duty electric vehicle is a vehicle that is both a light-duty vehicle
(i.e., light-duty vehicle or light-duty truck) and an electric
vehicle (i.e., electric vehicle or plug-in electric hybrid vehicle).
---------------------------------------------------------------------------

    We are proposing that qualifying renewable electricity (i.e.,
renewable electricity generated under Row Q or T of Table 1 to 40 CFR
80.1426) produced and put on a commercial electrical grid serving the
conterminous U.S. could be contracted for eRIN generation so long as
the OEM demonstrates that the vehicles it produced have used a
corresponding quantity of electricity. Under the proposed approach, EPA
would establish requirements for biogas generators and electricity
producers, but only an OEM would be allowed to generate the eRIN,
though the value of the eRIN would be expected to be distributed after
its generation amongst multiple parties. In this notice, we describe in
detail our proposed approach and associated design elements and propose
regulations that would implement the approach. We also describe several
other alternative approaches to designing the eRIN program and ask for
comment on those alternatives. The alternative approaches include
allowing producers of renewable electricity to generate eRINs, allowing
public access charging stations to generate eRINs, allowing independent
third parties to generate eRINs, and a number of hybrid approaches that
would allow multiple parties to generate eRINs. We also considered how
other programs, like California's Low Carbon Fuel Standard, address
similar policy goals and challenges.
    This section is divided into multiple subsections. The first two
subsections provide the context within which our

proposed eRIN program was developed, including the historical treatment
of electricity in the RFS program and the unique elements of renewable
electricity as a qualifying transportation fuel. In subsequent
subsections we introduce and discuss, among other things:

 Policy goals in developing the eRIN program
 Regulatory goals in developing the eRIN Program
 The proposed applicability of the eRIN program
 The proposed eRIN program structure
 Alternatives to the proposed structure
 Proposed changes to equivalence values
 Proposed compliance and enforcement provisions

    We request comment on all aspects of our proposed eRIN program,
including elements related to renewable natural gas (RNG) addressed
separately in Section IX.I and our projections of future eRIN supply
discussed in Section III.B.1.b.

A. Historical Treatment of Electricity in the RFS Program

1. Statutory Authority and Regulatory History
    Congress established the RFS2 program in the 2007 Energy
Independence and Security Act (EISA). Among other revisions to the
prior RFS1 program that had been established by EPAct2005, EISA defined
renewable fuel as ``fuel that is produced from renewable biomass and
that is used to replace or reduce the quantity of fossil fuel present
in a transportation fuel.'' \188\ EISA also provided a definition of
``renewable biomass,'' enumerating the seven categories of feedstocks
that can be used to produce qualifying renewable fuel under RFS2.\189\
This statutory definition of renewable biomass includes separated yard
waste, separated food waste, animal waste material, and crop residue,
any of which could be used to produce biogas through anaerobic
digestion.\190\ Additionally, the statutory definition of advanced
biofuel codified at CAA section 211(o)(1)(B)(ii)(V) explicitly
identifies biogas as a valid form of advanced biofuel.
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    \188\ CAA section 211(o)(1)(J).
    \189\ CAA section 211(o)(1)(I).
    \190\ Biogas was explicitly included in EPAct2005 as a renewable
fuel at CAA section 211(o)(1)(C)(i)(I)(bb) and therefore was
included in the RFS1 program that applied from 2006-2009. In the
2010 rulemaking which established the RFS2 program based on changes
to 211(o) enacted through EISA in 2007, we concluded that biogas was
a qualifying renewable fuel if it is produced from ``renewable
biomass.'' See 75 FR 14685-14686 (March 26, 2010).
---------------------------------------------------------------------------

    It is important to note that, consistent with the statutory
definition of renewable fuel provided by EISA, qualifying renewable
electricity under the RFS program must be generated from a feedstock
that qualifies as renewable biomass under Clean Air Act Section
211(o)(1)(I). Unlike some other renewable electricity programs,
electricity generated from energy sources such as solar, wind, and
hydropower does not qualify as renewable electricity or renewable fuel
under the RFS program.
    EPA is required to develop regulations to, inter alia, ``ensure
that transportation fuel sold or introduced into commerce in the United
States (except in non-conterminous States or territories), on an annual
average basis, contains at least the applicable volume of renewable
fuel, advanced biofuel, cellulosic biofuel, and biomass-based diesel [.
. .].'' \191\ Congress further required that EPA's regulations provide
for a credit mechanism under which a person could generate credits and
use or transfer them for the purpose of achieving the required annual
volumes of renewable fuels. Although the credit system must provide
``for the generation of an appropriate amount of credits by any person
that refines, blends, or imports gasoline that contains a quantity of
renewable fuel that is greater than'' the statutory volume, as well as
for the generation of credits for biodiesel and by small
refineries,\192\ the statute does not limit credit generation to these
parties, nor does it specify the mechanics of credit generation,
transfer, or disposition.
---------------------------------------------------------------------------

    \191\ CAA section 211(o)(2)(A)(i).
    \192\ CAA section 211(o)(5).
---------------------------------------------------------------------------

    Finally, EISA required EPA to conduct a study and issue a report to
Congress on the feasibility of issuing credits under the RFS program
for renewable electricity used in electric vehicles.\193\ In the 2010
rulemaking in which EPA promulgated regulations to implement the RFS2
program, EPA determined that electricity, as well as natural gas and
propane, could meet the statutory definition of renewable fuel and thus
be eligible to generate RINs if it was made from renewable biomass and
if parties could ``identify the specific quantities of their product
which are actually used as a transportation fuel.'' \194\ In the same
rulemaking, EPA established a qualifying RIN-generating pathway for
biogas used as transportation fuel as an advanced biofuel when derived
from landfills, sewage waste treatment plants, and manure
digesters.\195\ While EPA did not promulgate a specific pathway for
renewable electricity at that time, it did establish provisions
governing the treatment of renewable electricity as well as natural gas
and propane (i.e., CNG and LNG), provided that those fuels were derived
from biogas and that specific quantities of the fuels used as
transportation fuels could be measured.
---------------------------------------------------------------------------

    \193\ Public Law 110-140, 206(b)-(c) (2007).
    \194\ 75 FR 14670, 14686 (March 26, 2010).
    \195\ 75 FR 14670 (March 26, 2010). The CAA includes ``biogas''
as one of the types of renewable fuels ``eligible for consideration
as advanced biofuel.'' CAA section 211(o)(1)(B)(ii).
---------------------------------------------------------------------------

    In 2014, EPA finalized the RFS ``Pathways II'' rule, which among
other things added specific RIN-generating pathways for renewable CNG,
renewable LNG, and renewable electricity to rows Q and T to Table 1 of
40 CFR 80.1426.\196\ Inclusion of these new pathways in Table 1 was
intended to allow for the generation of RINs for renewable electricity
(along with renewable CNG and renewable LNG) that is used in
transportation and is produced from a qualifying biogas (i.e., biogas
that is produced from renewable biomass). Pathway Q allowed for
cellulosic biofuel RIN generation for renewable electricity produced
from biogas from landfills, municipal wastewater treatment facility
digesters, agricultural digesters, and separated municipal solid waste
(MSW) digesters, as well as biogas from the cellulosic components of
biomass processed in other waste digesters. Pathway T allowed for
advanced biofuel RINs generation for renewable electricity from biogas
from waste digesters, which encompasses non-cellulosic biogas. These
two new pathways were structured so that biogas from approved sources
would be the feedstock and renewable electricity would be the finished
fuel for RIN generation purposes.
---------------------------------------------------------------------------

    \196\ 79 FR 42128 (July 18, 2014).
---------------------------------------------------------------------------

    The Pathways II rule also established a set of regulatory
provisions that detail the criteria necessary for renewable electricity
to be demonstrated to be renewable fuel and thus eligible to generate
RINs under two scenarios. First, for electricity that is only
distributed via a closed, private, non-commercial system, the
electricity must be produced from renewable biomass under an EPA-
approved pathway and demonstrated to be sold and used as transportation
fuel.\197\ Under this scenario, only renewable electricity that was
generated inside a closed transmission network (e.g., an electricity
generating unit co-located at a landfill)

where the renewable electricity is directly supplied as transportation
fuel to EVs could generate RINs.
---------------------------------------------------------------------------

    \197\ 40 CFR 80.1426(f)(10)(i).
---------------------------------------------------------------------------

    The second scenario under which RINs could be generated for
renewable electricity addresses when electricity is introduced into a
commercial distribution system (i.e., a transmission grid). In addition
to the criteria noted above, potential RIN generators under this
scenario must also demonstrate that the renewable electricity was
loaded onto and withdrawn from a physically connected transmission
grid, that the amount of electricity sold as transportation fuel is
covered by the amount of renewable electricity placed onto the
transmission grid, and that no other party relied on the renewable
electricity for the creation of RINs.\198\ These additional
requirements for electricity transmitted via a transmission grid were
designed to ensure that the amount of renewable electricity claimed to
have been used as transportation fuel corresponds with the amount of
renewable electricity placed onto the transmission grid and that such
electricity is not double counted for RIN generation. Notably, however,
the regulations do not specify how or where the quantity of electricity
is measured, which party is the RIN generator, how a RIN generator
demonstrates that the electricity was actually used as transportation
fuel, nor how the RIN generator demonstrates that the electricity is
not double counted.
---------------------------------------------------------------------------

    \198\ 40 CFR 80.1426(f)(11)(i).
---------------------------------------------------------------------------

2. Need for New Regulations
    Due to the lack of specificity in the current regulations for how
potential RIN generators would demonstrate that electricity was
produced from renewable biomass and used as a transportation fuel, the
registration requests that EPA has received vary considerably in their
approaches. The main point of variation is the party that would
generate the eRINs. Suggestions have included:

 Parties that use renewable electricity in a specified fleet of
EVs (e.g., fleet operators)
 Parties that dispense renewable electricity at public charging
stations
 Parties that generate renewable electricity from qualifying
biogas
 Parties that produce the qualifying biogas for renewable
electricity generation
 Groups of interested EV owners that use renewable electricity
(e.g., groups representing individual light-duty EV owners)
 EV manufacturers whose vehicles use renewable electricity.

    The existing regulations did not envision this broad range of
differing approaches to eRIN generation. Registrants must be able to
demonstrate in their requests that the quantity of eRINs to be
generated could not be counted by another party \199\ (i.e., the
regulations prohibit the double counting of RIN generation for the same
quantity of renewable electricity). Thus, for a given quantity of
renewable electricity, at most one party--whether it is the renewable
electricity generator, the utility distributing the electricity, the EV
owner, the charging station, or the vehicle manufacturer--can generate
the corresponding eRINs. However, many of the current eRIN registration
requests use different sources and types of information to verify the
use of renewable electricity as transportation fuel and therefore
conflict with one other. Given the wide variety of approaches in
registration requests submitted to EPA, double counting would be almost
certain to occur were we to register more than one of the current
applicants. In other words, to prevent double counting, acceptance of
any one of these eRIN generation registration requests under the
existing regulations would necessarily preclude the acceptance of
others and constrain the ability of the RFS program to grow renewable
electricity volumes out into the future.
---------------------------------------------------------------------------

    \199\ See 40 CFR 80.1426(f)(11)(F), which states that ``[n]o
other party relied upon the renewable electricity for the creation
of RINs.''
---------------------------------------------------------------------------

    In light of this situation, we requested comment on the need for
regulatory changes related to several foundational eRIN-related topics
in the 2016 Renewable Enhancement and Growth Support (REGS) proposed
rule.\200\ We did not propose any amendments to the existing
regulations governing eRIN generation at 40 CFR 80.1426(f)(10)(i) and
(11)(i) at that time. Topics on which we requested comment include
preventing double-counting, eRIN program structure, and the equivalence
value \201\ for renewable electricity. Below we provide a high-level
summary of comments EPA received in response to the 2016 notice.
---------------------------------------------------------------------------

    \200\ 81 FR 80828 (November 16, 2016).
    \201\ See Section VIII.I for a discussion of our proposal to
revise the equivalence value for renewable electricity.
---------------------------------------------------------------------------

