\72\ The statute directs EPA to lower the cellulosic biofuel
volume to the projected production level where that level falls
short of the statutory volume. Under API v. EPA, 706 F.3d 474, 479-
80 (D.C. Cir. 2013), we must project this production level with
neutral aim at accuracy, that is, make a technical determination
about the market's ability to produce cellulosic biofuels. By
contrast, the discretionary portion of the cellulosic waiver
authority does not explicitly require EPA to project the
availability of advanced biofuels, but instead confers broad
discretion on EPA. Moreover, while we have chosen to estimate
reasonably attainable and attainable volumes of advanced biofuel,
these volumes do not equate to projected production alone. Rather,
in exercising the discretionary portion of the cellulosic waiver
authority, we also consider a range of policy factors--such as
costs, greenhouse gas emissions, energy security, market
disruptions, etc., as described throughout this section.
---------------------------------------------------------------------------

    As in prior rulemakings, we begin by considering what volumes of
advanced biofuels are reasonably attainable. In ACE, the Court noted
that in assessing what volumes are ``reasonably attainable,'' EPA had
considered the availability of feedstocks, domestic production
capacity, imports, and market capacity to produce, distribute, and
consume renewable fuel.\73\ These considerations include both demand-
side and supply-side factors.\74\ We are proposing to take a similar
approach for 2020, with the added consideration of the possibility that
higher volume requirements would lead to ``feedstock switching'' or
diversion of advanced biofuels from use in other countries. We also
took these factors into account in setting the 2017, 2018, and 2019
volume requirements, and we continue to believe that they are
appropriate considerations under the broad discretion provided by the
cellulosic waiver authority. We are proposing to establish the advanced
biofuel volume requirement at a level that would seek to minimize such
feedstock/fuel diversions within the discretion available under the
cellulosic waiver authority.
---------------------------------------------------------------------------

    \73\ See ACE, 864 F.3d at 735-36.
    \74\ See id. at 730-35.
---------------------------------------------------------------------------

    Our individual assessments of reasonably attainable volumes of each
type of advanced biofuel reflect this approach. As discussed in further
detail in this section, we find that 60 million gallons of imported
advanced ethanol, 60 million gallons of other advanced biofuels, and
2.78 billion gallons of advanced biodiesel and renewable diesel are
reasonably attainable. Together with our projected volume of 540
million gallons of cellulosic biofuel, the sum of these volumes is 4.94
billion gallons, slightly less than the 5.04 billion gallons which is
the lowest advanced biofuel requirement that EPA can require under the
cellulosic waiver authority.
    Therefore, we also have considered whether the market can
nonetheless make available 5.04 billion gallons of advanced biofuel,
notwithstanding likely feedstock/fuel diversions. That is, we assess
whether 5.04 billion gallons is merely ``attainable,'' as opposed to
``reasonably attainable.'' In particular, we assess whether additional
volumes of advanced biodiesel and renewable diesel are attainable. We
conclude that 2.83 billion gallons of advanced biodiesel and renewable
diesel are attainable, notwithstanding potential feedstock/fuel
diversions. This quantity of advanced biodiesel and renewable diesel,
together with the cellulosic biofuel, sugarcane ethanol, and other
advanced biofuels described above, would enable the market to make

available 5.04 billion gallons of advanced biofuels.
1. Imported Sugarcane Ethanol
    The predominant available source of advanced biofuel other than
cellulosic biofuel and BBD has historically been imported sugarcane
ethanol. Imported sugarcane ethanol from Brazil is the predominant form
of imported ethanol and the only significant source of imported
advanced ethanol. In setting the 2019 standards, we estimated that 100
million gallons of imported sugarcane ethanol would be reasonably
attainable.\75\ This was based on a combination of data from recent
years demonstrating relatively low import volumes and older data
indicating that higher volumes were possible. We also noted the high
variability in ethanol import volumes in the past (including of
Brazilian sugarcane ethanol), increasing gasoline consumption in
Brazil, and variability in Brazilian production of sugar as reasons
that it would be inappropriate to assume that sugarcane ethanol imports
would reach the much higher levels suggested by some stakeholders.
---------------------------------------------------------------------------

    \75\ 83 FR 63704 (December 11, 2018).
---------------------------------------------------------------------------

