[Federal Register Volume 88, Number 64 (Tuesday, April 4, 2023)]
[Notices]
[Page 19948]
[FR Doc No: 2023-06982]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER23-1492-000]

Santa Paula Energy Storage, LLC; Supplemental Notice That Initial
Market-Based Rate Filing Includes Request for Blanket Section 204
Authorization

    This is a supplemental notice in the above-referenced proceeding of
Santa Paula Energy Storage, LLC's application for market-based rate
authority, with an accompanying rate tariff, noting that such
application includes a request for blanket authorization, under 18 CFR
part 34, of future issuances of securities and assumptions of
liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is April 18, 2023.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically may mail similar pleadings to
the Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426. Hand delivered submissions in docketed
proceedings should be delivered to Health and Human Services, 12225
Wilkins Avenue, Rockville, Maryland 20852.
    In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
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concerning the Novel Coronavirus Disease (COVID-19), issued by the
President on March 13, 2020. For assistance, contact the Federal Energy
Regulatory Commission at [email protected] or call toll-free,
(886) 208-3676 or TYY,<PHONE_NUMBER>.

    Dated: March 29, 2023.
Debbie-Anne A. Reese,
Deputy Secretary.
[FR Doc. 2023-06982 Filed 4-3-23; 8:45 am]
BILLING CODE 6717-01-P


enabled by a proprietary technology or biological organism that makes
these changes possible.
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    \22\ Wyborny, Lester. ``In-Depth Assessment of Advanced Biofuels
Technologies.'' Memo to the docket, May 2010.
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g. Current Status of Biochemical Conversion Technology
    The biochemical cellulosic fuel production industry is currently
transitioning from an industry consisting mostly of small scale
research and optimization focused facilities to one capable of
producing fuel at a commercial scale. Companies such as Iogen, DuPont
Danisco Cellulosic Ethanol, and KL Energy are just beginning to market
the fuel they are producing at their first small scale commercial fuel
production facilities. By 2011 we expect several other cellulosic fuel
production facilities using biochemical processes to come online,
including the first commercial scale facilities of AE Advanced Fuels,
Agresti Biofuels, Bell Bio-Energy, and Fiberight. Many other
facilities, including some large scale facilities capable of producing
tens of millions of gallons of fuel are planned to come online starting
in 2012 and in the following years.
    There are many factors that are likely to continue to drive the
expansion of the cellulosic biofuel industry. The high price of
petroleum fuels and the mandates put into place by the RFS2

program have created a large demand for cellulosic biofuels. The
biochemical production process also has several advantages over other
methods of producing fuel from cellulosic feedstocks including
relatively low capital costs, highly selective fuel production,
flexibility in the type of fuel produced, and the promise of future
production cost reductions.
    While the poor worldwide economy and tight credit markets has had a
negative impact on the biofuel industry as a whole the cellulosic
biofuel producers utilizing biochemical processes have not been as hard
hit as many others in the industry. This is partially due to the
relatively low capital costs of biochemical production plants as a
result of the relative simplicity and mild operating conditions of
these plants. Several companies have been able to purchase distressed
grain ethanol plants and are in the process of modifying them to
produce cellulosic ethanol, further reducing the capital costs of their
initial facilities. Once biochemical fuel production facilities have
been constructed another advantage they have over other fuel production
processes is that their high selectivity in the fuels they produce.
Unlike chemical catalysts, which often produce a range of products and
byproducts, biological organisms often produce a single type of fuel,
which leads to very high fuel production rates per unit sugar. Finally,
there is a large potential to further decrease the production costs of
cellulosic biofuels using the biochemical processes. Unlike other
production methods such as gasification which are relatively mature
technologies, biochemical production of fuels is a young technology.
One of the major costs of the biochemical fuel production processes
currently are the enzymes. Great strides have been made recently in
reducing the cost of these enzymes, and as the price of enzymes
continues to fall so will the operating costs of biochemical fuel
production processes.
h. Major Hurdles to Commercialization
    Despite the many promising qualities of the biochemical fuel
production process several significant hurdles remain. Improvements
must be made to the pretreatment processes of the cellulosic materials
to maximize the conversion of cellulose and hemicellulose to simple
sugars and to minimize the production of other undesired compounds,
especially those that may inhibit the fuel production process. The
ability of the biological fuel production organisms to process a wide
range of both five and six carbon sugars must also continue to be
improved. Both these improvements will increase the fuel yield per ton
of cellulosic feedstock, reducing the operating costs of the process.
The cost of enzymes must continue to decrease to allow the fuel
produced by biochemical processes to be cost competitive with petroleum
and other cellulosic biofuels.
    Another significant hurdle that must be overcome is the profitable
utilization of the lignin portion of the cellulosic feedstock. Unlike
some of the other cellulosic biofuel production processes, the
biochemical process does not convert the lignin to fuel. Cellulosic
feedstock can contain up to 40% lignin, depending on the type of
feedstock used, so the effective utilization of this lignin is an
important piece of the profitability of the biochemical process. One
option for the use of the lignin is to burn it to provide process heat
and electricity, as well as excess electricity to the grid. While this
would provide good value for the lignin, it would require fairly
expensive boilers and turbines that increases the capital cost of the
facility. If the lignin cannot be used as part of the fuel production
process it may be able to be marketed as a solid fuel with high energy
density and low carbon intensity.
2. Thermochemical
    Thermochemical conversion involves biomass being broken down into
syngas using heat and upgraded to fuels using a combination of heat and
pressure in the presence of catalysts.\23\ For generating the syngas,
thermochemical processes partially oxidize biomass in the presence of a
gasifying agent, usually air, oxygen, and/or steam. It is important to
note that these processing steps are also applicable to other
feedstocks (e.g., coal or natural gas); the only difference is that a
renewable feedstock is used (i.e., biomass) to produce cellulosic
biofuel. The cellulosic biofuel produced can be mixed alcohols, but
optimizing the process to produce ethanol, or it could be diesel fuel
and naphtha. A thermochemical unit can also complement a biochemical
processing plant to enhance the economics of an integrated biorefinery
by converting lignin-rich, non-fermentable material left over from
high-starch or cellulosic feedstocks conversion.\24\ Compared to corn
ethanol or biochemical cellulosic ethanol plants, the use of biomass
gasification may allow for greater flexibility to utilize different
biomass feedstocks at a specific plant. Mixed biomass feedstocks may be
used, based on availability of long-term suppliers, seasonal
availability, harvest cycle, and costs.
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    \23\ U.S. DOE. Technologies: Processing and Conversion. Accessed
at: http://www1.eere.energy.gov/biomass/processing_conversion.html
on October 28, 2008.
    \24\ EERE, DOE, Thermochemical Conversion, & Biochemical
Conversion, Biomass Program Thermochemical R&D. http://
www1.eere.energy.gov/biomass/thermochemical_conversion.html http://
www1.eere.energy.gov/biomass/biochemical_conversion.html.
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    The general steps of the gasification thermochemical process
include: feedstock handling, gasification, gas cleanup and
conditioning, fuel synthesis, and separation. Refer to Figure IV.C.2-1
for a schematic of the thermochemical cellulosic ethanol production
process through gasification. For greater detail on the thermochemical
mixed-alcohols route refer to NREL technical documentation.\25\
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    \25\ Aden, Andy, Mixed Alcohols from Woody Biomass--2010, 2015,
2022, National Renewable Energy Laboratory (NREL), September 23,
2009.

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[GRAPHIC] [TIFF OMITTED] TP20JY10.003

    Figure IV.C.2-2 is a block diagram of a biomass to liquids (BTL)
process which produces diesel fuel and naphtha through a thermochemical
process.
[GRAPHIC] [TIFF OMITTED] TP20JY10.004

