Conventional ethanol............................................          13,845          13,955          13,779
Non-cellulosic advanced biofuel.................................           1,405           1,045           1,221
    Total.......................................................      \a\ 15,250          15,000          15,000
----------------------------------------------------------------------------------------------------------------
\a\ Includes the additional 250 million RINs needed to satisfy the supplemental volume requirement addressing
  the remand of the 2016 standards.

    Based on our assessment of available supply, we do not believe that
there would be a need for conventional biodiesel or renewable diesel to
be imported in order to help meet an effective conventional renewable
fuel candidate volume of 15.25 billion gallons in 2023 (after
accounting for the supplemental standard) and 15.0 billion gallons in
2024 and 2025. A review of the recent RIN generation data suggests that
conventional biodiesel and renewable diesel are unlikely to be supplied
to the U.S. market if sufficient volumes of advanced biodiesel and
renewable diesel are available. Nevertheless, such imports remain a
potential source in the event that the market did not respond to the
candidate volumes in the way that we have projected it would. As
discussed in Section III.B.4.b, total production capacity from
grandfathered biodiesel and renewable diesel facilities is
approximately 2.5 billion gallons.

E. Summary of Final Volume Requirements

    For the reasons described above, we are establishing RFS volume
requirements based the four component categories discussed above. The
volumes for each of the component categories (sometimes referred to as
implied volume requirements) are summarized in Table VI.E-1. Also shown
is the supplemental volume requirement addressing the 2016 remand,
discussed more fully in Section V.

                        Table VI.E-1--Final Volume Requirements for Component Categories
                                                 [Billion RINs]
----------------------------------------------------------------------------------------------------------------
                                                                       2023            2024            2025
----------------------------------------------------------------------------------------------------------------
Cellulosic biofuel..............................................            0.84            1.09            1.38
Biomass-based diesel \a\........................................            2.82            3.04            3.35
Non-cellulosic advanced biofuel.................................            5.10            5.45            5.95
Conventional renewable fuel.....................................           15.00           15.00           15.00
Supplemental volume requirement.................................            0.25               0               0
----------------------------------------------------------------------------------------------------------------
\a\ BBD volumes are given in billion gallons.

    These final volumes are similar to, but higher than the volumes in
the proposed rule (after accounting for the fact that we are not
finalizing the proposed eRIN provisions in this rule). Specifically,
the cellulosic biofuel volumes are higher for all three years. The
volumes for non-cellulosic advanced biofuels in this final rule are
equal to the volumes from the proposed rule in 2023, and 250 million
and 650 million ethanol-equivalent gallons higher in 2024 and 2025
respectively. Finally, the volumes for conventional biofuel in this
final rule are equal to the volumes in the proposed rule for 2023, and
250 million gallons lower for 2024 and 2025. The volumes for each of
the four component categories shown in the table above can be combined
to produce volume requirements for the four statutory categories on
which the applicable percentage standards are based. The results are
shown below.

                        Table VI.E-2--Final Volume Requirements for Statutory Categories
                                                 [Billion RINs]
----------------------------------------------------------------------------------------------------------------
                                                                       2023            2024            2025
----------------------------------------------------------------------------------------------------------------
Cellulosic biofuel..............................................            0.84            1.09            1.38
Biomass-based diesel \a\........................................            2.82            3.04            3.35
Advanced biofuel................................................            5.94            6.54            7.33
Total renewable fuel............................................           20.94           21.54           22.33

Supplemental volume requirement.................................            0.25               0               0
----------------------------------------------------------------------------------------------------------------
\a\ BBD volumes are given in billion gallons.

    We believe that these volume requirements will preserve and
continue the gains made through biofuels in previous years when the
statute specified applicable volume targets. In particular, these
volume requirements will help ensure that the transportation sector
will realize additional reductions in GHGs and that the U.S. will
experience greater energy independence and energy security. The volume
requirements will also promote ongoing development within the biofuels
and agriculture industries as well as the economies of the rural areas
in which biofuels production facilities and feedstock production
reside.
    As discussed in Section II, our volume requirements for 2023 and
the associated percentage standards will not be in place prior to the
beginning of 2023, and we are establishing the 2024 applicable volumes
after the statutory deadline. For the reasons described in Section II,
the standards are nonetheless appropriate.

VII. Percentage Standards for 2023-2025

    EPA has historically implemented the nationally applicable volume
requirements by establishing percentage standards that apply to
obligated parties, consistent with the statutory requirements at CAA
section 211(o)(3)(B). The statute gives EPA discretion as to how
applicable volume requirements should be implemented for years after
2022. The CAA requires EPA to promulgate regulations that, regardless
of the date of promulgation, contain compliance provisions applicable
to refineries, blenders, distributors, and importers that ensure that
the volumes in CAA section 211(o)(2)(B), which includes set volumes,
are met.\222\ Further, under the statutory requirement that we review
implementation of the program in prior years as part of our
determination of the appropriate volume requirements for years after
2022,\223\ we considered the past effectiveness of the use of
percentage standards as the implementation mechanism for volume
requirements. We determined that this mechanism continues to be
effective and reasonable, and obligated parties are, at this point,
very familiar with this implementation mechanism. We were also unable
to identify any straightforward and easily implementable alternative
mechanisms, nor were any suggested in comments on the proposal.
Therefore, we are continuing to use percentage standards as the
implementing mechanism for years after 2022.
---------------------------------------------------------------------------

    \222\ CAA section 211(o)(2)(A)(i) and (iii).
    \223\ CAA section 211(o)(2)(B)(ii).
---------------------------------------------------------------------------

    The obligated parties to which the percentage standards apply are
producers and importers of gasoline and diesel, as defined by 40 CFR
80.1406(a).\224\ Each obligated party multiplies the percentage
standards by the sum of all non-renewable gasoline and diesel they
produce or import to determine their Renewable Volume Obligations
(RVOs).\225\ The RVOs are the number of RINs that the obligated party
is responsible for procuring to demonstrate compliance with the
applicable standards for that year. Since there are four separate
standards under the RFS program, there are likewise four separate RVOs
applicable to each obligated party for each year.\226\ The renewable
fuel volumes used to determine the 2023, 2024, and 2025 percentage
standards are described in Section VI.E and are shown in Table VII-1.
---------------------------------------------------------------------------

    \224\ Note that in this action, we are moving the definition of
``obligated party'' without modification from 40 CFR 80.1406(a) to
40 CFR 80.2. This is part of an effort to consolidate all defined
terms into a single regulatory section. In Section IX.K, we further
discuss the consolidation of all definitions in 40 CFR part 80,
subpart M, into the definitions section at 40 CFR 80.2. EPA is not
reopening the definition of obligated party.
    \225\ 40 CFR 80.1407.
    \226\ As discussed in Section V, we are finalizing a
supplemental standard for 2023 to address the remand of the 2016
standards under ACE. That supplemental standard is in addition to
the four standards required under the statute, though as described
in Section V, compliance demonstrations for total renewable fuel and
the supplemental standard will be combined in annual compliance
reports submitted under 40 CFR 80.1451.

                 Table VII-1--Volumes for Use in Determining the Applicable Percentage Standards
                                                 [Billion RINs]
----------------------------------------------------------------------------------------------------------------
                                                                       2023            2024            2025
----------------------------------------------------------------------------------------------------------------
Cellulosic biofuel..............................................            0.84            1.09            1.38
Biomass-based diesel \a\........................................            2.82            3.04            3.35
Advanced biofuel................................................            5.94            6.54            7.33
Renewable fuel..................................................           20.94           21.54           22.33
Supplemental standard...........................................            0.25             n/a             n/a
----------------------------------------------------------------------------------------------------------------
\a\ The BBD volumes are in physical gallons (rather than RINs).

    As described in Section II.D, EPA is permitted to establish
applicable percentage standards for multiple future years after 2022 in
a single action for as many years as it establishes volume
requirements.

A. Calculation of Percentage Standards

    The formulas used to calculate the percentage standards applicable
to obligated parties are provided in 40 CFR 80.1405(c). We are
continuing to use the percentage standard mechanism to implement the
volume requirements for years after 2022.
    In addition to the required volumes of renewable fuel, the formulas
also require estimates of the volumes of non-renewable gasoline and
diesel, for both highway and nonroad uses, that are projected to be
used in the year in which the standards will apply. In previous annual
standard-setting rules,

the statute required the Energy Information Administration (EIA) to
provide to EPA projected volumes of transportation fuel to be sold or
introduced into commerce in the United States for the following
calendar year by October 31 of each year.\227\ However, the last year
to which this statutory requirement applied was 2021 and therefore it
does not apply to compliance years after 2022. Moreover, historically
the transportation fuel projections EIA provided to EPA consisted of
the gasoline and diesel volume projections from EIA's Short Term Energy
Outlook (STEO).\228\ The STEO only provides volume projections for one
future calendar year, which was sufficient to inform past annual
standard-setting rulemakings as they never established applicable
percentage standards for more than one future calendar year. In
contrast, this rulemaking establishes volume requirements and
associated percentage standards for three future calendar years.
Therefore, we cannot use the STEO as a source for projections of
gasoline and diesel for this action and are instead using EIA's 2023
Annual Energy Outlook (AEO) for the purposes of calculating the
percentage standards in this action.\229\
---------------------------------------------------------------------------

    \227\ CAA section 211(o)(3)(A).
    \228\ See, for example, ``EIA letter to EPA with 2020 volume
projections 10-9-2019,'' available in the docket.
    \229\ Available at https://www.eia.gov/outlooks/aeo.
---------------------------------------------------------------------------

    Before using EIA's projections of gasoline and diesel, however,
several adjustments need to be made. First, the projected gasoline and
diesel volumes in AEO 2023 include projections of renewable fuels used
in transportation fuel (e.g., ethanol, biodiesel, and renewable
diesel). Since renewable fuels are not subject to the percentage
standards, the volumes of renewable fuel are subtracted out of the EIA
projections of gasoline and diesel. Second, the projected diesel
volumes in AEO 2023 also include projections of diesel used in ocean-
going vessels. Since fuel used in ocean-going vessels is explicitly
excluded from the definition of transportation fuel in 40 CFR 80.2--and
therefore is not an obligated fuel and does not incur an RVO under the
RFS program--the volumes of these fuels are subtracted out of the EIA
projections of diesel. Third, the projected gasoline, diesel, and
renewable fuel volumes in AEO 2023 include projections of these fuels
used in Alaska. Since Alaska is not part of the RFS covered area--and
therefore fuel used in this state is excluded from the RFS program--the
volumes of gasoline, diesel, and renewable fuel used in Alaska are
subtracted out of EIA's nationwide projections of these fuels.\230\
Finally, as discussed in RIA Chapter 1.11, EPA has determined that it
is necessary to make an adjustment to the projections of gasoline and
diesel provided by EIA in AEO 2023 to accurately reflect the gasoline
and diesel volumes ultimately used by obligated parties in their RVO
calculations. The table below provides the precise projections from AEO
2023 used to calculate the percentage standards for 2023-2025.
---------------------------------------------------------------------------

    \230\ State-specific projections of gasoline, diesel, and
renewable fuel usage are not provided in AEO 2023. Instead, we use
data from EIA's State Energy Data System (SEDS) to estimate the
portion of these fuels used in Alaska, available at https://www.eia.gov/state/seds/seds-data-fuel.php.