    Preventing double counting of RINs is critical to the integrity of
the RFS program. The credit program EPA established pursuant to Clean
Air Act 211(o)(5) is the mechanism for ensuring that transportation
fuel in the United States contains the required volumes of renewable
fuel; if RINs do not correspond to the appropriate volume of renewable
fuel, the credit mechanism breaks down. As noted above, because the
existing eRIN regulations could potentially allow different parties
using different information to generate RINs for the same volumes of
renewable electricity, we determined that the existing regulations are
not sufficient to prevent double counting and we sought comment on this
issue (i.e., on ways to prevent double counting) in the 2016 REGS
proposal. However, in general, the public comments we received on the
REGS proposal focused primarily on eRIN program structure and whether
EPA should change the equivalence value for renewable electricity. The
limited public comment on double-counting we did receive focused on the
fact that EPA could avoid double-counting if EPA would specify, to the
exclusion of other parties, a specific RIN generator and rely upon a
single set of information for eRIN generation.
    We received a significant number of comments regarding eRIN program
structure. This level of response was not unexpected given the
importance to the stakeholders regarding which entity in the supply
chain would be regulatorily permitted to act as the RIN generator, and
which entities would be able to receive revenue from the eRIN.
Stakeholders from numerous parts of the renewable electricity lifecycle
(biogas producers, renewable electricity generators, vehicle
manufacturers, public access charging station operators, etc.)
submitted comments which indicated they were the most reasonable entity
to act as the RIN generator. Often these positions were predicated on a
specific set of data that a particular stakeholder uniquely had access
to and in their estimation was the most logical data on which to base
eRIN generation. EPA received suggestions for many different program
structures, and our review of these comments confirmed that many of the
recommended structures and existing registration requests were mutually
exclusive.
    We evaluated the comments received in response to the REGS
proposal, the registration requests that have been submitted, and the
additional potential eRIN generation approaches that have been
suggested to us. In light of the complexity associated with tracking
valid eRIN generation and qualified use (i.e., transportation use)
under the RFS program, we have concluded that it is necessary and
prudent to develop a modified and expanded set of comprehensive
regulatory provisions to ensure that renewable electricity which
qualifies under an approved RIN-generating pathways (e.g., Row Q or T)
is used as transportation fuel, and is not

double-counted.\202\ We acknowledge that the proposed approach
contained in this action is only one of many approaches that could be
established, and that stakeholders have diverse opinions on program
design. We look forward to further stakeholder input on the proposed
approach contained herein, the multiple policy and technical questions
associated with that approach, and alternative regulatory structures
that could potentially accomplish the same goals.
---------------------------------------------------------------------------

    \202\ As discussed in Section IX.I, we also believe that a new
set of regulatory provisions is needed for the production, transfer,
and use of biogas to accommodate a program that allows for multiple
uses of biogas--as renewable CNG/LNG, to generate renewable
electricity, and as a biointermediate to produce renewable fuels
other than renewable CNG/LNG or renewable electricity. The proposed
allowance for the use of biogas, in the form of RNG, for multiple
purposes under the RFS program would create an increased risk for
the multiple counting of the biogas for RIN generation resulting in
invalid and fraudulent RINs. The proposed biogas regulatory reform
provisions, discussed in Section IX.I, are designed to work in
tandem with the eRINs proposal to put in place a cohesive biogas
program that would minimize the potential for the multiple counting
of biogas for different uses. The proposed biogas regulatory reform
provisions are intended to provide the specificity needed to
streamline the onboarding of potentially hundreds of EGUs producing
renewable electricity from biogas into the program in a very short
amount of time. Were we not to finalize the proposed biogas
regulatory reform provisions discussed in Section IX.I, then we
would need to put in place additional/different requirements for
eRINs in order to avoid multiple counting of eRINs.
---------------------------------------------------------------------------

    We understand that some stakeholders who have submitted eRIN
registration requests take the position that their requests could and
should be accepted without any further action on the part of EPA to
modify the applicable regulations. Regardless of whether any one
registration request meets the regulatory requirements, under the
existing regulations, EPA very likely cannot approve one request
without denying all subsequent requests. Such an outcome would be
contrary to the purpose of the RFS program and thus to broader EPA
policy and implementation goals. While we acknowledge that it may be
possible to develop a renewable electricity generation and use a
business model that could enable registration under the existing
regulations, it would require that all aspects--from biogas production
to electrical generation and use in transportation--be carried out on-
site by the same entity. Such a model would result in an overly narrow
eRIN program that would limit the potential growth of renewable
electricity. Although it would avoid double counting, it would also
preclude the development of a more broadly applicable and equitable
framework for an eRIN program that would be capable of incentivizing
the full potential volume of renewable electricity used as
transportation fuel.
    We believe that the policy and regulatory design questions
confronting the Agency are sufficiently broad and complex that issuing
new regulations to govern an eRIN program is necessary. We further
believe that doing so provides maximum transparency into our policy
development process and offers stakeholders a chance to provide comment
on and improve our proposed approach.

B. The eRIN Generation and Disposition Chain

    In this subsection, we introduce and briefly discuss a number of
key concepts and terms that are used throughout our discussion of eRINs
and our proposed approach for governing their generation. As mentioned
above, in designing this new eRIN program EPA is able to draw upon its
experience implementing an RFS program that currently includes both
liquid and non-liquid fuels. Even with this experience, however, there
are aspects to the generation and use of renewable electricity in the
program that are unique, and which raise implementation and design
questions that we have not addressed before in other parts of the
program. This subsection is intended to provide descriptions of
foundational concepts that underlie and/or are used throughout this
notice, including all the various actors that participate in the eRIN
value chain. A starting point for this discussion relates to how biogas
is converted into electricity.
1. Biogas and Renewable Natural Gas
    Under the current RFS program, we broadly define biogas as ``the
mixture of hydrocarbons that is a gas at 60 degrees Fahrenheit and 1
atmosphere of pressure that is produced through the anaerobic digestion
of organic matter.'' \203\ Biogas typically contains a significant
amount of impurities and inert gases (e.g., carbon dioxide) and must
undergo pre-treatment before it can be used to generate electricity and
especially before it can be used as CNG/LNG in vehicles. In order for
the natural gas commercial pipelines to accept injections of biogas,
the biogas must first be upgraded to meet pipeline specifications prior
to injection. This pipeline quality biogas is called renewable natural
gas (RNG) \204\ and is fungible with fossil-based natural gas.
Electricity can be produced by combusting treated biogas or RNG; the
only difference is that the former is not pipeline quality while the
latter is.
---------------------------------------------------------------------------

    \203\ See 40 CFR 80.1401. Under the RFS program, biogas used to
produce renewable fuels must be produced from renewable biomass. See
id. (definition of ``renewable fuel''), Table 1 to 40 CFR 80.1426.
Also note, as discussed in Section VIII.K, we are proposing to
modify the definition of biogas consistent with the proposed eRIN
program and proposed biogas regulatory reform described in Section
IX.I.
    \204\ For purposes of this preamble, by renewable natural gas or
RNG, we mean a product derived from biogas that contains at least 90
percent biomethane content and meets the commercial distribution
pipeline specification for the pipeline that the biogas is injected
into. Biomethane is the methane component of biogas and RNG that is
derived from renewable biomass. Under the current regulations,
parties generate RINs for the energy, in BTUs, from the biomethane
content (exclusive of impurities, inert gases often found with
biomethane in biogas) that is demonstrated to be used as
transportation fuel.
---------------------------------------------------------------------------

2. Renewable CNG and LNG
    For biogas to be used as renewable CNG/LNG to fuel a vehicle (i.e.,
not used to generate electricity), the treated biogas or RNG is
compressed into compressed natural gas (renewable CNG) or liquified
natural gas (renewable LNG) and then used in CNG/LNG engines as
transportation fuel. Under our current regulations,\205\ we require
that parties demonstrate through contracts and affidavits that a
specific volume of RNG is used as transportation fuel within the U.S.,
and for no other purpose. RNG that parties can demonstrate via contract
is used for transportation is often called contracted RNG. Although not
required by EPA's regulations, typically under the RFS program, in
order for parties to enter into a contract to help the RIN generator
demonstrate that a volume of RNG was produced from renewable biomass
and is used as transportation fuel, that party contracts for a portion
of the value of the RIN generated for the volume.
---------------------------------------------------------------------------

    \205\ 40 CFR 80.1426(f)(10)(ii), (f)(11)(ii).
---------------------------------------------------------------------------

    We call the chain of parties that are involved in ensuring that
biogas is produced from renewable biomass and used as transportation
fuel the generation/disposition chain. For renewable CNG/LNG, this
chain includes:

 The biogas producer (i.e., the landfill or digester that
produces the biogas)
 The party that upgrades the biogas into RNG
 The parties that distribute and store the RNG (e.g.,
pipelines)
 The parties that compress the RNG into renewable CNG/LNG
 The dispensers of the renewable CNG/LNG (e.g., refueling
stations)
 The consumers of the CNG/LNG (e.g., a municipal bus fleet)
 And any third parties that help manage the information and
records needed to show that the biogas was

produced from renewable biomass and used as renewable CNG/LNG.

    If biogas is directly supplied to an end user via a private
pipeline, the CNG/LNG generation/disposition chain can be much smaller;
sometimes, even being a single party if the same party produces the
biogas, treats and compresses/liquifies it, and supplies an onsite
fleet of CNG/LNG vehicles. Under EPA's current regulations, any party
in a biogas generation/disposition chain can generate the RINs, but as
part of this action we are proposing to modify the biogas-to-renewable
CNG/LNG regulations to specify a particular RIN generator, as discussed
in detail in Section IX.I.
3. Converting Biogas/RNG to Electricity
    In a majority of situations where biogas is combusted to produce
electricity, an electricity generation unit (EGU) is collocated with
the source of the biogas. For example, a landfill operation may have an
onsite electricity generation unit like a reciprocating internal
combustion engine or a gas turbine.\206\ In these situations, only a
relatively minimal amount of gas cleanup is needed prior to combustion.
In some cases, though, non-collocated electricity generators buy
contracted RNG. In both cases--onsite generation from biogas, or
offsite generation from RNG--the generation/disposition chain for the
electricity includes all the parties in the renewable CNG/LNG chain for
the production and distribution of the biogas or RNG. As discussed in
more detail later in this section, however, the chain lengthens
significantly once the biogas or RNG is converted to electricity.
---------------------------------------------------------------------------

    \206\ For more basic information on landfill gas energy
projects, for example, see https://www.epa.gov/lmop/basic-information-about-landfill-gas.
---------------------------------------------------------------------------

4. Tracking Renewable Electricity to Transportation Use in the United
States
    For most fuels under the RFS program, it is unnecessary to track
the fuel from the point of its production to the point of end-use in
order to demonstrate that the renewable fuel was actually used as
transportation fuel. For example, once ethanol is denatured, it is
reasonably presumed that it will be used as transportation fuel as it
has no other practical uses.\207\ Similarly, once biodiesel meets
highway fuel specifications, it is presumed that it will be used as
transportation fuel.
---------------------------------------------------------------------------

    \207\ The regulations at 40 CFR 80.1401 states that in order for
ethanol to meet the definition of renewable fuel, the ethanol must
be denatured under the Department of Treasury's denaturant
requirements at 27 CFR parts 19 through 21.
---------------------------------------------------------------------------

    This is not the case, however, with RNG injected into a natural gas
commercial pipeline system, where it is mixed with fossil natural gas.
In that case, we are unable to assume that the main use of the RNG will
be for transportation because only a small percentage of natural gas
used in the United States is used for transportation.\208\ When RNG
moves through a pipeline system for distribution, the RNG is mixed with
a much larger proportion of fossil natural gas using the same system.
The two natural gases--one derived from renewable sources, the other
from fossil sources--are fungible at that point.
---------------------------------------------------------------------------

    \208\ EIA estimates that in 2020 only about 3 percent of natural
gas was used for transportation, see https://www.eia.gov/energyexplained/natural-gas/use-of-natural-gas.php.
---------------------------------------------------------------------------

