services.
    \107\ LMC International. Global Waste Grease Supply. August 2017
(EPA-HQ-OAR-2017-0091-3880).
---------------------------------------------------------------------------

    To project the increase in the use of biogenic FOG we used
historical data to determine the increase in the use of these
feedstocks to produce biodiesel and renewable diesel. From 2015-2018,
advanced biodiesel and renewable diesel produced from biogenic FOG
increased by an average of 48 million gallons per year.\108\ This
annual increase is higher than the increase in the use of these
feedstocks projected by the WAEES model, but lower than the potential
increase projected by LMC. We have included an additional 48 million
gallons of advanced biodiesel and renewable diesel from FOG in our
assessment of the reasonably attainable volume for 2020, consistent
with the observed annual increase in advanced biodiesel and renewable
diesel produced from these feedstocks in recent years.
---------------------------------------------------------------------------

    \108\ ``Projections of FOG biodiesel and renewable diesel 2015-
2018,'' memorandum from David Korotney to EPA Docket, EPA-HQ-OAR-
2019-0136.
---------------------------------------------------------------------------

    In total, we project that increases in feedstocks produced in the
U.S. are sufficient to produce approximately 159 million more gallons
of advanced biodiesel and renewable diesel in 2020 relative to 2019.
This number includes 94 million gallons from increased vegetable oil
production, 17 million gallons from increased corn oil production, and
48 million gallons from increased waste oil collection. This increase
does not include the projected 34 million gallons of biodiesel that
could be produced from the projected reduction in vegetable oil trade
since decreases in exported volumes of vegetable oils represent
feedstocks diverted from use in other countries. Our projection also
does not consider factors that could potentially affect the
availability of advanced biofuel feedstocks that could be used to
produce biodiesel or renewable diesel, such as changes in the volume of
vegetable oils used in food markets or other non-biofuel industries. In
our 2019 final rule, we determined that 2.61 billion gallons of
advanced biodiesel and renewable diesel were reasonably attainable in
2019,\109\ therefore our projection of the reasonably attainable volume
of advanced biodiesel and renewable diesel in 2020 is 2.77 billion
gallons.\110\
---------------------------------------------------------------------------

    \109\ 83 FR 63704 (December 11, 2018).
    \110\ We calculated the reasonably attainable volume for 2020 by
adding the projected increase in advanced feedstocks (159 million
gallons) to the reasonably attainable volume of these fuels we
projected for 2019 (2.61 billion gallons). Another possible approach
would be to add the 159-million-gallon increment in the reasonably
attainable volume to the volume we now project to be used in 2019,
2.74 billion gallons (rather than the reasonably attainable volume
we projected for 2019). This would result in a reasonably attainable
volume of 2.90 billion gallons. While this approach uses more recent
data on the availability of advanced biodiesel and renewable diesel
in 2019, it does not account for whether or not the additional use
of these fuels in 2019, beyond the reasonably attainable volume
calculated in the 2019 final rule, resulted in diversions of
advanced biofuels or feedstocks. In any event, even were we to adopt
this approach, it would make no difference to our final decision on
the volumes as (1) the difference in the calculated reasonably
attainable volume is slight, (2) the high costs of advanced
biodiesel and renewable diesel would justify exercising the maximum
cellulosic waiver in any event, and (3) the volume we are finalizing
is attainable under either approach.
---------------------------------------------------------------------------

e. Biodiesel and Renewable Diesel Imports and Exports
    EPA next considered potential changes in the imports of advanced
biodiesel and renewable diesel produced in other countries. In previous
years, significant volumes of foreign produced advanced biodiesel and
renewable diesel have been supplied to markets in the U.S. (see Table
IV.B.2-1). These significant imports were likely the result of a strong
U.S. demand for advanced biodiesel and renewable diesel, supported by
the RFS standards, the low carbon fuel standard (LCFS) in California,
the biodiesel blenders tax credit, and the opportunity for imported
biodiesel and renewable diesel to realize these incentives. We have not
included the potential for increased (or decreased) volumes of imported
advanced biodiesel and renewable diesel in our projection of the
reasonably attainable volume for 2020. As discussed previously, any
increases in the import of advanced biodiesel and renewable diesel is
necessarily diverted from other markets. There is also a far higher
degree of uncertainty related to the availability and production of
advanced biodiesel and renewable diesel in foreign countries, as this
supply can be affected by a number of unpredictable factors such as the
imposition of tariffs and increased incentives for the use of these
fuels in other countries (such as tax incentives or blend mandates).
EPA also lacks the data necessary to determine the quantity of these
fuels that would otherwise be produced and used in other countries, and
thus the degree to which the RFS standards are simply diverting this
fuel from use in other countries as opposed to incentivizing additional
production.
    While we do not consider changes in imports or exports of advanced
biodiesel and renewable diesel in our projection of the reasonably
attainable volume, changes to the volume of these fuels that is
imported and exported could potentially impact the attainable volume.
Imports of advanced biodiesel and renewable diesel are projected to
increase by 150 million gallons from 2018 to 2019 (from approximately
350 million gallons in 2018 to approximately 500 million gallons in
2019, see Table IV.B.3-2). At the same time, data through July 2019
suggests that the U.S. will export approximately 122 million gallons of
domestically produced biodiesel in 2019.\111\ Increased imports and/or
decreased exports of these fuels in 2020 could contribute to the market
supplying 2.83 billion gallons of advanced biodiesel and renewable
diesel. The higher volumes of imported advanced biodiesel and renewable
diesel in previous years (shown in Table IV.B.3-2) suggest that these
changes are possible, especially if the tariffs on biodiesel imported
from Argentina are reduced. Thus the potential for increased imports
and decreased exports further supports our determination that 2.83
billion gallons of advanced biodiesel and renewable diesel is
attainable.
---------------------------------------------------------------------------

    \111\ Projection is based on EIA data on exports of biomass-
based diesel (biodiesel) through July 2019. For more detail on this
projection see ``Projecting Advanced Biofuel Production and Imports
for 2019 (November 2019),'' memorandum from Dallas Burkholder to EPA
docket EPA-HQ-OAR-2019-0136.
---------------------------------------------------------------------------

    While changes to the volumes of imports/exports of advanced
biodiesel and renewable could supply the approximately 60 million
gallon difference between the reasonably attainable volume of these
fuels (2.77 billion gallons) and the volume needed to meet an advanced
biofuel volume of 5.09 billion ethanol-equivalent gallons (2.83 billion
gallons), these changes are not without impacts. Diverting this fuel to
markets in the U.S. may be complicated as doing so would likely require
higher prices for these fuels in the U.S. to divert the fuels from
foreign markets that are presumably more profitable currently. It may
also be more difficult and costly to distribute this additional volume
of biodiesel and renewable diesel to domestic markets than the current
foreign markets. Finally, reducing advanced biodiesel and renewable
diesel exports may indirectly result in the decreased availability of
imported volumes of these fuels, as other countries seek to replace
volumes previously imported from the U.S.
f. Attainable and Reasonably Attainable Volumes of Advanced Biodiesel
and Renewable Diesel
    In sum, the 2.83 billion gallons of advanced biodiesel and
renewable

diesel projected to be needed to achieve an advanced biofuel volume of
5.09 billion ethanol-equivalent gallons are attainable. We have reached
this conclusion based on our analysis of the above factors, including
historical supply of biodiesel and renewable diesel, the impacts of tax
policy and tariffs, production capacity and distribution
infrastructure, availability of advanced feedstocks, and imports and
exports. By contrast, we find that only 2.77 billion gallons of
advanced biodiesel and renewable diesel are reasonably attainable. This
estimate is based on our analysis of growth in qualifying feedstocks,
and represents the volume that can be supplied with minimal diversions
of advanced biofuels and feedstocks from existing uses, and the
associated harms of such diversions. These assessments support EPA's
decision to establish the advanced biofuel volume for 2020 at 5.09
billion gallons, a volume which neither requires the use of EPA's
general waiver authority nor the use of additional volumes of advanced
biofuel in place of cellulosic biofuel.