 Table VII.A-1--AEO 2023 Volumes Used for the Calculation of Percentage
                         Standards for 2023-2025
------------------------------------------------------------------------
        Fuel category                 Table                 Line
------------------------------------------------------------------------
Gasoline.....................  Table 11 \a\.......  Product Supplied/by
                                                     Fuel/Motor
                                                     Gasoline.
Renewables blended into        Table 2............  Energy Use & Related
 gasoline.                                           Statistics/Ethanol
                                                     (denatured)
                                                     Consumed in Motor
                                                     Gasoline.
                               Table 11...........  Biofuels/Other
                                                     Biomass-derived
                                                     Liquids.
Diesel.......................  Table 11...........  Product Supplied/by
                                                     Fuel/Distillate
                                                     fuel oil/of which:
                                                     Diesel.
Renewables blended into        Table 11...........  Biofuels/Biodiesel.
 diesel.
                                                    Biofuels/Renewable
                                                     Diesel.
Diesel used in ocean-going     Table 49...........  International
 vessels.                                            Shipping/Distillate
                                                     Fuel Oil (diesel).
------------------------------------------------------------------------
\a\ In the proposal for this action, we used the gasoline demand
  forecasts from Table 2 of AEO 2022 to calculate the proposed
  percentage standards. We intended to use Table 2 of AEO 2023 to
  calculate the percentage standards in this action as well; however,
  EIA informed EPA that 2023 gasoline demand forecast in Table 2 is not
  benchmarked to STEO whereas it is in Table 11 and directed EPA to use
  the values in Table 11 instead.

    In order to convert projections provided by EIA in energy units
into the volumes needed for the calculation of percentage standards, we
used the conversion factors provided in AEO 2023 Table 68.\231\
---------------------------------------------------------------------------

    \231\ Available at https://www.eia.gov/outlooks/aeo/data/browser/#/?id=20-AEO2023&cases=ref2023&sourcekey=0.
---------------------------------------------------------------------------

B. Treatment of Small Refinery Volumes

    In CAA section 211(o)(9), Congress provided for qualifying small
refineries to be temporarily exempt from RFS compliance through
December 31, 2010. Congress also provided that small refineries could
receive an extension of the exemption beyond 2010 based either on the
results of a required Department of Energy (DOE) study or in response
to individual petitions demonstrating that the small refinery suffered
``disproportionate economic hardship.'' CAA section
211(o)(9)(A)(ii)(II) and (B)(i).
    The annual percentage standards herein are based on our projection
that no gasoline or diesel produced by small refineries will be exempt
from RFS requirements pursuant to CAA section 211(o)(9) for 2023-2025.
In April and June 2022, EPA denied 105 pending SRE petitions for years
spanning 2016 through 2020, finding that, consistent with the holding
of the U.S. Court of Appeals for the Tenth Circuit in Renewable Fuels
Association v. EPA, SREs can only be granted under CAA section
211(o)(9) if a small refinery demonstrates that it would suffer
disproportionate economic hardship caused by compliance with the RFS
program requirements and not due, even in part, to other factors.\232\
In applying this new statutory interpretation, we found that that none
of the small refinery petitioners suffered disproportionate economic
hardship caused by their compliance with the RFS because all obligated
parties, including small refineries, are able to pass through the costs
of their RFS compliance (i.e., RIN costs) to their customers in the
form of higher sales prices for gasoline and diesel. Accordingly, we
denied all SRE petitions pending at that time.\233\
---------------------------------------------------------------------------

    \232\ Renewable Fuels Assn v. EPA, 948 F.3d 1206, 1253-54 (10th
Cir. 2020); see generally, April 2022 SRE Denial Action and June
2022 SRE Denial Action.
    \233\ For a fuller discussion of EPA's revised statutory
interpretation and analysis of the costs of RFS compliance, see the
April and June 2022 Denial Actions at Section IV.D.

---------------------------------------------------------------------------

    Absent new arguments and supporting data to the contrary, we
anticipate that the CAA interpretation and analysis presented in the
April and June 2022 SRE Denial Actions will also apply to these future-
year SRE petitions. Consequently, at this time, we anticipate that no
SREs will be granted for these future years, including the 2023-2025
compliance years covered by this action. Therefore, we project that the
exempt volumes from SREs to be included in the calculation specified by
40 CFR 80.1405(c) for 2023, 2024, and 2025 will be zero, and all small
refineries will be required to comply with their proportional RFS
obligations.\234\ Nevertheless, because the obligations are calculated
by applying the percentage standards to gasoline and diesel production
volume, the RFS volume obligations on small refineries are
proportionally smaller than on larger obligated parties. Even were EPA
to grant an SRE in the future for 2023-2025, we do not plan to revise
the percentage standards to account for such an exemption.\235\
---------------------------------------------------------------------------

    \234\ We are not prejudging any SRE petitions in this action;
however, absent a sufficient demonstration that a small refinery
experiences DEH caused by compliance with the RFS program, we do not
anticipate granting SREs in the future.
    \235\ See Renewable Fuel Standard (RFS) Program: RFS Annual
Rules, Response to Comments, EPA-420-R-22-009, June 2022, at 145 for
further discussion on our approach to this projection in the event
we grant a future SRE.
---------------------------------------------------------------------------

C. Percentage Standards

    The formulas in 40 CFR 80.1405 for the calculation of the
percentage standards require the specification of a total of 14
variables comprising the renewable fuel volume requirements, projected
gasoline and diesel demand for all states and territories where the RFS
program applies, renewable fuels projected by EIA to be included in the
gasoline and diesel demand, and projected gasoline and diesel volumes
from exempt small refineries. The values of all the variables used for
this rule are shown in Table VII.C-1 for 2023, 2024, and 2025.\236\
---------------------------------------------------------------------------

    \236\ See ``Calculation of Final 2023-2025 Percentage
Standards,'' available in the docket for this action.

                   Table VII.C-1--Volumes for Terms in Calculation of the Percentage Standards
                                                 [Billion RINs]
----------------------------------------------------------------------------------------------------------------
                                                                                2023
             Term                         Description               2023     Supplemental      2024       2025
----------------------------------------------------------------------------------------------------------------
RFVCB.........................  Required volume of cellulosic         0.84            0.00       1.09       1.38
                                 biofuel.
RFVBBD........................  Required volume of biomass-           2.82            0.00       3.04       3.35
                                 based diesel \a\.
RFVAB.........................  Required volume of advanced           5.94            0.00       6.54       7.33
                                 biofuel.
RFVRF.........................  Required volume of renewable         20.94            0.25      21.54      22.33
                                 fuel.
G.............................  Projected volume of gasoline...     138.62          138.62     139.57     137.49
D.............................  Projected volume of diesel.....      55.44           55.44      52.59      52.04
RG............................  Projected volume of renewables       14.48           14.48      14.89      14.77
                                 in gasoline.
RD............................  Projected volume of renewables        4.48            4.48       4.93       4.73
                                 in diesel.
GS............................  Projected volume of gasoline          0.00            0.00       0.00       0.00
                                 for opt-in areas.
RGS...........................  Projected volume of renewables        0.00            0.00       0.00       0.00
                                 in gasoline for opt-in areas.
DS............................  Projected volume of diesel for        0.00            0.00       0.00       0.00
                                 opt-in areas.
RDS...........................  Projected volume of renewables        0.00            0.00       0.00       0.00
                                 in diesel for opt-in areas.
GE............................  Projected volume of gasoline          0.00            0.00       0.00       0.00
                                 for exempt small refineries.
DE............................  Projected volume of diesel for        0.00            0.00       0.00       0.00
                                 exempt small refineries.
----------------------------------------------------------------------------------------------------------------
\a\ The BBD volume used in the formula represents physical gallons. The formula contains a 1.6 multiplier to
  convert this physical volume to ethanol-equivalent volume, consistent with the change to the BBD conversion
  factor discussed in Section X.D.

    Using the volumes shown in Table VII.C-1, we have calculated the
percentage standards for 2023, 2024, and 2025 as shown in Table VII.C-
2.

                                       Table VII.C-2--Percentage Standards
----------------------------------------------------------------------------------------------------------------
                                                                     2023 (%)        2024 (%)        2025 (%)
----------------------------------------------------------------------------------------------------------------
Cellulosic biofuel..............................................            0.48            0.63            0.81
Biomass-based diesel............................................            2.58            2.82            3.15
Advanced biofuel................................................            3.39            3.79            4.31
Renewable fuel..................................................           11.96           12.50           13.13
Supplemental standard...........................................            0.14             n/a             n/a
----------------------------------------------------------------------------------------------------------------

    The percentage standards shown in Table VII.C-2 are included in the
regulations at 40 CFR 80.1405(a) and apply to producers and importers
of gasoline and diesel.

VIII. Administrative Actions

A. Assessment of the Domestic Aggregate Compliance Approach

    The RFS regulations specify an ``aggregate compliance'' approach
for demonstrating that planted crops and crop residue from the U.S.
comply with the ``renewable biomass'' requirements that address lands
from which qualifying feedstocks may be harvested.\237\ In the 2010
RFS2 rulemaking, EPA established a baseline number of acres for U.S.
agricultural land in 2007 (the year of EISA's enactment) and determined
that as long as this baseline number of acres is not exceeded, it is
unlikely, based on our assessment of historical trends and economic
considerations, that new land outside of the 2007 baseline is being
devoted to crop production. The regulations specify, therefore, that
renewable fuel producers using planted crops or crop residue from the
U.S. as feedstock in renewable fuel production need not undertake
individual recordkeeping and reporting related to documenting that
their feedstocks come from qualifying lands, unless EPA determines
through one of its annual evaluations that the 2007 baseline acreage of
402 million acres agricultural land has been exceeded. The regulations
promulgated in 2010 require EPA to make an annual finding concerning
whether the 2007 baseline amount of U.S. agricultural land has been
exceeded in a given year. If the baseline is found to have been
exceeded, then producers using U.S. planted crops and crop residue as
feedstocks for renewable fuel production would be required to comply
with individual recordkeeping and reporting requirements to verify that
their feedstocks are renewable biomass.
---------------------------------------------------------------------------

    \237\ 40 CFR 80.1454(g). EPA established the ``aggregate
compliance'' approach in the 2010 RFS2 rule and has applied it for
the U.S. in annual RFS rulemakings since then. See 75 FR 14701-04.
In this final rule, we have not reexamined or reopened this policy,
including the regulations at 40 CFR 80.1454(g) and 80.1457.
Similarly, as further explained below, we have applied this approach
for Canada since our approval of Canada's petition to use aggregate
compliance in 2011. In this final rule, we have also not reexamined
or reopened our decision on that petition. Any comments we received
on these issues are beyond the scope of this rulemaking.
---------------------------------------------------------------------------

    Based on data provided by the USDA Farm Service Agency (FSA) and
Natural Resources Conservation Service (NRCS), we have estimated that
U.S. agricultural land reached approximately 384.7 million acres in
2022 and thus did not exceed the 2007 baseline acreage of 402 million
acres.238 239 We will continue to monitor total agricultural
land annually to determine if national agricultural land acreage
increases above this 2007 national aggregate baseline, as specified in
the RFS2 Rule.\240\
---------------------------------------------------------------------------

    \238\ For additional analysis and the underlying USDA data, see
``Assessment of Domestic Aggregate Compliance Approach 2022,''
available in the docket for this action.
    \239\ USDA also provided EPA with 2021 data from the
discontinued Grassland Reserve Program (GRP) and Wetlands Reserve
Program (WRP). Given this data, EPA estimated the total U.S.
agricultural land both including and omitting the GRP and WRP
acreage. In 2021, combined land under GRP and WRP totaled 2,993,177
acres. Subtracting the GRP and WRP acreage in addition to the
Agriculture Conservation Easement Program acreage yields an estimate
of 379.6 million total acres of U.S. agricultural land in 2021. Just
subtracting the Agriculture Conservation Easement Program leads to
an estimate of 382.6 million total acres of U.S. agricultural land
in 2021.
    \240\ 75 FR 14701.
---------------------------------------------------------------------------