    At the time of the 2019 standards final rule, we used available
data from a portion of 2018 to estimate that import volumes of
sugarcane ethanol were likely to fall significantly below the 200
million gallons we had assumed when we set the 2018 standards. Since
the 2019 final rule, new data reveals a continued trend of low imports.
Specifically, import data for all of 2018 is now available and
indicates that imports of sugarcane ethanol reached just 44 million
gallons.
[GRAPHIC] [TIFF OMITTED] TP29JY19.008

    While it is difficult to predict imports for 2020, we believe that
the most recent data suggests that it would be unreasonable to expect
more than 100 million gallons of sugarcane ethanol imports in 2020.
Moreover, the E10 blendwall, the existence of a recurring tax credit
for biodiesel with which it competes within the advanced biofuel
category, and the fact that imported sugarcane ethanol typically costs
more than corn ethanol create disincentives for increasing imports
above the levels in recent years.\76\ As a result of these factors and
the lower levels that have occurred in recent years, we believe it
would be appropriate to reduce the expected volume of imported
sugarcane ethanol below 100 million gallons. Imports of sugarcane
ethanol appear to have stabilized in the 2014-2018 timeframe in
comparison to previous years. The average for these years was 62
million gallons. Due to the difficulty in precisely projecting future
import volumes as described further below, we believe that a rounded
value of 60 million gallons would be more appropriate and thus we use
60 million gallons of imported sugarcane ethanol for the purposes of
projecting reasonably attainable volumes of advanced biofuel for 2020.
While we have not conducted an in-depth assessment of the volume of
sugarcane ethanol that could be imported into the U.S. without
diverting this fuel from other markets, we believe the volume of fuel
imported in previous years is a reasonable way to project the
reasonably attainable volume of sugarcane ethanol in 2020.
---------------------------------------------------------------------------

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

    We note that the future projection of imports of sugarcane ethanol
is inherently imprecise and that actual imports in 2020 could be lower
or higher than 60 million gallons. Factors that could affect import
volumes include uncertainty in the Brazilian political climate, weather
and harvests in Brazil, world ethanol demand and

prices, constraints associated with the E10 blendwall in the U.S., the
status of the biodiesel tax credit, world demand for and prices of
sugar, and the cost of sugarcane ethanol relative to that of corn
ethanol. After considering these factors, and in light of the high
degree of variability in historical imports of sugarcane ethanol, we
believe that 60 million gallons is reasonably attainable for 2020.\77\
---------------------------------------------------------------------------

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

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

                          Table IV.B.2-1--Historical Supply of Other Advanced Biofuels
                                      [Million ethanol-equivalent gallons]
----------------------------------------------------------------------------------------------------------------
                                                                                Domestic
                                      CNG/LNG       Heating oil       Naphtha         ethanol         Total a
----------------------------------------------------------------------------------------------------------------
2013............................              26               0               3              23              52
2014............................              20               0              18              26              64
2015............................               0               1              24              25              50
2016............................               0               2              26              27              55
2017............................               2               2              32              26              62
2018............................               1               3              31              25              60
----------------------------------------------------------------------------------------------------------------
\a\ Excludes consideration of D5 renewable diesel, as this category of renewable fuel is considered as part of
  BBD as discussed in Section IV.B.3.

    The significant decrease after 2014 in CNG/LNG from biogas as
advanced biofuel with a D code of 5 is due to the re-categorization in
2014 of landfill biogas from advanced (D code 5) to cellulosic (D code
3).\78\ Subsequently, total supply of these other advanced biofuels has
exhibited no consistent trend during 2015 to 2018. Based on this
historical record, we believe that 60 million gallons is reasonably
attainable in 2020.\79\ As with sugarcane ethanol, we have not
conducted an in-depth assessment of the volume of other advanced
biofuels that could be made available to the U.S. without diverting
this fuel from other markets. We believe the volume of fuel supplied in
previous years is a reasonable way to project the reasonably attainable
volume of sugarcane ethanol in 2020.
---------------------------------------------------------------------------

    \78\ 79 FR 42128 (July 18, 2014).
    \79\ The imprecision in projecting volumes of other advanced
biofuel has the same relative impact on our overall assessment of
the attainability of advanced biofuel as our consideration of
imports of sugarcane ethanol. Namely, even a significant deviation
in the actual availability of other advanced biofuel would likely
have negligible impact on the market's ability to meet the advanced
biofuel volumes.
---------------------------------------------------------------------------