    The first step in a thermochemical plant is feedstock size
reduction. The particle size requirement for a thermochemical process
is around 10-mm to 100-mm in diameter.\26\ Once the feed is ground to
the proper size, flue gases from the char combustor and tar reformer
catalyst regenerator dry the feed from the as received moisture level
of around 30% to 50% moisture to the level required by the gasifier.
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    \26\ Lin Wei, Graduate Research Assistant, Lester O. Pordesimo,
Assistant Professor Willam D. Batchelor, Professor, Department of
Agricultural and Biological Engineering, Mississippi State
University, MS 39762, USA, Ethanol Production from Wood: Comparison
of Hydrolysis Fermentation and Gasification Biosynthesis, Paper
Number: 076036, Written for presentation at the 2007 ASABE Annual
International Meeting. Minneapolis Convention Center, Minneapolis,
MN, 17-20 June 2007.
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    The dried, ground feedstock is fed to a gasification reactor for
producing syngas. There are two general classes of gasifiers, partial
oxidation (POx) and indirect gasifiers. Partial oxidation gasifiers
(directly-heated gasifiers) use the exothermic reaction between oxygen
and organics to provide the heat necessary to devolatilize biomass and
to convert residual carbon-rich chars. Indirect gasifiers use steam to
accomplish gasification through heat transfer from a hot solid or
through a heat transfer surface. Either the byproduct char and/or a
portion of the product gas can be combusted with air (external to the
gasifier itself) to provide the energy required for gasification. The
raw syngas produced from either type of gasifier has a low to medium
energy content which consists mainly of CO, H2,
CO2, H2O, N2, and hydrocarbons.
    Once the biomass is gasified and converted to syngas, the syngas
must be cleaned and conditioned, as minor components of tars, sulfur,
nitrogen oxides, alkali metals, and particulates have the potential to
negatively affect the syngas conversion steps. Therefore, unwanted
impurities are removed in a gas cleanup step and the gas composition is
further modified during gas conditioning. Because this step is a
necessary part of the thermochemical process, thermochemical plants are
good candidates for processing municipal solid waste (MSW) which may
contain a significant amount of toxic material. Gas conditioning steps
include sulfur polishing to remove trace levels of H2S and
water-gas shift to adjust the final H2/CO ratio for
optimized fuel synthesis.
    After cleanup and conditioning, the ``clean'' syngas is comprised
of essentially CO and H2. The syngas is then converted into
a liquid fuel by a catalytic process. The fuel producer has the choice
of producing diesel fuel or alcohols from syngas by optimizing the type
of catalyst used and the H2/CO ratio. Diesel fuel has
historically been the primary focus of such processes by using a
Fischer Tropsch reactor, as it produces a high quality distillate
product. However, with a $1.01 per gallon cellulosic biofuel tax
deduction which favors the less energy dense ethanol, it may be
economically advantageous for fuel producers to convert syngas to
ethanol instead of to diesel fuel.
    A carefully integrated conventional steam cycle produces process
heat and electricity (excess electricity is exported). Pre-heaters,
steam generators, and super-heaters generate steam that drives turbines
on compressors and electrical generators. The heat balance around a
thermochemical unit or thermochemical combined unit must be carefully
designed and tuned in order to avoid unnecessary heat losses.\27\ These
facilities greatly increase the thermal efficiency of these plants, but
they add to the very high capital costs of these technologies.
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    \27\ S. Phillips, A. Aden, J. Jechura, and D. Dayton, National
Renewable Energy Laboratory, Golden, Colorado 80401-3393, T.
Eggeman, Neoterics International, Inc., Thermochemical Ethanol via
Indirect Gasification and Mixed Alcohol Synthesis of Lignocellulosic
Biomass, Technical Report, NREL/TP-510-41168, April 2007.
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a. Ethanol Based on a Thermochemical Platform
    Conceptual designs and techno-economic models have been developed
for ethanol production via mixed alcohol synthesis using catalytic
processes. The proposed mixed alcohol process produces a mixture of
ethanol along with higher normal alcohols (e.g., n-propanol, n-butanol,
and n-pentanol). The by-product higher normal alcohols have value as
commodity chemicals and fuel additives.
    The liquid rundown from the low-pressure separator is dehydrated in
vapor-phase molecular sieves, producing the dehydrated mixed alcohol
feed into a methanol/ethanol overhead stream and a mixed, higher
molecular weight alcohol bottom stream. The overhead stream is further
separated into a methanol stream and an ethanol stream.
    Two companies which are pursuing ethanol based on a thermochemical
route are Range Fuels and Enerkem. Range has operated a pilot plant for
over 7 years using over 20 different nonfood feedstocks. Range broke
ground building its first commercial plant late in late 2008 and is
expected to be operational in 2010. This plant will be located in
Soperton, Georgia and is partially funded from proceeds of a DOE grant.
The plant will use wood, grasses, and corn stover as feedstocks. In its
initial phase, the Range plant is expected to produce 4 million gallons
per year of methanol. After the company is confident in its operations,
Range will begin efforts to expand the plant and add additional
reaction capacity to convert the methanol to ethanol.
    Enerkem is pursuing cellulosic ethanol production via the
thermochemical route. The Canadian-based company was recently announced
as a recipient of a $50 million grant from DOE to build a 10 MGY woody
biomass-to-ethanol plant in Pontotoc, MS. The U.S. plant is not
scheduled to come online until 2012, but Enerkem is currently building
a 1.3 MGY demonstration plant in Westbury, Quebec. According to the
company, plant construction in Westbury started in October 2007 and the
facility is currently scheduled to come online around the middle of
2010. While it's unclear at this time whether the cellulosic ethanol
produced will be exported to the United States, Enerkem has expressed
interest in selling its fuel commercially. If Enerkem does export some
of its cellulosic biofuel to the U.S., it could help to enable refiners
meet the 2011 cellulosic biofuel standard.
b. Diesel and Naphtha Production Based on a Thermochemical Platform
    The cleaned and water-shifted syngas is sent to the Fischer Tropsch
(FT) reactor where the carbon monoxide and hydrogen are reacted over a
FT catalyst. Current FT catalysts include iron-based catalysts, and
cobalt-based catalysts. The FT reactor creates a syncrude, which is a
variety of hydrocarbons that boil over a wide distillation range (a mix
of heavy and light hydrocarbons) which are separated into various
components based on their vapor pressure, mainly liquid petroleum gas
(LPG), naphtha, distillate and wax fractions. The heavier compounds are
hydrocracked to maximize the production of diesel fuel. Conversely, the
naphtha material is very low in octane thus, it would either have to be
upgraded, or blended down with high octane blendstocks (i.e., ethanol),
or be upgraded to a higher octane blendstock to have much value for use
in gasoline.
    Choren is an European company which is pursuing a thermochemical
technology for producing diesel fuel and naphtha. The principal aspect
of Choren's process is their patented three stage gasification reactor.
The three-stage gasification reactor includes low temperature
gasification, high

temperature gasification and endothermic entrained bed gasification.
Choren designed its gasification reactor with three stages to more
fully convert the feedstock to syngas. Choren will be building a
commercial Plant in Freiberg/Saxony Germany that is expected to be
operational in 2011 or 2012. Initially, the plant will use biomass from
nearby forests, the wood-processing industry and straw from farmland.
Although any fuel produced in 2011 by its Freiberg/Saxony plant and
marketed commercially would most likely be used in Europe, it is
possible that some of that fuel could be exported to the U.S. Choren is
also planning to build a commercial thermochemical/biomass-to-liquids
(BTL) plant in the U.S. after their Freiberg/Saxony plant is
operational in Germany.
    Baard Energy is a U.S. company which plans on utilizing a
thermochemical technology for producing diesel fuel and naphtha. Baard,
however, plans on primarily combusting coal and cofiring biomass with
the coal. Cofiring the biomass with the coal will make their first
plant more like the coal-to-liquids plants which are operating today,
which may help to convince investors that this technology is already
tested. Baard's coal and biomass-to-liquids plant is not expected to be
operational until at least 2012.
    Probably the largest commercialization hurdle for the companies
pursing the thermochemical route is the very high capital costs
associated with these technologies. Because of the economic hardships
associated with recent global recession, banks are less willing to make
loans to fund new technologies which are likely to be considered
riskier investments. The capital costs are very high because there are
two significant reactors required for each plant--the gasification
reactor and the syngas to fuel reactor. Additionally, the syngas must
be cleaned to protect the catalysts used in the downstream syngas to
fuel reactor which requires additional capital costs. Because the
syngas would be cleaned anyways, this technology is a very good
candidate for processing MSW which may contain toxic compounds. When
considering the cost savings for not having to pay the tipping fees at
municipal dumping grounds, MSW feedstocks may avoid almost all the
purchase costs for MSW feedstocks which would significantly help offset
the high capital costs.
3. Hybrid Thermochemical/Biochemical Processes
    Hybrid technologies include process elements involving both the
gasification stage of a typical thermochemical process, as well as the
fermentation stage of a typical biochemical process and therefore
cannot be placed easily into either category. For more specific
information regarding either biochemical processes or thermochemical,
please see Sections IV.C.1 and IV.C.2 respectively. Currently, there
are several strategies for the production of ethanol through hybrid
processes; these strategies are differentiated by the order in which
the thermochemical and biochemical steps take place within the process,
as well as how the intermediate products from each step are used.
    While we do not expect significant commercial production from
hybrid processes in 2011, there are several companies pursing this
approach for the future. Examples of the first process strategy,
described in the paragraph below, include both INEOS Bio and Coskata.
INEOS Bio (along with partner New Planet Energy) has recently been
selected for a $50MM DOE grant for the construction of an 8 MGPY plant
in River County, Florida; predicted to finish construction in late
2011. Coskata is currently running a 40,000 gallon per year pilot plant
that became operational in 2009 in Madison, Pennsylvania. Coskata is
targeting to design and build a 50 MGPY commercial plant that it
expects to be operational in 2012. A company currently pursing the
second process strategy, described in the following third paragraph, is
Zeachem Inc. Zeachem is currently constructing a 250 KGPY demonstration
plant in Boardman, Oregon. They have received a $25MM DOE grant and
expect to have a full commercial production facility operational in
2013.
    One strategy involves the gasification of all feedstock material to
syngas before being processed into ethanol using a biochemical
fermenter. Further information regarding gasification can also be found
in Section IV.C.2. After gasification, the syngas stream is cooled and
bubbled into a fermenter containing modified microorganisms, usually
bacteria or yeast. This fermenter replaces the typical catalysts found
after gasification in a traditional thermochemical process. Further
information regarding fermentation can be found in Section IV.C.1.
Unlike traditional fermentation (which break down C5 and C6 sugars),
these microorganisms are engineered to convert the carbon monoxide and
hydrogen contained in the syngas stream directly into ethanol. After
fermentation, the effluent water/ethanol stream from the fermenter is
separated similarly to a biochemical process; usually using a
combination of distillation and molecular sieves. The separated water
can then be recycled back into the fermentation stage of the process.
Typical yields of ethanol are predicted in the 100-120 gallon per ton
range.
    Since gasification converts all carbonaceous feedstock material to
a uniform syngas before fermentation, there is a higher flexibility of
feedstock choices than if these materials were to be fermented
directly; including agricultural residues, switchgrass, farm-grown
trees, sorted MSW, or any combination of such. In addition, processing
incoming feedstock with gasification does not require the addition of
enzymes or acid hydrolysis necessary in a biochemical process to aid in
the breakdown of cellulosic materials. Fermenting syngas also captures
all available carbon contained in the feedstock, including lignin that
would not be processed in a typical biochemical fermentation. However,
more energy is lost as waste heat as well as secondary carbon dioxide
production in the gasification process than would be lost for
biochemical feedstock preparation. Using a fermenter in a hybrid
process replaces the catalyst needed in a typical thermochemical
process. These microorganisms allow for a higher variation of the
incoming syngas stream properties, avoid the necessity of a water-shift
reaction preceding traditional catalytic conversion, and are able to
operate at lower temperatures and pressures than those required for a
catalytic conversion to ethanol. Microorganisms, unlike a catalyst, are
also self-sustaining and do not require periodic replacement. They are,
however, susceptible to bacterial and viral infections which requires
periodic cleaning of the fermentation reactors.
    Another hybrid production strategy involves gasification of the
typically unfermentable feedstock fraction (lignin) concurrently with a
typical fermentation step for the cellulose and hemicellulose fraction.
These steps are subsequently combined in a hydrogenation reaction of
the produced syngas with the product of the fermented stream. Feedstock
first undergoes acid hydrolysis to break down contained cellulose and
hemicellulose. Before fermentation, the unfermentable portion of
feedstock (lignin, ash and other residue) is fractioned and sent to a
gasifier. Concurrently, the remaining fraction of hydrolyzed feedstock
is fermented using an acetogen microorganism. These acetogens occur
naturally, and therefore do not have to be modified for this