B. Assessment of the Canadian Aggregate Compliance Approach

    The RFS regulations specify a petition process through which EPA
may approve the use of an aggregate compliance approach for planted
crops and crop residue from foreign countries.\241\ On September 29,
2011, EPA approved such a petition from the Government of Canada.\242\
The total agricultural land in Canada in 2022 is estimated at 116.4
million acres. This total agricultural land area includes 94.9 million
acres of cropland and summer fallow, 11.7 million acres of pastureland,
and 9.8 million acres of agricultural land under conservation
practices. This acreage estimate is based on the same methodology used
to set the 2007 baseline acreage for Canadian agricultural land in
EPA's response to Canada's petition. This 2022 acreage does not exceed
the 2007 baseline acreage of 122.1 million acres.\243\ We will continue
to monitor total agricultural land annually to determine if Canadian
agricultural land acreage increases above its 2007 aggregate baseline,
as specified in the RFS2 Rule.\244\
---------------------------------------------------------------------------

    \241\ 40 CFR 80.1457.
    \242\ See ``EPA Decision on Canadian Aggregate Compliance
Approach Petition'' (Docket Item No. EPA-HQ-OAR-2011-0199-0015).
    \243\ The data used to make this calculation can be found in
``Assessment of Canadian Aggregate Compliance Approach 2022,''
available in the docket for this action.
    \244\ 75 FR 14701.
---------------------------------------------------------------------------

IX. Biogas Regulatory Reform

    We are finalizing biogas regulatory reform provisions to allow for
the use of biogas as a biointermediate and RNG as a feedstock to
produce biogas-derived renewable fuels other than renewable CNG/
LNG.\245\ The biogas regulatory reform provisions will also
substantially help improve oversight of the program and mitigate
against the potential for parties to double-count biogas and RNG given
the program's expansion, thereby helping to ensure that only valid RINs
are generated for biogas-derived renewable fuels. EPA received comment
from many stakeholders on our proposed biogas regulatory reform
provisions; we summarize and respond to all comments received in RTC
Section 10.
---------------------------------------------------------------------------

    \245\ For purposes of this section of the preamble, by renewable
natural gas or RNG, we mean a product derived from biogas that is
produced from renewable biomass and that meets the natural gas
commercial distribution pipeline specification for the pipeline that
it is injected into. We refer to biogas that is produced from
renewable biomass and that has undergone treatment to remove
impurities and inert gases to a level suitable for its use to
produce renewable CNG/LNG, but is not injected onto the natural gas
commercial pipeline system as treated biogas. Generally, the primary
difference between RNG and treated biogas is that RNG is injected
onto the natural gas commercial distribution system and treated
biogas is distributed via a closed, private distribution system.
Biomethane is the methane component of biogas, treated biogas, and
RNG that is derived from renewable biomass. Under the previous and
new regulations, RIN generation is based on the energy, in BTUs,
from biomethane (exclusive of impurities, inert gases often found
with biomethane in biogas) that is demonstrated to be used as
transportation fuel.
---------------------------------------------------------------------------

A. Background

1. Statutory Authority
    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 EPAct 2005, 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.'' \246\ This definition has two
relevant key components, both of which are necessary to generate RINs:
(1) The fuel must be produced from renewable biomass, and (2) The fuel
must be used to replace or reduce fossil fuel used as transportation
fuel. 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.\247\ This statutory
definition of renewable biomass includes, among other things, separated
yard waste, separated food waste, animal waste material, and crop
residue, any of which are commonly used to produce biogas through
anaerobic digestion.\248\ EISA, as reflected in CAA section
211(o)(2)(A)(i),

also directs EPA to ``promulgate'' and ``revise'' ``regulations . . .
to ensure that transportation fuel sold or introduce into commerce . .
. contains at least the applicable volume of renewable fuel, advanced
biofuel, cellulosic biofuel, and biomass-based diesel.'' The
regulations EPA is promulgating as part of biogas regulatory reform in
this action are necessary to ensure that biogas and RNG used to produce
fuels that are in turn used to satisfy the statutory volume
requirements actually qualify as renewable fuel, i.e., are actually
produced from renewable biomass and used as transportation fuel.
---------------------------------------------------------------------------

    \246\ CAA section 211(o)(1)(J).
    \247\ CAA section 211(o)(1)(I).
    \248\ Biogas was explicitly included in EPAct 2005 as a
renewable fuel and therefore was included in the RFS1 program that
applied from 2006-2009. In the 2010 rulemaking that established the
RFS2 program based on changes to CAA section 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).
---------------------------------------------------------------------------

    Additionally, the statutory definition of advanced biofuel at CAA
section 211(o)(1)(B)(ii)(V) explicitly identifies biogas as a valid
form of advanced biofuel. However, the statute does not specify how
biogas that is produced from renewable biomass must be used in order to
qualify as renewable fuel (i.e., in the form of CNG or LNG, or in some
other form). Biogas can be used as a feedstock to create renewable CNG/
LNG, through clean-up and compression, or to produce other fuels, such
as hydrogen or Fischer-Tropsch fuels. In this action, we are putting in
place provisions that will allow for biogas to be used as a
biointermediate feedstock to produce renewable fuels other than
renewable CNG/LNG. As explained in our action establishing a
biointermediates program, biointermediates are simply renewable biomass
feedstocks that are partially processed at one facility before being
transported to a different facility to complete processing into
renewable fuel.\249\ While EPA had historically not permitted
feedstocks to be processed at multiple facilities due to implementation
and oversight concerns, we recently expanded the program to allow
processing at two different facilities under certain circumstances. In
establishing the initial biointermediates program, EPA did not include
biogas as a biointermediate because we acknowledged that the
regulations we were promulgating at that time would not be appropriate
for the more complex circumstances of biogas. The biogas regulatory
reform regulations we are promulgating in this action provide the
compliance and oversight mechanisms necessary to allow biogas to be
processed into a biointermediate at one facility and then further
processed into renewable fuel at a second facility while remaining
consistent with the statutory requirements and applicable RFS
pathway.\250\
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    \249\ 87 FR 39600, 39635-51 (July 1, 2022).
    \250\ The regulations similarly allow RNG that has been placed
on a commercial pipeline be withdrawn and used to produce renewable
fuel.
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2. Regulatory History
    In the 2010 RFS2 rule, EPA included regulatory provisions for the
generation of advanced biofuel (D code 5, or D5) RINs from biogas used
as transportation fuel. The RFS2 regulations listed biogas as the fuel
and included provisions for how a party demonstrated that biogas was
used as transportation fuel. However, biogas as the term is defined in
EPA's regulations and often used by industry is not actually a product
that can be used as a transportation fuel. Biogas must undergo
significant treatment to be used as a fuel especially in the form CNG/
LNG because impurities found in biogas could cause substantial
operability issues thereby harming CNG/LNG engines. Additionally, after
promulgating the pathway for D5 RINs EPA received several pathway
petitions requesting that EPA allow for the generation of cellulosic
biofuel (D code 3, or D3) RINs for biogas produced from cellulosic
feedstocks.
    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 (``Pathway Q'' and ``Pathway T'', respectively).\251\
Pathway Q allowed for D3 RIN generation for renewable CNG/LNG 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 D5
RIN generation for renewable CNG/LNG from biogas from waste digesters,
which encompasses non-cellulosic biogas. These two pathways were
structured so that biogas from approved sources would be the feedstock
and renewable CNG/LNG would be the finished fuel for RIN generation
purposes.
---------------------------------------------------------------------------

    \251\ 79 FR 42128 (July 18, 2014).
---------------------------------------------------------------------------

    The Pathways II rule also established a then new set of regulatory
provisions that detail the criteria necessary for biogas to be
demonstrated to be renewable fuel and thus eligible to generate RINs.
The regulations address two scenarios under which renewable CNG/LNG is
produced and used for transportation. First, for renewable CNG/LNG
produced from biogas that is only distributed via a closed, private,
non-commercial system, the renewable CNG/LNG must be produced from
renewable biomass under an EPA-approved pathway and demonstrated to be
sold and used as transportation fuel.\252\ Under this scenario, only
renewable CNG/LNG that was produced and distributed as transportation
fuel in a closed, private non-commercial system could generate RINs.
Typically, parties that generate RINs under the closed scenario are
directly supplying renewable CNG/LNG to a CNG/LNG fleet in close
proximity to where the biogas is produced and collected and in many
cases the party that generates the RIN is the same party that owns/
operates the CNG/LNG fleet.
---------------------------------------------------------------------------

    \252\ 40 CFR 80.1426(f)(10)(i).
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    The second scenario under which RINs could be generated for
renewable CNG/LNG addresses when renewable CNG/LNG is introduced into a
commercial distribution system (e.g., natural gas commercial pipeline
system). In addition to demonstrating that the CNG/LNG is produced from
renewable biomass under an EPA-approved pathways and sold and used as
transportation fuel, potential RIN generators under this scenario must
also demonstrate that the RNG was loaded onto and withdrawn from a
physically-connected natural gas commercial distribution system, that
the amount of CNG/LNG sold as transportation fuel corresponds with the
amount of RNG placed onto the natural gas commercial distribution
system, and that no other party relied on the RNG for the creation of
RINs.\253\ These additional requirements for CNG/LNG transmitted via a
natural gas commercial distribution system were designed to ensure that
the amount of renewable CNG/LNG claimed to have been used as
transportation fuel corresponds with the amount of RNG placed onto the
natural gas commercial distribution system and that such CNG/LNG is not
double counted for RIN generation.
---------------------------------------------------------------------------

    \253\ 40 CFR 80.1426(f)(11)(i).
---------------------------------------------------------------------------

    Since promulgation of the prior regulatory provisions in the RFS
Pathways II rule,\254\ many parties have requested that EPA approve
pathways to allow the use of biogas as a biointermediate to produce
various types of fuels (e.g., steam methane reforming the biogas into
hydrogen or using a Fischer-Tropsch process to turn biogas into
renewable diesel). These parties have suggested that EPA should
encourage these biogas-derived renewable fuels to increase the

production and use of advanced and cellulosic renewable fuels.
---------------------------------------------------------------------------

    \254\ See 79 FR 42128 (July 18, 2014).
---------------------------------------------------------------------------

    In the 2020-2022 RFS Standards Rule, we promulgated regulatory
provisions that allowed for the generation of RINs from renewable fuels
produced from biointermediates.\255\ However, we did not include the
use of biogas as a biointermediate at that time. While we recognized
the opportunity to increase the availability of advanced and cellulosic
biogas-derived renewable fuels in support of the statutory goals, we
also noted that allowing biogas or contracted RNG to be used as an
input to produce a fuel other than renewable CNG/LNG entails adding
further layers of complexity to a system that is already challenging to
implement and oversee. In response to the significant number of
comments requesting the inclusion of biogas a biointermediate in the
2020-2022 RFS Standards Rule, we stated that we neither developed nor
proposed the provisions that would be necessary to address the unique
circumstances associated with biogas as a biointermediate and that we
intended to address the use of biogas as a biointermediate in a future
rulemaking.\256\ We believed then, and still believe, that the previous
biogas provisions \257\ must be modified to ensure that biogas is not
double counted in a situation where biogas may have multiple uses
(e.g., as renewable CNG/LNG or as a biointermediate).
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    \255\ 87 FR 39600 (July 1, 2022).
    \256\ See 87 FR 39600, 39641 (July 1, 2022).
    \257\ For purposes of this preamble, the previous biogas
provisions refer to those regulatory requirements that apply for the
generation of RINs from qualifying biogas under 40 CFR part 80,
subpart M, that are being modified by this final action. These
regulatory provisions will sunset and be replaced by the biogas
regulatory reform provisions discussed in this section, which
include a modified definition of biogas. Additionally, 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.
---------------------------------------------------------------------------

3. The Biogas and Biogas RIN Disposition and Generation Chain
    In this subsection, we introduce and briefly discuss a number of
key concepts and terms that are used throughout our discussion of
biogas regulatory reform, including the relevant parties that
participate in the biogas disposition/generation chain.\258\
---------------------------------------------------------------------------