    We recognize that the potential exists for additional volumes of
advanced biofuel from sources such as jet fuel, liquefied petroleum gas
(LPG), butanol, and liquefied natural gas (as distinct from CNG), as
well as non-cellulosic CNG from biogas produced in digesters. However,
since they have been produced, if at all, in only de minimis and
sporadic amounts in the past, we do not have a reasonable basis for
projecting substantial volumes from these sources in 2020.\80\
---------------------------------------------------------------------------

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

3. Biodiesel and Renewable Diesel
    Having projected the production volume of cellulosic biofuel, and
the reasonably attainable volumes of imported sugarcane ethanol and
``other'' advanced biofuels, we next assess the potential supply of
advanced biodiesel and renewable diesel. First, we calculate the amount
of advanced biodiesel and renewable diesel that would need to be
supplied to meet the advanced requirement were we to exercise our
maximum discretion under the cellulosic authority: 2.83 billion
gallons. This calculation, shown in Table IV.B.3-1, helps inform the
exercise of our waiver authorities. Second, we consider the historical
supply of these fuels and the impact of the biodiesel tax policy on
advanced biodiesel and renewable diesel use in the U.S. Next, we
consider factors that could potentially limit the supply of these fuels
including the production capacity of advanced biodiesel and renewable
diesel production facilities, the ability for the market to distribute
and use these fuels, the availability of feedstocks to produce these
fuels, and fuel imports and exports. Based on our projection of the
domestic growth in advanced biodiesel and renewable diesel feedstocks,
we project a reasonably attainable volume of 2.75 billion gallons of
advanced biodiesel and renewable diesel in 2020. Since this volume is
lower than the 2.83 billion gallons we calculated would need to be
supplied to meet the advanced requirement were we to exercise our
maximum discretion under the cellulosic authority, we finally consider
if additional supplies of advanced biodiesel and renewable diesel are
attainable. Ultimately, we conclude that a volume of at least 2.83
billion gallons of advanced biodiesel and renewable diesel is
attainable in 2020. We note that we have not attempted to determine the
maximum attainable volume of these fuels. While the maximum attainable
volume of advanced biodiesel and renewable diesel in 2020 is likely
greater than 2.83 billion gallons we do not believe it would be
appropriate to require a greater volume of these fuels due to the high
cost and the increased likelihood of adverse unintended impacts
associated with these fuels.
    Calculating the volume of advanced biodiesel and renewable diesel
that would be needed to meet the volume of advanced biofuel for 2020 is
an important benchmark to help inform EPA's consideration of our waiver
authorities. In situations where the reasonably attainable volume of
biodiesel and renewable diesel exceeds the volume of these fuels that
would be needed to meet the volume of advanced biofuel after reducing
the advanced biofuel volume by the same amount as

the cellulosic biofuel volume, as was the case in 2017 and 2018, EPA
may consider whether or not to allow additional volumes of these fuels
to backfill for missing cellulosic biofuel volumes. In situations where
the reasonably attainable volume of advanced biodiesel and renewable
diesel is less than the volume of these fuels that would be needed to
meet the volume of advanced biofuel after reducing the advanced biofuel
volume by the same amount as the cellulosic biofuel volume, EPA may
consider whether or not to use additional waiver authorities, to the
extent available, to make further reductions to the advanced biofuel
volume.

   Table IV.B.3-1--Determination of Volume of Biodiesel and Renewable
    Diesel Needed in 2020 To Achieve 5.04 Billion Gallons of Advanced
                                 Biofuel
          [Million ethanol-equivalent gallons except as noted]
------------------------------------------------------------------------

------------------------------------------------------------------------
Lowest 2020 advanced biofuel volume requirement                    5,040
 permitted using under the cellulosic waiver authority..
Cellulosic biofuel......................................             540
Imported sugarcane ethanol..............................              60
Other advanced..........................................              60
Calculated advanced biodiesel and renewable diesel           4,380/2,826
 needed (ethanol-equivalent gallons/physical gallons)
 \81\...................................................
------------------------------------------------------------------------