C. Volume Requirement for Advanced Biofuel

    In exercising the cellulosic waiver authority for 2017 and earlier,
we determined it was appropriate to require a partial backfilling of
missing cellulosic volumes with volumes of non-cellulosic advanced
biofuel we determined to be reasonably attainable, notwithstanding the
increase in costs associated with those decisions.\112\ For the 2018
and 2019 standards, in contrast, we placed a greater emphasis on costs
in the context of balancing the various considerations, ultimately
concluding that the applicable volume requirement should be based on
the maximum reduction permitted under the cellulosic waiver authority,
effectively preventing any backfilling of missing cellulosic biofuel
with advanced biofuel. In setting the 2019 standards, we also found
that greater volumes of advanced biofuel would be attainable but did
not believe that requiring higher volumes would be appropriate as such
volumes were not reasonably attainable and would lead to diversion of
advanced feedstocks or biofuels and the associated harms.
---------------------------------------------------------------------------

    \112\ See, e.g., Renewable Fuel Standards for 2014, 2015 and
2016, and the Biomass-Based Volume for 2017: Response to Comments
(EPA-420-R-15-024, November 2015), pages 628-631, available in
docket EPA-HQ-OAR-2015-0111-3671.
---------------------------------------------------------------------------

    For 2020, we are following the same approach as in 2018 and 2019
and exercising the cellulosic waiver authority to reduce the advanced
biofuel requirement by the maximum extent permitted. This results in an
advanced biofuel volume of 5.09 billion gallons. This also preserves
the implied statutory volume target for non-cellulosic advanced biofuel
at 4.5 billion gallons, identical to that for 2019. As in the 2019
standards, we are taking this approach for two reasons, each of which
is an independent and sufficient justification. First, as in 2019, the
reasonably attainable volume of advanced biofuel for 2020 falls short
of the volume resulting from the maximum exercise of the cellulosic
authority. It is thus appropriate to exercise the cellulosic waiver
authority to the maximum extent to minimize the harms associated with
advanced biofuel and feedstock diversions.
    Second, even if greater volumes of advanced biofuel are reasonably
attainable, the high cost of these fuels independently justifies
reducing the advanced biofuel volume for 2020 by the maximum amount
permitted under the cellulosic waiver authority. In the 2019 final rule
we presented illustrative cost projections for sugarcane ethanol and
soybean biodiesel in 2019, the two advanced biofuels that would be most
likely to provide the marginal increase in volumes of advanced biofuel
in 2019 in comparison to 2018. Sugarcane ethanol results in a cost
increase compared to gasoline that ranges from $0.39-$1.04 per ethanol-
equivalent gallon. Soybean biodiesel results in a cost increase
compared to diesel fuel that ranges from $0.74-$1.23 per ethanol-
equivalent gallon. Thus, the cost of these renewable fuels is high as
compared to the petroleum fuels they displace.
    In conclusion, we believe that a 2020 advanced biofuel volume
requirement of 5.09 billion ethanol-equivalent gallons is appropriate
following our assessment of volumes that are attainable and in
consideration of carryover RINs, potential feedstock/fuel diversions,
and costs. Comments requesting higher or lower volumes are addressed in
the separate Response to Comments document.

D. Volume Requirement for Total Renewable Fuel

    As discussed in Section II.A.1, we believe that the cellulosic
waiver provision is best interpreted as requiring that the advanced
biofuel and total renewable fuel volumes be reduced by equal amounts.
For the reasons we have previously articulated, we believe this
interpretation is consistent with the statutory language and best
effectuates the objectives of the statute, including the environmental
objectives that generally favor the use of advanced biofuels over non-
advanced biofuels and the legislative intent reflected in the statutory
volume tables.\113\ If we were to reduce the total renewable fuel
volume requirement by a lesser amount than the advanced biofuel volume
requirement, we would effectively increase the opportunity for
conventional biofuels to participate in the RFS program beyond the
implied statutory volume of 15 billion gallons. Applying an equal
reduction of 9.91 billion gallons to both the statutory target for
advanced biofuel and the statutory target for total renewable fuel
results in a total renewable fuel volume of 20.09 billion gallons as
shown in Table IV.A-1. This volume of total renewable fuel results in
an implied volume of 15 billion gallons of conventional renewable fuel,
which is the same as in the 2019 final rule. We have investigated the
different ways that the market could respond to a total renewable fuel
volume requirement of 20.09 billion gallons in a memorandum to the
docket.\114\ \115\
---------------------------------------------------------------------------

    \113\ See 81 FR 89752-89753 (December 12, 2016). See also 78 FR
49809-49810 (August 15, 2013); 80 FR 77434 (December 14, 2015).
    \114\ ``Updated market impacts of biofuels in 2020,'' memorandum
from David Korotney to docket EPA-HQ-OAR-2019-0136. In prior
actions, similar analyses to those described in this memorandum
indicated that the market was capable of both producing and
consuming the required volume of renewable fuels, and that as a
result there was no basis for finding an inadequate domestic supply
of total renewable fuel. See 82 FR 34229 & n.82 (July 21, 2017).
Given the D.C. Circuit's decision in ACE, however, assessment of
demand-side constraints is no longer relevant for determining
inadequate domestic supply. Even so, we believe consideration of the
ways that the market could make this volume available may still be
generally relevant to whether and how EPA exercises its waiver
authorities, such as our consideration of whether the volumes will
cause severe economic harm.
    \115\ We note that the previously cited memorandum discusses the
potential for total ethanol consumption in 2020, but does not make
specific projections for E0, E15 and E85. Volumes of these ethanol
blends are highly dependent upon consumer demand and retail
distribution infrastructure. In prior annual rules, we assessed
volumes of these blends in determining whether and to what extent to
exercise the inadequate domestic supply waiver prong of the general
waiver authority. The D.C. Circuit's decision ACE precludes
assessment of demand-side constraints in determining inadequate
domestic supply. While we could still assess such blend volumes in
deciding whether and to what extent to exercise our other
discretionary waiver authorities, and in evaluating the market's
ability to meet the total renewable fuel requirement, doing so is
not necessary. In terms of the market's ability to satisfy the total
renewable fuel requirement, the more relevant consideration is
whether the pool-wide ethanol volume, together with volumes of other
biofuels, suffices. We note that EPA does not establish separate
standards for E0, E15, or E85. Moreover, there has historically been
a lack of reliable data on volumes of these blends, making reliance
on the pool-wide ethanol volume a more technically robust approach.
---------------------------------------------------------------------------

    We note that the statute provides other authorities for EPA to
reduce the required volumes beyond that permitted

by the cellulosic waiver. As explained in Section II of this rule and
in Section 2 of the Response to Comments document, we do not believe it
is appropriate to further reduce volumes under the general waiver
authority.
    We acknowledge that there is some uncertainty regarding whether the
market will actually make available 5.09 billion ethanol-equivalent
gallons of advanced biofuel or 20.09 billion ethanol-equivalent gallons
of total renewable fuel in 2020. In the event that the market is not
able to meet these volume requirements with biofuels produced and used
in 2020, the carryover RIN bank represents a source of RINs that could
help obligated parties meet them if the market fails to supply
sufficient advanced biofuels. As discussed in greater detail in Section
II.B.1, carryover RINs provide obligated parties compliance flexibility
in the face of substantial uncertainties in the transportation fuel
marketplace and provide a liquid and well-functioning RIN market upon
which success of the entire program depends. We currently estimate that
there are approximately 680 million advanced biofuel carryover RINs and
2.80 billion non-advanced (D6) carryover RINs available.