    \258\ For purposes of this preamble, we refer to the chain of
parties that produce biogas, RNG and biogas-derived renewable fuels,
distribute such products, use such biogas-derived renewable fuels as
a transportation fuel, and generate and transfer RINs for biogas-
derived renewable fuels collectively as the biogas disposition/
generation chain.
---------------------------------------------------------------------------

a. Biogas and RNG
    Under the previous biogas provisions, EPA broadly defined 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.'' Biogas typically contains significant
amounts of impurities and inert gases (e.g., carbon dioxide) and must
undergo pre-treatment before it can be used to produce transportation
fuel (e.g., CNG/LNG in vehicles). In order for commercial natural gas
pipelines to accept injections of biogas, the biogas must first be
upgraded to meet pipeline specifications prior to injection. In this
action, we call this pipeline quality biogas RNG, and we define biogas
to be the precursor to RNG. The biogas producer is the party that
produces biogas at a biogas production facility, and the RNG producer
is the party that produces RNG at an RNG production facility.
b. Renewable CNG and LNG From RNG
    For biogas to be used as renewable CNG/LNG to fuel a vehicle, 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 previous biogas
regulations,\259\ we required that parties demonstrate through
contracts and affidavits that a specific volume of RNG was used as
transportation fuel within the U.S., and for no other purpose. For RNG
to renewable CNG/LNG, the chain of parties that are involved in
ensuring that biogas is produced from renewable biomass and used as
transportation fuel includes:
---------------------------------------------------------------------------

    \259\ 40 CFR 80.1426(f)(10)(ii), (f)(11)(ii).
---------------------------------------------------------------------------

     The biogas producer (i.e., the landfill or digester that
produces the biogas)
     The party that upgrades the biogas into RNG (the RNG
producer)
     The parties that distribute and store the RNG (e.g.,
pipeline operators)
     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 biogas disposition/generation 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.
4. Need for Regulatory Change
    The previous biogas provisions lack specificity and clarity in
several key areas, which, as EPA has gained experience in implementing
the program, we have determined undermines EPA's ability to implement,
oversee, and enforce the program. Critically, we have concerns that the
existing regulations allow for double counting of biogas volumes or
generating invalid RINs from biogas or RNG. These perversities could be
exacerbated as EPA allows for multiple uses of biogas (i.e., allows
biogas to be used as a biointermediate). The lack of specificity and
clarity has also led to a high degree of program complexity,
unnecessarily burdening both EPA and industry and hindering effective
oversight.
    The previous biogas provisions do not specify how or where the
quantity of CNG/LNG was to be measured, which party was the RIN
generator, how a RIN generator was to demonstrate that the CNG/LNG was
actually used as transportation fuel, or how the RIN generator
demonstrated that the CNG/LNG was not double counted. The previous
biogas provisions were also silent on whether and how parties could
store biogas prior to and after registration, how parties reconcile
stored volumes over periods of time, and when if ever such volumes had
to be used as transportation fuel for RIN generation.
    Due to the lack of specificity in those previous biogas provisions
for how potential RIN generators would demonstrate that CNG/LNG was
produced from renewable biomass and used as a transportation fuel, the
registration requests that EPA received over the past several years
varied considerably in their approaches. The main point of variation
concerned the party that would generate the RINs. Approaches in
registration requests have included:
     Parties that use renewable CNG/LNG in a specified fleet
(e.g., fleet operators)
     Parties that dispense renewable CNG/LNG
     Parties that generate RNG from qualifying biogas
     Parties that produce the qualifying biogas for renewable
CNG/LNG generation

     Marketers that organize contracts between RNG producers
and CNG/LNG users.
    EPA did not envision this broad range of differing approaches to
RIN generation for renewable CNG/LNG when we designed the previous
biogas regulations. While these regulations required registrants to
demonstrate in their requests that another party could not double count
the quantity of RINs generated for a volume of biogas and renewable
CNG/LNG,\260\ the regulations are so open-ended that multiple parties--
the renewable CNG/LNG producer, the party distributing the CNG/LNG,
biogas producer, fleet owners, and/or dispensing stations--could be in
a position to claim a single volume. That is, while the regulations
prohibit the double counting of RIN generation for the same quantity of
renewable CNG/LNG, they also inadvertently made it relatively easy for
double counting to occur.
---------------------------------------------------------------------------

    \260\ See 40 CFR 80.1426(f)(11)(ii)(H), which states that ``[n]o
other party relied upon the volume of biogas/CNG/LNG for the
creation of RINs.''
---------------------------------------------------------------------------

    The previous biogas provisions also allowed for a single renewable
CNG/LNG dispenser to contract with multiple RNG producers and allowed a
single RNG producer to contract with multiple CNG/LNG dispensers. This
flexibility allowed for the creation of network of contracts which
encompass many RNG producers, many RNG distributers and marketers, and
many CNG/LNG dispensers, creating a complex paperwork system for EPA to
track and that increased the difficulty of effectively overseeing the
program.
    The regulatory revisions outlined in this section are necessary to
promote expansion of renewable fuel volumes, to prevent invalid RINs,
and to allow EPA and industry to effectively ensure compliance, as
discussed in more detail below.
a. 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, provided in satisfies the applicable
statutory and regulatory requirements. 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 and other states.
However, the opportunity for continued growth of RNG is expected to be
constrained in the future by two factors. First, the economics of
developing biogas facilities becomes increasingly challenging for
smaller facilities, and particularly for facilities located more
remotely from natural gas pipeline interconnects. The first facilities
brought into the program tended to be the largest and most economical,
with it becoming increasingly costly to bring on incremental volume
over time. Second, as discussed in Section III.B.1., the rate of growth
in the consumption capacity of the in-use fleet of CNG/LNG vehicles is
expected to slow. When the program started in 2016, there was a
sizeable existing fleet of CNG/LNG vehicles that were operating on
fossil natural gas and that could quickly be used to generate RINs
through establishing contracts for RNG. Since the use of RNG has been
saturating the existing in-use CNG/LNG vehicle fleet, particularly the
largest and most economical fleets, the use of biogas as a feedstock
for renewable fuel production will be increasingly constrained by the
much slower growth in CNG/LNG fleet sales. At the same time, based on
the number of existing landfills \261\ and wastewater treatment
facilities and the potential for significant expansion of anaerobic
digesters,\262\ there exists significant potential to increase the
productive use of biogas by using it as a biointermediate to produce
renewable fuel under the RFS program. By tapping into the greater
market for that biogas that can be economically converted to other
renewable fuels, the impending constraints on the use of biogas as a
feedstock for renewable fuel production can be mitigated.
---------------------------------------------------------------------------

    \261\ https://www.epa.gov/lmop/landfill-gas-energy-project-data.
    \262\ https://www.epa.gov/agstar/livestock-anaerobic-digester-database.
---------------------------------------------------------------------------

    The use of biogas to produce fuels other than renewable CNG/LNG is
also consistent with the statute's focus on growth in cellulosic
biofuel over other advanced biofuels and conventional renewable fuel
after 2015.\263\ However, due to concerns with the potential double
counting of biogas/RNG for RIN generation, EPA has not registered
parties to generate RINs for biogas used for fuels other than renewable
CNG/LNG under the existing regulations, so biogas use has instead been
limited to the CNG/LNG vehicle market under the RFS program. Allowing
the program to incorporate biogas-derived renewable fuels other than
renewable CNG/LNG would support the increase in usage of renewable
fuels which can reduce GHGs emissions and promote energy independence.
---------------------------------------------------------------------------

    \263\ 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.
---------------------------------------------------------------------------

b. Preventing Double Counting and Fraud
    In order for the RFS program to function, the RIN market must
maintain foundational integrity: namely, the 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 not been found to be invalid, a non-trivial quantity of
invalid RINs have also been generated.\264\ The significant value of
the RINs, particularly cellulosic RINs, provides incentives for
fraudulent generation, and complicated renewable fuel production and
distribution systems, such as the contractual network for demonstrating
that CNG/LNG qualifies as renewable fuel described in Section IX.A.2,
provide opportunities for fraudulent behavior. Fraudulent RINs can be
generated, for example, by parties fabricating reports or records to
generate RINs for volumes of biogas that have been used for a
different, non-transportation fuel purpose. 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 or made a calculation error. 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.
---------------------------------------------------------------------------

    \264\ 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.
---------------------------------------------------------------------------

    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 invalidity.
    The potential for double counting of biogas, RNG, and biogas-
derived renewable fuels is a significant concern since it can undermine
the credit system that EPA uses to implement the statutory volume
requirements under CAA section 211(o). Even though the existing
regulations prohibit such double counting,\265\ we have concerns that
those regulations and the complex system of contracts and documentation
they entail do not enable EPA to detect or protect against the double
counting of RINs from biogas feedstocks because of the challenge
tracking biogas through commercial pipelines.
---------------------------------------------------------------------------

    \265\ See 40 CFR 80.1426(f)(11)(i)(F).
---------------------------------------------------------------------------

    Invalid RINs can also create adverse market effects. 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 fuels.
    Having a robust means of avoiding double counting and fraud is
particularly important because once EPA begins accepting registration
requests for biogas to be used as a biointermediate and biogas-derived
renewable fuels other than renewable CNG/LNG, the opportunities for the
double counting of biogas could increase dramatically. For example,
without a robust system in place a party could easily 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 production of other renewable
fuel generated from the same volume of RNG.
    We believe that the biogas regulatory reform provisions we are
finalizing virtually eliminate the potential for double counting and
minimize opportunities for fraud by specifying the party that generates
RINs, by holding all directly regulated parties in the biogas
disposition/generation chain liable for transmitting or using invalid
RINs, by tracking RNG through reporting requirements, and by leveraging
third-party oversight mechanisms (i.e., third-party engineering
reviews, RFS QAP, and annual attest engagements).
c. Enhancing Program Simplicity and RIN Integrity
    While the previous biogas provisions provide flexibility, as
described in Section IX.A.2, they have also resulted in a complex
program that is overly burdensome for both EPA and industry. Under the
previous biogas provisions, 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 is used as transportation fuel in the form
of renewable CNG/LNG. These demonstrations occur during registration in
the form of extensive paperwork, including contracts and associated
documentation; registration packages can sometimes number over a
thousand pages of contracts for a single RNG production facility. These
contracts can also cover multiple facilities, creating an ever more
complex network of contracts.
    The potential expanded use of biogas as a biointermediate and RNG
as a feedstock to produce renewable fuels would make the program under
the previous biogas provisions impracticable to oversee and, as
discussed above, more susceptible to double counting and fraud. Since
biogas may have multiple uses, it is crucial to minimize the potential
for generating invalid or fraudulent RINs, including the double
counting of RINs. As more uses of biogas are allowed under the program,
additional regulatory measures are necessary because EPA will be
tracking and overseeing increased volumes of biogas, and we want to
ensure a program design that enables EPA to effectively track and
oversee larger volumes of biogas (particularly in instances where
biogas is converted into RNG and placed into a natural gas commercial
pipeline system) going to multiple end uses. We also want to avoid
situations in which opaque contractual mechanisms could potentially
allow multiple parties to claim that the same volume of biogas is used
as two or more biogas-derived renewable fuels.
    One of the revisions EPA is finalizing in this rulemaking is to
track the flow of RNG in EMTS. Doing so will simplify oversight, ensure
that quantities of biogas-derived renewable fuels used as
transportation fuel are real, and provide confidence to encourage
investment in these fuels. The biogas regulatory reform program
includes those parties, and only those parties, that are necessary and
best able to demonstrate the valid use of renewable fuel use for
transportation: the biogas producer, the RNG producer, and the party
that can demonstrate its use for transportation (e.g., the renewable
CNG dispenser). Each party has a set of clearly defined roles and
responsibilities under the program.
5. Summary of Changes
    In this rulemaking, EPA proposed to specify requirements for
different parties within the biogas disposition/generation chain. We
also proposed to expand how biogas can be used through provisions
allowing biogas to be used as a biointermediate such that renewable
fuel produced from biogas could be produced through sequential
operations at more than one facility and allowing RNG to be used as a
feedstock to produce a different renewable fuel. We are finalizing many
elements of biogas regulatory reform largely as proposed. The key
elements of the biogas regulatory reforms that we are now finalizing
include the following:
     Specification of the party that upgrades the biogas to RNG
(the RNG producer) as the RIN generator.
     A requirement that the RNG producer assign RINs generated
for the RNG to the specific volume of RNG when the volume is injected
into a natural gas commercial pipeline system.
     A requirement that the party that can demonstrate that the
RNG was used as transportation fuel may separate the RIN.
     Specific regulatory requirements for key parties (i.e.,
biogas producer, RNG producer, RNG RIN owners, and RNG RIN separators)
in the RNG production, distribution, and use.
     Conditions on the use of biogas and storage of RNG prior
to registration.
     Specific provisions to address when biogas is used as a
biointermediate and when RNG is used as a feedstock.
    These elements are applied to the following parties:
     The party that produces the biogas (the biogas producer).
     The party that upgrades the biogas to RNG, injects the RNG
into the natural gas commercial pipeline system, and generates/assigns
the RIN to the RNG (the RNG producer).
     Any party that transfers title of the assigned RIN (RNG
RIN owner).
     The party that demonstrates that the RNG was used as
transportation fuel in the form of renewable CNG/LNG (the RNG RIN
separator) or used as a feedstock to produce a renewable fuel other
than renewable CNG/LNG.
    We discuss each of these key elements and parties in more detail in
the following sections.