process. These acetogen convert both C6 and C5 portions of the
hydrolized feedstock to acetic acid. This reaction creates no carbon
dioxide, unlike traditional fermentation using yeast, preserving the
maximum amount of carbon for the finished fuel. The acetic acid stream
then undergoes esterification to create ethyl acetate. Meanwhile, the
syngas stream from the gasification of lignin and other residue is
separated into its carbon monoxide and hydrogen components. The carbon
monoxide stream can be further combusted to provide process heat or
energy. The hydrogen stream is combined with the ethyl acetate in a
hydrolysis reaction to form ethanol. Acetic acid and ethyl acetate also
form the precursors to many other chemical compounds and therefore may
also be sold in addition to ethanol. Typical yields for this technology
are predicted in the 130-150 gallon per ton range.
4. Pyrolysis and Depolymerization
    Pyrolysis and depolymerization is a group of technologies which are
capable of creating biofuels from cellulose by either thermally or
catalytically breaking them down into molecules which fall within the
boiling range of transportation fuels. Pyrolysis technologies are
usually thought of being primarily a thermal technology, however, newer
pyrolysis technologies are being developed which are attempting to
integrate some catalysts into the technology. These are all unique
processes, typically with single companies developing the technologies,
so they are discussed separately.
a. Pyrolysis Diesel Fuel and Gasoline
    Pyrolysis oils, or bio-oils, are produced by decomposing cellulosic
biomass at lower temperatures than the gasification process, thus
producing a liquid bio oil instead of a synthesis gas.\28\ The reaction
can occur either with or without the use of catalysts, but it occurs
without any additional oxygen being present. The resulting oil which is
produced must have particulates and ash removed in filtration to create
a homogenous ``dirty'' crude oil type of product. This dirty crude oil
must be further upgraded to hydrocarbon fuels via hydrotreating and
hydrocracking processing, which reduces its total oxygen content and
cracks the heaviest of the hydrocarbon compounds. One of the finished
fuels produced by the pyrolysis process is diesel fuel, however, a
significant amount of gasoline would likely be produced as well. There
are two main reaction pathways currently being explored: A two step
pyrolysis pathway, and a one step pyrolysis pathway.
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    \28\ DOE EERE Biomass Program. ``Thermochemical Conversion
Processes: Pyrolysis'' http://www1.eere.energy.gov/biomass/
thermochemical_processes.html, November 6, 2008.
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    The simplest technology used for the two-step pyrolysis approach is
called fast pyrolysis. The fast pyrolysis technology uses sand in a
fluidized bed to transform bio-fuels into a product named bio-oil. This
is purely a thermal process, where the sand's (or other solid) role is
to transport heat to the biomass. Fast pyrolysis technology has two
problems to be solved. First, fast pyrolysis oil is unstable, acidic,
viscous and may separate itself into two phases so it must be
immediately upgraded or it will begin to degrade and repolymerize. The
second issue is that pyrolysis bio-oil must be upgraded before it can
be used as a transportation fuel.
    Another approach to Fast Pyrolysis being pursued by several
companies would be to substitute a catalyst in place of sand and the
catalyst would be able to stabilize the resulting bio-oil in addition
to helping depolymerize the biomass to liquids. Although the resulting
bio-oil is stable, it still has to be upgraded into a transportation
fuel, since it would still have a high level of oxygenated compounds.
    The National Renewable Energy Laboratory (NREL) is working on a
``hot filtration'' technology that apparently is able to stabilize bio-
oil created using the fast pyrolysis process for a very long period of
time (years). This would allow the bio-oil to be stored and transported
to an upgrading facility without significant degradation.
    It is possible to use a sophisticated catalyst (instead of sand) in
a single step pyrolysis reaction to create pyrolysis oils that exhibit
much improved bio-oil properties. The catalysts would not only be able
to help depolymerize cellulosic feedstocks, but they produce a bio-oil
which could possibly be used directly as transportation fuel. Thus, a
second upgrading step may not be necessary. The difficulty encountered
by this technology is that catalysts which have been used in the one
step process are relatively expensive and they degrade quickly due to
the metals which are present in the biomass. Development work on the
two-step and one-step pyrolysis processes is ongoing.
    Dynamotive Energy Systems Corporation is a Canadian company which
has developed a pyrolysis technology that uses medium temperatures and
oxygen free reactions to convert dry waste biomass and energy crops
into different products. The liquid product produced by the Dynamotive
process is called BioOil. The BioOil contains up to 25% water, though
the water is intimately mixed and does not easily separate into another
phase with time. Since the BioOil contains significant amounts of
water, it is not directly useable as fuel in conventional vehicles and
would have to be converted via another catalytic conversion processing
step. The additional catalytic step envisioned by Dynamotive to upgrade
the BioOil into a transportation fuel would combust the material into a
synthesis gas which would then be converted into diesel fuel or bio-
methanol via a catalytic reaction (the BTL process). The diesel fuel
produced is expected to be compatible with existing petroleum diesel
fuels. The poor quality BioOil, though, could be used in the No. 2
industrial heating oil market at industrial facilities. However,
because of its high acidity level, users would need to change equipment
metallurgy to stainless steel for pipes, pumps, tanks, nozzles etc.
    Dynamotive has two small demonstration plants. One demonstration
plant is located in Guelph, Ontario, Canada and its capacity is 66,000
dry tons of biomass a year with an energy output equivalent to 130,000
barrels of oil. The other of its demonstration plants is located in
West Lorne Ontario, Canada. Dynamotive continues to work on a
technology for converting its BioOil to transportation fuels, although
they have not announced plans for building such a facility due to
funding limits. While Dynamotive is expected to continue to sell its
fuel into the chemicals market, it could find a fuel oil user in the
U.S. to use its fuel under the RFS2 program that refiners could use to
comply with the 2011 cellulosic biofuel standard.
    Envergent is a company formed through a joint venture between
Honeywell's UOP and the Ensyn Corporation. Although Ensyn has been
using fast pyrolysis for more than a decade to produce specialty
chemicals, UOP is relying on its decades of experience developing
refining technologies to convert the pyrolysis oils into transportation
fuels. Envergent is also working with Federal laboratories to further
their technology. Based on their current technology and depending on
the feedstock processed, about 70% of the feedstock is converted into
liquid products. The gasoline range products produced are high in
octane, while the diesel fuel products are low in cetane. Envergen
estimates that if it was able to procure cellulosic feedstocks at 70
per ton, that their technology would be competitive with