    Having calculated the volume of advanced biodiesel and renewable
diesel that would need to be supplied to meet the volume of advanced
biofuel for 2020 after reducing the advanced biofuel volume by the same
amount as the cellulosic biofuel volume, EPA next projected the
reasonably attainable volume of these fuels for 2020. With regard to
advanced biodiesel and renewable diesel, there are many different
factors that could potentially influence the reasonably attainable
volume of these fuels used as transportation fuel or heating oil in the
U.S. These factors include the availability of qualifying biodiesel and
renewable diesel feedstocks, the production capacity of biodiesel and
renewable diesel facilities (both in the U.S. and internationally), and
the availability of imported volumes of these fuels.\82\ A review of
the volumes of advanced biodiesel and renewable diesel used in previous
years is especially useful in projecting the potential for growth in
the production and use of such fuels, since for these fuels there are a
number of complex and inter-related factors beyond simply total
production capacity (including the availability of advanced feedstocks,
the expiration of the biodiesel tax credit, recent tariffs on biodiesel
from Argentina and Indonesia, and other market-based factors) that are
likely to affect the supply of advanced biodiesel and renewable diesel.
---------------------------------------------------------------------------

    \81\ To calculate the volume of advanced biodiesel and renewable
diesel that would generate the 4.38 billion RINs needed to meet the
advanced biofuel volume EPA divided the 4.38 billion RINs by 1.55.
1.55 is the approximate average (weighted by the volume of these
fuels expected to be produced in 2020) of the equivalence values for
biodiesel (generally 1.5) and renewable diesel (generally 1.7).
    \82\ Throughout this section we refer to advanced biodiesel and
renewable diesel as well as advanced biodiesel and renewable diesel
feedstocks. In this context, advanced biodiesel and renewable diesel
refer to any biodiesel or renewable diesel for which RINs can be
generated that satisfy an obligated party's advanced biofuel
obligation (i.e., D4 or D5 RINs). While cellulosic diesel (D7) also
contributed towards an obligated party's advanced biofuel
obligation, these fuels are discussed in Section III rather than in
this section. An advanced biodiesel or renewable feedstock refers to
any of the biodiesel, renewable diesel, jet fuel, and heating oil
feedstocks listed in Table 1 to 40 CFR 80.1426 or in petition
approvals issued pursuant to section 80.1416, that can be used to
produce fuel that qualifies for D4 or D5 RINs. These feedstocks
include, for example, soy bean oil; oil from annual cover crops; oil
from algae grown photosynthetically; biogenic waste oils/fats/
greases; non-food grade corn oil; camelina sativa oil; and canola/
rapeseed oil (See pathways F, G, and H of Table 1 to section
80.1426).
---------------------------------------------------------------------------

    In addition to a review of the volumes of advanced biodiesel and
renewable diesel used in previous years, we believe the likely growth
in production of feedstocks used to produce these fuels, as well as the
total projected available volumes of these feedstocks, are important
factors to consider. This is because while there are many factors that
could potentially limit the production and availability of these fuels,
the impacts of increasing production of advanced biodiesel and
renewable diesel on factors such as costs, energy security, and GHG
emissions are expected to vary depending on whether the feedstocks used
to produce these fuels are sourced from waste sources or by-products of
other industries (such as the production of livestock feed or ethanol
production),\83\ from the diversion of feedstocks from existing uses,
or whether they drive increased oilseed production, or from the
diversion of feedstocks from existing uses. The energy security and GHG
reduction value associated with the growth in the use of advanced
biofuels is greater when these fuels are produced from waste fats and
oils or feedstocks that are byproducts of other industries (such as
soybean oil from soybeans primarily grown as animal feed), rather than
from materials that represent a switching of existing advanced
feedstocks from other uses to renewable fuel production or the
diversion of advanced biodiesel and renewable diesel from foreign
markets. This is especially true if the parties that previously used
the advanced biofuel or feedstocks replace these oils with low cost
palm oil \84\ or petroleum-derived products, as we believe would likely
be the case in 2020.\85\ In this case the global production of advanced
biodiesel and renewable diesel would not increase, and the potential
benefits associated with increasing the diversity of the supply of
transportation fuel (energy security) \86\ and the production of
additional volumes of advanced biodiesel and renewable diesel (low GHG
sources of transportation fuel) would be reduced.
---------------------------------------------------------------------------