    Regulatory requirements for each of these key activities and
parties are necessary to ensure that the biogas is produced, converted
to RNG, and eventually used as transportation fuel consistent with CAA
and regulatory requirements. Specifying the requirements applicable to
each party enables EPA to take a streamlined regulatory approach to the
production, distribution, and use of RNG that allows for the flexible
use of RNG without imposing strict limitations on which parties can
take title to and use the RNG.
    Furthermore, we are also sunsetting regulatory provisions that will
no longer be necessary. For example, much of the documentation of
contracts between each party in the biogas distribution/generation
chain previously required to be submitted to EPA at registration will
no longer be necessary to submit.
    Finally, based on comments requesting more time for parties to
comport with the biogas regulatory reform provisions, we are providing
more time for both new and existing registrants to come into
compliance, as discussed in Section IX.F.
    We did not propose to revisit or reopen the pathways for biogas
established in the 2014 RFS Pathways II rule and are therefore not
addressing any issues or comments received on the pathways themselves.
We will continue to review pathway petitions under 40 CFR 80.1416 and
may take separate regulatory action on additional pathways for biogas
as appropriate in the future.

B. Biogas Under a Closed Distribution System

    Under the previous biogas provisions, there were two approaches for
generating RINs from biogas to renewable CNG/LNG: (1) biogas in a
closed, private, non-commercial distribution system that is compressed
to renewable CNG/LNG, and (2) biogas upgraded to RNG, injected into a
commercial pipeline system, and then compressed to renewable CNG/
LNG.\266\ The focus of this regulatory reform deals with RNG injected
onto the natural gas commercial pipeline system. We are therefore
finalizing as proposed only minor modifications to the existing
regulatory provisions for biogas used to produce a renewable fuel when
the biogas is produced and made into a biogas-derived renewable fuel in
a closed distribution system. Because it is typically only a single
party participating in a closed distribution system (i.e., the same
party that produces the biogas is the same party that converts the
biogas to renewable CNG/LNG and then uses that biogas in their own CNG/
LNG fleets), there is little opportunity for the double counting of
biogas through multiple parties claiming the same volume across the
biogas distribution/generation chain.
---------------------------------------------------------------------------

    \266\ See 40 CFR 80.1426(f)(10) and (11).
---------------------------------------------------------------------------

    We are finalizing as proposed that parties that generate RINs for
biogas to renewable CNG/LNG via a closed distribution system will
continue to operate under similar provisions to the previous biogas
provisions. We are also finalizing as proposed a requirement that when
the biogas producer is a separate party from the party that generates
RINs for biogas to renewable CNG/LNG in a closed distribution system,
the biogas producer will have to separately register with EPA. This
provision ensures that biogas producers are treated consistently
throughout the program and helps EPA identify how parties are related
in the biogas distribution/generation chain. We recognize that this may
require some parties to update their registration information with EPA,
but we do not expect this to require new third-party engineering
reviews or the resubmission of registration materials.
    To help ensure consistency in the regulatory requirements for all
biogas-derived renewable fuels, we are moving the provisions for biogas
to renewable CNG/LNG via a closed distribution system into the new 40
CFR part 80, subpart E. We sought comment on whether and how to
streamline the regulatory requirements for biogas to renewable CNG/LNG
via a closed distribution system. We did not receive significant
comments regarding parties producing renewable CNG/LNG from biogas via
a closed distribution system, and we are finalizing that we are moving
these provisions to subpart E as proposed.

C. RNG Producer as the RIN Generator

    For biogas upgraded to RNG and placed on a natural gas commercial
pipeline system, we are finalizing as proposed that RNG producers will
be the sole RIN generators, and that they will generate RINs for RNG
they produce and inject into a commercial pipeline. The previous
regulations allowed any party to generate RINs from biogas-derived
renewable fuels, even parties that were not part of the biogas
distribution/generation chain. In the RFS Pathways II rule, we did not
specify a RIN generator because we believed that the complexities of
the production and distribution of biogas-derived renewable fuels
warranted a case-by-case approach to RIN generation.\267\ We noted that
we would continue to monitor RIN generation practices and that we might
reconsider specifying the RIN generator for biogas-derived renewable
fuels at a later date. Based on our experience implementing the program
since then, and in light of the expansion in the use of biogas as a
biointermediate and RNG as a feedstock, we now believe that it is
important to designate a RIN generator.
---------------------------------------------------------------------------

    \267\ 79 FR 42128, 42144 (July 18, 2014).
---------------------------------------------------------------------------

    We believe that RNG producers are best positioned to generate the
RINs for two reasons. First, one of the goals of biogas regulatory
reforms is to minimize the potential for double counting of biogas or
RNG since such biogas or RNG could potentially be used to produce
multiple types of fuels. By designating RNG producers as the RIN
generators, the RINs will effectively be tracked in EMTS from RNG
injection through withdrawal via the assignment, separation and/or
retiring of RINs, as discussed in more detail in Section IX.D. This
approach significantly reduces double counting concerns since a
specific volume of RNG will have corresponding RINs assigned to it, and
by specifying that the RINs can only be separated under specific
circumstances.
    Second, we believe RNG producers are also well positioned to
determine whether the RNG was produced from qualifying biogas and to
determine the correct amount of biomethane that will qualify for RIN
generation. RNG producers typically add non-renewable components to
biogas to make pipeline quality RNG. They are often the only party
aware of the non-renewable components, and the only party in a position
to measure the biomethane content of the RNG prior to introducing non-
renewable components.
    We also considered designating other parties as the RIN generator.
For example, we considered designating the party that produces or uses
the renewable CNG/LNG as the RIN generator. However, if we finalized
such an approach, then we will largely forgo any ability to track
assigned RINs to volumes of RNG in EMTS because the RNG will have
already traversed the entirety of the natural gas commercial pipeline
system before the RIN was generated and assigned. This approach will
not remedy the double counting and tracking concerns under the existing
program. The RNG would still have to be tracked via a complicated
series of contractual relationships instead of electronically in EMTS.
The downstream party and EPA acting in its oversight capacity would
still have to go

to great lengths to ensure that the RNG was not double counted before
the RIN was generated.
    We recognize that the approach we are finalizing will affect a
number of parties that are currently registered to generate RINs for
biogas to renewable CNG/LNG, and we specifically sought comment on our
proposal to designate the RNG producer as the RIN generator for RNG
injected into a natural gas commercial pipeline system. We received a
number of comments relating to who should be the RIN generator for RNG
RINs. Multiple commenters suggested that our approach should be broader
and that we should allow third parties, such as marketers, to be the
RIN generator. These commenters stated that smaller entities might not
have the expertise necessary and would not want to take on the
liability associated with RIN generation. Commenters also expressed
concern regarding the need to re-negotiate contracts that had
previously let a party other than the RNG producer generate RINs.
    Given that in this action we are expanding the use of biogas as a
biointermediate and RNG as a feedstock, we believe it is important for
parties that generate RINs in the RFS program to be held responsible
for complying with the regulations, and in general we believe that
parties that have a direct role in the production or use of a fuel are
the more appropriate parties to generate RINs. Parties involved in the
production of feedstocks or renewable fuel should not be allowed to
shift liability to third parties. While stakeholder comments provided
perspectives on market dynamics, these commenters did not explain how
allowing third parties to generate RINs would directly improve
compliance and enforcement of this expanded program.
    Additionally after reviewing stakeholder comments and engaging
directly with companies,\268\ we remain convinced that this step is
necessary to implement the other proposed changes discussed below. By
making the RNG producer the RIN generator, we will greatly improve our
ability to track the movement of the RNG via RINs assigned at the point
of injection as discussed in Section IX.D. This change will also
simplify the program while improving our ability to effectively oversee
it. In response to concerns on contract negotiation timing, we are
finalizing modifications to our proposed implementation date, as
discussed in Section IX.F.
---------------------------------------------------------------------------

    \268\ See ``Set Rule Log of Meetings,'' available in the docket
for this action.
---------------------------------------------------------------------------

    Based on our experience with CNG/LNG, and from stakeholders'
experience in California's LCFS program, we recognize that third
parties will likely serve a useful role in supporting regulated parties
in brokering and trading biogas, RNG, and biogas-derived renewable
fuel. We also believe that biogas producers, RNG producers, and RNG RIN
separators would likely contract with third parties to help them comply
with the proposed regulatory requirements by preparing and submitting
registration requests and periodic reports. Since our system for
registration and RIN generation allows third parties to assist the
regulated party in preparing to comply with the applicable regulatory
requirements (e.g., by helping to prepare reports, broker RIN
transactions, etc.), and we are not planning on changing this allowance
under this rule, we believe this should provide most of the
functionality the commenters requested.