    Consequently, by the time the natural gas is used to fuel a
vehicle, there is no meaningful way to identify which molecules of
methane were originally sourced from biogas and which came from fossil
sources. As discussed above, and in light of this dynamic, when EPA
introduced RNG as a transportation fuel in the RFS program in the
Pathways II rule, we set up a system whereby the demonstration that RNG
was used as transportation fuel relied on accounting protocols,
recordkeeping requirements, and requirements for contracts and
affidavits attesting that a specific volume of RNG was used as
transportation fuel, and for no other purpose.\209\
---------------------------------------------------------------------------

    \209\ See 40 CFR 80.1426(f)(11)(ii).
---------------------------------------------------------------------------

    We face a similar situation with renewable electricity. Like
natural gas, electricity's main use is for purposes other than
transportation. Like RNG, the distribution of renewable electricity
relies on and is fungibly distributed through the same distribution
system (i.e., the commercial electrical transmission grid) as for non-
renewable electricity. The renewable electricity, once produced, is
physically impossible to distinguish from non-renewable electricity.
Whether produced from coal, wind, solar, hydro, natural gas, or biogas,
and whether produced in California, New York, Canada, or Mexico, once
electricity is on the commercial electrical transmission grid, it is
only identifiable as electricity. The electricity that shows up in the
vehicle's battery is an indistinct commodity. This means that, for any
eRIN program that involves use of the commercial transmission grid, the
tracking and verification that a given quantity of renewable
electricity made from renewable biomass was in fact used as
transportation fuel can only be done through accounting and records
management. As with the generation of RINs for RNG, since the relevant
records and the data on which those records are based exist at
different locations and are managed by different parties, any eRIN
program thus will also need to be based on the contractual transfer of
information between parties.
    There are multiple steps, and multiple actors, involved in the
process chain from the point at which biogas is produced to the point
where electricity is used to charge an EV. The actors, whom we will be
discussing in various parts of this notice, include:

 Biogas producers (e.g., landfills and agricultural digesters)
 Parties that clean up and compress biogas to pipeline-quality
renewable natural gas (RNG)
 Biogas and RNG distributors (e.g., natural gas pipelines)
 Renewable electricity generators
 Electricity transmission and distribution owners
 EV charging station owners
 Electric vehicle (EV) owners
 Vehicle manufacturers (original equipment manufacturers or
OEMs)

    Throughout the discussion in this notice, we refer to this process
chain--from renewable electricity generation through use as a
transportation fuel--along with all of the actors in that chain, as the
``eRIN generation/disposition chain.''
    As is discussed throughout this proposal, in order to establish an
eRIN program that is both consistent with the statutory requirements
and implementable, information is needed to demonstrate that: (1)
renewable electricity is being generated from qualifying biogas, and
(2) that a commensurate amount of electricity is stored in the vehicle
battery and thus actually used as transportation fuel. However, at
points in between generation and use, all that is being transported is
fungible electricity that is neither identifiable as renewable nor
uniquely used for transportation. Consequently, the critical
information needed for eRIN generation purposes is from parties on the
front end where the electricity is produced and on the back end where
it is consumed. Because the information is often not proprietary (e.g.,
a vehicle owner, vehicle OEM and charge station will all have data on a
vehicle's charge event, and almost all parties could have records on
the quantity of electricity used for transportation), there is arguably
no one single point in the eRIN generation/

disposition chain, nor one single type of entity within that chain,
that is clearly more appropriate to designate as the eRIN generator
than any other from a technical perspective.
    While from a technical perspective there may not be one party
ideally suited to act as the eRIN generator, from a legal, program
implementation, and policy perspective there are reasons to propose to
designate one party in the chain as eligible to generate eRINs in the
first instance (acknowledging that the RIN value could subsequently be
shared among different parties). From a legal perspective, we must
ensure that our choice of the designated eRIN generator is consistent
with any applicable statutory requirements. From a policy perspective,
we must ensure that our choice of the designated eRIN generator
supports the program's ability to address key market constraints to the
increased use of renewable electricity in transportation: renewable
electricity production, EV fleet growth, and/or EV charging
infrastructure. From a program implementation perspective, the nature
of the eRIN generation/disposition chain also means there are different
ways that EPA could structure the program to ensure that statutory
requirements--that qualifying renewable electricity is being used for
transportation--are met. Although each of the parties described in the
chain play some role in facilitating the production, distribution, and
use of renewable electricity produced from qualifying biogas and used
as transportation fuel, some of them might be considered more critical
to ensuring that the statutory requirements are met. We sought to
include elements in our proposed program that we believe could both
maximally encourage the generation of eRINs and ensure that the eRINs
are valid. Ultimately, we concluded that the key factors/parties on
which to focus for the proposal for purposes of program implementation
are biogas production, renewable electricity generation, and EV fleet
growth (through OEMs).

C. Policy Goals in Developing the eRIN Program

    Renewable electricity used for transportation has been included in
the RFS program since 2010; EPA's current task is to develop a revised
set of regulations governing RIN generation for this renewable fuel.
EPA's foremost policy goal in developing the proposed eRIN program is
to support the RFS program's mandate to increase the use of renewable
fuels, in particular cellulosic biofuels, over time, consistent with
the statute's focus on growth in this category for years after 2015.
Moreover, an eRIN program can also support Congress' goals of reducing
GHGs and increasing energy security,\210\ both of which can be affected
by the design of that program. We anticipate that increasing renewable
fuel volumes, in the form of allowing the generation of RINs for
renewable electricity for use in transportation, will also have the
ancillary effect of incentivizing increased electrification of the
vehicle fleet. Where possible and consistent with our statutory
mandate, we have considered these and other ancillary effects in
formulating the eRIN program we are proposing in this action. We also
believe it is critical to take into account the views expressed by
stakeholders as well as our experience with biogas-derived renewable
CNG/LNG under the RFS. Each of these goals is discussed below, and the
discussion of the proposed program that we believe fulfills these goals
is described in Sections VIII.E and F.
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    \210\ Congress stated that the purposes of EISA, in which the
RFS2 program was enacted, included ``[t]o move the United States
toward greater energy independence and security, to increase the
production of clean renewable fuels, to protect consumers, to
increase the efficiency of products, building, and vehicles, to
promote research on and deploy greenhouse gas capture and storage
options, and to improve the energy performance of the Federal
Government, and for other purposes.'' Public Law 110-140 (2007). See
also, CAA 211(o)(1) (definitions of qualifying biofuel include
requirement that they reduce greenhouse gas emissions by specified
amounts relative to a petroleum baseline).
---------------------------------------------------------------------------

1. Supporting the Broad Goals of the RFS Program
    The broad goals of the RFS program are to reduce GHG emissions and
enhance energy security through increases in renewable fuel use over
time. Inclusion of new types of renewable fuel or expansion of existing
types of renewable fuel in the program can help to accomplish these
goals. Any fuel that is produced from renewable biomass and is used as
transportation fuel (as defined in the Clean Air Act) has the potential
to participate in the RFS program. Biogas is already a major source of
renewable fuel, with RNG used as renewable CNG/LNG currently
representing the vast majority of cellulosic biofuel. As discussed in
Section III.B.1, use of RNG has been growing at a rapid rate since 2016
through the incentives created by the cellulosic RIN under the RFS
program, in addition to LCFS credits in California. However, as also
discussed in Section III.B.1, the opportunity for continued growth of
RNG is expected to be constrained in the future due to the consumption
capacity of the in-use fleet of CNG/LNG vehicles. As the use of RNG
saturates the existing in-use fleet, the use of biogas as a feedstock
for renewable fuel production will be constrained by the much slower
growth in CNG/LNG fleet sales. At the same time, based on the number of
existing landfills \211\ and wastewater treatment facilities and the
potential for significant expansion of anaerobic digesters,\212\ there
exists significant potential to increase the productive use of biogas
to produce renewable fuel under the RFS program. By tapping into the
greater market for that biogas that is and can be converted to
renewable electricity, the impending constraints on the use of biogas
as a feedstock for renewable fuel production can be mitigated.
Specifically, by coupling the existing capacity for electricity
generation from qualifying biogas with the expansion of EVs in the
fleet that is already underway, the RFS program can increase renewable
fuel use in transportation in keeping with the overarching goal of the
program.
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    \211\ https://www.epa.gov/lmop/landfill-gas-energy-project-data.
    \212\ https://www.epa.gov/agstar/livestock-anaerobic-digester-database.
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    The use of renewable electricity from qualifying biogas as
transportation fuel is also consistent with the statute's focus on
growth in cellulosic biofuel over other advanced biofuels and
conventional renewable fuel after 2015.\213\ The existing RIN-
generating pathways in rows Q and T of Table 1 to 40 CFR 80.1426
provide for the generation of D-code 3 (cellulosic) and D-code 5
(advanced) RINs, respectively. The determination that biogas from
landfills, municipal wastewater treatment facility digesters,
agricultural digesters, and separated MSW digesters; and biogas from
cellulosic components of biomass processed in other waste digesters is
predominantly cellulosic was made in the 2014 Pathways II Rule.\214\ In
that rule, EPA further concluded that:
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    \213\ For years after 2015, conventional renewable fuel remains
constant at 15 billion gallons, and non-cellulosic advanced biofuel
increases by no more than 0.5 billion gallons annually. Annual
increases in cellulosic biofuel, in contrast, accelerate from 1.25
billion gallons in 2016 to 2.5 billion gallons in 2022.
    \214\ 79 FR 42128 (July 18, 2014).
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     Biogas-based renewable electricity achieved at least a 60
percent reduction in greenhouse gases relative to gasoline; and
     The majority of the biogas was likely to come from
cellulosic material in a landfill or digesters that processed
predominantly cellulosic materials.\215\
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    \215\ The pathway in Row Q of Table 1 to 80.1426 allows for the
generation of D3 RINs from renewable CNG/LNG produced from biogas
from landfills, municipal wastewater treatment facility digesters,
agricultural digesters, and separated MSW digesters; and biogas from
the cellulosic components of biomass processed in other waste
digesters. For purposes of this preamble, a predominantly cellulosic
material is a feedstock that has an adjusted cellulosic content of
at least 75 percent.