V. Impacts of 2020 Volumes on Costs

    In this section, EPA presents its assessment of the illustrative
costs of this final RFS annual rulemaking. It is important to note that
these illustrative costs do not attempt to capture the full impacts of
this final rule. We frame the analyses we have performed for this rule
as ``illustrative'' so as not to give the impression of comprehensive
estimates. These estimates are provided for the purpose of showing how
the cost to produce a gallon of a ``representative'' renewable fuel
compares to the cost of fossil fuels (e.g., petroleum-derived fuels).
There are a significant number of caveats that must be considered when
interpreting these illustrative cost estimates. For example, there are
many different feedstocks that could be used to produce biofuels, and
there is a significant amount of heterogeneity in the costs associated
with these different feedstocks and fuels. Some renewable fuels may be
cost competitive with the fossil fuels they replace; however, we do not
have cost data on every type of feedstock and every type of fuel.
Therefore, we do not attempt to capture this range of potential costs
in our illustrative estimates.
    The renewable fuel volumes for which we provide cost estimates are
described in Section III. In this section, we estimate illustrative
costs for two different cases. In the first case, we provide
illustrative cost estimates by comparing the final 2020 RFS renewable
fuel volumes to 2020 RFS statutory renewable fuel volumes. In the
second case, we examine the final 2020 RFS renewable fuel volumes to
the final 2019 RFS renewable fuel volumes to estimate changes in the
annual costs of the final 2020 RFS annual rule in comparison to the
final 2019 RFS annual rule.\116\
---------------------------------------------------------------------------

    \116\ This action imposes renewable fuel standards only for
2020. However, solely for E.O. 13771 purposes in this section, we
estimate the costs of the relevant volumes as though they applied in
future years as well. Therefore, we use the term ``annual costs'' in
this section.
---------------------------------------------------------------------------

A. Illustrative Costs Analysis of 2020 Final Volumes Compared to the
2020 Statutory Volumes Baseline

    In this section, EPA provides illustrative cost estimates that
compare the final 2020 RFS cellulosic renewable volume requirement to
the 2020 RFS cellulosic statutory renewable fuel volume that would be
required absent the exercise of our cellulosic waiver authority under
CAA section 211(o)(7)(D)(i). As described in Section III, we are
finalizing a cellulosic volume of 0.59 billion gallons for 2020, using
our cellulosic waiver authority to waive the statutory cellulosic
volume of 10.5 billion gallons by 9.91 billion gallons. Estimating the
cost savings from renewable fuel volumes that are not projected to be
produced is inherently challenging. EPA has taken the relatively
straightforward methodology of multiplying the waived cellulosic volume
by the wholesale per-gallon costs of cellulosic biofuel production
relative to the fossil fuels they displace.
    While there may be growth in other cellulosic renewable fuel
sources, we believe it is appropriate to use cellulosic ethanol
produced from corn kernel fiber at an existing corn starch ethanol
production facility as representative of cellulosic renewable fuel. As
explained in Section III, we believe that production of the major
alternative cellulosic biofuel--compressed natural gas/liquefied
natural gas (CNG/LNG)-derived from biogas--is constrained in 2020 due
to a limitation in the number of vehicles capable of using this form of
fuel.\117\
---------------------------------------------------------------------------

    \117\ See Section III.D.2 for a further discussion of the
quantity of CNG/LNG projected to be used as transportation fuel in
2020.
---------------------------------------------------------------------------

    EPA uses a ``bottom-up'' engineering cost analysis to quantify the
costs of producing a gallon of cellulosic ethanol derived from corn
kernel fiber. There are multiple processes that could yield cellulosic
ethanol from corn kernel fiber. EPA assumes a cellulosic ethanol
production process that generates biofuel using distiller's grains, a
co-product of generating corn starch ethanol that is commonly dried and
sold into the feed market as distillers dried grains with solubles
(DDGS), as the renewable biomass feedstock. We assume an enzymatic
hydrolysis process with cellulosic enzymes to break down the cellulosic
components of the distiller's grains. This process for generating
cellulosic ethanol is similar to approaches currently used by industry
to generate cellulosic ethanol at a commercial scale, and we believe
these cost estimates are likely representative of the range of
different technology options being developed to produce ethanol from
corn kernel fiber. We then compare the per-gallon costs of the
cellulosic ethanol to the fossil fuel that would be replaced at the
wholesale stage, since that is when the two are blended together.
    These cost estimates do not consider taxes, retail margins, or
other costs or transfers that occur at or after the point of blending.
Transfers are payments within society and are not additional costs
(e.g., RIN payments are one example of a transfer payment). We do not
attempt to estimate potential cost savings related to avoided
infrastructure costs (e.g., the cost savings of not having to provide
pumps and storage tanks associated with higher-level ethanol blends).
When estimating per-gallon costs, we consider the costs of gasoline on
an energy-equivalent basis as compared to ethanol, since more ethanol
gallons must be consumed to travel the same distance as on gasoline due
to the ethanol's lower energy content.
    Table V.A-1 below presents the cellulosic fuel cost savings
associated with this final rule that are estimated using this
approach.\118\ The per-gallon cost differences for cellulosic ethanol
range from $0.46-$3.30 per ethanol-equivalent gallon ($/EEG).\119\
Given that commercial cellulosic ethanol production is still at an
early stage in its deployment, these cost estimates have a significant
range. Multiplying the per-

gallon cost differences by the amount of cellulosic biofuel waived in
this final rule results in approximately $4.6-$33 billion in cost
savings.
---------------------------------------------------------------------------

    \118\ Details of the data and assumptions used can be found in a
Memorandum available in the docket entitled ``Cost Impacts of the
Final 2020 Annual Renewable Fuel Standards'', Memorandum from
Michael Shelby, Dallas Burkholder, and Aaron Sobel available in
docket EPA-HQ-OAR-2019-0136.
    \119\ For the purposes of the cost estimates in this section,
EPA has not attempted to adjust the price of the petroleum fuels to
account for the impact of the RFS program, since the changes in the
renewable fuel volume are relatively modest in comparison to the
quantity of fuel associated with the petroleum market. Rather, we
have used the wholesale price projections for gasoline and diesel as
reported in EIA's October 2019 STEO.