D. Assignment, Separation, Retirement, and Expiration of RNG RINs

    EPA is finalizing revisions to the regulations to specify how
parties will assign, separate, and retire RINs generated for RNG. Under
the previous regulations, RINs were generated and immediately separated
after any party in the biogas disposition/generation chain demonstrated
that a specific amount of RNG was used as transportation fuel. Because
RINs were generated and simultaneously separated based on the same
event, the previous biogas provisions did not provide tracking of RNG
or renewable CNG/LNG in EMTS through RIN assignment and separation.
    We are finalizing as proposed that the RNG producer must assign any
and all RINs generated for a given volume of RNG to the same volume of
RNG at the point of injection, and the RINs must follow transfer of
title of that RNG until it is withdrawn from the same natural gas
commercial pipeline system.\269\ The purpose of this requirement is to
ensure that the RIN, as tracked through EMTS, follows the transfer of
title of the RNG as the RNG moves through the natural gas commercial
pipeline system.
---------------------------------------------------------------------------

    \269\ For purposes of this preamble, when we refer to the RNG
producer we are collectively referring to the party that produces
and injects the RNG into the natural gas commercial pipeline system
or imports the RNG into the covered location. Unless otherwise
specified, all proposed requirements as part of this proposal apply
to both RNG producers and RNG importers.
---------------------------------------------------------------------------

    Regarding RIN separation, we are finalizing with technical
modifications the proposal that only the party that demonstrates that
the RNG was used as transportation fuel will be eligible to separate
the RINs generated for the RNG from the RNG itself., This party is
defined as the RNG RIN separator. This party may either be the party
that withdrew the RNG from the natural gas commercial pipeline system
or the party that produced or oversaw the production of the renewable
CNG/LNG from the RNG. This is a different approach than the prior
regulations. Previously, the party that generates the RINs from a
volume of biogas separates any RINs generated for that biogas
immediately after the party has demonstrated that the biogas was
produced from renewable biomass under an EPA-approved pathway and used
as transportation fuel. Separation does not necessarily occur at the
end of the biogas distribution/generation chain, which necessitates
tracking via contractual relationships, as discussed above, and forgoes
any ability for EMTS to track the assigned RINs as the volumes of RNG
move through the natural gas commercial pipeline system. Our changes
will allow for RINs assigned to a given volume of RNG to be tracked via
EMTS as the RNG moves through the natural gas commercial pipeline
system from injection to withdrawal. Similarly, we are finalizing as
proposed the clarification that the provisions that require obligated
parties to separate assigned RINs when they take title to any assigned
RINs do not apply to RINs assigned to RNG. Allowing obligated parties
to separate assigned RINs for RNG would undermine the purpose of our
proposal to use RINs assigned to RNG in EMTS to track transfers of RNG.
    In the case of RNG used to produce renewable CNG/LNG, the party
that obtains the documentation needed to demonstrate that the RNG was
used to produce transportation fuel in the form of renewable CNG/LNG is
best positioned to separate the RIN. This is analogous to the
provisions that require parties blending denatured fuel ethanol into
gasoline to separate any assigned RINs for the denatured fuel ethanol
at fuel terminals (i.e., the point at which it is reasonable to assume
that the denatured fuel ethanol will be used as transportation
fuel).\270\ Similarly, once a party has turned RNG into renewable CNG
or renewable LNG, we can reasonably assume that the renewable CNG or
renewable LNG will be used as transportation fuel. We proposed that the
party that separates RNG RINs must have withdrawn the RNG from the
natural gas commercial pipeline system and produced renewable CNG/LNG
from that RNG, among other

requirements. We received comments that the party that withdraws the
RNG from the natural gas commercial pipeline system is not always the
same party that converts RNG into renewable CNG/LNG. We believe either
the party that withdraws the RNG from the natural gas commercial
pipeline system and produces renewable CNG/LNG from that RNG or the
party that converts RNG into renewable CNG/LNG could have sufficient
information to be positioned to demonstrate that the RNG is used as
transportation fuel, so we have finalized the regulations to allow
either party to separate RNG RINs.
---------------------------------------------------------------------------

    \270\ 40 CFR 80.1429.
---------------------------------------------------------------------------

    To address the potential issue of double counting an RNG RIN where
a party claims that the RNG is used both as renewable CNG/LNG and as a
different biogas-derived renewable fuel, we are finalizing as proposed
the requirement that parties that use RNG to produce a biogas-derived
renewable fuel other than renewable CNG/LNG will have to retire the
assigned RINs for the RNG used as a feedstock and then generate a
separate RIN using the procedures for RIN generation for the new
renewable fuel.
    RNG RINs will expire consistent with the current regulatory
requirements at 40 CFR 80.1428(c). Under 40 CFR 80.1428(c), any RIN
that is not used for compliance purposes for the year in which it was
generated, or for the following year, is considered an expired RIN, and
expired RINs are considered invalid RINs under 40 CFR 80.1431. What
this means for RNG RINs is that if no party separates an RNG RIN or
retires the RNG RIN to produce renewable fuel by the annual compliance
deadline for the compliance year following the year in which that RNG
RIN was generated, the RNG RIN will expire. For example, if a RIN is
generated for RNG injected into the natural gas commercial pipeline
system in 2024, then that RNG RIN will expire after the 2025 annual
compliance deadline. If no party separated the assigned RIN for the RNG
because no party was able to demonstrate that the RNG was used as
transportation fuel or as a feedstock, then the RNG RIN will expire and
no longer be usable for compliance purposes. We note that this approach
is consistent with existing regulations for how RIN expiration works
under the RFS program generally. We also note that that this provision
will allow for at least 15 months for any assigned RNG RIN to be
separated (i.e., a RIN generated and assigned in December of a
compliance year will have at least 15 months before it expires after
the subsequent compliance year's annual compliance deadline), and in
many cases much longer. We believe this to be sufficient time for
parties to demonstrate that the RNG with the assigned RINs was used as
transportation fuel and will help encourage parties to use RNG as
transportation fuel under the RFS before the RIN expires.
    Separating the RIN assignment and RIN separation roles provides
multiple benefits to both EPA and the regulated community. First, this
approach will significantly increase the ability for the title to RNG
to be tracked and overseen, because the transfer of title to RNG will
follow the assigned RIN and will be reported in EMTS. EPA and third
parties will be able to track the parties that transferred title to the
RNG and follow the movement of the RNG via the assigned RIN in EMTS, as
opposed to having to track a complex series of contractual
relationships between each and every party in the RNG distribution
system. This approach will also greatly simplify the auditing process
for both EPA and for third parties, allowing for increased program
oversight.
    Second, this approach allows us to streamline the registration,
reporting, and recordkeeping requirements for RNG and RNG RINs by
utilizing EMTS for tracking. This creates a number of efficiencies.
With regard to registration, it eliminates the need for parties to
submit contracts at registration, as discussed in Section IX.A. For
reporting, since the RNG and RNG RINs will be tracked in EMTS, we will
no longer require the reporting of affidavits and other documentation
concerning the transfer of RNG that we currently require to ensure that
the RIN generator has the information needed to demonstrate that a
specific volume of RNG was used as transportation fuel. For
recordkeeping, EMTS will electronically provide real-time data
concerning how a given volume of RNG is transferred and ultimately
used. This eliminates the need for the existing provisions that require
RIN generators to obtain documents from every party in the biogas
distribution/generation chain in the form of additional contracts,
affidavits, or real-time electronic data. These registration,
reporting, and recordkeeping requirements significantly streamline
program implementation for EPA and reduce the compliance burden on
regulated parties.
    Third, this mitigates the risk of counting a given volume of RNG
more than once because we are clearly specifying the point in the
process when RNG RINs must be generated (i.e., at the point where RNG
is injected into the natural gas commercial pipeline system) and the
point in the process when RNG RINs must be separated (i.e., when the
RNG is demonstrated to be used as a transportation fuel). Because the
RNG can only be injected into the natural gas commercial pipeline
system once and because an assigned RNG RIN can only be separated once,
this specificity virtually eliminates a party's ability to double count
the RNG at the point of injection or claim that a given quantity of RNG
was used for more than one purposes.

E. Structure of the Regulations

    Due to the comprehensive nature of the biogas regulatory reform
provisions, we are creating a stand-alone subpart rather than embed
them in the rest of the RFS regulatory requirements in 40 CFR part 80,
subpart M. Thus, we are finalizing as proposed the creation of a new
subpart for biogas-derived renewable fuels--subpart E in 40 CFR part
80. This new subpart includes provisions not only for biogas and RNG
used to produce renewable CNG/LNG, but also for other biogas-derived
renewable fuels including biogas cases where biogas is used as a
biointermediate and RNG is used as a feedstock. The provisions for
these fuels under subpart M are being copied into the new subpart E,
and the provisions within subpart M are being phased out as described
in Section IX.F.
    Based on our general approach adopted in the Fuels Regulatory
Streamlining Rule,\271\ we are structuring the new subpart for biogas-
derived renewable fuels as follows:
---------------------------------------------------------------------------

    \271\ See 85 FR 78415-78416 (December 4, 2020).
---------------------------------------------------------------------------

     Identify general provisions (e.g., implementation dates,
scope, applicability etc.).
     Articulate the general requirements that apply to parties
regulated under the subpart (e.g., biogas producers, RNG producers, and
RNG RIN separators).
     Articulate the specific compliance and enforcement
provisions for biogas-derived renewable fuels (e.g., registration,
reporting, and recordkeeping requirements).
    We believe that this subpart and structure will make the biogas-
derived renewable fuel provisions more accessible to all stakeholders,
help ensure compliance by making requirements more easily identifiable,
and help future participants in biogas-derived biofuels better
understand regulatory requirements in the future.

F. Implementation Date

    In response to extensive request from public comment to provide
more lead time for the implementation of the biogas regulatory reform
provisions, we

are finalizing more time than proposed for both new parties and
existing registrants to come into compliance with the biogas regulatory
reform provisions. Parties that are registered to generate RINs for
renewable CNG/LNG prior to July 1, 2024 will have until January 1, 2025
to come into compliance with the biogas regulatory reform provisions.
Parties registered July 1, 2024 or after will have to meet the biogas
regulatory reform provisions beginning July 1, 2024. On January 1,
2025, all parties must comply with the biogas regulatory reform
provisions and only biogas and RNG produced under the biogas regulatory
reform provisions are eligible for RIN generation. Below we discuss our
proposed timeline, the comments we received, and how we adjusted the
timeline based on the comments.
    Recognizing the need to provide a transition period for parties
that are already generating RINs for biogas under the prior provisions
to the biogas regulatory reforms, we proposed that all parties
operating under the previous biogas provisions would have to come into
compliance with the proposed biogas regulatory reform provisions by
January 1, 2024. We also proposed that parties that injected RNG into
the natural gas commercial pipeline system under the previous biogas
provisions prior to January 1, 2024 could use the RNG for the
generation of RINs under the previous biogas regulatory provisions
until January 1, 2025. We believed at the time that this was enough
time for parties to come into compliance with the proposed biogas
regulatory reform provisions and utilize for RIN generation the RNG
stored on the natural gas commercial pipeline system. We sought comment
on whether more time was needed for parties to transition to the
proposed biogas regulatory reform provisions.
    In response, we received significant public comment suggesting that
more time was needed by both parties already registered under the
previous biogas provisions and parties looking to register new
facilities under the biogas regulatory reform provisions. Commenters
suggested that the new testing and measurement requirements for biogas
and RNG could take considerable time for parties to install compliant
meters and arrange for independent third-party engineers to ensure that
such meters were installed consistent with the new regulatory
requirements. Commenters suggested that the implementation timeline
should also consider facilities that are not currently registered
because it can take years for an RNG project to be developed and many
new projects may need modification to comport with the new
requirements. Additionally, several commenters suggested that it would
take more than the approximately six months allotted for the
renegotiation of contracts with parties that produce, distribute, and
use RNG to align with the new requirements. Parties suggested that by
not providing enough lead time to comport with the measurement
requirements and to allow parties to renegotiate contracts, EPA would
strand a significant volume of RNG that would otherwise be eligible for
use as renewable CNG/LNG under the RFS program. Some commenters
suggested that EPA should provide an additional year over what was
proposed (i.e., a January 1, 2025 start date instead of the proposed
January 1, 2024 date), while others suggested EPA push the deadline to
January 1, 2026.
    In response to the requests for more time for existing registrants,
we are finalizing a start date of January 1, 2025, for facilities
registered under the previous biogas provisions by July 1, 2024. We
believe this extension should afford enough time for those facilities
to come into compliance with the new regulatory requirements. It would
in practice allow for almost a year and a half for parties to update
their facilities to comport with the new regulatory requirements,
update their registration information with EPA, and renegotiate their
contracts. This would also provide existing registrants enough time to
use any RNG stored on the natural gas commercial pipeline system before
the new RIN generation requirements for RNG begin on January 1, 2025.
    In response to the requests for more time for new registrations, we
are finalizing a start date of July 1, 2024, which affords new parties
enough time prepare to meet the new regulatory requirements for biogas
regulatory reform. Because these facilities are still preparing to come
into the RFS program, we believe that a full year is sufficient for
them to make adjustments to their facilities and contractual
relationships prior to registration. Furthermore, we must balance the
need to provide facilities that have planned to participate in the RFS
under the previous biogas provisions with our ability to implement and
oversee the program.
    We are finalizing as proposed that any RIN generators under the
previous biogas provisions must generate RINs for RNG stored in the
natural gas commercial pipeline system by January 1, 2025. As stated in
the proposal, we believe this is a sufficient amount of time to utilize
the amount of stored RNG as transportation fuel, and it is important to
begin the tracking in EMTS via the RIN of all RNG under the RFS program
as soon as practicable. A January 1, 2025 deadline may encourage
existing registrants to comply with the biogas regulatory reform
provisions prior to the deadline because the RNG produced under those
existing registrations may have difficulty using the RNG as
transportation fuel for RIN separation by the January 1, 2025 deadline.
    To ensure a smooth transition, we are requiring that existing
registrants submit registration updates comporting with the biogas
regulatory reform provisions no later than October 1, 2024. We
anticipate that 3 months is enough time for EPA to process the
registration requests of the existing registrants; however, we
encourage existing registrants to submit updates prior to the deadline
if able to ensure a smooth transition to the biogas regulatory reform
provisions. Existing RIN generators will be allowed to generate RINs
under the previous biogas regulatory reform provisions for biogas and
RNG used as transportation fuel prior to January 1, 2025.\272\ Any RINs
generated for biogas used as transportation fuel or RNG on or after
January 1, 2025 must adhere to the biogas regulatory reform provisions.
---------------------------------------------------------------------------