2 fuel oil produced from crude oil priced at about $40 per
barrel. Envergent is licensing this technology as well as working with
a U.S. oil company to test out this technology in a commercial setting
here in the U.S.
    Petrobras is a Brazilian oil company also working to develop a
pyrolysis technology. Because of Petrobas' work in this area (and other
areas on biofuels), a Memorandum of Understanding was signed by United
States' Secretary of State and Brazil's External Relations Minister on
March 9, 2007 to advance the cooperation on biofuels. A second
Memorandum of Understanding was signed by PETROBRAS and NREL on
September 2008 aiming at collaborating to maximize the benefit of their
respective institutional interests in second generation biofuels.
Petrobras is negotiating a Cooperation Agreement with NREL to develop a
two step pyrolysis route to produce biofuels from agricultural wastes
such as sugar cane bagasse, wood chips or corn stover. Petrobras is
optimistic that a catalytic pyrolysis technology can be developed that
will produce a stable bio-oil (pyrolysis oil). Petrobras is hopeful
that a one-step pyrolysis technology can be developed to convert
biomass directly to transportation fuels, although in the end Petrobras
believes that the two step process may be more economically attractive.
b. Catalytic Depolymerization
    Two companies that are pursuing catalytic depolymerization are
Green Power Inc. and Cello Energy.
    The Green Power process catalytically depolymerizes cellulosic
feedstocks at moderate temperatures into liquid hydrocarbon fuels. The
proposed feedstock is municipal solid waste (MSW) or other waste
material such as animal waste, plastics, agriculture residue, woody
biomass and sewage waste. The feedstock is first ground to a size finer
than 5 mm. The feedstock is placed along with a catalyst, some lime,
which serves as a neutralizing agent, and some fuel which provides a
liquid medium, into a reactor and heated to around 350 degrees Celsius.
As described, this technology may fit the description for catalyzed
pyrolysis reactions described above, but because we are not certain of
the reaction kinetics, we have categorized this as a separate catalytic
depolymerization technology. In the reactor, the feedstock is
catalytically converted to liquid fuels which primarily fall within the
gasoline and diesel fuel boiling ranges, although these fuels may need
further upgrading. The liquid fuels are separated from some solids
which are present and are distilled into typical fuel streams including
naphtha, diesel fuel, kerosene and fuel oil. According to the
literature writing about this technology, the process reportedly
produces 120 gallons per ton of feedstock inputted into the process. A
light hydrocarbon gas, which is mostly methane, is also produced, but
this gas is expected to be burned in a turbine to generate electricity
and the waste heat is used for heating the process. Apparently, some
carbon dioxide is also formed and is released from the process.
    Greenpower completed construction on a demonstration plant located
in Fife, Washington about March of 2008. Greenpower is working on
obtaining additional funding and to obtain an air permit through the
State of Washington Environmental Office. While we don't believe that
Greenpower will have its plant operational in 2011 due to financial and
other issues the company faces, those issues could be resolved to allow
this company to produce fuel that could help refiners comply with the
cellulosic biofuel volume standard for 2011.
    The Cello-Energy process is also a catalytic depolymerization
technology. At moderate pressure and temperature, the Cello-Energy
process catalytically removes the oxygen and minerals from the
hydrocarbons that comprise finely ground cellulose. This results in a
mixture of short chain (3, 6 and 9 carbon) hydrocarbon compounds. These
short chain hydrocarbon compounds are polymerized to form compounds
that boil in the diesel boiling range, though the process can also be
adjusted to produce gasoline or jet fuel. The resulting diesel fuel
meets the ASTM standards, is in the range of 50 cetane to 55 cetane and
typically contains 3 ppm of sulfur.
    The Cello process is reported to be on the order of 82% efficient
at converting the feedstock energy content into the energy content of
the product, which is very high compared to most of today's biochemical
and thermochemical processes which are on the order of 50% efficient,
or less. Because of the simplicity of the process, the capital costs
are very low. A 50 million gallon per year plant is claimed to only
incur a total cost of $45 million. Because of its high efficiency in
converting feedstocks into liquid fuel, the production and operating
costs are estimated to be very low.
    In December 2008, Cello completed construction on a 20 million
gallon per year commercial demonstration plant. However, at the present
they are still working to resolve process issues that have arisen upon
scaleup from their pilot plant. We expect that Cello will be able to
produce some volume of cellulosic biofuel in 2011.
5. Catalytic Reforming of Sugars to Gasoline
    Virent Biorefining is pursuing a process called ``Bioforming''
which functions similarly as the gasoline reforming process used in the
refining industry. Hence, this is a very different technology to any of
those other cellulosic biofuel technologies discussed above. While
refinery-based catalytic reforming technologies raise natural
gasoline's octane value and produces aromatic compounds, Bioforming
reforms biomass-derived sugars into hydrocarbons for blending into
gasoline and diesel fuel. The process operates at moderate temperatures
and pressures. In March of 2010, Virent announced that they had begun
operating a larger pilot plant capable of about 30 gallons per day.
Commercialization of the Virent process will happen sometime after
2011.
    For this technology to become a cellulosic biofuel technology, it
will be necessary to link this reforming technology with a technology
which breaks cellulose down into starch or sugars. In parallel with its
Bioreforming work, Virent is working on a technology to break down
cellulose into sugars upstream of its technology which reforms sugars
to gasoline.

V. Proposed Changes to RFS2 Regulations

    Following publication of the final RFS2 program regulations ,\29\
EPA identified two program areas that could benefit from the addition
of new regulatory provisions. The first would provide for the
generation of RINs for fuel produced between July 1, 2010 and December
31, 2010 representing certain fuel pathways that are not currently in
Table 1 to Sec.  80.1426, but which could possibly be added later this
year if they are determined to meet the applicable GHG thresholds.
Under this proposal RINs could be generated only if the pathways are
indeed approved, and only for quantities reflecting fuel produced
between the effective date of the RFS2 regulations and the effective
date of a new pathway added to Table 1 to Sec.  80.1426. The second
program addition would establish procedures for petitions requesting
EPA authorization of an aggregate compliance approach to renewable
biomass verification for feedstocks grown in foreign countries, akin to
that applicable to crops and crop

residue grown within the U.S. We are proposing to make amendments to
the RFS regulations in Subpart M to implement both of these provisions.
---------------------------------------------------------------------------

    \29\ 75 FR 14670, March 26, 2010.
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A. Delayed RIN Generation for New Pathways