    Table V.A-1--Illustrative Costs Analysis of 2020 Final Cellulosic
             Volumes Compared to the 2020 Statutory Volumes
------------------------------------------------------------------------

------------------------------------------------------------------------
Cellulosic Volume Required (Million Ethanol-                         590
 Equivalent Gallons)..............................
Change in Required Cellulosic Biofuel from 2020                  (9,910)
 Statutory Volume (Million Ethanol-Equivalent
 Gallons).........................................
Cost Difference Between Cellulosic Corn Kernel               $0.46-$3.30
 Fiber Ethanol and Gasoline Per-Gallon ($/Ethanol-
 Equivalent Gallons) \120\ ($/EEG) \121\..........
Annual Change in Overall Costs (Million $) \122\..    $(4,600)-$(33,000)
------------------------------------------------------------------------

B. Illustrative Cost Analysis of the 2020 Final Volumes Compared to the
2019 Final Volumes
---------------------------------------------------------------------------

    \120\ For this table and all subsequent tables in this section,
approximate costs in per-gallon cost difference estimates are
rounded to the cents place.
    \121\ Since the proposed rule, we have updated these per-gallon
and total annual cost differences based on EIA's updated projections
for petroleum gasoline costs in 2020 from the October Short-Term
Energy Outlook.
    \122\ For this table and all subsequent tables in this section,
approximate resulting costs (other than in per-gallon cost
difference estimates) are rounded to two significant figures.
---------------------------------------------------------------------------

    In this section, we provide illustrative cost estimates for the
final 2020 RFS volumes compared to the final 2019 RFS volumes. In
comparison to the final 2019 RFS volumes, the final 2020 RFS volumes
result in an overall increase of 172 million ethanol-equivalent gallons
of cellulosic biofuel derived from CNG/LNG from landfill biogas. To
estimate the cost of production of CNG/LNG derived from landfill gas
(LFG), EPA uses Version 3.2 of the Landfill Gas Energy Cost Model, or
LFGcost-Web.\123\ LFGcost-Web is a software tool developed by EPA's
Landfill Methane Outreach Program (LMOP) to conduct initial economic
feasibility analysis of developing LFG energy recovery projects in the
United States. The default inputs and cost estimates by LFGcost-Web are
based on typical project designs and for typical landfill situations.
The Model attempts to include all equipment, site work, permits,
operating activities, and maintenance that would normally be required
for constructing and operating a typical project.
---------------------------------------------------------------------------

    \123\ The current version of this model and user's manual are
downloadable from the LMOP website. https://www.epa.gov/lmop/download-lfgcost-web/.
---------------------------------------------------------------------------

    Table V.B-1 presents estimates of per energy-equivalent gallon
costs for producing CNG/LNG derived from landfill biogas relative to
natural gas at the wholesale level. These per-gallon costs are then
multiplied by the increase in the final 2020 RFS cellulosic biofuel
volume relative to the 2019 final RFS cellulosic biofuel volume to
obtain an estimate of costs of using increased qualities of CNG/LNG
from landfill biogas. An estimate of overall costs associated with the
increase in the cellulosic biofuel volume is calculated as the range of
$(1.1)-$17 million.

  Table V.B-1--Illustrative Costs Analysis of the 2020 Final Cellulosic
           Volume Compared to the 2019 Cellulosic Volume \124\
------------------------------------------------------------------------

------------------------------------------------------------------------
                            Cellulosic Volume
------------------------------------------------------------------------
Change in Volume (Million Ethanol-Equivalent                         172
 Gallons).........................................
------------------------------------------------------------------------
                    CNG/LNG Derived from Biogas Costs
------------------------------------------------------------------------
Cost Difference Between CNG/LNG Derived from               $(0.01)-$0.10
 Landfill Biogas and Natural Gas Per Gallon ($/
 Ethanol-Equivalent Gallons) ($/EEG)..............
Annual Increase in Overall Costs (Million $)......            $(1.1)-$17
------------------------------------------------------------------------

    The annual volume-setting process encourages consideration of the
RFS program on a piecemeal (i.e., year-to-year) basis, which may not
reflect the full, long-term costs and benefits of the program. For the
purposes of this final rule, other than the estimates of costs of
producing a ``representative'' renewable fuel compared to cost of
fossil fuel, EPA did not quantitatively assess other direct and
indirect costs or benefits of changes in renewable fuel volumes. These
direct and indirect costs and benefits may include infrastructure
costs, investment, climate change impacts, air quality impacts, and
energy security benefits, which all to some degree may be affected by
the annual volumes. For example, we do not have a quantified estimate
of the lifecycle GHG or energy security benefits for a single year
(e.g., 2020). Also, there are impacts that are difficult to quantify,
such as rural economic development and employment changes from more
diversified fuel sources, that are not quantified in this rulemaking.
While some of these impacts were analyzed in the 2010 final rulemaking
that established the current RFS program, we have not analyzed these
impacts for the 2020 volume requirements.\125\
---------------------------------------------------------------------------

    \124\ For the proposed 2020 annual RFS rule, we estimated that
there would be an increase of cellulosic biofuel derived from CNG/
LNG from landfill biogas of 126 million gallons (ethanol-equivalent)
compared to the 2019 final annual RFS volumes. The total costs of
the proposed 2020 cellulosic volume compared to 2019 RFS cellulosic
volume range from $(3.2)-$10 million. In this final rule, both the
projected volume increase of CNG/LNG derived from biogas and the
cost of natural gas to which this fuel is compared have been
updated.
    \125\ RFS2 Regulatory Impact Analysis (RIA). U.S. EPA 2010,
Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis.
EPA-420-R-10-006. February 2010. Docket EPA-HQ-OAR-2009-0472-11332.
---------------------------------------------------------------------------

VI. Biomass-Based Diesel Volume for 2021

    In this section we discuss the BBD applicable volume for 2021. We
are setting this volume in advance of those for other renewable fuel
categories in light of the statutory requirement in CAA section
211(o)(2)(B)(ii) to establish the applicable volume of BBD for years
after 2012 no later than 14 months before the applicable volume will
apply. We are not at this time setting the BBD

percentage standards that would apply to obligated parties in 2021 but
intend to do so in late 2020, after receiving EIA's estimate of
gasoline and diesel consumption for 2021. At that time, we will also
set the percentage standards for the other renewable fuel types for
2021. Although the BBD applicable volume sets a floor for required BBD
use, because the BBD volume requirement is nested within both the
advanced biofuel and the total renewable fuel volume requirements, any
BBD produced can be used to satisfy both of these other applicable
volume requirements, even beyond the mandated BBD volume.