    \83\ Vegetable oils from oilseeds grown in the U.S. such as
soybeans and canola are generally by-products or secondary products
of the production of livestock feed. However, depending on the
relative value of protein meal and vegetable oil, as well as the
cost of production of oilseed crops, higher demand for vegetable oil
can lead to increased planting of oilseed crops. Vegetable oil is
the primary product of palm oil plantations, and demand for this oil
is the primary driver for increased planting of palm oil
plantations.
    \84\ For instance, see the draft GHG assessment of palm oil
biodiesel and renewable diesel at 77 FR 4300 (January 27, 2012).
    \85\ We believe palm or petroleum-derived products would likely
be used replace advanced biodiesel and renewable diesel diverted to
the U.S. as these products are currently the lowest cost sources.
    \86\ If qualifying vegetable oils that are diverted to produce
biodiesel and renewable diesel in the U.S. are replaced with
vegetable oil or petroleum products that would otherwise have been
used in the transportation fuel pool there would be no increase in
energy security. Conversely, if diverting vegetable oils to produce
biodiesel and renewable diesel results in the increased production
of vegetable oils or increased extraction of crude oil we would
expect some energy security benefits.
---------------------------------------------------------------------------

a. Historical Supply of Biodiesel and Renewable Diesel
    Before considering the projected growth in the production of
qualifying feedstocks that could be used to produce advanced biodiesel
and renewable diesel, as well as the total

volume of feedstocks that could be used to produce these fuels, it is
helpful to review the volumes of biodiesel and renewable diesel that
have been used in the U.S. in recent years. While historic data and
trends alone are insufficient to project the volumes of biodiesel and
renewable diesel that could be provided in future years, historic data
can serve as a useful reference in considering future volumes. Past
experience suggests that a high percentage of the biodiesel and
renewable diesel used in the U.S. (from both domestic production and
imports) qualifies as advanced biofuel.\87\ In previous years,
biodiesel and renewable diesel produced in the U.S. have been almost
exclusively advanced biofuel.\88\ Imports of advanced biodiesel
increased through 2016, but were lower in 2017 and 2018, as seen in
Table IV.B.2-1. Volumes of imported biodiesel and renewable diesel,
which include both advanced and conventional biodiesel and renewable
diesel, have varied significantly from year to year, as they are
impacted both by domestic and foreign policies, as well as many
economic factors.
---------------------------------------------------------------------------

    \87\ From 2011 through 2018 approximately 96 percent of all
biodiesel and renewable diesel supplied to the U.S. (including
domestically produced and imported biodiesel and renewable diesel)
qualified as advanced biodiesel and renewable diesel (14,214 million
gallons of the 14,869 million gallons) according to EMTS data.
    \88\ From 2011 through 2018 over 99.9 percent of all the
domestically produced biodiesel and renewable diesel supplied to the
U.S. qualified as advanced biodiesel and renewable diesel (12,268
million gallons of the 12,275 million gallons) according to EMTS
data.

                                                      Table IV.B.3-2--Advanced (D4 and D5) Biodiesel and Renewable Diesel From 2011 to 2018
                                                                                [Million gallons] \a\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       2011            2012            2013          2014 \b\        2015 \b\          2016            2017            2018
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic Biodiesel (Annual Change)..............................       967 (N/A)     1,014 (+47)    1,377 (+363)     1,303 (-74)     1,253 (-50)    1,633 (+380)     1,573 (-60)    1,844 (+271)
Domestic Renewable Diesel (Annual Change).......................        62 (N/A)        23 (-39)        98 (+75)       156 (+58)       175 (+19)       226 (+51)       258 (+32)       306 (+48)
Imported Biodiesel (Annual Change)..............................        44 (N/A)         40 (-4)      156 (+116)       130 (-26)      261 (+131)      562 (+301)      462 (-100)      173 (-289)
Imported Renewable Diesel (Annual Change).......................         0 (N/A)        28 (+28)      145 (+117)       129 (-16)        121 (-8)       170 (+49)       193 (+23)        185 (-8)
Exported Biodiesel and Renewable Diesel (Annual Change).........        48 (N/A)        68 (+20)        83 (+15)         89 (+6)         96 (+7)       135 (+39)       171 (+36)        163 (-8)
                                                                 -------------------------------------------------------------------------------------------------------------------------------
    Total \c\ (Annual Change)...................................     1,025 (N/A)     1,037 (+12)    1,693 (+656)     1,629 (-64)     1,714 (+85)    2,456 (+742)    2,315 (-141)     2,345 (+30)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ All data from EMTS. EPA reviewed all advanced biodiesel and renewable diesel RINs retired for reasons other than demonstrating compliance with the RFS standards and subtracted these RINs
  from the RIN generation totals for each category in the table above to calculate the volume in each year.
\b\ RFS required volumes for these years were not established until December 2015.
\c\ Total is equal to domestic production of biodiesel and renewable plus imported biodiesel and renewable diesel minus exports.