    As described in the RFS2 final rule, we did not have sufficient
time to complete the necessary lifecycle GHG impact assessment for
certain fuel pathways. We indicated that we would model and evaluate
several additional pathways after the final rule (see Section V.C of
the RFS2 final rule, 75 FR 14796). EPA anticipates modeling and
publishing the lifecycle GHG analyses for the following four pathways
later this year:
     Grain sorghum ethanol.
     Pulpwood biofuel.
     Palm oil biodiesel.
     Canola oil biodiesel.
Depending on how these lifecycle GHG results compare with the required
GHG thresholds for cellulosic biofuel, biomass-based diesel, advanced
biofuel, and conventional renewable fuel, we may add one or more of
these pathways to Table 1 to Sec.  80.1426. Once a new pathway is
approved, producers using that pathway could generate RINs with the
specified D code.
    We consider the four new fuel pathways currently being analyzed to
be an extension of the RFS2 final rule. Had we been able to complete
these analyses for the RFS2 final rule and verified that the GHG
thresholds had been met, D codes to represent these pathways would have
been included in Table 1 to Sec.  80.1426 promulgated on March 26,
2010, and renewable fuel producers could have begun using those
pathways to generate RINs beginning on July 1, 2010. Indeed, we are
aware of a number of producers who intend to produce biofuel using one
of the four pathways listed above despite the fact that a determination
regarding their lifecycle GHG impact has not yet been made.
    Based on the fact that we may have included the four pathways
listed above in the RFS2 final rule if the lifecycle modeling had been
completed in time, we believe that it would be appropriate to allow
renewable fuel producers using any of these four pathways that are
ultimately approved for inclusion in Table 1 to Sec.  80.1426 to
generate RINs for all fuel they produce and sell on and after July 1,
2010. However, while EPA is expeditiously working to complete its GHG
assessments for these four fuel pathways in 2010, the determination of
whether any of the four pathways will meet the 20%, 50%, or 60% GHG
thresholds may not occur until after July 1, 2010. Therefore, RINs
representing fuel produced between July 1, 2010 and any EPA approval of
a new fuel pathway could only be generated after the renewable fuel in
question had been produced and sold, after the time when EPA announces
the results of the lifecycle analyses and specifies the applicable D
code in Table 1 to Sec.  80.1426. Thus we are proposing a new
regulatory provision for the generation of ``Delayed RINs'' that would
allow RINs with newly specified D codes to be generated for eligible
fuel produced between July 1, 2010 and the date any new D code is
approved for one of the four fuel pathways listed above. This Delayed
RINs provision would only be applicable for any of the four pathways
described above that are determined to meet the applicable GHG
thresholds. We are also proposing that this provision would apply only
for renewable fuel produced in 2010, since the lifecycle GHG
assessments for the four pathways listed above is expected to be
completed in 2010. Our proposed regulatory provision for Delayed RIN
generation would be inserted into Sec.  80.1426 as new paragraph (g).
As for any RIN generation, producers using this new regulatory
provision would need to be registered under RFS2 before they could
generate Delayed RINs, and would need to comply with the recordkeeping
and reporting requirements of the regulations.
    We do not believe that this proposed provision for Delayed RINs
should be extended to any other pathways. The four pathways listed
above are the only pathways currently under evaluation that would have
been included in the RFS2 final rule if we had completed the modeling
in time. Moreover, we have provided a petition process in Sec.  80.1416
for other fuel pathways for which lifecycle GHG assessments have not
yet been made.
    In developing this proposed provision for Delayed RIN Generation,
we have accounted for renewable fuel producers who are eligible for an
exemption from the 20% GHG reduction requirement for their fuel under
Sec.  80.1403 (``grandfathered'' producers) and those that are not.
Grandfathered producers can generate RINs for their renewable fuel
starting on July 1, 2010, but must designate the D code as 6 for such
fuel, identifying it as conventional renewable fuel. They must also
transfer those RINs with renewable fuel they sell. If one of the four
fuel pathways described above is approved between July 1, 2010 and
December 31, 2010 for use of a D code other than 6, and the producer
wishes to apply this new D code to fuel they have already produced and
transferred, the RINs they already generated and transferred with
renewable fuel they produced must be accounted for. We are proposing a
process whereby these grandfathered producers would be required to
acquire and retire RINs from the open market with a D code of 6 prior
to the generation of Delayed RINs. The number of RINs retired in this
fashion must be no greater than the number they generated between July
1, 2010 and the effective date of the new applicable pathway. Producers
who are not grandfathered under Sec.  80.1403 cannot generate RINs
starting on July 1, 2010, and so would not be required to acquire and
retire any RINs prior to the generation of Delayed RINs.
    The generation of Delayed RINs would also differ for grandfathered
producers and non-grandfathered producers. Grandfathered producers
would base the number of Delayed RINs they generate on the number of
RINs with a D code of 6 that they retired as described above. In
contrast, non-grandfathered producers would base the number of Delayed
RINs they generate on the volume of renewable fuel they produced and
sold between July 1, 2010 and the effective date of the new pathway.
Since all Delayed RINs will be generated after the renewable fuel in
question had been produced and sold, they would be assigned a K code of
2 and thus could be sold by the producer separately from renewable
fuel.
    Finally, we believe that there should be a deadline for the
generation of Delayed RINs to ensure that they are entering the market
as close as possible to the date of production of the renewable fuel
that they represent. We are proposing that all Delayed RINs must be
generated within 30 days of the effective date of a new pathway added
to Table 1 to Sec.  80.1426 between July 1, 2010 and December 31, 2010.
We believe that 30 days would provide sufficient time for producers who
are grandfathered to first acquire and retire RINs from the open
market, and would be sufficient to allow any producer to generate
Delayed RINs according to the procedures in the regulations. However,
we request comment on a longer period within which Delayed RINs must be
generated.
    We request comment on our proposed provision for Delayed RINs.

B. Criteria and Process for Adoption of Aggregate Approach to Renewable
Biomass for Foreign Countries

    In the preamble to the final RFS2 regulations, EPA indicated that,
while we did not have sufficient data at the time to make a finding
that the aggregate compliance approach adopted for domestically-grown
crops and crop

residues would be appropriate for foreign-grown feedstocks, we would
consider applying the aggregate compliance approach for renewable
biomass on a country by country basis if adequate land use data becomes
available.
    Since promulgation of the final RFS2 regulations, we have received
several inquiries regarding the process, criteria, and data needed for
EPA to approve the aggregate compliance approach for planted crops and
crop residue grown in areas outside the U.S. Thus, in today's rule, EPA
is proposing a process by which entities may petition EPA for approval
of the aggregate compliance approach for specified renewable fuel
feedstocks either in a foreign country as a whole or in a specified
geographical area within a country. The proposed regulations include a
general criterion and a number of considerations that EPA will use in
evaluating petitions. They also include a list of submissions that are
required, absent an explanation by petitioner of why they should not be
required for EPA to approve a petition. The proposed rule also includes
a description of the proposed process by which EPA would make decisions
concerning any petitions received.
1. Criterion and Considerations
    In developing these proposed regulations, EPA relied substantially
on the approach we used to determine that an aggregate compliance
approach was appropriate for planted crops and crop residue from U.S.
agricultural land. The fundamental finding that would be required of
EPA in approving a petition for application of the aggregate approach
would be that an aggregate compliance approach will provide reasonable
assurance that specified renewable fuel feedstocks from a given
geographical area meet the definition of renewable biomass and will
continue to meet the definition of renewable biomass, based on the
submission of credible, reliable and verifiable data. Based on our
experience in making the comparable finding for U.S.-grown crops and
crop residues, we are also proposing a number of more specific factors
that would be considered in determining whether this finding should be
made, as described below. EPA is proposing to consider:
     Whether there has been a reasonable identification of the
aggregate amount of agricultural land in the specified geographical
area on December 19, 2007 that was available for the production of the
specified feedstock(s) and that satisfy the definition of renewable
biomass, taking into account the definitions of terms such as
``cropland,'' ``pastureland,'' ``planted crop,'' and ``crop residue''
included in the final RFS2 regulations.
     Whether information from years preceding and following
2007 shows that the identified aggregate amount of land in the specific
geographical area, called the 2007 baseline area of land, is not likely
to be exceeded in the future.
     Whether economic considerations, legal constraints,
historical land use and agricultural practices and other factors show
that it is likely that producers of the feedstock(s) will continue to
use agricultural land within the baseline area of land identified into
the future, as opposed to clearing and cultivating land not eligible
under the 2007 baseline.
     Whether there is a reliable method to evaluate on a
continuing basis whether the 2007 baseline area of land is being or has
been exceeded.
     Whether an entity has been identified to conduct data
gathering and analysis needed for an annual EPA evaluation of the
aggregate compliance approach if EPA grants the petition.
    EPA is requesting comments on the proposed general criterion and
specific considerations for approving the aggregate compliance approach
for non-domestically grown feedstocks. The existing approved aggregate
approach for U.S. domestic feedstocks applies to all crops and crop
residue that could be used in renewable fuel production. EPA has
received inquiries on the extent to which approval could be obtained
for a single, or limited number, of feedstocks. The proposed
regulations leave open the possibility of feedstock-specific petitions,
but EPA particularly solicits comment on the extent to which different
or additional data submittals or inquiries would be appropriate for
such petitions.
2. Data Sources
    To make the aggregate compliance determination for U.S.
agricultural lands, EPA obtained USDA data from three independently
gathered national land use data sources (the Farm Service Agency (FSA)
Crop History Data, the USDA Census of Agriculture (2007), and the
satellite-based USDA Crop Data Layer (CDL)). Please see Section
II.C.4.c.iii. of the preamble to the final RFS2 rule (75 FR 14701
(March 26, 2010)) for a more detailed description of the data sources
used. Using these data sources, EPA was able assess the area of land
(acreage) available in the United States under EISA for production of
crops and crop residues that meet the definition of renewable biomass.
In the case of a petition to apply the aggregate compliance approach to
feedstocks from a specific geographical area in a foreign country, when
considering the information and data submitted by the petitioner, EPA
will evaluate such information on a case-by-case basis, but suggests
that petitioners obtain data from sources that are at least as
credible, reliable, and verifiable as the USDA data used to make the
determination for U.S. agricultural land.
    When evaluating whether the data relied on are credible, reliable,
and verifiable, EPA will take into account whether the data is
submitted by, generated by, or approved by the national government of
the foreign country in question, as well as how comprehensive and
accurate the data source is. It is important for the national
government of the area seeking consideration be involved in this
process, and we seek comment on whether or not involvement of the
national government should be required as part of the petitioning and/
or data submittal processes. Additionally, EPA will take into
consideration whether the data is publically available, whether the
data collection and analysis methodologies and information on the
primary data source are available to EPA, and whether the data has been
generated, analyzed, and/or approved or endorsed by an independent
third party. EPA would also take into account the quality of the data
that is available on an annual basis for EPA's annual assessments of
any approved aggregate compliance approach, as well as whether the
petitioner has identified an entity who will provide to EPA an analysis
of the data updates each year following EPA's approval of the aggregate
compliance approach for that area. Furthermore, EPA will consider
agricultural land use trends from several years preceding 2007, as well
as the years following 2007 to the time the petition is submitted in
order to evaluate whether or not it is likely that a 2007 baseline
would be exceeded in the future. EPA will consider whether there are
laws in place in the area for which the petition was submitted that
might prohibit or incentivize the clearing of new agricultural lands
and the efficacy of these laws. EPA will also assess whether any market
factors are expected to drive an increase in the demand for
agricultural land.
3. Petition Submission
    EPA is proposing that all submittals, including the petition,
supporting documentation, and annual data and analyses, be submitted in
English. We are also proposing that petitioners submit specified
information as part of their formal petition submission package, or
explain why such