A. Statutory Requirements

    The statute establishes applicable volume targets for years through
2022 for cellulosic biofuel, advanced biofuel, and total renewable
fuel. For BBD, applicable volume targets are specified in the statute
only through 2012. For years after those for which volumes are
specified in the statute, EPA is required under CAA section
211(o)(2)(B)(ii) to determine the applicable volume of BBD, in
coordination with the Secretary of Energy and the Secretary of
Agriculture, based on a review of the implementation of the program
during calendar years for which the statute specifies the volumes and
an analysis of the following factors:
    1. The impact of the production and use of renewable fuels on the
environment, including on air quality, climate change, conversion of
wetlands, ecosystems, wildlife habitat, water quality, and water
supply;
    2. The impact of renewable fuels on the energy security of the
United States;
    3. The expected annual rate of future commercial production of
renewable fuels, including advanced biofuels in each category
(cellulosic biofuel and BBD);
    4. The impact of renewable fuels on the infrastructure of the
United States, including deliverability of materials, goods, and
products other than renewable fuel, and the sufficiency of
infrastructure to deliver and use renewable fuel;
    5. The impact of the use of renewable fuels on the cost to
consumers of transportation fuel and on the cost to transport goods;
and
    6. The impact of the use of renewable fuels on other factors,
including job creation, the price and supply of agricultural
commodities, rural economic development, and food prices.
    The statute also specifies that the volume requirement for BBD
cannot be less than the applicable volume specified in the statute for
calendar year 2012, which is 1.0 billion gallons.\126\ The statute does
not, however, establish any other numeric criteria, and provides EPA
discretion over how to weigh the importance of the often competing
factors and the overarching goals of the statute when the EPA sets the
applicable volumes of BBD in years after those for which the statute
specifies such volumes. In the period 2013-2022, the statute specifies
increasing applicable volumes of cellulosic biofuel, advanced biofuel,
and total renewable fuel, but provides no numeric criteria, beyond the
1.0 billion gallon minimum, on the level at which BBD volumes should be
set.
---------------------------------------------------------------------------

    \126\ See CAA section 211(o)(2)(B)(v).
---------------------------------------------------------------------------

    In establishing the BBD and cellulosic standards as nested within
the advanced biofuel standard, Congress clearly intended to support
development of BBD and especially cellulosic biofuels, while also
providing an incentive for the growth of other non-specified types of
advanced biofuels. In general, the advanced biofuel standard provides
an opportunity for other advanced biofuels (advanced biofuels that do
not qualify as cellulosic biofuel or BBD) to compete with cellulosic
biofuel and BBD to satisfy the advanced biofuel standard after the
cellulosic biofuel and BBD standards have been met.
    In Alon Refining Krotz Spring, Inc. v. EPA, the D.C. Circuit
affirmed EPA's approach to setting the 2017 BBD volume as ``consistent
with the structure and purposes of the statute.'' \127\ In today's
rule, we have applied the same general methodology upheld in Alon with
updated information. Similar to the rule reviewed in Alon, today's rule
finds that it is the advanced biofuel standard, when set in 2021, that
will drive the use of BBD in 2021. Furthermore, in light of the
benefits of incentivizing other advanced biofuels, we choose to
preserve the existing gap for other advanced biofuels, and accordingly
establish the BBD volume at the same level as for 2020: 2.43 billion
gallons.
---------------------------------------------------------------------------

    \127\ Alon Refining Krotz Springs, Inc. v. EPA, 936 F.3d 628,
666 (D.C. Cir 2019).
---------------------------------------------------------------------------

B. Review of Implementation of the Program and the 2021 Applicable
Volume of Biomass-Based Diesel

    One of the considerations in determining the BBD volume for 2021 is
a review of the implementation of the program to date, as it affects
BBD. This review is required by the CAA, and also provides insight into
the capabilities of the industry to produce, import, export,
distribute, and use BBD. It also helps us to understand what factors,
beyond the BBD standard, may incentivize the availability of BBD. In
reviewing the program, we assess numerous regulatory, economic, and
technical factors, including the availability of BBD in past years
relative to the BBD and advanced standards; the prices of BBD,
advanced, and conventional RINs; the competition between BBD and other
advanced biofuels in meeting the portion of the advanced standard not
required to be met by BBD or cellulosic RINs; the maturation of the BBD
industry over the course of the RFS program; and the effects of the BBD
standard on the production and development of both BBD and other
advanced biofuels.
    Table VI.B.1-1 shows, for 2011-2019, the number of BBD RINs
generated, the number of RINs retired due to export, the number of RINs
retired for reasons other than compliance with the annual BBD
standards, and the consequent number of available BBD RINs; for 2011-
2019, the BBD and advanced biofuel standards; and for 2020, the BBD and
advanced biofuel standards.

              Table VI.B.1-1--Biomass-Based Diesel (D4) RIN Generation and Advanced Biofuel and Biomass-Based Diesel Standards in 2011-2020
                                                             [Million RINs or gallons] \128\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                BBD RINs                                            Advanced
                                                                                retired,    Available       BBD          BBD        biofuel
                                                                 BBD RINs     Exported       non-      BBD RINs a    standard     standard     standard
                                                                generated    BBD (RINs)   compliance               (gallons) b    (RINs) b     (RINs) b
                                                                                reasons
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011.........................................................        1,692           48          102        1,542          800        1,200        1,350
2012.........................................................        1,738          102           91        1,545        1,000        1,500        2,000
2013.........................................................        2,740          125          101        2,514        1,280        1,920        2,750
2014.........................................................        2,710          134           99        2,477        1,630      c 2,490        2,670
2015.........................................................        2,796          145           45        2,606        1,730      c 2,655        2,880
2016.........................................................        4,009          203          121        3,685        1,900        2,850        3,610
2017.........................................................        3,849          257          115        3,477        2,000        3,000        4,280
2018.........................................................        3,871          247           59        3,565        2,100        3,150        4,290
d 2019.......................................................        4,381          183            0        4,198        2,100        3,150        4,920
2020.........................................................          N/A          N/A          N/A          N/A        2,430        3,645        5,100
--------------------------------------------------------------------------------------------------------------------------------------------------------
a Available BBD RINs may not be exactly equal to BBD RINs Generated minus Exported RINs and BBD RINs Retired, Non-Compliance Reasons, due to rounding.
b The volumes for each year are those used as the basis for calculating the percentage standards in the final rule. They have not been retroactively
  adjusted for subsequent events, such as differences between projected and actual gasoline and diesel use and exempted small refinery volumes.
c Each gallon of biodiesel qualifies for 1.5 RINs due to its higher energy content per gallon than ethanol. Renewable diesel qualifies for between 1.5
  and 1.7 RINs per gallon, but generally has an equivalence value of 1.7. While some fuels that qualify as BBD generate more than 1.5 RINs per gallon,
  EPA multiplies the required volume of BBD by 1.5 in calculating the percent standard per 80.1405(c). In 2014 and 2015 however, the number of RINs in
  the BBD Standard column is not exactly equal to 1.5 times the BBD volume standard as these standards were established based on actual RIN generation
  data for 2014 and a combination of actual data and a projection of RIN generation for the last three months of the year for 2015, rather than by
  multiplying the required volume of BBD by 1.5. Some of the volume used to meet the BBD standard in these years was renewable diesel, with an
  equivalence value higher than 1.5.
d 2019 ``BBD RINs generated,'' ``Exported BBD,'' and ``BBD RINs retired, Non-compliance reason'' are projected based on data through September 2019.