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    However, as described in Section VIII.A, because we have not
registered parties to generate eRINs under the existing regulations,
biogas use has instead been limited to the CNG/LNG vehicle market under
the RFS program. Moreover, based on conversations with stakeholders, we
believe that other factors have also limited the ability of potential
biogas production facilities from participating in the RFS program: the
costs of biogas cleanup to the quality needed for injection into common
carrier pipelines and use in CNG/LNG vehicles can be prohibitive, and
many existing landfills and digesters are located a significant
distance from the natural gas commercial pipeline system and cannot
cost effectively connect. Enabling biogas to be used to generate
renewable electricity and eRINs under the RFS program would open up not
only a lower cost option for many biogas production facilities, but
also enable an even lower GHG-emitting means of using available biogas
resources for transportation.\216\ Thus, we anticipate that one
important consequence of this proposal would be to enable a
substantially increased number of biogas production facilities to
participate in the RFS program, thus expanding the opportunity for
biogas to be used as a feedstock to produce a lower GHG-emitting
renewable fuel.
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    \216\ Converting the biogas to electricity at the same location
where the biogas is produced tends to be the lowest GHG and lowest
cost means of using it for transportation since it avoids the
additional expense and energy consumption associated with cleaning
up the gas, transporting it in a pipeline, and compressing/
liquifying it prior to fueling a vehicle.
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    The renewable electricity generators are an essential component of
the production and use of renewable electricity as transportation fuel.
Throughout the development of this proposal, we have heard from many
stakeholders involved in the production of renewable electricity that
have spoken about the financial difficulty of building new renewable
electricity projects and keeping existing projects operational in order
to increase electricity production. Given that sufficient renewable
electricity generation is necessary in order to increase available
volumes of renewable fuel, and in particular cellulosic biofuels, a
primary consideration for this proposal was creating a mechanism
through which renewable electricity generators would be provided an
incentive to participate in the RFS program and increase renewable
electricity production. We believe that the proposed program described
in Section VIII.F would, through the eRIN revenue sharing agreements we
anticipate would be created, significantly increase the participation
in the program of renewable electricity generators, and thus the
potential for growth in the production and use of renewable fuel in the
form of renewable electricity used for transportation.
2. Incentivizing Growth in Renewable Fuel
    Congress designed the RFS program to create incentives for and
reduce barriers to the increased production and use of renewable fuel
in the United States. For liquid biofuels, the primary constraints have
generally been around renewable fuel production and the higher costs of
renewable fuels relative to petroleum-based fuels; the existing vehicle
fleet was typically capable of consuming the types and quantities of
renewable fuels in the blends offered and has therefore not generally
been a constraint. As a result, EPA's regulatory framework targeted the
incentive, i.e., the RIN value, at the renewable fuel producers. As
explained above, existing constraints on certain parts of the renewable
electricity generation/disposition chain have, to date, limited its
potential use as transportation fuel in the United States. Thus,
consistent with our approach to renewable fuels generally under the RFS
program, in designing this proposed eRINs program one of our goals has
been to target the eRIN incentive to where it is most likely to
alleviate existing constraints on the increased use of renewable
electricity as transportation fuel.
    However, unlike liquid biofuels, electricity is not predominantly
used as transportation fuel and renewable electricity cannot be
renewable fuel unless and until it is demonstrated to actually have
been used for transportation (liquid fuels can generally be assumed to
be used for transportation once they enter the distribution system).
This means that in order to address existing constraints on renewable
electricity that qualifies as renewable fuel, we need to consider and
incentivize both renewable electricity generation and transportation
end use.
    First, in order to increase renewable electricity used as renewable
fuel it is necessary to ensure that adequate renewable electricity
generation from qualifying biogas exists and will continue to exist
into the future. Enabling the generation of eRINs under the RFS program
has the potential to provide an incentive for the renewable electricity
generation, which in turn directly supports the goal of increasing
renewable fuel use over time. That is, incentivizing growth in
renewable electricity is both a natural outcome of including
electricity in the program and necessary to serve the statutory purpose
of the RFS program. The renewable electricity market has many
interrelated components, including the biogas production (e.g.,
landfills and agricultural digesters), biogas and natural gas
pipelines, the renewable electricity generating units, the electricity
transmission and distribution grid, EV charge stations, EV
manufacturing, and EV ownership and use. The design of the eRIN program
has the ability to direct the incentives to the market components that
can have the greatest impact on growing the use of renewable
electricity for transportation purposes. We have heard from
stakeholders representing almost every segment of this market. In
general, each party we have heard from that is connected in some way to
the renewable electricity market believes it is important that they
either be able to generate the eRIN themselves or at least in some way
derive some revenue from the eRIN to support investments in their
component of the renewable electricity market.
    The current RIN-generating pathways for renewable electricity are
based on biogas production, which has been driven by factors other than
the RFS program for many years that are likely to continue into the
future. These factors include the proliferation of landfills and
wastewater treatment facilities needed to support an expanding
population, and various types of waste digesters whose biogas can be
used to comply with the California LCFS program or to provide a new
source of onsite energy. Enabling value from the eRIN to flow to
support investment for growth in biogas and to expand the conversion of
that biogas to renewable electricity (either onsite or offsite) is
another component of increasing the use of renewable electricity and
thus of renewable fuel under the RFS program.
    A second significant constraint on increasing renewable electricity
used as renewable fuel is the composition of the existing vehicle
fleet. Just as with E15 and E85 compatible vehicles for ethanol and
natural gas vehicles for RNG, without growth in the vehicle fleet that
can consume renewable electricity, growth in the use of such
electricity as renewable fuel will be constrained. In designing an
eRINs program, it is thus

also important to consider whether and how it can support increased
electrification of the transportation sector.
    An eRINs program can help ensure that the increased use of
renewable fuel is not limited by the size of the EV fleet. Growth in
renewable electricity used as renewable fuel will depend in part on the
economic attractiveness of EVs relative to their internal combustion
engine counterparts. An eRIN program that is designed to meet the
statutory objective of increasing renewable fuel use should thus allow
for revenue from eRINs to incentivize activities that can increase
electrification of the fleet, which could include lowering the cost of
EVs and/or increasing the availably of public access charging
infrastructure. From this perspective, enabling value from the eRIN to
also flow toward EV manufacturers, EV charging stations, or even EV
consumers would also be appropriate.
    Regardless of the party that generates the eRINs, we believe an
eRIN program should be designed so that all parties with regulatory
responsibilities under an eRIN program would benefit under the proposed
program (i.e., would receive some portion of the value of eRINs). This
is because, as explained above, qualifying renewable electricity as a
transportation fuel depends on all parties in the regulatory framework
having a financial incentive to participate. We expect that the market
would adjust to apportion the value of eRINs among regulated parties in
such a way as to ensure that they are all incentivized to increase
production of qualifying renewable fuel.\217\ Furthermore, regardless
of the parties that are included in the regulatory framework for eRINs
and therefore might benefit directly through some portion of the eRIN
value, we believe that all parties in the value chain would benefit
from the proposed eRIN program as it encourages renewable fuel growth.
---------------------------------------------------------------------------

    \217\ See further discussion in Section VIII.F.
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    Different eRIN program design structures can affect which aspect of
the renewable electricity transportation value chain is most directly
supported through the eRIN value. The proposed eRIN program structure
outlined in Section VIII.F is intended to support the increased use of
renewable fuel though targeted incentives for reducing the cost of EVs
and the generation of renewable electricity from qualifying biogas.
However, we acknowledge that other eRIN program structures are possible
and, in Section VIII.H, discuss alternative eRIN program structures,
including structures that are more focused on facilitating greater
access to public access charging infrastructure, which may increase the
use of renewable electricity as transportation fuel as well. Increasing
the use of renewable electricity as transportation fuel is a multi-
aspect challenge that is unlikely to be achieved through any singularly
targeted policy. We are aware that both EV cost and access to public
access charging infrastructure are important aspects of the challenge
to increase use of renewable electricity as transportation fuel. That
said, these are only two such aspects of a broader challenge, and that
the need to target policy support to address them, may shift over time.
3. Taking Into Account Stakeholder Views and Needs
    In our efforts to develop a functional eRIN program, we have
identified numerous issues that are often complex and intertwined.
These issues are evidenced by the disparate approaches presented in the
registration requests we have received to date for eRIN generation, and
in other feedback we have received from stakeholders in response to the
2016 REGS proposal and subsequent annual standard-setting rulemakings.
There is clear and strong interest on the part of many parties in not
only having a functional eRIN program as soon as possible, but also in
ensuring that the program provides incentives to parties at particular
stages in the eRIN generation/disposition chain. For these and other
reasons, it is important for us to understand the views of all parties
that are or could be regulated under the eRIN program. We encourage all
parties to provide comments on all aspects of our proposed eRIN
program.

D. Regulatory Goals in Developing the eRIN Program

    In the course of developing the proposed eRIN program, we have
evaluated and balanced as many factors as possible in order to
construct a program that would ensure that the statutory requirements
are met and that all eRINs generated are valid. This section describes
the importance of ensuring that renewable electricity which can be used
to comply with the applicable standards under the RFS program is
generated from qualifying renewable biomass and is used as
transportation fuel. Relatedly, we also considered how the regulatory
program could be constructed to ensure that eRINs are not double
counted and cannot be generated fraudulently. Finally, we discuss the
regulatory goal of minimizing complexity while ensuring the integrity
of eRINs. To these ends, we have drawn from experience with existing
programs such as the current regulations governing biogas-based CNG/LNG
and California's Low Carbon Fuel Standard (LCFS) program.
    Details of our proposed eRIN program structure which we believe
meet these goals are presented in Section VIII.F. A discussion of
alternative program structures that we considered is then provided in
Section VIII.H.
1. Ensuring That Renewable Electricity Is Produced From Renewable
Biomass
    Section 211(o)(1)(J) of the Clean Air Act requires that renewable
fuels that qualify under the RFS program be produced from renewable
biomass and used as transportation fuel, or, under certain
circumstances, as heating oil or jet fuel.\218\ Under the existing EPA-
approved pathways, only biogas can be used to generate qualifying
electricity, and that biogas must be produced from renewable biomass as
defined in 40 CFR 80.1401. Rows Q and T of Table 1 to 40 CFR 80.1426
provide additional criteria regarding the biogas production processes
that have been approved for RIN generation. Under Row Q, renewable
electricity may be eligible to generate cellulosic (D-code 3) RINs if
it is produced from biogas from landfills, municipal wastewater
treatment facility digesters, agricultural digesters, or separated MSW
digesters; or if it is produced from biogas from the cellulosic
components of biomass process in other waste digesters. In each of
these cases, EPA has determined that the feedstocks in the landfill or
digester that are generating biogas are predominantly cellulosic.\219\
Under Row T, renewable electricity may be eligible to generate advanced
biofuel (D-code 5) RINs if it is produced from biogas from waste
digesters.\220\
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    \218\ While the Clean Air Act and EPA regulations provide for
renewable fuels used as a transportation fuel, heating oil, or jet
fuel, renewable electricity is only available for use as a renewable
fuel as transportation fuel due to technological, implementation
and/or regulatory barriers. Therefore, for purposes of this
preamble, we refer to transportation fuel as the only qualifying use
of renewable electricity.
    \219\ 79 FR 42128 (July 18, 2014).
    \220\ Ibid.
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    As mentioned earlier, we are not proposing to reopen the
determination that renewable electricity made from renewable biomass
and used as transportation fuel qualifies as renewable fuel, nor the
renewable electricity pathways in Rows Q and T, and we are not
proposing any new RIN-generating pathways in this action. However, we
are proposing a new set of implementation requirements including

registration, recordkeeping, and reporting requirements for biogas
producers and renewable electricity generators that would be used to
demonstrate that electricity that generates eRINs is produced from
renewable biomass. These new requirements would more robustly ensure
that biogas producers can demonstrate that their biogas is produced
from renewable biomass and that they can contract with electricity
generators for the purchase of such biogas to produce renewable
electricity. The demonstration that renewable electricity is generated
from biogas that is, in turn, produced from qualifying renewable
biomass is the same regardless of the many eRIN program structures
considered for this proposal. That is, the information collection and
other requirements pertaining to the demonstration that electricity is
produced from renewable biomass are largely independent of the other
eRIN program elements that govern which party(ies) produces, collects,
and uses that information in order to generate eRINs. Our proposed
registration, recordkeeping, and reporting requirements are discussed
in Section VIII.L.
2. Ensuring That Renewable Electricity Is Used as Transportation Fuel
    In addition to being produced from renewable biomass, Clean Air Act
section 211(o)(1)(J) requires that qualifying renewable electricity be
used for transportation fuel. For every renewable fuel in the RFS
program, we have imposed regulatory requirements to help ensure that
the renewable fuel was used as transportation fuel as required by the
Clean Air Act. Because each renewable fuel has a different production,
distribution, and use chain, we tailor our regulatory requirements to
the specific fuel. For example, for ethanol, we require that the
ethanol be denatured in accordance with TTB requirements prior to the
generation of RINs. We imposed this requirement because until the
ethanol has been denatured, the ethanol could be used for non-
qualifying (i.e., non-transportation) use. After the ethanol has been
denatured, the denatured ethanol is virtually guaranteed to be used as
transportation fuel. Similarly, for biodiesel and renewable diesel, we
require that such fuels must meet specified quality standards needed
for the fuels to be used in diesel engines. After biodiesel and
renewable diesel have been demonstrated to meet fuel quality
specifications, we can be reasonably assured that those fuels will be
used as transportation fuel. In cases where a biofuel has many
purposes, making it relatively difficult to show that a fuel will be
used as transportation fuel and nothing else, we impose additional
regulatory requirements prior to RIN generation.\221\ For example, in
the case of natural gas where the majority is used for purposes other
than transportation, we require that documentation be provided that
demonstrates that the renewable CNG/LNG produced from biogas was used
as transportation fuel and for no other purpose.
---------------------------------------------------------------------------