information is not necessary for EPA to approve their petition.
Petitioners would need to submit an assessment of the total amount of
land that is cropland or pastureland that was cleared or cultivated
prior to December 19, 2007 and that was actively managed or fallow and
nonforested on that date. For example, in assessing the amount of total
existing agricultural land in the U.S. on the enactment date of EISA,
EPA used FSA Crop History data to show that there were 402 million
acres of agricultural land existing in the U.S. in 2007. Additionally,
if the petitioner is seeking approval of the aggregate compliance
approach for a particular feedstock, they would also need to submit an
assessment of the total amount of agricultural land dedicated to that
feedstock in 2007 within the specified area. Petitioners would also be
required to provide EPA with maps or electronic data identifying the
boundaries of the land in question and a description of the
feedstock(s) for which the petitioner is submitting the petition.
    As part of the petition, the petitioner would be required to submit
to EPA land use data that demonstrates that the land in question is
agricultural land that was cleared or cultivated prior to December 19,
2007 and that was actively managed or fallow and nonforested on that
date, which may include satellite imagery data, aerial photography,
census data, agricultural surveys, and/or agricultural economic
modeling data. As mentioned above, the FSA crop history data used for
the U.S. aggregate compliance approach determination consists of annual
records of farm-level land use data that includes all cropland and
pastureland in the U.S. EPA also considered USDA Census of Agriculture
data, which consists of a full census of the U.S. agricultural sector
once every five years, as well as the USDA Nation Agricultural
Statistics Service (NASS) Crop Data Layer (CDL), which is based on
satellite data.
    In establishing the total amount of existing agricultural land for
the U.S. aggregate compliance approach determination, EPA relied on the
RFS2 definitions of the relevant terms, including planted crops, crop
residue, and agricultural land, which is defined as consisting of
cropland, pastureland and CRP land. EPA will take into consideration
whether the data submitted by the petitioner relies on comparable
definitions. For purposes of RFS2, planted crops are defined as all
annual or perennial agricultural crops from existing agricultural land
that may be used as feedstocks for renewable fuel, such as grains,
oilseeds, sugarcane, switchgrass, prairie grass, duckweed, and other
species (but not including algae species or planted trees), providing
they were intentionally applied by humans to the ground, a growth
medium, a pond or tank, either by direct application as seed or plant,
or through intentional natural seeding or vegetative propagation by
mature plants introduced or left undisturbed for that purpose. Crop
residue is defined as the biomass left over from the harvesting or
processing of planted crops from existing agricultural land and any
biomass removed from existing agricultural land that facilitates crop
management (including biomass removed from such lands in relation to
invasive species control or fire management), whether or not the
biomass includes any portion of a crop or crop plant. Cropland is
defined as land used for production of crops for harvest and includes
cultivated cropland, such as for row crops or close-grown crops, and
non-cultivated cropland, such as for horticultural or aquatic crops.
Pastureland is land managed for the production of indigenous or
introduced forage plants for livestock grazing or hay production, and
to prevent succession to other plant types. It is important to note
that EPA considers pastureland to be distinctly different from
rangeland, which may be used for livestock grazing, but is not managed
to prevent succession to other plant types. Finally, CRP land is land
enrolled in the US Conservation Reserve Program (administered by USDA's
Farm Service Agency), which encourages farmers to convert highly
erodible cropland or other environmentally sensitive acreage to
vegetative cover, such as tame or native grasses, wildlife plantings,
trees, filterstrips, or riparian buffers. EPA recognizes that the CRP
is only applicable to U.S. agricultural land. EPA solicits comments on
whether the final rules should allow EPA to consider land that is
equivalent or similar to US CRP land as existing agricultural land for
purposes of RFS2-compliant feedstock cultivation in a foreign country,
and whether EPA should be able to make such a determination in the
context of a petition for application of the aggregate approach to a
foreign country.
    The petitioner would also be required to provide EPA with
historical land use data for the land in question, covering the years
from prior to 2007 to the current year. For the U.S. aggregate
compliance approach determination, EPA analyzed the FSA Crop History
data from the years 2005 through 2007 and the USDA Census of
Agriculture from 1997 through 2007, finding that there was an overall
decade trend of contraction of agricultural land utilization in the
U.S. The petitioner would need to provide a description of any
applicable laws, agricultural practices, economic considerations, or
other relevant factors that had or may have an effect on the use of the
land in question. For the U.S. aggregate compliance approach
determination, EPA also took in account the EISA renewable fuel
obligations, the unsuitability and high cost of developing previously
undeveloped land for agricultural purposes, as well as projected
increases in crop yields on existing agricultural land.
    Finally, the petitioner would be required to provide EPA with a
plan describing how the entity who will, on a continuing yearly basis,
conduct any data gathering and analysis necessary to assist EPA in its
annual assessment of any approved aggregate approach. In the plan, the
petitioner would describe the data, the data source, and the schedule
on which the data would be updated and made available to EPA and the
public. Additionally, the plan would include the entity's strategy and
schedule for conducting an annual analysis of the data and providing it
to EPA.
4. Petition Process
    We believe that it will be important to incorporate a public
comment component into EPA's deliberations on a petition made to
incorporate an aggregate compliance approach for a new area. EPA plans
to publish a Federal Register notice informing the public of incoming
petitions, with information on how to view the petitions and any
supporting information. EPA proposes to then accept public comment on
the petition for a specified period of time. Once the public comment
period closes, EPA will make an assessment, taking into account the
information submitted in the petition as well as the comments received,
and will then publish a decision in the Federal Register to either
approve or deny the petitioner's request. If the petition has been
approved, the Federal Register notice will specify an effective date at
which time producers using the specified feedstocks from the specified
areas identified in EPA's approval will be subject to the aggregate
compliance approach requirements in 40 CFR 80.1454(g) in lieu of the
renewable biomass recordkeeping and reporting requirements. In the
event that the annual data submitted by the petitioner

is insufficient to demonstrate that the baseline amount of land has not
been exceeded or if the annual data is not submitted in a timely
manner, EPA will make a finding that the baseline acreage has been
exceeded and producers using crops or crop residue from the specified
area will be subject to the individual recordkeeping and reporting
requirements described in the regulations. EPA is seeking comments on
this proposed process. Additionally, EPA requests comment on whether
the burden associated with the petition process is reasonable, and how
it might be minimized while still remaining adequately robust. Specific
estimates about the time and cost of preparing a petition will be
published in Information Collection Request associated with this
proposed rulemaking.

VI. Public Participation

    We request comment on all aspects of this proposal. This section
describes how you can participate in this process.

A. How do I submit comments?

    We are opening a formal comment period by publishing this document.
We will accept comments during the period indicated under DATES in the
first part of this proposal. If you have an interest in the proposed
standards and changes to the RFS regulations described in this
document, we encourage you to comment on any aspect of this rulemaking.
We also request comment on specific topics identified throughout this
proposal.
    Your comments will be most useful if you include appropriate and
detailed supporting rationale, data, and analysis. Commenters are
especially encouraged to provide specific suggestions for any changes
that they believe need to be made. You should send all comments, except
those containing proprietary information, to our Air Docket (see
ADDRESSES in the first part of this proposal) before the end of the
comment period.
    You may submit comments electronically, by mail, or through hand
delivery/courier. To ensure proper receipt by EPA, identify the
appropriate docket identification number in the subject line on the
first page of your comment. Please ensure that your comments are
submitted within the specified comment period. Comments received after
the close of the comment period will be marked ``late.'' EPA is not
required to consider these late comments. If you wish to submit
Confidential Business Information (CBI) or information that is
otherwise protected by statute, please follow the instructions in
Section VI.B.