    In reviewing historical BBD RIN generation and use, we see that the
number of RINs available for compliance purposes exceeded the volume
required to meet the BBD standard in 2011-13 and 2016-19.\129\
Additional production and use of biodiesel was likely driven by a
number of factors, including demand to satisfy the advanced biofuel and
total renewable fuels standards, the biodiesel tax credit,\130\ and
various other State and local incentives and mandates allowing for
favorable blending economics. Moreover, additional production of BBD,
beyond the volumes shown in the above table, was exported.
---------------------------------------------------------------------------

    \128\ Available BBD RINs Generated, Exported BBD RINs, and BBD
RINs Retired for Non-Compliance Reasons information from EMTs.
    \129\ The number of RINs available in 2014 and 2015 was
approximately equal to the number required for compliance in those
years, as the standards for these years were finalized at the end of
November 2015 and EPA's intent at that time was to set the standards
for 2014 and 2015 to reflect actual BBD use. See 80 FR 77490-92,
77495 (December 14, 2015).
    \130\ The biodiesel tax credit was reauthorized in January 2013.
It applied retroactively for 2012 and for the remainder of 2013. It
was once again extended in December 2014 and applied retroactively
to all of 2014 as well as to the remaining weeks of 2014. In
December 2015 the biodiesel tax credit was authorized and applied
retroactively for all of 2015 as well as through the end of 2016. In
February 2018 the biodiesel tax credit was authorized and applied
retroactively for all of 2017. The biodiesel tax credit is not
currently in place for 2018, 2019, or 2020.
---------------------------------------------------------------------------

    The prices paid for advanced biofuel and BBD RINs beginning in
early 2013 through September 2019 (the last month for which data is
available) also support the conclusion that the advanced biofuel, and
in some periods the total renewable fuel standards, provide a
sufficient incentive for additional biodiesel volume beyond what is
required by the BBD standard. Because the BBD standard is nested within
the advanced biofuel and total renewable fuel standards, and therefore
can help to satisfy three RVOs, we would expect the price of BBD RINs
to exceed that of advanced and conventional renewable RINs.\131\ If,
however, BBD RINs are being used (or are expected to be used) by
obligated parties to satisfy their advanced biofuel obligations, above
and beyond the BBD standard, we would expect the prices of advanced
biofuel and BBD RINs to converge.\132\ Further, if BBD RINs are being
used (or are expected to be used) to satisfy obligated parties' total
renewable fuel obligation, above and beyond their BBD and advanced
biofuel requirements, we would expect the price for all three RIN types
to converge.
---------------------------------------------------------------------------

    \131\ This is because when an obligated party retires a BBD RIN
(D4) to help satisfy their BBD obligation, the nested nature of the
BBD standard means that this RIN also counts towards satisfying
their advanced and total renewable fuel obligations. Advanced RINs
(D5) count towards both the advanced and total renewable fuel
obligations, while conventional RINs (D6) count towards only the
total renewable fuel obligation.
    \132\ We would still expect D4 RINs to be valued at a slight
premium to D5 and D6 RINs in this case (and D5 RINs at a slight
premium to D6 RINs) to reflect the greater flexibility of the D4
RINs to be used towards the BBD, advanced biofuel, and total
renewable fuel standard. This pricing has been observed over the
past several years.
---------------------------------------------------------------------------

    When examining RIN price data from 2011 through September 2019,
shown in Figure VI.B.2-1, we see that beginning in early 2013 and
through September 2019 the advanced RIN (D5) price and BBD (D4) RIN
prices were approximately equal. Similarly, from early 2013 through
late 2016 the conventional renewable fuel (D6) RIN and BBD RIN prices
were approximately equal. This demonstrates that the advanced biofuel
standard, and in some periods the total renewable fuel standard, are
capable of incentivizing increased BBD volumes beyond the BBD standard.
The advanced biofuel standard has incentivized additional volumes of
BBD since 2013, while the total standard had incentivized additional
volumes of BBD from 2013 through 2016.\133\ We do note, however,

that in 2011-2012 the BBD RIN price was significantly higher than both
the advanced biofuel and conventional renewable fuel RIN prices. At
this time, the E10 blendwall had not yet been reached, and it was
likely more cost effective for most obligated parties to satisfy the
portion of the advanced biofuel requirement that exceeded the BBD and
cellulosic biofuel requirements with advanced ethanol.
---------------------------------------------------------------------------

    \133\ Although we did not issue a rule establishing the final
2013 standards until August of 2013, we believe that the market
anticipated the final standards, based on EPA's July 2011 proposal
and the volume targets for advanced and total renewable fuel
established in the statute. (76 FR 38844, 38843 July 1, 2011).
Similarly, for 2014 and 2015, although we issued the final standards
in late 2015, the proposed rule incentivized the market to use BBD
volumes exceeding the proposed BBD standard to help satisfy the
proposed advanced and total standards. See 80 FR 33100 (2014-16
standards proposed June 10, 2015); 78 FR 71732 (2014 standards
proposed Nov. 29, 2013).
[GRAPHIC] [TIFF OMITTED] TR06FE20.002

    We also examined the opportunity for advanced biofuels other than
BBD and cellulosic biofuels, as shown in Table VI.B.1-2. We believe it
is important to preserve this opportunity for other advanced biofuels,
and we are conscious of public comments claiming that BBD volume
requirements that are a significant portion of the advanced volume
requirements effectively disincentivize the future development of other
promising advanced biofuel pathways.\134\ A variety of different types
of advanced biofuels, rather than a single type such as BBD, would
increase energy security (e.g., by increasing the diversity of
feedstock sources used to make biofuels, thereby reducing the impacts
associated with a shortfall in a particular type of feedstock) and
increase the likelihood of the development of lower cost advanced
biofuels that meet the same GHG reduction threshold as BBD.\135\
---------------------------------------------------------------------------

    \134\ See, e.g., Comments from Advanced Biofuel Association,
available in EPA docket EPA-HQ-OAR-2018-0167-1277.
    \135\ All types of advanced biofuel, including BBD, must achieve
lifecycle GHG reductions of at least 50 percent. See CAA section
211(o)(1)(B)(i), (D).

                Table VI.B.1-2--Opportunity for and RIN Generation of ``Other'' Advanced Biofuels
                                                 [Million RINs]
----------------------------------------------------------------------------------------------------------------
                                                                                Available BBD  (D4)
                                                    Opportunity for    Available advanced    RINs in  excess of
                                                  ``other'' advanced        (D5) RINs       the BBD  requirement
                                                     biofuels \a\                                    \b\
----------------------------------------------------------------------------------------------------------------
2011............................................                 150                   223                   342
2012............................................                 500                   597                    45
2013............................................                 829                   548                   594
2014 \c\........................................                 147                   143                   -13
2015 \c\........................................                 102                   147                   -49
2016............................................                 530                    98                   835

2017............................................                 969                   144                   477
2018............................................                 852                   178                   415
2019 \d\........................................               1,352                   310                 1,048
----------------------------------------------------------------------------------------------------------------
\a\ The opportunity for ``other'' advanced biofuel is calculated by subtracting the number of cellulosic biofuel
  and BBD RINs required each year from the number of advanced biofuel RINs required. This portion of the
  advanced standard can be satisfied by advanced (D5) RINs, BBD RINs in excess of those required by the BBD
  standard, or cellulosic RINs in excess of those required by the cellulosic standard.
\b\ The available BBD (D4) RINs in excess of the BBD requirement is calculated by subtracting the required BBD
  volume (multiplied by 1.5 to account for the equivalence value of biodiesel) required each year from the
  number of BBD RINs available for compliance in that year. This number does not include carryover RINs, nor do
  we account for factors that may impact the number of BBD RINs that must be retired for compliance, such as
  differences between the projected and actual volume of obligated gasoline and diesel. The required BBD volume
  has not been retroactively adjusted for subsequent events, such as differences between projected and actual
  gasoline and diesel use and exempted small refinery volumes.
\c\ The 2014 and 2015 volume requirements were established in November 2015 and were set equal to the number of
  RINs projected to be available for each year.
\d\ Available advanced RINs and available D4 RINs in excess of the BBD requirement are projected based on data
  through September 2019.