    \221\ See 40 CFR 80.1426(f)(17).
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    Similar to natural gas, the vast majority of electricity is
currently used for non-transportation purposes. This fact was discussed
in the 2010 RFS2 rulemaking where we highlighted the need for
regulations to ensure that RIN-generating renewable electricity is
actually used for transportation.\222\ Therefore, in order to ensure
compliance with the statutory definition of renewable fuel, a
regulatory framework is needed to ensure that eRINs are generated only
for the amount of renewable electricity used as transportation fuel.
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    \222\ See, e.g., 75 FR 14686, 14729 (March 26, 2010).
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a. Approaches for Quantifying Renewable Electricity Consumption in
Transportation
    Quantification under an eRIN system must take place both for
renewable electricity production by EGUs and renewable electricity
consumption by EVs. The ability to quantify how much electricity is
used in an EV, and to quantify and verify how much of that can be
``claimed'' to be renewable electricity generated from qualifying
biogas, is the foundation for determining how many eRINs may be
generated, and for ensuring the program is structurally sound.
Quantifying how much renewable electricity produced from qualifying
biogas is a relatively straightforward matter, as it is metered when it
is put on a commercial electrical grid serving the conterminous U.S.
Quantifying the use of that electricity as transportation fuel, on the
other hand, presents a more complex challenge. Based on a review of
approaches used in other programs, like California's LCFS, and on
approaches suggested to us by stakeholders, EPA considered two general
approaches for how we could assess the amount of renewable electricity
consumed in the EV fleet: a ``bottom-up'' and a ``top-down'' approach
as described below. We acknowledge that both approaches are potentially
implementable. The choice of which type of approach to use has
implications for other program considerations discussed throughout this
section, including implementation complexity, compliance burden, data
privacy, and prevention of double counting and fraud.
    Broadly speaking, a bottom-up approach would rely on using granular
levels of data for EV charging events collected at vehicle charge
stations and/or through vehicle telematics. California's LCFS program,
discussed in Section VIII.H.5, uses a bottom-up approach to determining
vehicle consumption data. In developing our proposed approach, we
investigated several different bottom-up data sources and approaches to
determining how much electricity is used and in which vehicles.
Examples of sources EPA could potentially rely on to gather consumption
data in such an approach include:

 Data from charging stations showing the amount of electricity
each vehicle used to charge
 Data from onboard vehicle telematics, which records the
vehicle battery's state of charge
 Dedicated meters added to Electric Vehicle Servicing Equipment
(EVSE)
 Data loggers added to EVs
 Statistical methods

    By recording, reporting, tracking, and verifying this data one can
have reasonable assurance in the accuracy of both the individual eRIN
generation events and the overall eRIN volumes when aggregated.
However, the many potential sources of error and the sheer quantity of
millions and eventually billions of individual vehicle charge events
present a considerable challenge to verifying the authenticity and
accuracy of the data which would be needed to ensure measured
quantities actually represented real and/or not double-counted
quantities of renewable electricity used in transportation. The level
of effort associated with collecting, reporting and verifying all of
this information on a continuous basis to support RIN generation at the
national level would be considerable and affect a number of other
programmatic design considerations. For example, regulated parties and
EPA would have to develop mechanisms to store and report the millions
of charging events in a consistent and implementable way. After such a
mechanism was developed, procedures by regulated parties, third-party
auditors, and EPA would have to be developed to ensure that such data
representing charging events were appropriately utilized in the
generation of RINs. Because of the sheer volume of

charging events, errors and duplicative charging events would likely
result in the almost continuous correction of electricity consumption
data used for RIN generation in a ``bottom-up'' approach. These changes
would necessitate specified procedures for dealing with any invalid
eRINs generated on the erroneous data by the regulated party and by
EPA. While addressing the volume of data and resulting errors presents
a significant challenge, we acknowledge that the program could be
structured in ways to minimize burden (e.g., through targeted audits of
the data, automated data quality control mechanisms designed into
information collection systems, or the use of statistical methods to
estimate and evaluate electricity consumption).
    By contrast, and as further discussed in Section VIII.F, a top-down
approach would use higher-level, aggregate data on EV fleet electricity
use to generate consumption measurements. Such an approach would use
existing data and information to generate overall market average values
that could be used for eRIN generation. It would rely on the law of
averages to ensure the overall accuracy of the result and would
minimize errors associated with individual measurements.
    For example, a top-down approach, rather than requiring granular
detail on individual charge events, could determine consumption based
on an equation that includes an OEM's EV fleet population and the
average electricity consumption of those vehicles. Such an approach
would be reliant upon an accurate characterization of the population of
vehicles and the average electricity consumption of those vehicles in
order to appropriately quantify the electricity consumed each year. A
key factor, and a potential source of uncertainty for this approach,
would be ensuring the data used to calculate the average annual energy
consumption of EVs are in fact representative of what happens in the
fleet. From a statistical standpoint, the central limit theorem
dictates that the standard error of the population mean is far less
than the standard error of any individual sample, suggesting that a
population approach is more appropriate. Therefore, our use of the
population-wide, annual average energy consumption of EVs would
minimize uncertainty. Utilizing the entire electrified vehicle
population, rather than a sample, also allows us to differentiate
between the different types of EVs in use, something that would be much
more challenging if we were to use information on individual charging
events, which may not have precise data about the different EV types.
Pairing the population data for vehicle type with vehicle use data
(average annual energy consumption for BEV and PHEVs) would allow the
program to appropriately credit average annual electricity consumption
for each vehicle in the fleet. Within the PHEV category, it can also be
used to differentiate between the all-electric range of the vehicle and
the average annual electricity consumed.\223\ Such a top-down approach
(i.e., based on average, aggregate electricity consumption) could
provide a robust basis for quantifying the amount of electricity that
is used in electric vehicles at the scale relevant to a national eRIN
program. While we acknowledge that the approach may not be as precise
for individual EV circumstances, it might be more accurate for
electricity consumption of the national EV fleet and thus more
appropriately capture renewable fuel use and further the statutory goal
to increase the use of such fuel over time.
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    \223\ We discuss the differentiation between BEVs and PHEVs
further in RIA Chapters 1 and 2.
---------------------------------------------------------------------------

    A top-down approach would also lend itself well to addressing a
number of other important program considerations discussed throughout
this section, including complexity, compliance burden, data privacy,
and prevention of double counting and fraud. For example, a top-down
approach would provide a means for demonstrating the use of electricity
as transportation fuel without requiring any data that could
potentially be used to identify individuals or their behaviors.
b. Data Privacy
    The RFS program and its requirements generally apply to companies
and the facilities those companies own/operate, with individual
consumers quite removed from the RIN generation process as they simply
fill up their tanks with renewable fuels (neat or blended) at their
convenience. That is, for liquid biofuels, the determination that a
fuel is used for transportation takes place upstream of the actual
customer. While biogas used as CNG/LNG does require that the
demonstration of transportation use occur at the fueling station,
because this fuel is almost exclusively used by private or public fleet
vehicles, the privacy of individual vehicle owners and users has never
been a significant concern.
    Electricity is fundamentally different than other renewable fuels
that participate in the RFS program because individual consumers, in
particular those charging their EVs at their homes, may be the parties
that are best able to ultimately demonstrate that electricity is used
for transportation, as opposed to some other purpose. When we evaluated
many of the RIN generation structures proposed by stakeholders (e.g.,
public access charging stations, LCFS, and vehicle telematics), it is
the data associated with the unique charging behavior of individual
vehicle owners for their vehicles such as charge location, time, and
quantity that ultimately can be used to demonstrate the quantity of
electricity used for transportation.
    In the case of charge stations, it may be possible for the station
owner to submit aggregated charging data that span charging events
across locations and a specific period of time. However, even in this
case, individual records with personal identifiable information would
need to be kept and potentially audited for oversight and compliance
purposes. In other situations, every unique charging event (including
personal identifiable information, parameters of the charging event,
and perhaps location) would need to be submitted so that the
disaggregation of charge events could be performed. In the case of our
proposed program, the information regarding vehicle use would be
handled by the OEMs rather than EPA and would not be used directly for
RIN generation. The process of how this data is intended to be utilized
in the RIN generation process is outlined in greater detail in a
technical memo to this proposal.\224\
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    \224\ Such data privacy concerns are not relevant for the top-
down approach, as discussed further in the technical memorandum,
``Examples of RIN generation under the proposed RFS eRIN
provisions,'' available in the docket for this action.
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    We appreciate the fact that many individuals have concerns about
information on their location and behaviors being submitted to, and
retained by, a government agency. We have also heard from stakeholders
about the challenges and limitations associated with the use of
Personal Identifying Information (PII) in other programs given the
existing and expanding constraints placed on the use of PII in state
laws, including those in LCFS states such as California and Washington.
They expressed concern that reliance on PII might unnecessarily
constrain the generation of eRINs and thus the volume of renewable
electricity that qualifies under the program. In an effort to respect
these concerns, we believe that the approach we take to ensuring that
renewable electricity is used as transportation fuel should avoid, to
the extent possible, the

collection and use of potentially sensitive, private information such
as vehicle charging data that identifies a person's location at any
particular point in time and how they may have been using their
vehicle. Up to this point, we have been able to design the RFS program
in a manner that avoids the collection and use of potentially
sensitive, private information, and we believe it is important to
continue to do so to the extent practicable.
3. Preventing Double Counting and Fraud
    In order for the RFS program to function, the RIN market must have
integrity, i.e., parties that transact RINs and use RINs for compliance
must have confidence that those RINs are valid. While the vast majority
of RINs generated over the RFS program's history have been valid, a not
insignificant quantity of invalid RINs have been generated.\225\ The
significant value of the RINs, particularly cellulosic RINs, provides
incentives for fraudulent generation, and complicated renewable fuel
production and distribution systems provide an opportunity for parties
who are so inclined. Fraudulent RINs can be generated by parties
fabricating reports or records to make RINs generated for non-existent
fuels appear valid. Furthermore, the more complicated the regulatory
requirements and data systems, the more likely it is that parties may
inadvertently generate invalid RINs due to simple errors such as
reliance on a faulty meter that measured volumes incorrectly. That is,
invalid RIN generation, including double counting of RINs (generating
more than one RIN for the same ethanol-equivalent gallon of renewable
fuel), can result from either intentional or unintentional actions.
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    \225\ For more information, see EPA's Civil Enforcement of the
Renewable Fuel Standard Program page available at: https://www.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program.
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    As we noted in the REGS proposal, the potential for double counting
of eRINs is a significant concern due to the potential for double
counting to undermine the credit system that EPA uses to implement the
statutory volume requirements under CAA section 211(o). We noted that
even though the existing regulations prohibit such double
counting,\226\ we had concerns that those regulations would not enable
EPA to detect or protect against the double counting of eRINs because
multiple types of data can be used to demonstrate the use of
electricity as transportation fuel and some of these data overlap
across datasets and are not proprietary to one party. For example,
under the existing regulations, if an EV owner charged their vehicle at
a public charging station, it is possible that the vehicle owner,
charging station owner, and vehicle manufacturer would all have
information documenting the amount of renewable electricity used in
this single charging event and could all potentially use that data to
generate eRINs.
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    \226\ See 40 CFR 80.1426(f)(11)(i)(F).
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    Because of the similarities between renewable electricity used in
EVs and RNG used in CNG/LNG vehicles, both of which are not
predominately used as transportation fuel, double-counting concerns are
also similar for both. As we have considered ways in which we can
prevent double counting for renewable electricity, we considered how we
might also strengthen the regulations to prevent double counting for
RNG. As with the existing eRINs regulations, under the existing
regulatory structure for biogas used to produce renewable CNG/LNG,
parties generating RINs must demonstrate that no other party relied on
that same volume of biogas, renewable CNG, or renewable LNG to generate
RINs.\227\ As stated previously, to date we have only approved
registrations for the use of biogas used in CNG/LNG vehicles, not for
the use of biogas to generate renewable electricity. However, we have
concerns that, once we begin approving registration requests for
renewable electricity, the opportunities for the double counting of
biogas could increase dramatically. For example, a party may generate
RINs for a quantity of biogas used to produce RNG for use in CNG/LNG
vehicles and then, through a complex contractual network, attempt to
allow a different party to generate a RIN for renewable electricity
generated from the same volume of RNG. We are proposing revisions to
the regulatory requirements for RNG to prevent such double counting,
which are presented in Section IX.I.
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    \227\ See 40 CFR 80.1426(f)(11)(ii)(H).
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    In all cases of double counting, some or all of the RINs generated
would be invalid and may additionally be deemed fraudulent. The
generation of invalid RINs can have a deleterious effect on RIN markets
and impose a significant burden on regulated parties and EPA to
identify and replace those invalid RINs, take enforcement action
against liable parties, and remedy the infraction. A material quantity
of invalid RINs would create adverse market effects, as well. In the
short term, invalid RIN generation could oversupply the credit market
and adversely impact credit values. In the longer term, remediation of
invalid RINs could invalidate the data upon which EPA bases its
projections of future supply to set standards and undermine investment
in the growth of valid renewable electricity. Any viable eRIN program
design must eliminate, to the extent possible, the ability of parties
to generate invalid RINs, whether for double-counted renewable
electricity or for double-counted biogas that is used to generate
renewable electricity. Doing so could include, for instance, limiting
the number of parties involved in the generation of a specific quantity
of eRINs, holding all directly regulated parties in the eRIN
generation/disposition chain liable for transmitting or using invalid
RINs, and/or leveraging third-party oversight mechanisms (i.e., third-
party engineering reviews, RFS QAP, and annual attest engagements) to
help identify, verify, and correct potential issues related to invalid
RIN generation.
4. Program Complexity and Implementation Burden
    In general, the more complex a regulatory program, the more
resource-intensive it is for EPA to develop, implement, and oversee
that program, and likewise the more difficult and resource-intensive it
is for regulated parties to understand and successfully comply with it.
Additionally, the more complex the program, the later its effective
date must be in order to permit sufficient time for registration
requests to be reviewed and accepted, and for regulated parties to
establish the necessary compliance mechanisms. Furthermore, the more
complicated and resource-intensive a new program, the greater the
disproportionate effect on smaller entities, which often lack the
resources and expertise to quickly understand and meet the new
program's requirements. Finally, the more complex the program design,
the more value is devoted to resources required to administer the
program throughout the generation/disposition chain. These
administrative costs have the potential to erode the program's key
objectives. Therefore, one of our goals in developing the applicable
regulations for the eRIN program was to minimize implementation burden
by limiting the complexity of the program to the extent it is
practicable to do so.
    In the case of eRINs, we anticipate the participation of
potentially hundreds of biogas-to-electricity projects using a variety
of feedstocks and electricity generation technologies. These hundreds
of parties would, in turn, contractually associate with hundreds of
other parties as necessary to connect