B. How should I submit CBI to the agency?

    Do not submit information that you consider to be CBI
electronically through the electronic public docket, http://
www.regulations.gov, or by e-mail. Send or deliver information
identified as CBI only to the following address: U.S. Environmental
Protection Agency, Assessment and Standards Division, 2000 Traverwood
Drive, Ann Arbor, MI 48105, Attention Docket ID EPA-HQ-OAR-2010-0133.
You may claim information that you submit to EPA as CBI by marking any
part or all of that information as CBI (if you submit CBI on disk or
CD-ROM, mark the outside of the disk or CD-ROM as CBI and then identify
electronically within the disk or CD-ROM the specific information that
is CBI). Information so marked will not be disclosed except in
accordance with procedures set forth in 40 CFR part 2.
    In addition to one complete version of the comments that include
any information claimed as CBI, a copy of the comments that does not
contain the information claimed as CBI must be submitted for inclusion
in the public docket. If you submit the copy that does not contain CBI
on disk or CD-ROM, mark the outside of the disk or CD-ROM clearly that
it does not contain CBI. Information not marked as CBI will be included
in the public docket without prior notice. If you have any questions
about CBI or the procedures for claiming CBI, please consult the person
identified in the FOR FURTHER INFORMATION CONTACT section.

VII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993),
this action is a ``significant regulatory action'' because it raises
novel legal or policy issues. Accordingly, EPA submitted this action to
the Office of Management and Budget (OMB) for review under EO 12866 and
any changes made in response to OMB recommendations have been
documented in the docket for this action.
    The economic impacts of the RFS2 program on regulated parties,
including the impacts of the required volumes of renewable fuel, were
already addressed in the RFS2 final rule promulgated on March 26, 2010
(75 FR 14670). This action proposes the percentage standards applicable
in 2011 based on the volumes that were analyzed in the RFS2 final rule.
This action also proposes two new regulatory provisions that have been
determined to have no adverse economic impact on regulated parties
since they would increase flexibility to produce qualifying renewable
fuel under the RFS2 program.

B. Paperwork Reduction Act

    The information collection requirements in this proposed rule have
been submitted for approval to the Office of Management and Budget
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The
Information Collection Request (ICR) document prepared by EPA has been
assigned EPA ICR number 2398.01.
    This proposed regulation has a provision that EPA would use to
authorize renewable fuel producers using foreign-grown feedstocks to
use an aggregate approach to comply with the renewable biomass
verification provisions, similar to that applicable to producers using
crops and crop residue grown in the United States. See discussion in
Section V.B. For this authorization, foreign based entities could
petition EPA for approval of the aggregate compliance approach for
specified renewable fuel feedstocks either in a foreign country as a
whole or in a specified geographical area within a country. This
petition request for crops from foreign grown land areas would be
voluntary. If approved by EPA, such a petition would allow biomass
produced in a foreign country or geographical area to be counted as
feedstock to make renewable fuel under the RFS2 program. Other actions
in this proposed regulation would not impose any new information
collection burdens on regulated entities beyond those already required
under RFS2. The submission of this information is required in order for
EPA to evaluate and act on the petitions. Respondents may assert claims
of business confidentiality (CBI) for any or all of the information
they submit. We do not believe that most respondents would characterize
the information they submit to us under this information collection as
CBI. However, any information claimed as confidential would be treated
in accordance with 40 CFR Part 2 and established Agency procedures.
Information that is received without a claim of confidentiality may be
made available to the public without further notice to the submitter
under 40 CFR 2.203.
    EPA estimates that there would be 15 respondents (petitioners),
submitting 15 responses (petitions) in response to this provision. The
estimated burden annual

burden, assuming 15 respondents, would be 200 hours and annual cost is
$14,196. Burden is defined at 5 CFR 1320.3(b).
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.
    To comment on the Agency's need for this information, the accuracy
of the provided burden estimates, and any suggested methods for
minimizing respondent burden, EPA has established a public docket for
this rule, which includes this ICR, under Docket ID number EPA-HQ-OAR-
2010-0133. Submit any comments related to the ICR to EPA and OMB. See
ADDRESSES section at the beginning of this notice for where to submit
comments to EPA. Send comments to OMB at the Office of Information and
Regulatory Affairs, Office of Management and Budget, 725 17th Street,
NW., Washington, DC 20503, Attention: Desk Office for EPA. Since OMB is
required to make a decision concerning the ICR between 30 and 60 days
after July 20, 2010, a comment to OMB is best assured of having its
full effect if OMB receives it by August 19, 2010. The final rule will
respond to any OMB or public comments on the information collection
requirements contained in this proposal.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) A small business as defined
by the Small Business Administration's (SBA) regulations at 13 CFR
121.201; (2) a small governmental jurisdiction that is a government of
a city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field.
    After considering the economic impacts of today's proposed rule on
small entities, we certify that this proposed action will not have a
significant economic impact on a substantial number of small entities.
This rule sets the annual standard for cellulosic biofuels, proposes a
regulatory provision for the generation of Delayed RINs, and
establishes criteria for foreign countries to adopt an aggregate
approach of compliance with the renewable biomass provision similar to
that used in the U.S. However, the impacts of the RFS2 program on small
entities were already addressed in the RFS2 final rule promulgated on
March 26, 2010 (75 FR 14670). Therefore, this proposed rule will not
impose any additional requirements on small entities. We continue to be
interested in the potential impacts of the proposed rule on small
entities and welcome comments on issues related to such impacts.

D. Unfunded Mandates Reform Act

    This action contains no Federal mandates under the provisions of
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C.
1531-1538 for State, local, or tribal governments or the private
sector. The action imposes no enforceable duty on any State, local or
tribal governments or the private sector. Therefore, this action is not
subject to the requirements of sections 202 or 205 of the UMRA.
    This action is also not subject to the requirements of section 203
of UMRA because it contains no regulatory requirements that might
significantly or uniquely affect small governments.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government, as
specified in Executive Order 13132. This proposed rule does not have
federalism implications. It will not have substantial direct effects on
the States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government, as specified in Executive Order 13132.
Thus, Executive Order 13132 does not apply to this rule.
    In the spirit of Executive Order 13132, and consistent with EPA
policy to promote communications between EPA and State and local
governments, EPA specifically solicits comment on this proposed rule
from State and local officials.

F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    This action does not have tribal implications, as specified in
Executive Order 13175 (65 FR 67249, November 9, 2000). This proposed
rule does not have tribal implications, as this rule will be
implemented at the Federal level and impose compliance costs only on
transportation fuel refiners, blenders, marketers, distributors,
importers, and exporters. Tribal governments would be affected only to
the extent they purchase and use regulated fuels. Thus, Executive Order
13175 does not apply to this action.

G. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks

    EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying
only to those regulatory actions that concern health or safety risks,
such that the analysis required under section 5-501 of the EO has the
potential to influence the regulation. This action is not subject to EO
13045 because it does not establish an environmental standard intended
to mitigate health or safety risks and because it implements specific
standards established by Congress in statutes.

H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use

    This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355
(May 22, 2001)) because it is not likely to have a significant adverse
effect on the supply, distribution, or use of energy.

I. National Technology Transfer Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus standards in its regulatory
activities unless to do so would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., materials specifications, test methods, sampling
procedures, and business practices) that are developed or adopted by
voluntary consensus standards bodies. NTTAA directs EPA to provide
Congress, through OMB, explanations when the Agency decides not to use
available and applicable voluntary consensus standards.

    This proposed rulemaking does not involve technical standards.
Therefore, EPA is not considering the use of any voluntary consensus
standards.

J. Executive Order 12898: Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations

    Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes
Federal executive policy on environmental justice. Its main provision
directs Federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
    EPA has determined that this proposed rule will not have
disproportionately high and adverse human health or environmental
effects on minority or low-income populations because it does not
affect the level of protection provided to human health or the
environment. This action does not relax the control measures on sources
regulated by the RFS2 regulations and therefore will not cause
emissions increases from these sources.

VIII. Statutory Authority

    Statutory authority for this action comes from section 211 of the
Clean Air Act, 42 U.S.C. 7545. Additional support for the procedural
and compliance related aspects of today's proposal, including the
proposed recordkeeping requirements, come from Sections 114, 208, and
301(a) of the Clean Air Act, 42 U.S.C. Sections 7414, 7542, and
7601(a).

List of Subjects in 40 CFR Part 80

    Environmental protection, Air pollution control, Diesel Fuel, Fuel
additives, Gasoline, Imports, Labeling, Motor vehicle pollution,
Penalties, Reporting and recordkeeping requirements.

    Dated: July 9, 2010.
Lisa P. Jackson,
Administrator.
    For the reasons set forth in the preamble, 40 CFR part 80 is
proposed to be amended as follows:

PART 80--REGULATION OF FUELS AND FUEL ADDITIVES

    1. The authority citation for part 80 continues to read as follows:

    Authority: 42 U.S.C. 7414, 7542, 7545, and 7601(a).

    2. Section 80.1426 is amended by revising paragraph (e)(1) and
adding paragraph (g) to read as follows:

Sec.  80.1426  How are RINs generated and assigned to batches of
renewable fuel by renewable fuel producers or importers?