    In each year since 2016, there has been a significant gap for other
advanced biofuels, but this gap has nonetheless been dominated by BBD.
While the RFS volumes created the opportunity for up to 530 million,
969 million, 852 million, and 1,352 million gallons of ``other''
advanced for 2016, 2017, 2018, and 2019 respectively to be used to
satisfy the advanced biofuel obligation, only 98 million, 144 million,
178 million, and 310 million gallons of ``other'' advanced biofuels
were generated. This is significantly less than the volumes of
``other'' advanced available in 2012-2013. Despite creating space
within the advanced biofuel standard for ``other'' advanced, in recent
years, only a small fraction of that space has been filled with
``other'' advanced, and BBD continues to fill most of the gap between
the BBD standard and the advanced standard. Thus, there does not appear
to be a compelling reason to increase the ``space'' maintained for
``other'' advanced biofuel volumes.
    This conclusion is consistent with our approach in the 2019 final
rule, when we established the 2019 advanced biofuel volume and the 2020
BBD volume. The overall volume of non-cellulosic advanced biofuel
increased by 500 million gallons for 2019. For the 2020 BBD volume, we
determined that it was appropriate to also increase the BBD volume by
the same energy-equivalent amount (330 million physical gallons) as it
would preserve the space already available for other advanced biofuels
to compete in 2018 (850 million RINs). This space is many times the
amount of other advanced biofuels used in each year starting from 2016.
    In this action, we are maintaining the implied non-cellulosic
advanced biofuel standard for 2021 that is presented in the statute,
and that is equivalent to the implied non-cellulosic advanced biofuel
standard for 2020. For the 2021 BBD volume, we thus find that it is
appropriate to maintain the BBD volume for 2021 at 2.43 billion
gallons. Even in an optimistic scenario, we do not believe that the use
of other advanced biofuels will approach 850 million gallons by 2021.
We recognize, however, the dynamic nature of the fuels marketplace, and
the impact that the BBD blender's tax credit can have on the relative
economics of BBD versus other advanced biofuels, so going forward we
intend to assess the appropriate space for other advanced biofuels in
subsequent rules setting BBD volumes.
    At the same time, the rationale for preserving the ``space'' for
``other'' advanced biofuels remains. We note that the BBD industry in
the U.S. and abroad has matured since EPA first increased the required
volume of BBD beyond the statutory minimum in 2013.\136\ To assess the
maturity of the biodiesel industry, EPA compared information on BBD RIN
generation by company in 2012 and 2018 (the most recent year for which
complete RIN generation by company is available). In 2012, the annual
average RIN generation per company producing BBD was about 11 million
RINs (about 7.3 million gallons) with approximately 50 percent of
companies producing less than 1 million gallons of BBD a year.\137\
Since that time, the BBD industry has matured in a number of critical
areas, including growth in the size of companies, the consolidation of
the industry, and more stable funding and access to capital. By 2018,
the average BBD RIN generation per company had climbed to over 36
million RINs (23.7 million gallons) annually, more than a 3-fold
increase. Only 20 percent of the companies produced less than 1 million
gallons of BBD in 2017.\138\
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    \136\ See also generally 84 FR 36794-95 (further explaining our
approach in establishing the 2013 BBD volume and our experience
since that time).
    \137\ ``BBD RIN Generation by Company in 2012 and 2018,''
available in EPA docket EPA-HQ-OAR-2019-0136.
    \138\ Id.
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    We recognize that the space for other advanced biofuels in 2021
will ultimately depend on the 2021 advanced biofuel volume. While EPA
is not establishing the advanced biofuel volume for 2021 in this
action, we anticipate that the non-cellulosic advanced biofuel volume
for 2021, when established, will be greater than 3.65 billion gallons
(equivalent to 2.43 billion gallons of BBD, after applying the 1.5
equivalence ratio). This expectation is consistent with our actions in
previous years. Accordingly, we expect that the 2021 advanced biofuel
volume, together with the 2021 BBD volume established today, will
continue to preserve a considerable portion of the advanced biofuel
volume that could be satisfied by either additional gallons of BBD or
by other unspecified and potentially less costly types of qualifying
advanced biofuels.

C. Consideration of Statutory Factors in CAA Section
211(o)(2)(B)(ii)(I)-(VI) for 2021 and Determination of the 2021
Biomass-Based Diesel Volume

    As in past annual standard-setting rulemakings, we find that
additional volumes of BBD would displace other advanced biofuel, due to
the nested

nature of the standards,\139\ as opposed to petroleum fuels. More
specifically, for a given advanced biofuel standard, greater or lesser
BBD volume requirements generally do not change the amount of advanced
biofuel used to displace petroleum fuels; the total volume of advanced
biofuels is unchanged regardless of the BBD volume requirement. Thus
increasing the BBD volume requirement would result in the displacement
of other types of advanced biofuels that could have been used to meet
the advanced biofuels volume requirement.
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    \139\ The BBD volume requirement is nested within the advanced
biofuel requirement, and the advanced biofuel requirement is, in
turn, nested within the total renewable fuel volume requirement. See
CAA section 211(o)(2)(B)(i)(IV), (II). This means that any BBD
produced can be used to satisfy both these other applicable volume
requirements even beyond the BBD volume requirement.
---------------------------------------------------------------------------

    As a result, as in past assessments of the factors articulated in
CAA 211(o)(2)(B)(ii)(I)-(VI), we consider BBD in comparison to other
advanced biofuels, and not in comparison to petroleum diesel. Our
primary assessment of the statutory factors is that because the BBD
requirement is nested within the advanced biofuel volume requirement,
we expect that the 2021 advanced volume requirement will determine the
level of BBD use, production, and imports that occur in 2021.
Therefore, we continue to believe that approximately the same overall
volume of BBD would likely be supplied in 2021 regardless of the 2021
BBD volume requirement. In the long-term, however, leaving adequate
room for growth of other advanced biofuels could have a beneficial
impact on certain statutory factors. Notably, this incentivizes the
development of other advanced biofuels with potentially superior cost,
climate, environmental, and other characteristics, relative to BBD. We
present a detailed analysis of the statutory factors for the BBD volume
requirement in a memorandum to the docket.\140\
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    \140\ ``Memorandum to docket: Statutory Factors Assessment for
the 2021 Biomass-Based Diesel (BBD) Applicable Volumes.'' See Docket
EPA-HQ-OAR-2019-0136.
---------------------------------------------------------------------------

D. BBD Volume Requirement for 2021

    Based on the above analysis, we are setting the applicable volume
of BBD at 2.43 billion gallons for 2021. We believe this volume sets
the appropriate floor for BBD, and that the volume of BBD actually used
in 2021 will be driven by the level of the advanced biofuel and
potentially the total renewable fuel standards that the Agency will
establish for 2021. In addition, despite providing a significant degree
of space for ``other'' advanced biofuels in recent years, far smaller
volumes of ``other'' advanced have been utilized to meet the advanced
standard. The BBD volume we are finalizing today continues to preserve
the existing gap between the advanced biofuel volume and the sum of the
cellulosic biofuel and BBD volumes. We believe this provides sufficient
incentive to producers of ``other'' advanced biofuels, while also
acknowledging that the advanced standard has been met predominantly
with biomass-based diesel. Namely, this would allow other advanced
biofuels to continue to compete with excess volumes of BBD for market
share under the advanced biofuel standard. This would provide
significant long term certainty for investments in other advanced
biofuels that over time could compete with BBD to fill the advanced
biofuel standard. In sum, our assessment of the statutory factors and
the implementation of the program supports a volume of 2.43 billion
gallons.