                                                       Table IV.B.3-3--Conventional (D6) Biodiesel and Renewable Diesel From 2011 to 2018
                                                                                [Million gallons] \a\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       2011            2012            2013          2014 \b\        2015 \b\          2016            2017            2018
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic Biodiesel (Annual Change)..............................         0 (N/A)          0 (+0)          6 (+6)          1 (-5)          0 (+0)          0 (+0)          0 (+0)          0 (+0)
Domestic Renewable Diesel (Annual Change).......................         0 (N/A)          0 (+0)          0 (+0)          0 (+0)          0 (+0)          0 (+0)          0 (+0)          0 (+0)
Imported Biodiesel (Annual Change)..............................         0 (N/A)          0 (+0)        31 (+31)        52 (+21)        74 (+22)       113 (+39)        0 (-113)          0 (+0)
Imported Renewable Diesel (Annual Change).......................         0 (N/A)          0 (+0)        53 (+53)         0 (-53)      106 (+106)        43 (-63)      144 (+101)       33 (-111)
Exported Biodiesel and Renewable Diesel (Annual Change).........         0 (N/A)          0 (+0)          0 (+0)          0 (+0)          0 (+0)          1 (+1)          0 (-1)          0 (+0)
                                                                 -------------------------------------------------------------------------------------------------------------------------------
    Total \c\ (Annual Change)...................................         0 (N/A)          0 (+0)        90 (+90)        53 (-37)      180 (+127)       155 (-25)       144 (-11)       33 (-111)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ All data from EMTS. EPA reviewed all conventional biodiesel and renewable diesel RINs retired for reasons other than demonstrating compliance with the RFS standards and subtracted these
  RINs from the RIN generation totals for each category in the table above to calculate the volume in each year.
\b\ RFS required volumes for these years were not established until December 2015.
\c\ Total is equal to domestic production of biodiesel and renewable plus imported biodiesel and renewable diesel minus exports.

    Since 2011, the year-over-year changes in the volume of advanced
biodiesel and renewable diesel used in the U.S. have varied greatly,
from a low of 141 million fewer gallons from 2016 to 2017 to a high of
742 million additional gallons from 2015 to 2016. These changes were
likely influenced by multiple factors such as the cost of biodiesel
feedstocks and petroleum diesel, the status of the biodiesel blenders
tax credit, growth in marketing of biodiesel at high volume truck stops
and centrally fueled fleet locations, demand for biodiesel and
renewable diesel in other countries, biofuel policies in both the U.S.
and foreign countries, and the volumes of renewable fuels (particularly
advanced biofuels) required by the RFS. This historical information
does not indicate that the maximum previously observed increase of 742
million gallons of advanced biodiesel and renewable diesel would be
reasonable to expect in 2019 or 2020, nor does it indicate that the low
(or negative) growth rates observed in other years would recur. Rather,
these data illustrate both the magnitude of the changes in advanced
biodiesel and renewable diesel in previous years and the significant
variability in these changes.