    \272\ We expect that RINs generated for biogas demonstrated to
be used in as transportation fuel by December 31, 2024, under the
previous biogas provisions will be generated by February 2025.
Typically, because the RIN generator must collect documentation from
various parties in the contractual chain to ensure that the biogas
or RNG was used as transportation fuel prior to RIN generation, RIN
generation can take around a month after the biogas or RNG was used
as transportation fuel.
---------------------------------------------------------------------------

    In addition to extending some of the deadlines, to further address
timing concerns raised by commenters related to the implementation of
this biogas regulatory reform, we are finalizing several changes based
on comments to the proposed provisions themselves which are designed to
allow for a smoother transition to the reformed biogas regulatory
provisions. These changes to what we proposed include, but are not
limited to, streamlining the registration process for existing
registered biogas and RNG production facilities by no longer requiring
certificates of analysis for biogas and RNG at initial registration, no
longer requiring at registration waivers from pipelines for RNG that
did not meet applicable pipeline specifications, and removing the
proposed emissions-related registration requirements. Also, as
discussed in Section IX.H.2, we are intending to update our reporting

systems to more readily accommodate the submission of reports to
streamline and modernize the submission of biogas and RNG-related
information under biogas regulatory reform.

G. Definitions

    We are finalizing with modifications the proposed definitions of
various regulated parties, their facilities, and the products related
to the production of biogas-derived renewable fuels. We are also
finalizing with modifications the proposed definitions of other terms
as necessary for clarity and consistency. We have modified the proposed
definitions related to biogas regulatory reform based on public
comments and describe those changes in more detail either below or in
the RTC document.
    We are also finalizing the proposal to move and consolidate all
defined terms for the RFS program from 40 CFR 80.1401 to 80.2. We are
doing this because we moved all of the non-RFS fuel quality
regulations, including the relevant definitions, from 40 CFR part 80 to
part 1090 as part of our Fuels Regulatory Streamlining Rule.\273\ As
such, it is no longer necessary to have separate definitions sections
for 40 CFR part 80, subpart M, as only requirements related to the RFS
program are housed in 40 CFR part 80. We are not changing the meaning
of the terms moved from 40 CFR 80.1401 to 80.2, but are simply
relocating them to consolidate the definitions that apply to RFS in a
single location. Because we have consolidated all definitions for the
RFS program into 40 CFR 80.2, any newly defined terms under this action
appear in 80.2.
---------------------------------------------------------------------------

    \273\ 85 FR 78417-78420 (December 4, 2020).
---------------------------------------------------------------------------

    For parties regulated under the biogas regulatory reform
provisions, we are finalizing several new terms to specify which
persons and parties are subject to the revised regulatory requirements
in a manner that is consistent with our approach under our other fuel
quality and RFS regulations. For example, a biogas producer is defined
as any person who owns, leases, operates, controls, or supervises a
biogas production facility, and a biogas production facility is any
facility where biogas is produced from renewable biomass that qualifies
under the RFS program. The same framework for applies to RNG producers.
    Under the previous RFS regulations, the term ``biogas'' is used to
refer to many things and its use may differ depending on context. In
some cases, we distinguish between raw biogas, i.e., biogas collected
at a landfill or through a digester that contains impurities and large
portions of inert gases, and pipeline-quality biogas which has many of
the impurities removed for distribution through a commercial pipeline.
Some stakeholders also use the pipeline-quality biogas term
interchangeably with renewable CNG or renewable LNG, which are
renewable fuels produced from biogas. To clarify our intent, we are
finalizing specific definitions for biogas-derived renewable fuel,
biogas, treated biogas, biomethane, and renewable natural gas (RNG).
    ``Biogas'' is often used to broadly mean any renewable fuel used in
the transportation sector that has its origins in biogas. However, in
the context of the RFS program, we have learned that it is necessary to
distinguish between these products. We are therefore finalizing a
definition of ``biogas-derived renewable fuel'' that includes renewable
CNG, renewable LNG, or any other renewable fuel that is produced from
biogas or its pipeline-quality derivative RNG now or in the future.
    We are defining biomethane as exclusively methane that is produced
from renewable biomass. We believe a separate definition for biomethane
is important because biomethane (exclusive of impurities and inert
gases often found with biomethane in biogas) is what RIN generation is
based on. In order to ensure the appropriate measurement of biomethane
for RIN generation for RNG, we issued guidance under the existing
regulations that cover cases where non-renewable components are added
to biogas, and we are codifying provisions based on that previously
issued guidance in this action.\274\ Biomethane is a component of
biogas, RNG, treated biogas, renewable CNG, and renewable LNG, all of
which, under the definitions being finalized in this action, must be
produced through anaerobic digestion of renewable biomass.
---------------------------------------------------------------------------

    \274\ See ``Guidance on Biogas Quality and RIN Generation when
Biogas is Injected into a Commercial Pipeline for use in Producing
Renewable CNG or LNG under the Renewable Fuel Standard Program.''
September 2016. EPA-420-B-16-075.
---------------------------------------------------------------------------

    We are defining biogas as a mixture including biomethane that is
produced from anaerobic digestion and may have undergone some
processing to remove water vapor, particles, and some trace gases, but
requires additional processing (such as removal of carbon dioxide,
oxygen, or nitrogen) to be suitable for use to produce a biogas-derived
renewable fuel. This new definition of biogas is intended to make it
explicit that biogas includes gas collected at landfills or through a
digester before that biogas is either upgraded to produce RNG or is
used to make a biogas-derived renewable fuel, which was intended but
not stated in the previous definition. Gas containing biomethane that
has undergone treatment to remove components such that it is suitable
for use to produce a biointermediate or biogas-derived renewable fuels
is no longer biogas and is either RNG or treated biogas, depending on
whether it meets pipeline specifications and is placed on a commercial
pipeline.
    To describe biogas-derived pipeline-quality gas, we proposed to
adopt a term now in common use--renewable natural gas, or RNG. Under
the proposed definition, in order to meet the definition of RNG, the
product would have to have met all of the following:
     The gas must be produced from biogas,
     The gas must contain at least 90 percent biomethane
content,
     The gas must meet the commercial distribution pipeline
specification submitted and accepted by EPA as part of registration,
and
     The gas must be designated for use to produce a biogas-
derived renewable fuel.
    We proposed that RNG must contain at least 90 percent biomethane
content because we believed this to be consistent with many commercial
pipeline specifications that we have seen submitted as part of existing
registration submissions for the biogas to renewable CNG/LNG pathways.
We received public comments stating that the proposed 90 percent
biomethane content limit was too stringent or unnecessary because of
how EPA proposed to define a batch of RNG. Some public commenters noted
that commercial pipeline specifications are typically specified in
methane (i.e., not specific to biomethane) and that often non-renewable
components are blended into RNG to meet pipeline specifications. The
public commenters highlighted that it would be energy intensive to
clean up biogas to meet a 90 percent biomethane threshold and that many
pipeline's methane content specifications are well below the proposed
level. Other public commenters noted that because of how EPA proposed
to measure RNG (i.e., direct measurement of biomethane using specified
meters) and to define a batch of RNG (i.e., by being the volume of
directly measured biomethane), such a limit was unnecessary and
confusing. Based on these comments, we are not finalizing the proposed
90 percent biomethane threshold in the definition of RNG.
    We are finalizing as proposed to define RNG such that it only meets
the

definition if the gas is designated for use to produce a biogas-derived
renewable fuel under the RFS program. We are finalizing this element of
the definition for consistency with the regulatory requirement that
such fuels be used only for transportation under the RFS consistent
with the Clean Air Act. This element is important to avoid the double-
counting of volumes of RNG that could be claimed as both a renewable
fuel under the RFS program and as a product for a non-transportation
use under a different federal or state program.
    EPA's previous biogas guidance explains that biogas injected onto
the commercial pipeline should meet the specific pipeline
specifications required by the commercial pipeline in order to qualify
as transportation fuel for RIN generation.\275\ Commenters noted that
our proposed definition excluded RNG that required addition of non-
renewable components. Based on these comments, we are modifying our
proposed definition of RNG to specify that RNG must not require removal
of components to be placed into a commercial pipeline. This definition
would not disqualify gas that requires addition of non-renewable
components in order to meet pipeline specifications. Since the
definition of RNG is based on pipeline specifications, registration
submissions for RNG must include these pipeline specifications to
demonstrate that the definition of RNG will be met.
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    \275\ See ``Guidance on Biogas Quality and RIN Generation when
Biogas is Injected into a Commercial Pipeline for use in Producing
Renewable CNG or LNG under the Renewable Fuel Standard Program.''
September 2016. EPA-420-B-16-075.
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    Treated biogas results from processing biogas similar to RNG, but,
unlike RNG, it is not intended to be placed on a commercial pipeline.
We have created different regulatory provisions for treated biogas and
RNG because we have different concerns regarding how to verify that
they are used as transportation fuel. Treated biogas is a separate term
from RNG to distinguish the different regulatory provisions.
    We have incorporated the use of these new definitions in both 40
CFR part 80, subpart E and 40 CFR part 80, subpart M where applicable.