* * * * *
    (e) * * *
    (1) Except as provided in paragraph (g)(7) of this section for
delayed RINs, the producer or importer of renewable fuel must assign
all RINs generated to volumes of renewable fuel.
* * * * *
    (g) Delayed RIN generation. Parties who produce or import renewable
fuel may generate delayed RINs to represent renewable fuel volumes that
have already been transferred to another party if those renewable fuel
volumes can be described by a pathway that has been added to Table 1 to
Sec.  80.1426 on or after July 1, 2010 and before January 1, 2011.
    (1) When a new pathway is added to Table 1 to Sec.  80.1426, EPA
will specify the effective date of that new pathway.
    (2) Delayed RINs must be generated within 30 days of the effective
date of the rule in which the pathway is added.
    (3) Delayed RINs may only be generated to represent renewable fuel
produced or imported between July 1, 2010 and the effective date of the
rule in which the pathway is added.
    (4) If a party originally generated and transferred RINs with
renewable fuel volumes, and those RINs can be described by a pathway
added to Table 1 to Sec.  80.1426 on or after July 1, 2010 and before
January 1, 2011, that party must retire a number of gallon-RINs prior
to generating delayed RINs.
    (i) The number of gallon-RINs retired must not exceed the number of
gallon-RINs originally generated to represent the renewable fuel
volumes produced or imported between July 1, 2010 and the effective
date of the rule in which the pathway is added.
    (ii) Retired RINs must have a D code of 6.
    (iii) Retired RINs must have a K code of 2.
    (iv) Retired RINs must have been generated in 2010.
    (5) For parties that retire RINs pursuant to paragraph (g)(4) of
this section, the number of delayed gallon-RINs generated shall be
equal to the number of gallon-RINs retired.
    (6) For parties that did not retire RINs pursuant to paragraph
(g)(4) of this section, the number of delayed gallon-RINs generated
shall be determined pursuant to paragraph (f) of this section.
    (i) The standardized volume of fuel (Vs) used to
determine the RIN volume (VRIN) under paragraph (f) of this
section shall be the standardized volume of renewable fuel produced or
imported between July 1, 2010 and the effective date of the rule in
which the pathway is added.
    (ii) The renewable fuel for which delayed RINs are generated must
be described by a pathway that has been added to Table 1 to Sec.
80.1426 on or after July 1, 2010 and before January 1, 2011.
    (7) All delayed RINs generated by a renewable fuel producer must be
generated on the same date.
    (8) Delayed RINs shall have a K code of 2.
    (9) The D code that shall be used in delayed RINs generated shall
be the D code specified in Table 1 to Sec.  80.1426 which corresponds
to the pathway that describes the producer's operations.
    3. Section 80.1454 is amended by revising paragraph (g)
introductory text to read as follows:

Sec.  80.1454  What are the recordkeeping requirements under the RFS
Program?

* * * * *
    (g) Aggregate compliance with renewable biomass requirement. Any
producer or RIN-generating importer of renewable fuel made from planted
crops or crop residue from existing U.S. agricultural land as defined
in Sec.  80.1401, or any producer or RIN-generating importer of
renewable fuel made from feedstock covered by a petition approved
pursuant to Sec.  80.1457, is subject to the aggregate compliance
approach and is not required to maintain feedstock records unless EPA
publishes a finding that the 2007 baseline amount of agricultural land
has been exceeded or that the criterion in Sec.  80.1457(a) is no
longer satisfied.
* * * * *
    4. Section 80.1457 is added to read as follows:

Sec.  80.1457  Petition process for international aggregate compliance
approach.

    (a) EPA may approve a petition for application of the aggregate
compliance approach to non-U.S. planted crops and crop residues from
existing foreign agricultural land if it determines that an aggregate
compliance approach will provide reasonable assurance that specified
renewable fuel feedstocks from a given geographical area meet the
definition of renewable biomass and will continue to meet the
definition of renewable biomass, based on the submission of credible,
reliable, and verifiable data.
    (1) As part of its evaluation, EPA will consider:
    (i) Whether there has been a reasonable identification of the

aggregate amount of agricultural land in the specified geographical
area as of December 19, 2007 that was available for the production of
the specified feedstock(s) and that satisfy the definition of renewable
biomass;
    (ii) Whether information from years preceding and following 2007
shows that the 2007 amount of agricultural land identified in paragraph
(a)(1)(i) of this section is not likely to be exceeded in the future;
    (iii) Whether economic considerations, legal constraints,
historical land use and agricultural practices, and/or other factors
show that it is likely that producers of the feedstock(s) will continue
to use agricultural land within area of land identified in paragraph
(a)(1)(i) of this section in the future as opposed to clearing and
cultivating land that was not included in that area of land.
    (iv) Whether there is a reliable method to evaluate on a continuing
basis whether the 2007 area of land identified in paragraph (a)(1)(i)
of this section is being exceeded; and
    (v) Whether an entity has been identified to conduct data gathering
and analysis needed for the evaluation specified in paragraph
(a)(1)(iv) of this section, for submission to EPA on an annual basis if
EPA grants the petition.
    (2) [Reserved]
    (b) Any petition submitted under paragraph (a) of this section must
be in the English language, and must include all of the following, or
an explanation of why it is not needed for EPA to approve the petition:
    (1) Maps or electronic data identifying the boundaries of the land
for which the petitioner seeks approval of an aggregate compliance
approach.
    (2)(i) For petitions regarding crops or crop residue, the total
amount of land that is cropland or pastureland within the geographic
boundaries specified in paragraph (b)(1) of this section that was
cleared or cultivated prior to December 19, 2007 and that was actively
managed or fallow and nonforested on that date, and the total amount of
land that is cropland or pastureland within the geographic boundaries
specified in paragraph (b)(1) of this section that was not cleared or
cultivated prior to December 19, 2007 and actively managed or fallow
and nonforested on that date.
    (ii) If the petitioner is seeking approval of the aggregate
compliance approach for a particular planted crop or crop residue, the
total amount of land within the geographic boundaries specified in
paragraph (b)(1) of this section that was used for the production of
that feedstock in 2007 and that was actively managed or fallow and
nonforested on that date, and the total amount of land within the
geographic boundaries specified in paragraph (b)(1) of this section
that was used for the production of that feedstock in 2007 that was not
cleared or cultivated prior to December 19, 2007 and actively managed
or fallow and nonforested on that date.
    (3) A description of the feedstock(s) for which the petitioner is
submitting the petition.
    (4) Land use data that demonstrates that the land in question in
paragraph (b)(1) of this section is cropland or pastureland that was
cleared or cultivated prior to December 19, 2007 and that was actively
managed or fallow and nonforested on that date, which may include any
of the following:
    (i) Satellite imagery data.
    (ii) Aerial photography.
    (iii) Census data.
    (iv) Agricultural surveys.
    (v) Agricultural economic modeling data.
    (5) Historical land use data for the land within the geographic
boundaries specified in paragraph (b)(1) of this section to the current
year, which may include any of the following:
    (i) Satellite imagery data.
    (ii) Aerial photography.
    (iii) Census data.
    (iv) Agricultural surveys.
    (v) Agricultural economic modeling data.
    (6) A description of any applicable laws, agricultural practices,
economic considerations, or other relevant factors that had or may have
an effect on the use of the land within the geographic boundaries
specified in paragraph (b)(1) of this section.
    (7) A plan describing how the petitioner will identify an entity
who will, on a continuing basis, conduct data gathering, analysis, and
submittal to assist EPA in making an annual determination of whether
the criterion specified in paragraph (a) of this section remains
satisfied.
    (8) Any additional information the Administrator may require.
    (c) If EPA approves a petition it will issue a Federal Register
notice announcing its decision and specifying an effective date for the
application of the aggregate compliance approach to the specified
feedstock(s) from the specific geographical area. Thereafter, the
specified feedstocks from the specified area will be covered by the
aggregate compliance approach set forth in Sec.  80.1454(g), or as
otherwise specified pursuant to paragraph (d) of this section.
    (d) If EPA grants a petition to establish an aggregate compliance
approach for a specified feedstock(s) from a specific geographical
area, it may include any conditions that EPA considers appropriate in
light of the conditions and circumstances involved.
    (e)(1) EPA may withdraw its approval of the aggregate approach for
the area and feedstocks in question if:
    (i) EPA determines that the data submitted pursuant to the plan
described in paragraph (b)(7) of this section does not demonstrate that
the amount of cropland and pastureland within the geographic boundaries
covered by the approved petition does not exceed the 2007 baseline
amount of land;
    (ii) EPA determines based on other information that the criterion
specified in paragraph (a) of this section is no longer satisfied; or
    (iii) EPA determines that the data needed for its annual evaluation
has not been collected and submitted in a timely and appropriate
manner.
    (2) If EPA withdraws its approval, then producers using feedstocks
from that area will be subject to the individual recordkeeping and
reporting requirements of Sec.  80.1454(b) through (d) in accordance
with the schedule specified in Sec.  80.1454(g).

[FR Doc. 2010-17281 Filed 7-19-10; 8:45 am]
BILLING CODE 6560-50-P