renewable biomass to biogas production, biogas to electricity
generation, electricity to transportation use, and transportation use
to eRIN generation. Given these facts, the complexity of the eRIN
program could prove prohibitive to implement. A viable program design
will depend, among other things, on which parties would be required to
register with EPA and the data, information, and mechanisms parties use
to demonstrate compliance with the regulatory requirements. The greater
the number of registrants, the more complex and time consuming it will
be to register parties to generate eRINs. Furthermore, the greater the
amount of data and information that must be reported, reviewed, and
verified, the greater the resource needs and time needed to design and
implement the compliance oversight systems. Our goal in designing the
eRIN program is to do so using a regulatory structure that is as
straightforward as possible and that attempts to minimize undue
complexity.
    One aspect of program design we have investigated relates to the
tracking of contractual information. When we implemented the
requirements for RNG under the current regulations, we did so by
requiring that contractual relationships between each and every party
in the distribution system be provided and tracked to enable
verification of RIN validity. However, we believe that we can design
the eRIN program to largely avoid a similar level of complexity. In
particular, while we have requirements in place for biogas under the
current regulations to track such contractual relationships, we believe
that they could be largely unnecessary in an eRIN program moving
forward.\228\ We also investigated ways to minimize program complexity
by reducing the need for regulated parties to obtain and submit large
amounts of data to the EPA that track billions of charging events.
Section VIII.M presents our conclusions regarding these aspects of the
eRIN program.
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    \228\ In fact, as discussed in more detail in Section IX.I, we
are proposing to reform the current biogas regulations in part to
reduce the burden associated with implementation and oversight.
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    In addition, we have implemented the current regulatory provisions
for biogas to renewable CNG/LNG for over eight years and have gleaned
important lessons from this experience. As described in more detail in
Section IX.I, the current provisions for biogas-derived renewable CNG/
LNG contain a flexible, but resource-intensive set of regulatory
provisions that we believe needs to be amended to allow for the use of
biogas to produce renewable electricity. The two primary issues from
our experience implementing the biogas to renewable CNG/LNG regulatory
provisions that we believe should be addressed in an effective eRIN
program are minimizing program complexity and avoiding double-counting.
    One key determinant of program complexity concerns whether
regulations permit more than one category of parties to be the RIN
generator, or whether they designate only one category as eligible to
generate RINs. To help inform this decision with respect to eRINs, EPA
reviewed our experience implementing our CNG/LNG program in the RFS,
where our current regulations allow any party in the biogas CNG/LNG
generation/disposition chain to generate the RINs. We have concluded
that while this approach does provide flexibility, it has also resulted
in a complex program that arguably is overly burdensome for both EPA
and industry. Under the current regulations, parties demonstrate that
biogas is used as renewable CNG/LNG for RIN generation through an
extensive network of contractual relationships and documentation that
shows that a specific volume of qualifying biogas was used as
transportation fuel in the form of renewable CNG/LNG. These
demonstrations occur both during registration in the form of voluminous
registration requests, which can sometimes number over a thousand pages
of contracts, and on an ongoing basis to support RIN generation in the
form of contracts and affidavits from each party in the CNG/LNG
generation/disposition chain to show that the biogas or RNG was used as
transportation fuel. Because we anticipate that there are hundreds of
existing biogas-to-electricity projects ready to participate in the
proposed eRIN on the effective date of the rule, we believe that the
existing program for biogas to CNG/LNG is likely not the appropriate
model on which to base an eRIN program that will have many times more
participating parties and facilities.
    Renewable electricity also qualifies as transportation fuel under
California LCFS program. We engaged in a number of conversations with
California Air Resources Board (CARB) staff who developed and
implemented the LCFS program, along with several companies which
currently participate in it. These conversations gave us a better
appreciation for how the LCFS program functions. While the LCFS program
is governed by different legal requirements and other constraints than
the RFS program and therefore cannot be used as a direct model for an
eRIN program under CAA section 211(o), we were able to glean some
valuable information from LCFS and CARB's experience implementing it
that has factored into our proposed eRINs approach. Further discussion
of the LCFS program as a model for eRINs under the RFS program is
provided in Sections VIII.H.1 and VIII.H.5.a.i.

E. Proposed Applicability of the eRIN Program

    In the sections that follow, we discuss the structure of our
proposed eRIN program in two parts. This section presents our proposal
for the program's applicability in terms of the renewable electricity
for which RIN can be generated, the specific types of electric
vehicles/engines which we propose would be covered, the geographic
scope, and the timing for registrations and eRIN generation.
Subsequently, Section VIII.F describes our proposed approach to eRIN
generation, including designation of the eRIN generator and details
regarding how eRIN generation would be quantified.
1. Approved RIN-Generating Pathways for Renewable Electricity
    As discussed in Section VIII.A.1, EPA promulgated pathways for the
generation of cellulosic (Row Q of Table 1 to 40 CFR 80.1426) and
advanced (Row T) RINs for renewable electricity produced from biogas in
the 2014 Pathways II rulemaking.\229\ This proposal is limited to
revising the regulatory structure for implementation of these existing
pathways, which we are not revisiting or reopening here. While a number
of stakeholders have requested that EPA promulgate additional pathways
for production of renewable electricity from feedstocks other than
biogas from renewable biomass, we are not doing so in this
rulemaking.\230\ Thus, at this time, only renewable electricity
produced from biogas under one of the approved pathways in Rows Q and T
of Table 1 to 40 CFR 80.1426 would be eligible to generate eRINs under
our proposed program.\231\ We anticipate promulgating

additional eRIN pathways in the future and intend to revise the
regulations to accommodate them as needed.
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    \229\ 79 FR 42128, July 18, 2014.
    \230\ We reiterate that the promulgation of additional pathways
is a separate action from promulgation of regulations to implement
the existing pathways. Any comments on this proposal requesting that
EPA promulgate additional pathways for the generation of eRINs,
beyond those already contained in Table 1 to 40 CFR 80.1426, are
outside the scope of this rulemaking.
    \231\ We note that if we were to finalize the proposed eRINs
program, eRINs could also be generated under a facility-specific
pathway for biogas to electricity approved under 40 CFR 80.1416. We
have not approved any pathways for biogas to electricity under 40
CFR 80.1416 at the time of this proposal.
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2. Covered Vehicles and Engines
    As stated earlier, in order to qualify as renewable fuel under the
Clean Air Act, renewable electricity generated from qualifying
renewable biomass must be used for transportation. As part of
developing a proposed program structure, we need to determine what
qualifies as use for transportation and what data and information are
then needed to demonstrate it. As explained below, while for some types
of electric vehicles or engines we believe sufficient data are
available to demonstrate that the electricity used is renewable fuel
and quantify such use, we do not believe that is the case for all types
of electric vehicles or engines at this time. Therefore, we are
proposing a program under which only renewable electricity used in
light-duty electric vehicles would be eligible to generate eRINs.
a. Light-Duty Electric Vehicles
    Electrification of light-duty vehicles is relatively far along in
its development compared to other applications within the
transportation sector. The significant degree of light-duty
electrification that has already occurred means that the data and
information needed to link renewable electricity to transportation use
are readily available. This information includes data related to real-
world operation of light-duty electric vehicles that can be used to
determine the amount of electricity used for transportation, including
average vehicle use patterns and the efficiency of vehicle charging and
vehicle operation. We discuss the particular vehicle information
required for our proposed structure in Section VIII.F.5.a.
Additionally, experience with electrification of light-duty vehicles to
date has provided an understanding of which parties play what roles in
the electrification of the vehicle fleet, including who holds what data
and who is in a position to best ensure that double counting of eRINs
does not occur.
    As discussed further below, other end-uses within the
transportation sector are at a considerably more nascent stage in their
electrification and thus have considerably less data and information
available. Although the Clean Air Act's definition of renewable fuel
does not differentiate between renewable fuel used by one vehicle or
engine type versus another, at this time we do not have sufficient
information about electricity use in vehicles and engines other than
light-duty EVs to determine the amount of renewable electricity that is
used and to ensure that double counting of eRINs will not occur.
Therefore, we are proposing in this action to limit eRIN generation to
light-duty EVs. However, we intend to adopt a ``learning by doing''
approach for eRINs and anticipate that opportunities for expansion into
other applications within the transportation sector may materialize as
the program matures and sufficient information becomes available.
b. Treatment of Legacy Fleet
    We are proposing to allow for the generation of eRINs from
renewable electricity used in both new light-duty electric vehicles and
light-duty electric vehicles that are part of the existing fleet (i.e.,
legacy electric vehicles). So long as sufficient data and information
exist for EPA to ensure that eRINs are generated only for renewable
electricity that qualifies as renewable fuel, whether that renewable
fuel is used in legacy or new electric vehicles is not relevant under
the RFS program. This treatment is consistent with the treatment of
other renewable fuels used in vehicles and engines under the RFS
program. For example, the RFS program does not provide any more or less
credit for ethanol blended into gasoline if the gasoline-ethanol blend
is used in a model year (MY) 1970 light-duty vehicle or a MY 2022
light-duty vehicle; each gallon of ethanol can have a RIN generated for
it regardless of the vehicle the ethanol will ultimately be used in.
Therefore, consistent with other renewable fuels under the RFS program,
we are proposing to allow the generation of eRINs for the use of
renewable electricity in all light-duty EVs inclusive of the legacy
fleet. We seek comment on this proposal.
    As explained below, our proposal to permit eRINs to be generated
for both new and legacy light-duty electric vehicles is viable because
it does not rely on information collected from individual vehicles. For
further detail, see Section VIII.F for a discussion of our proposed
approach and Section VIII.H for a discussion of alternative approaches
that we considered.
c. BEVs and PHEVs
    The term ``electric vehicle'' covers a wide range of types of
electric vehicles (e.g., mild hybrids, hybrids, plug-in hybrids, and
battery electric vehicles). However, there are two main types of
electric vehicles that are potentially eligible to generate eRINs
because they derive power from the commercial electrical grid serving
the conterminous U.S. and therefore have the potential to use renewable
electricity for transportation purposes.\232\ The first, and most
straightforward, type is full battery electric vehicles (BEVs).\233\
Full BEVs only have an electrified drivetrain and rely entirely on
electricity stored in their battery for all motive power. From a RIN
accounting perspective, BEVs are relatively simple as it must be the
case that all miles traveled by BEVs, i.e., all transportation use, is
reliant upon electricity.
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    \232\ There are other categories of hybrid electric vehicles,
but generate their electricity onboard the vehicle and do not plug
into the electric grid.
    \233\ The regulations at 40 CFR 86.1803-01 define this type of
EV, and we are proposing to use the same definition.
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    The second type of vehicle that is potentially eligible to generate
eRINs is plug-in hybrid electric vehicles (PHEVs). While PHEVs utilize
electricity in their onboard battery, they also have an internal
combustion engine in addition to the battery from which they can source
motive power. Because of this duality, our proposed structure must
include a mechanism for parsing the fraction of vehicle miles traveled
(VMT) powered by electricity (often referred to as eVMT) from the
fraction of VMT sourced from the internal combustion engine. A
description of the proposed method used to accomplish this parse, along
with the data collected to establish the procedure, are discussed in
DRIA Chapter 6.1.4.
d. Applications Outside the Scope of the Proposed eRIN Program
    As explained above, the eRIN program we are proposing in this
action would cover only light-duty electric vehicles. We recognize,
however, that other applications within the transportation sector,
namely medium-duty and heavy-duty vehicles and nonroad equipment, can
be electrified. In fact, just as with the light-duty market over the
past decade, there are rapid advancements being made in electrification
of these sectors, in particular in the highway medium-duty and heavy-
duty vehicle sectors, where virtually every manufacturer has announced
plans to commercialize electric vehicles and where early product
offerings are now available. While we do not believe that it would be
appropriate to include them in the eRIN program at this time, we intend
to continue monitoring the electrification of heavy-duty vehicles and
nonroad equipment and may consider including them in the future.