H. Registration, Reporting, Product Transfer Documents, and
Recordkeeping

    We are finalizing with modifications the proposed compliance
provisions necessary to ensure that the production, distribution, and
use of biogas, RNG, and biogas-derived renewable fuels are consistent
with Clean Air Act requirements under the RFS program. These compliance
provisions include registration, reporting, PTDs, and recordkeeping
requirements. Each of these compliance provisions is discussed below.
1. Registration
    Under the RFS program, biointermediate and renewable fuel producers
are required to demonstrate at registration that their facilities can
produce the specified biointermediates and renewable fuels from
renewable biomass under an EPA-approved pathway. These producers
demonstrate that they are capable of making qualifying biointermediates
and renewable fuels by having an independent third-party engineer
conduct a site visit and prepare a report confirming the accuracy of
the producer's registration submission. These RFS registration
requirements serve as an important step to ensure that only
biointermediates and renewable fuels that can be demonstrated to meet
the Clean Air Act requirements for producing qualifying renewable fuels
are allowed into the program. We also require parties that transact
RINs to register in order for them to gain access to EPA systems where
RIN transactions are recorded and to submit required periodic reports,
which are necessary to ensure that we can track and verify the validity
of RINs.
    To that end, biogas producers, RNG producers, and RNG RIN
separators must register with EPA prior to participation in the RFS
program. Under these registration requirements, biogas producers, RNG
producers, and RNG RIN separators must submit information that
demonstrates that the facilities are capable of producing biogas, RNG,
or renewable CNG/LNG from renewable biomass under an EPA-approved
pathway. For biogas producers and RNG producers, this information must
include the feedstocks that the producer intends to use, the process
through which the feedstock is converted into biogas or RNG, and any
other information necessary for EPA to determine whether the biogas or
RNG, was produced in a manner consistent with Clean Air Act and EPA's
regulatory requirements. Such information is necessary to ensure that
biogas-derived renewable fuels are produced only from qualifying
biogas. Biogas producers and RNG producers must also establish a
baseline volume for their respective facilities at registration. This
baseline volume is intended to represent the production capacity of the
facility and serve as a check for EPA and third parties on the volumes
reported by a facility of biogas or RNG to help identify potential
fraud. Like biointermediate production and renewable fuel production
facilities, we are requiring that biogas production and RNG production
\276\ undergo a third-party engineering review as part of registration
to have an independent professional engineer verify at registration
that the facility is capable of producing biogas or RNG consistent with
Clean Air Act and EPA regulatory requirements. For RNG RIN separators,
we are requiring they submit a description of process and equipment
used to compress RNG into renewable CNG/LNG at registration and a list
of initial dispensing locations.
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    \276\ See 40 CFR 80.1450(b)(2).
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    We are also finalizing as proposed that biogas producers and RNG
producers associate with one another as part of their registrations. An
association is a process where two parties establish that they are
related for purposes of complying with regulatory requirements under
the RFS program. Such associations are needed to track the
relationships between the parties and to allow RIN generators the
ability to generate RINs in EMTS. For example, under the RFS QAP, RIN
generators must associate with QAP auditors in order to generate Q-RINs
in EMTS. Similarly, biointermediate producers and renewable fuel
producers must associate with one another in order for the renewable
fuel producer to generate RINs for renewable fuels produced from
biointermediates. These associations must be submitted via registration
because our registration system is currently set up to track these
kinds of relationships. Similarly, when biogas is used to produce a
biogas-derived renewable fuel or as a biointermediate in a biogas
closed distribution system, biogas producers and RIN generators must
also associate with one another at registration.
    It is important to note that under existing fuel quality
regulations at 40 CFR part 1090 and RFS regulations at 40 CFR part 80,
new registrants who require an annual attest engagement (see Section
IX.K.2) must identify a third-party auditor and associate with that
party via registration. To submit materials on behalf of the regulated
party, any third-party auditor who is not already registered must
register in accordance with existing requirements under 40 CFR parts
1090 and 80 using forms and procedures specified by EPA. For parties
required to complete an annual attest engagement under biogas
regulatory reform, the registration and association of third-party
auditors will

function the same because we did not propose and are not modifying the
existing requirement that all parties do so. We only highlight this
provision to aide affected stakeholder's understanding of how the
biogas regulatory reform will work and discuss related attest
engagement requirements in more detail in Section IX.K.2.
    We received several comments opposed to the requirement that biogas
producers directly register. Commenters discussed how this might
subject small parties to liability and regulatory burdens and suggested
that the QAP process effectively oversees the process. However, it is
important for parties that choose to produce biogas under the RFS
program to be held responsible for complying with the regulations,
because the biogas producer is the party best able to demonstrate that
the biogas was produced from renewable biomass under an EPA-approved
pathway. This is critical for EPA's oversight and enforcement
capabilities, and to ensure that fuels that are used to satisfy the
statutory volume requirements are actually qualifying renewable fuel.
The RFS QAP mainly provides oversight for the facilities registered
under the RFS and is not a substitute for holding biogas producers that
do not comply with the regulatory requirements liable. As discussed in
Section IX.C, we believe that third parties will continue to help
smaller entities participate in the RFS program as they currently do
for other renewable fuels.
2. Reporting
    Under the RFS program, we generally require reports from regulated
parties for the following reasons: (1) To monitor compliance with the
applicable RFS requirements; (2) To support the generation,
transaction, and use of RINs via EMTS; (3) To have accurate information
to inform EPA decisions; and (4) To promote public transparency. We
already have reporting requirements for renewable fuels, including for
renewable CNG/LNG, in 40 CFR 80.1451. We are establishing similar
reporting requirements for biogas producers, RNG producers, and RNG RIN
separators.
    For biogas producers, we are requiring monthly batch reports that
include the amount of raw biogas produced as well as the biomethane
content and energy for the biogas produced at each biogas production
facility. In these reports, biogas producers must also break down each
batch by its verification status, by its associated pathway information
(e.g., D code, feedstock, and designated use), and by the party
receiving the batch (e.g., RNG producer).\277\ The associated pathway
information includes how the biogas will be used (i.e., whether the
biogas would be used to make renewable CNG/LNG via a closed, private
pipeline system; RNG; or used as a biointermediate). This information
is necessary for EPA to ensure that the amount of biogas produced
corresponds to the biogas producer's registration information and
serves as the basis for RIN generation for biogas-derived renewable
fuels. This information is also important for the verification of RINs
under the RFS QAP and for annual attest audits.
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    \277\ Multiple commenters noted a difference in the preamble to
the NPRM and the proposed regulations regarding whether separate
batches should be generated by digester or by facility. We are
finalizing that batches should be generated by facility, as
discussed in RTC Section 10.5.
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    We intend to have biogas producers complete the monthly reporting
requirement by entering batch reports directly into EMTS and then
transferring each batch also in EMTS to a party that uses such biogas
to produce a biogas-derived renewable fuel, RNG, or a biointermediate.
Tracking the movement of biogas batches in EMTS between the biogas
producer and the parties that use such biogas to produce biogas-derived
renewable fuels, RNG, or as a biointermediate will improve the quality
of information, enable better information sharing between parties,
including third-party auditors, and define a structured reporting
process.
    For RNG producers, we are requiring quarterly reports to support
verification of the amount of RNG produced from qualifying biogas and
injected into the natural gas commercial pipeline system. RNG producers
must report the amount and energy content of biogas used to produce RNG
and the quantity of RNG that was produced and placed onto the natural
gas commercial pipeline system by verification status and associated
pathway. Similar to the biogas reports, these reporting requirements
are necessary to demonstrate the amount of RNG produced from qualifying
biogas and to describe the amount of RNG placed on the natural gas
commercial pipeline system, and to help track the associated pathways
and D-codes of the produced RNG. We note that these reports are
intended to replace the previous reporting requirements for renewable
CNG/LNG RIN generators.\278\ Under biogas regulatory reform, we will no
longer require that the contracts or affidavits were obtained from
parties in the biogas distribution/generation chain, since this
tracking will be done via EMTS. We believe this will greatly simplify
the quarterly reporting requirements related to RNG when compared to
the prior biogas to renewable CNG/LNG regulatory provisions.
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    \278\ RFS0601: Renewable Fuel Producer Supplemental report.
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    Similar to the reporting procedure for biogas producers, RNG
producers will generate RNG RINs in EMTS and transact them to parties
that use the RNG as a feedstock, for process heat, or to produce
renewable CNG/LNG. RNG producers would match the corresponding batch of
biogas to the batch of RNG through transactions in EMTS like how RINs
are currently transacted. This allows a batch of RNG to be directly
connected to a corresponding amount of biogas batches within the RNG
producer's EMTS holdings. This process ensures the batch information
has been properly reported and transferred between parties. The reports
will also serve as the basis for third-party verification and EPA
audits to help ensure the validity of RNG RINs.
    We are requiring that RNG RIN separators submit periodic reports
related to their RNG RIN separation activities. For RNG to renewable
CNG/LNG, these reports must denote which facilities/dispensers
converted RNG to renewable CNG/LNG, where the renewable CNG/LNG was
dispensed, and the amount of RNG that was converted to renewable CNG/
LNG and dispensed. This information is necessary to help demonstrate
that the RNG was converted to renewable CNG/LNG and used as
transportation fuel. These periodic reports also serve as the basis for
attest auditors and EPA to verify RNG RIN separation activities.
    RNG RIN separators must also submit additional information related
to the separation transaction in EMTS. Under the previous regulations,
we established a series of codes to identify the reason that a RIN is
separated, consistent with the regulatory requirements that allow for
RIN separation.\279\ To implement the requirements for biogas
regulatory reform, we are requiring that RNG RIN separators identify in
EMTS the reason they were separating an assigned RIN from RNG via new
separation codes; i.e., whether the RIN was separated from the RNG for
conversion to renewable CNG/LNG. These parties may only separate the
RIN from RNG after they have the documentation needed to demonstrate
that the RNG was used as transportation fuel in the form of renewable
CNG/LNG.\280\ These changes to EMTS will

help track the use of RNG under the RFS program, which we believe will
improve program oversight.
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    \279\ See 40 CFR 80.1429.
    \280\ Note, RIN separation transactions are reported in EMTS.
RNG RIN separators must report RIN separations consistent with the
regulatory requirements specified in 40 CFR 80.140(d) and 80.1452.
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3. Product Transfer Documents (PTDs)
    We are requiring product transfer documents (PTDs) for transfers of
title for biogas and RNG. We have historically used PTDs to create a
record trail that demonstrates the movement of product and information
between various parties, as a mechanism to designate and certify
regulated products as meeting EPA's regulatory requirements, and to
convey specific information to parties that take custody or title to
the product.\281\ PTDs are important for biogas regulatory reform as
they are necessary to document that qualifying biogas was transferred
between biogas producers and RNG producers. EPA and third parties also
review PTDs to help verify the RINs are validly generated.
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    \281\ The PTD requirements for RFS are described at 40 CFR
80.1453.
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    For biogas title transfers, we are requiring that PTDs include
information related to the transferer and transferee, the intended use
of the biogas, the amount of biogas being transferred, and the date
that title of the biogas was transferred. For RNG title transfers, we
are requiring that PTDs include the names and addresses of the
transferor and transferee, the transferor's and transferee's EPA
company registration numbers, the amount of RNG being transferred, and
the date of the transfer. Additionally, we are requiring that RNG
producers clearly designate on the PTDs that the RNG must be used as
transportation fuel. We note that the RIN PTD requirements at 40 CFR
80.1453(a) also apply to transfers of title for the RINs assigned to
the RNG. For cases when RNG is transferred prior to injection into the
natural gas commercial pipeline system (i.e., between the RNG
production facility and the injection point), we are also requiring
PTDs for transfer of RNG custody that indicate that the RNG must be
used for qualifying purpose. The purpose of requiring PTDs for custody
transfers prior to injection into the natural gas commercial pipeline
system is to create a paper trail so that third parties and EPA can
audit whether the RNG claimed as injected into the pipeline was in fact
injected into the natural gas commercial pipeline system. These
elements of the PTDs largely mirror the elements included on the
current PTD requirements for transfers of renewable fuels and
biointermediates under the current RFS program in 80.1453.
4. Recordkeeping
    We are finalizing as proposed recordkeeping requirements for biogas
producers, RNG producers, and RNG RIN separators. The purpose of
recordkeeping requirements under the RFS program is to allow
verification that the renewable fuels were produced from qualifying
renewable biomass, under an EPA-approved pathway, and that the
renewable fuel was used as transportation fuel, heating oil, or jet
fuel. These records serve as the basis for information submitted to EPA
as part of registration and reporting, as well as for the basis of
audits conducted by independent third parties and EPA.
    For biogas producers, we are requiring records that are already
required under the RFS for the production of renewable CNG/LNG from
biogas. These records include information needed to show that biogas
came from qualifying renewable biomass, copies of all registration
information including information related to third-party engineering
reviews, copies of all reports, and copies of any required testing and
measurement under the RFS program.
    For RNG producers, we are including recordkeeping requirements
consistent with other parties that produce renewable fuels under the
RFS program. Relevant to RNG production, RNG producers must maintain
records indicating how much biogas was received at their facility from
a registered biogas producer, records demonstrating how much biogas was