VII. Percentage Standards for 2020

    The renewable fuel standards are expressed as volume percentages
and are used by each obligated party to determine their Renewable
Volume Obligations (RVOs). Since there are four separate standards
under the RFS program, there are likewise four separate RVOs applicable
to each obligated party. Each standard applies to the sum of all non-
renewable gasoline and diesel produced or imported.
    Sections II through IV provide our rationale and basis for the
final volume requirements for 2020.\141\ The volumes used to determine
the final percentage standards are shown in Table VII-1.
---------------------------------------------------------------------------

    \141\ The 2020 volume requirement for BBD was established in the
2019 standards final rule (83 FR 63704, December 11, 2018)
---------------------------------------------------------------------------

  Table VII-1--Volumes for Use in Determining the Final 2020 Applicable
                          Percentage Standards
                            [Billion gallons]
------------------------------------------------------------------------

------------------------------------------------------------------------
Cellulosic biofuel.........................................         0.59
Biomass-based diesel.......................................         2.43
Advanced biofuel...........................................         5.09
Renewable fuel.............................................        20.09
------------------------------------------------------------------------

    For the purposes of converting these volumes into percentage
standards, we generally use two decimal places to be consistent with
the volume targets as given in the statute, and similarly two decimal
places in the percentage standards. In past years we have used three
decimal places for cellulosic biofuel in both the volume requirement
and percentage standards to more precisely capture the smaller volume
projections and the unique methodology that in some cases results in
estimates of only a few million gallons for a group of cellulosic
biofuel producers (see Section III for a further discussion of the
methodology for projecting cellulosic biofuel production and our
decision to round the projected volume of cellulosic biofuel to the
nearest 10 million gallons). However, the volume requirements for
cellulosic biofuel have increased over time. We have therefore
determined that volume requirements and percentage standards for
cellulosic biofuel will now use two decimal places.
    In this section, we also discuss our regulatory change to the
percent standard formulas to account for a projection of the aggregate
volume for SREs that we expect to grant for the 2020 compliance year.
This section also provides our rationale for that projection of exempt
gasoline and diesel volume. Additionally, we also provide our approach
for evaluating SREs going forward, including for the currently pending
2019 petitions and for 2020 petitions we receive in the future.

A. Calculation of Percentage Standards

    The formulas used to calculate the percentage standards applicable
to producers and importers of gasoline and diesel are provided in 40
CFR 80.1405. The formulas rely on estimates of the volumes of gasoline
and diesel fuel, for both highway and nonroad uses, which are projected
to be used in the year in which the standards will apply. The projected
gasoline and diesel volumes are provided by EIA and include projections
of ethanol and biomass-based diesel used in transportation fuel.\142\
Since the percentage standards apply only to the non-renewable gasoline
and diesel produced or imported, the volumes of renewable fuel are
subtracted out of the EIA projections of gasoline and diesel.
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    \142\ Letter from Linda Capuano, EIA Administrator to Andrew
Wheeler, EPA Administrator. October 9, 2019. Available in docket
EPA-HQ-OAR-2019-0136.
---------------------------------------------------------------------------

    Transportation fuels other than gasoline or diesel, such as natural
gas, propane, and electricity from fossil fuels, are not currently
subject to the standards, and volumes of such fuels are not used in
calculating the annual percentage standards. Since under the
regulations the standards apply only to producers and importers of
gasoline and diesel, these are the transportation fuels

used to set the percentage standards, as well as to determine the
annual volume obligations of an individual gasoline or diesel producer
or importer under 40 CFR 80.1407.
    As specified in the RFS2 final rule,\143\ the percentage standards
are based on energy-equivalent gallons of renewable fuel, with the
cellulosic biofuel, advanced biofuel, and total renewable fuel
standards based on ethanol equivalence and the BBD standard based on
biodiesel equivalence. However, all RIN generation is based on ethanol-
equivalence. For example, the RFS regulations provide that production
or import of a gallon of qualifying biodiesel will lead to the
generation of 1.5 RINs. The formula specified in the regulations for
calculation of the BBD percentage standard is based on biodiesel-
equivalence, and thus assumes that all BBD used to satisfy the BBD
standard is biodiesel and requires that the applicable volume
requirement be multiplied by 1.5 in order to calculate a percentage
standard that is on the same basis (i.e., ethanol-equivalent) as the
other three standards. However, BBD often contains some renewable
diesel, and a gallon of renewable diesel typically generates 1.7
RINs.\144\ In addition, there is often some renewable diesel in the
conventional renewable fuel pool. As a result, the actual number of
RINs generated by biodiesel and renewable diesel is used in the context
of our assessment of the applicable volume requirements and associated
percentage standards for advanced biofuel and total renewable fuel, and
likewise in obligated parties' determination of compliance with any of
the applicable standards. While there is a difference in the treatment
of biodiesel and renewable diesel in the context of determining the
percentage standard for BBD versus determining the percentage standard
for advanced biofuel and total renewable fuel, it is not a significant
one given our approach to determining the BBD volume requirement. Our
intent in setting the BBD applicable volume is to provide a level of
guaranteed volume for BBD, but as described in Section VII.B of the
2019 standards final rule, we do not expect the BBD standard to be
binding in 2020.\145\ That is, we expect that actual supply of BBD, as
well as supply of conventional biodiesel and renewable diesel, will be
driven by the advanced biofuel and total renewable fuel standards and
will exceed the BBD standard.
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    \143\ See 75 FR 14670 (March 26, 2010).
    \144\ Under 40 CFR 80.1415(b)(4), renewable diesel with a lower
heating value of at least 123,500 Btu/gallon is assigned an
equivalence value of 1.7. A minority of renewable diesel has a lower
heating value below 123,500 BTU/gallon and is therefore assigned an
equivalence value of 1.5 or 1.6 based on applications submitted
under 40 CFR 80.1415(c)(2).
    \145\ 83 FR 63704 (December 11, 2018).
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B. Small Refineries and Small Refiners

    In CAA section 211(o)(9), enacted as part of the EPAct, and amended
by EISA, Congress provided a temporary exemption to small refineries
\146\ through December 31, 2010. Congress provided that small
refineries could receive a temporary extension of the exemption beyond
2010 based either on the results of a required DOE study, or for the
reason of ``disproportionate economic hardship'' in response to small
refinery petitions submitted ``at any time.'' CAA section
211(o)(9)(B)(i).
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    \146\ A small refiner that meets the requirements of 40 CFR
80.1442 may also be eligible for an exemption.
---------------------------------------------------------------------------

    Pursuant to this petition process, EPA often granted SREs for a
given compliance year after the applicable percentage standards for
that compliance year had been established. Under our prior approach to
calculating the percentage standards, we did not account for these
exemptions in establishing the percentage standards.\147\ We only