    The historic data indicates that the biodiesel tax policy in the
U.S. can have a significant impact on the volume of biodiesel and
renewable diesel used in the U.S. in any given year.\89\ While the
biodiesel blenders tax credit has applied in each year from 2010 to
2017, it has only been prospectively in effect during the calendar year
in 2011, 2013, and 2016, while other years it has been applied
retroactively. The biodiesel blenders tax credit expired at the end of
2009 and was re-instated in December 2010 to apply retroactively in
2010 and extend through the end of 2011. Similarly, after expiring at
the end of 2011, 2013, and 2014 the tax credit was re-instated in
January 2013 (for 2012 and 2013), December 2014 (for 2014), December
2015 (for 2015 and 2016), and February 2018 (for 2017). Each of the
years in which the biodiesel blenders tax credit was in effect during
the calendar year (2013 and 2016) resulted in significant increases in
the volume of advanced biodiesel and renewable diesel used in the U.S.
over the previous year (656 million gallons and 742 million gallons
respectively). However, following these large increases in 2013 and
2016, there was little to no growth in the use of advanced biodiesel
and renewable diesel in the following years: Only 21 million gallons
from 2013 to 2015, negative 141 million gallons from 2016 to 2017, and
30 million gallons from 2017 to 2018. This decrease from 2016 to 2017
occurred even though the required volume of advanced biofuel increased
from 3.61 in 2016 to 4.28 billion gallons in 2017. This pattern is
likely the result of both accelerated production and/or importation of
biodiesel and renewable diesel in the final few months of years during
which the tax credit was available to take advantage of the expiring
tax credit, as well as relatively lower volumes of biodiesel and
renewable diesel production and import in 2014, 2015, and 2017 than
would have occurred if the tax credit had been in place.\90\ The
availability of this tax credit also provides biodiesel and renewable
diesel with a competitive advantage relative to other advanced biofuels
that do not qualify for the tax credit.
---------------------------------------------------------------------------

    \89\ The status of the tax credit does not impact our assessment
of the reasonably attainable volume of advanced biodiesel and
renewable diesel in 2020 as our assessment is primarily based on
feedstock availability. The status of the tax credit may affect the
maximum attainable volume of these fuels, but our assessment
demonstrates that 2.83 billion gallons of advanced biodiesel and
renewable diesel is attainable whether or not the tax credit is
renewed prospectively (or retrospectively) for 2020.
    \90\ We also acknowledge that EPA not finalizing the required
volumes of renewable fuel under the RFS program for 2014 and 2015
until December 2015 likely affected the volume of advanced biodiesel
and renewable diesel supplied in these years. Further, the
preliminary tariffs on biodiesel imported from Argentina and
Indonesia announced in August 2017 likely negatively affected the
volume of biodiesel supplied in 2017 and 2018.
---------------------------------------------------------------------------

    Another important factor highlighted by the historic data is the
impact of the recently imposed tariffs imposed the U.S. on biodiesel
imported from Argentina and Indonesia. In December 2017 the U.S.
International Trade Commission adopted tariffs on biodiesel imported
from Argentina and Indonesia.\91\ According to data from EIA,\92\ no
biodiesel was imported from Argentina or Indonesia since September
2017, after a preliminary decision to impose tariffs on biodiesel
imported from these countries was announced in August 2017. As a result
of these tariffs, total imports of biodiesel into the U.S. were
significantly lower in 2018 than they had been in 2016 and 2017. The
decrease in imported biodiesel did not, however, result in a decrease
in the volume of advanced biodiesel and renewable diesel supplied to
the U.S. in 2018. Instead, higher domestic production of advanced
biodiesel and renewable diesel, in combination with lower exported
volumes of domestically produced biodiesel, resulted in an overall
increase in the volume of advanced biodiesel and renewable diesel
supplied in 2018.
---------------------------------------------------------------------------

    \91\ ``Biodiesel from Argentina and Indonesia Injures U.S.
Industry, says USITC,'' Available online at: https://www.usitc.gov/press_room/news_release/2017/er1205ll876.htm.
    \92\ See ``EIA Biomass-Based Diesel Import Data'' available in
docket EPA-HQ-OAR-2019-0136.
---------------------------------------------------------------------------