i. Medium- and Heavy-Duty Vehicles
    In contrast to light-duty vehicles and trucks, we do not believe we
have sufficient information and data on electrified medium- and heavy-
duty vehicle production and use to allow for eRIN generation associated
with such vehicles at this time. The electrified medium- and heavy-duty
markets are relatively nascent and there are relatively few vehicles
currently being operated or offered for sale in the marketplace when
compared to the light-duty vehicle sector.\234\ This results in a
general lack of data and information which would be needed to develop
the regulatory program in terms of both ensuring the appropriateness of
programmatic responsibilities and supporting the eRIN generation
calculations required to quantify potential RIN generation. At the same
time, the heavy-duty industry is at the beginning stages of expected
rapid growth in zero emission vehicle technology, including battery
electric vehicles, which we expect will help address this general lack
of data in the coming years, as discussed further below.
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    \234\ https://calstart.org/wp-content/uploads/2022/07/ZIO-ZETs-June-2022-Market-Update.pdf
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    We considered whether the proposed structure for light-duty
electric vehicles and trucks could simply be extended to the medium-
and heavy-duty markets. However, we concluded that until the market
further develops it would not be possible to ensure the same regulatory
requirements we are proposing for light-duty EVs would be appropriate
for the future market of medium- and heavy-duty EVs. In the light-duty
sector, the OEM builds the vehicle and powertrain and then introduces
the entire vehicle to commerce. This is the pattern that the light-duty
sector appears to be following as it transitions from internal
combustion engines to EVs as well. Although this vertical integration
occasionally exists in the heavy-duty markets, it is not typical at
present. In the current heavy-duty vehicle market, it is often not
clear who is the original equipment manufacturer (OEM). The engine,
chassis, and trailers which together comprise a vehicle are often made
by different manufacturers. The situation for the medium-duty market is
often somewhere between that of light-duty and heavy-duty. How the
medium- and heavy-duty EV markets develop is yet to be determined.
    In addition, given the current low production volume of medium- and
heavy-duty EVs, the manufacturers have little sales volume over which
to spread the compliance and implementation burden associated with
generating eRINs. These manufacturers are initially unlikely to be able
to cost-effectively comply with or choose to devote the necessary
resources to the proposed regulatory requirements to generate eRINs,
e.g., through the hiring of RIN market specialists and other resources
to fulfill the obligations affiliated with generation and transacting
of RINs.
    Furthermore, because there are relatively few medium- and heavy-
duty EVs and so little operational data from them it is not yet clear
how such EVs will be used. Since the fueling, range, and cost-per-mile
characteristics of medium- and heavy-duty EVs differ from light-duty
vehicles, it is likely that medium- and heavy-duty EVs will be operated
differently than their light-duty counterparts. Furthermore, given
their different use cases, it is also likely that vehicle charging will
be considerably different. Thus, there simply is not reliable
information at this time for the medium- and heavy-duty sectors on
factors such as vehicle miles traveled on electricity, charging
efficiency, or specific energy consumption on which to base eRIN
calculations and programmatic design decisions.
    These are not sufficient reasons to propose to exclude medium- and
heavy-duty vehicles from the eRIN program indefinitely, but we believe
that they are relevant considerations to exclude them at this time. We
recognize that the medium- and heavy-duty vehicle industry is at the
early stages of a major transition to EV technologies, and over the
next several years we will see a large growth in the range of EV
product offerings and sales volumes. As this market grows, we will
reassess the potential inclusion of medium- and heavy-duty electric
vehicles once the eRIN program is established and more in-use data for
medium- and heavy-duty electricity vehicles becomes available. For
example, as a result of financial incentives put in place by the
Bipartisan Infrastructure Law of 2021, a large number of electric
school buses are expected to be introduced into the fleet in just the
next few years. In addition, the Inflation Reduction Act of 2022
contains many significant incentives for zero emission heavy-duty
vehicles (including infrastructure, R&D, manufacturing and purchase
incentives), and we expect the industry and market to respond rapidly
to take advantage of those incentives. Consequently, we anticipate that
the same type of data and information that was necessary to propose
eRIN provisions for the light-duty fleet will soon be available for at
least the school bus fleet, if not other portions of the medium- and
heavy-duty market. While we are not proposing a program that will
include medium- and heavy-duty electric vehicles in this rulemaking, we
welcome public comment on this proposal, as well as on the data and
information that would be needed to incorporate them in the future.
ii. Non-Road Vehicles, Engines, and Equipment
    Another component of the transportation sector that already has
considerable electrification and could experience growth in the future
is nonroad vehicles, engines, and equipment. However, at this time we
are proposing to exclude nonroad vehicles, engines, and equipment from
generating eRINs for both regulatory and policy reasons. As with
medium-duty and heavy-duty vehicles, at this time there would be
significant challenges associated with extending an eRIN program to
nonroad vehicles, engines, and equipment, related in large part due to
their diversity and the associated difficulty in procuring the
necessary data. Nonroad vehicles, engines, and equipment include
everything from small weed trimmers and leaf blowers to airport ground
equipment to large excavators, all of which have different market
structures and different use cases for electricity. This makes it
challenging to ensure we have the data and information necessary to
develop the regulatory program in terms of both ensuring the
appropriateness of programmatic responsibilities and creating eRIN
generation calculations which accurately reflect the use of renewable
electricity in these engines. In addition, there is some question as to
whether under the RFS program, off-highway vehicles, engines, and
equipment with electric motors would meet the definition of nonroad
vehicles and engines under our regulations at 40 CFR 80.1401 and
whether fuel used in nonroad vehicles, engines, and equipment is used
as ``transportation fuel.'' We seek comment on the exclusion of
renewable electricity used in non-road vehicles, engines, and equipment
under this proposal.
3. Geographic Scope
    Clean Air Act section 211(o)(2)(A)(i) requires that the RFS program
``ensure that transportation fuel sold or introduced into commerce in
the United States (except in non-conterminous States or territories),
on an annual average basis, contains at least the applicable volume of
renewable fuel, advanced biofuel, cellulosic biofuel, and

biomass-based diesel.'' \235\ Thus, under the RFS program generally,
renewable fuel that is produced in or imported into the 48 continuous
United States or Hawaii is eligible to generate RINs. Additionally, EPA
has imposed regulatory requirements to ensure that eligible fuel is
actually used as transportation fuel in the conterminous 48 states or
Hawaii.\236\
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    \235\ The Clean Air Act requires that the RFS program apply to
the conterminous 48 states, and permitted Hawaii, Alaska, and U.S.
territories to opt in. To date, only Hawaii has opted in. EPA refers
to conterminous 48 states and Hawaii the ``covered location'' under
the RFS program (see the definition of ``covered location'' in 40
CFR 80.1401).
    \236\ Note that for any renewable fuels that are exported from
the covered location, the exporter of the renewable fuel must
satisfy an exporter RVO under the regulations at 40 CFR 80.1430.
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    We evaluated the appropriate geographic scope of an eRIN program
against this statutory backdrop. There are two aspects of geographic
coverage to consider: the boundaries within which renewable electricity
generation can occur and where light-duty electric vehicles using that
electricity must be located. We address the first here. For liquid
biofuels, this is addressed by focusing primarily on where the
renewable fuel was produced or imported while accounting for any
renewable fuel that is exported. However, as discussed in Section
VIII.B, electricity has some unique characteristics that make
determining the appropriate geographic scope a challenge, notably, that
(1) once qualifying renewable electricity is loaded onto the commercial
electrical grid serving the conterminous U.S. it is indistinguishable
from non-qualifying electricity, and (2) electricity withdrawn from a
commercial electrical grid serving the conterminous U.S.as myriad uses,
most of which are not for transportation. As a result, once renewable
electricity is loaded onto a commercial electrical grid serving the
conterminous U.S., it is necessary to rely on a series of contractual
relationships, rather than direct tracking, to connect renewable
electricity to transportation end use. We discuss the implications of
these two factors for the geographic scope of our proposed eRIN program
in the subsections that follow. See Section VIII.F.4 for further
explanation.
a. Connection to Grids in the Conterminous United States
    Electricity used by customers in the conterminous United States is
transmitted primarily via three interconnections--the Eastern, Western
and, Texas Interconnections; the Eastern Interconnection also extends
into Canada and the Western Interconnection covers parts of Canada and
Mexico.\237\ Once renewable electricity generated from qualifying
biogas is loaded onto a commercial transmission grid that is part of
one of these Interconnections, it is impossible to distinguish that
renewable electricity from electricity of any other origin.
Additionally, given that EVs are not geographically constrained to
charging on just one Interconnection, it would be arbitrary to limit
the scope of the eRIN program thusly. We are therefore proposing that
any electricity that is produced from qualifying biogas and transmitted
via an interconnection supplying consumers in the conterminous United
States is eligible to participate in the program (i.e., is eligible to
be contracted for to generate eRINs). Furthermore, as discussed in
Section VIII.F.5.a, we are proposing that any EV that is registered by
a state in the conterminous 48 states be eligible to generate eRINs.
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    \237\ See https://www.energy.gov/oe/services/electricity-policy-coordination-and-implementation/transmission-planning/recovery-act-0.
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    Additionally, as with other renewable fuel production under the RFS
program, foreign produced renewable electricity could also qualify for
eRIN generation. As noted above, the interconnections extend beyond
U.S. borders to Canada and Mexico and electricity is regularly traded
across these international borders to and from transmission networks
serving customers in the conterminous United States. Consequently, we
are proposing that electricity generators using qualifying renewable
biogas in Canada and Mexico that are capable of establishing bilateral
contracts with a load serving entity in the conterminous United States
be allowed to participate in the program. That is, we are proposing
that electricity generators using qualifying renewable biogas that are
capable of selling their electricity for use in the conterminous United
States are eligible to participate. Any foreign producers in Canada or
Mexico wishing to participate would be subject to the requirements
described in Section VIII.Q in addition to satisfying the generally
applicable requirements for participation in the eRIN program as a
renewable electricity generator. We request comment on whether defining
the geographic scope of the program to allow electricity generators
using qualifying biogas in Canada and Mexico that are capable of
serving the conterminous United States is appropriate. We also request
comment on alternative approaches to defining the geographic scope of
the program, including descriptions of how any alternatives are
consistent with the requirement that RIN-generating renewable fuel be
produced or imported for use in the conterminous United States (see
Section VIII.E.3.c below for discussion of Hawaii).
    Under this proposal, renewable electricity produced in other
foreign countries not meeting the aforementioned criteria would not
qualify under the program. Unlike other fuels, there is no way to
import renewable electricity produced in foreign countries into the
conterminous United States unless they are connected to transmission
networks serving electricity to customers in the conterminous United
States. That is, there is no way renewable electricity can be used for
transportation in the United States unless it is placed on a
transmission grid that serves U.S. customers. We also seek comment on
our proposed determination that renewable electricity produced in
foreign countries, other than renewable electricity produced in the
circumstances described in the previous paragraph, cannot qualify under
the program.
b. Hawaii
    While our proposed approach for the conterminous U.S. both allows
for the connection of renewable electricity generation to
transportation use and provides for maximum flexibility for the eRIN
program, the State of Hawaii uses geographically separate electricity
transmission systems. Therefore, under the proposed approach, it cannot
be assumed that renewable electricity generated in Hawaii is used to
charge the U.S. fleet of electric vehicles as a general matter.
Similarly, it could not be assumed that EVs operated within Hawaii are
fueled on renewable electricity supplied from qualifying electrical
generation occurring outside of Hawaii. Consequently, under our
proposed eRIN program structure, electrified vehicles registered in
Hawaii would be unable to participate in the proposed eRIN program at
this time. Similarly, electricity generators in Hawaii would also be
unable to participate in the proposed eRIN program at this time. While
we acknowledge that there most likely are both electricity generation
from qualifying biogas and light-duty electric vehicles in Hawaii and
that it may be possible to connect the two, at this stage in the eRIN
program development we believe it would significantly increase the
implementation burden and program complexity to include

renewable electricity generated and used as a transportation fuel in
Hawaii. Due to the increase in implementation burden and program
complexity, inclusion of Hawaii into the eRIN program could ultimately
delay the start date of the program.
    We request comment, including data and other information, on these
limitations and methods by which electrified vehicle and electricity
generators using qualifying renewable biomass in the state of Hawaii
could be incorporated into the program. In particular, we request
comment on the efficacy of setting up a separate parallel program just
for the state of Hawaii, including whether it would necessitate
manufacturers to have a separate fleet and records just for Hawaii.
4. Timing and Start Date
    The expansion of the RFS program to include new regulations
governing the generation of eRINs will result in many new parties
registering and participating for the first time. The process of
registering these parties, and of them becoming familiar with and
complying with the RFS program, will require significant time and
resources, both for participants and the EPA. Consequently, we do not
believe that it is realistically feasible for the generation of eRINs
to be permitted in 2023. Instead, we are proposing to permit eRIN
generation beginning on January 1, 2024.
    A January 1, 2024 start date would serve a number of important
purposes. First, it should allow eRIN generation to align temporally
with the proposed volume requirements, which include a projection of
eRIN generation. That is, it would be inappropriate for eRIN generation
to begin in the year prior to or in the year following the year in
which a projection of eRIN generation is included in the determination
of the applicable standards. Were eRIN generation to lag the volume
requirements, there could be a significant shortfall in cellulosic RINs
which would disrupt the market and could potentially necessitate a
waiver action. Conversely, were eRIN generation to proceed the volume
requirements, there could be a significant oversupply of cellulosic
RINs that would likely depress RIN prices, adversely affecting
participation. Second, it would allow regulated parties more time to
get their engineering reviews conducted, register, and develop their
internal operating and compliance systems to comport with the new
regulations in an orderly manner thereby avoiding the inevitable
problems that would otherwise be expected if done in haste. Third, the
proposed January 1, 2024 start date would allow parties interested in
participating in the program or impacted by the program more time to
establish the necessary contractual relationships necessary to
implement the new program. Fourth, the proposed start date would allow
EPA time to modify EMTS and evaluate registration requests as they are
submitted to the agency. Finally, the proposed start date would align
the start of the program with the existing calendar year structure of
the RFS program. Based on our experience implementing the RFS program,
this alignment makes the submission of quarterly and annual reports
more straightforward and results in a smoother implementation than a
mid-year effective date because compliance demonstrations under the RFS
program are built around a compliance period that begins on the first
day of the calendar year.
    We recognize that some parties believe that EPA could include a
projection of eRINs in the applicable 2023 standards, and thus permit
eRINs to be generated in 2023. However, it is highly uncertain whether
the parties necessary to generate eRINs--biogas producers, renewable
electricity generators, and OEMs--will be prepared to participate in
2023. It is also not clear if and how many contracts would be
established between participants in 2023. As a result, a projection of
eRIN generation for 2023 in this rulemaking would be considerably less
accurate than our projections for 2024 and 2025, potentially resulting
in a substantial oversupply or shortfall in the availability of
cellulosic RINs with the attendant consequences described above.
    Although we have confidence that at least some parties will be
registered and contracts established by January 1, 2024, there is a
significant amount of uncertainty in the number of biogas production
facilities and renewable electricity generation facilities that will be
able to arrange for independent third-party engineering reviews and
establish contractual relationships with eRIN generators to enable RIN
generation to begin on that date. As noted in DRIA Chapter 6, we
estimate that there are over 500 landfill-to-electricity projects and
over 200 digester-to-electricity projects already in operation. A large
majority of the electricity output from these facilities would be
needed to meet the electricity demands of the national light-duty EV
fleet. However, prior to their production being used to generate RINs,
each of these projects would have to arrange for an independent third-
party professional engineer (PE) to conduct an engineering review.
Based on the currently anticipated timing for signature and effective
date of the final rule establishing an eRINs program, industry will
only have three to four months before the proposed start of the eRIN
program on January 1, 2024, to conduct engineering reviews, submit
registration submissions, and make contractual arrangements for eRIN
generation. As discussed in the DRIA, we estimate that, on average, the
current pool of PEs conducts around 300 engineering reviews per year.
Most of these occur in the second half of the year prior to the January
31 deadline for 3-year registration updates. Because of the overlap
between eRIN implementation and the typical 3-year registration update
cycle, the number of PEs needed to both complete the registration
updates and conduct reviews for the new eRIN participants would need to
more than double to accommodate the electricity demands of the entire
national light-duty EV fleet in 2024. Additionally, first-time
engineering reviews are more difficult than 3-year updates because the
facility has not previously been visited by a PE and the regulated
parties (biogas producers and renewable electricity generators) are
less acquainted with the regulatory requirements. The time and effort
we anticipate it would take to conduct these reviews would be
compounded by the fact that because the eRINs regulatory provisions
would be new, the PEs themselves would not be acquainted with the new
regulatory requirements, which would increase the amount of time for
them to complete their reviews. For these reasons, it is highly
unlikely that industry would be able to develop and submit the
registration materials needed to register the hundreds of facilities to
cover all of the electricity used in the light-duty EV fleet at the
start of the eRIN program.
    We thus believe the volumes of eRINs that will be produced in 2024
and 2025 will be defined by the pace at which biogas electricity
facilities will be able to complete their engineering reviews and
enable eRIN generation. We have projected potential eRIN volumes at the
start of the program based on how many and when such facilities could
be registered. Using these estimates, we can estimate the amount of
eRINs that would be generated for 2024 and 2025 based on reasonable
assumptions for how quickly facilities could become registered and
produce qualifying biogas and renewable electricity. The volumes we are
proposing based upon our assessment are 600 million RINs from renewable
electricity in 2024 and 1.2

billion RINs from renewable electricity in 2025. We discuss the
methodology for these volumes in DRIA Chapter 6, and we seek comment on
our approach and assumptions. We also seek comment on ways to
streamline the registration process to increase the number of
facilities that we are able to bring into the program by January 1,
2024.
    We also recognize that EPA may need more time to review and accept
the initial registration submissions for the potentially hundreds of
new facilities that would be able to participate in the program by
January 1, 2024. As such, we are considering providing parties wishing
to participate in the eRIN program additional flexibilities in the case
where they are able to submit timely registration requests, but EPA is
unable to accept those requests prior to January 1, 2024, if certain
conditions are met. We describe this potential flexibility in more
detail in Section VIII.K.2.

F. Proposed Program Structure for Light-Duty Vehicles

    This section describes the proposed program governing the
generation of eRINs. The proposed regulations in new subpart E of 40
CFR part 80 would implement the program as described in this section.
Topics covered in this section include key participants, identification
of the party to be the RIN generator, and the requirements for RIN
generation and program participation. Section VIII.H provides a
discussion of the alternative program structures that we considered,
including approaches wherein parties other than the OEM would generate
the eRINs. We discuss in greater detail the specific regulatory
requirements in Sections VIII.L through R.
1. Contract-Based Structure for eRIN Program
    As discussed in Section VIII.B, electricity on the commercial
electrical grid serving the conterminous U.S. is fungible. This fact
directly informs the proposed eRIN program design to ensure renewable
electricity is used as transportation fuel. Renewable electricity that
is generated from qualifying biogas at an EGU is loaded onto a
commercial electrical grid serving the conterminous U.S. and at that
point it becomes impossible to distinguish the renewable electricity
from electricity generated from any non-qualifying energy sources.
This, in turn, makes it impossible to track the physical renewable
electricity or to determine its ultimate disposition. Therefore, rather
than tracking physical quantities of electricity from generation to
disposition, regulatory and voluntary programs for the use of renewable
electricity typically use a contractual relationship between a
generator and end-user (or another party in the electricity value
chain) as a proxy. Examples of this type of contractual-based program
relationship include the Renewable Portfolio Standards discussed in
Section XIII.H.2 and the California LCFS Program discussed in Section
XIII.H.1.
    As explained previously, the CAA's definition of renewable fuel
requires that qualifying renewable electricity be both produced from
renewable biomass and used for transportation. Given the impossibility
of tracking physical electricity from its point of generation into
electric vehicles, EPA's proposed eRIN program relies on a contract-
based framework similar to the RFS program's current approach to CNG/
LNG, as well other renewable electricity programs. That is, we are
proposing to require eRIN generators to demonstrate that the
electricity used as transportation fuel was produced from renewable
biomass under an EPA-approved pathway through, among other things, the
existence of a bilateral contract between the eRIN generator and
renewable electricity generator. This contract, which we refer to as
the RIN generation agreement, would establish the exclusive ability of
the RIN generator to generate RINs for a given quantity of renewable
electricity produced from qualifying biogas at a renewable electricity
generation facility. The mechanism of RIN generation agreements would
ensure that renewable electricity produced from qualifying biogas is
able to generate RINs only once, and that only one party, in this case
the eRIN generator, would be able to claim that quantity of renewable
electricity as transportation fuel.\238\ We believe that, given the
unique circumstances of electricity used as a transportation fuel,
relying on RIN generation agreements is a reasonable approach to
meeting the Clean Air Act's requirement that renewable fuel be produced
from renewable biomass and used for transportation. As explained above,
once electricity is loaded on a commercial electrical grid serving the
conterminous U.S., it is impossible to track specific quantities--
renewable electricity is entirely indistinguishable from fossil-based
electricity. Thus, any eRIN program that involves the use of a
commercial electrical grid serving the conterminous U.S. will
necessarily rely on a contractually based mechanism to satisfy the
statutory requirements.
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    \238\ We note that under our proposal, RIN generation agreements
would cover 100 percent of renewable electricity generation for a
facility except for any electricity generation from the facility
that is sold outside the RFS program. In other words, our proposal
would not require that all electricity generated at a facility be