    The historical data suggests that the supply of advanced biodiesel
and renewable diesel could potentially increase from the projected 2.35
billion gallons in 2018 to 2.83 billion gallons in 2020 (the projected
volume needed to meet the advanced biofuel volume for 2020 after
reducing the statutory advanced biofuel volume by the same amount as
the cellulosic biofuel reduction). This would represent an average
annual increase of approximately 240 million gallons from 2018 to 2020.
These increases are very similar to the average increase in the volume
of advanced biodiesel and renewable diesel used in the U.S. from 2011
through 2018 (190 million gallons per year) and significantly less than
the highest annual increase during this time (742 million gallons from
2015 to 2016).
b. Assessment of Qualifying Feedstocks for Biodiesel and Renewable
Diesel
    After reviewing the historical volume of advanced biodiesel and
renewable diesel used in the U.S. and considering the possible impact
of the expiration of the biodiesel tax credit (discussed in Section
IV.B.3.a), EPA next considers other factors that may impact the
production, import, and use of advanced biodiesel and renewable diesel
in 2020. The production capacity of registered advanced biodiesel and
renewable diesel production facilities is highly unlikely to limit the
production of these fuels, as the total production capacity for
biodiesel and renewable diesel at registered facilities in the U.S.
(4.1 billion gallons) exceeds the volume of these fuels that are
projected to be needed to meet the advanced biofuel volume for 2020
after exercising the cellulosic waiver authority (2.83 billion
gallons).\93\ Significant registered production also exists
internationally. Similarly, the ability for the market to distribute
and use advanced biodiesel and renewable diesel appears unlikely
constrain the growth of these fuels to a volume lower than 2.83 billion
gallons. The investments required to distribute and use this volume of
biodiesel and renewable diesel are expected to be manageable by the
marketplace given the RIN value incentive, as this volume is less than
400 million gallons greater than the volume of biodiesel and renewable
diesel produced, imported, and used in the U.S. in 2018.
---------------------------------------------------------------------------

    \93\ The production capacity of the sub-set of biodiesel and
renewable diesel producers that generated RINs in 2018 is
approximately 2.9 billion gallons. See ``Biodiesel and Renewable
Diesel Registered Capacity (March 2019)'' Memorandum from Dallas
Burkholder to EPA Docket EPA-HQ-OAR-2019-0136.
---------------------------------------------------------------------------

    Conversely, the availability of advanced feedstocks that can be
used to produce advanced biodiesel and renewable diesel, as well as the
availability of imported advanced biodiesel and renewable diesel, may
be limited in 2020. We acknowledge that an increase in the required use
of advanced biodiesel and renewable diesel could be realized through a
diversion of advanced feedstocks from other uses, or a diversion of
advanced biodiesel and renewable diesel from existing markets in other
countries. Furthermore, the volume of advanced biodiesel and renewable
diesel and their corresponding feedstocks projected to be produced
globally exceeds the volume projected to be required in 2020 (2.83
billion gallons of advanced biodiesel and renewable diesel and the
corresponding volume of advanced feedstocks) by a significant
margin.\94\ In

addition, actions unrelated to the RFS program, such as recent tariffs
on soybeans exported to China, could result in increased supplies of
domestic biodiesel feedstocks.\95\ However, we expect that further
increases in advanced biofuel and renewable fuel volumes would be
increasingly likely to incur adverse unintended impacts.
---------------------------------------------------------------------------

    \94\ The March 2019 WASDE projects production of vegetable oils
in 2018/2019 in the World to be 203.93 million metric tons. This
quantity of vegetable oil would be sufficient to produce
approximately 58.3 billion gallons of biodiesel and renewable
diesel. Global production of biodiesel is projected to be 39.0
billion liters (10.3 billion gallons) in 2019 according to the July
2018 OECD-FAO Agricultural Outlook. Based on the projected
production of biodiesel by country we estimate that approximately
85% of this biodiesel (all biodiesel except that produced in
Columbia, Indonesia, Malaysia, and Thailand) could qualify as
advanced biofuel if the feedstocks meet the definition of renewable
biomass.
    \95\ The potential impacts of this tariff on the availability of
biodiesel feedstocks is discussed in our discussion of available
vegetable oils in Section IV.B.3.c.
---------------------------------------------------------------------------

    We perceive the net benefits to be lower both because of the
potential disruption of the current biogenic fats, oils, and greases
market, the associated cost impacts to other industries resulting from
feedstock switching, and the potential adverse effect on lifecycle GHG
emissions associated with feedstocks for biofuel production that would
have been used for other purposes and which must then be backfilled
with other feedstocks. Similarly, increasing the supply of biodiesel
and renewable diesel to the U.S. by diverting fuel that would otherwise
have been used in other countries results in higher lifecycle GHG
emissions than if the supply of these fuels was increased by an
increased collection of waste fats and oils or increased production of
feedstocks that are byproducts of other industries, especially if this
diversion results in increased consumption of petroleum fuels in the
countries that would have otherwise consumed the biodiesel or renewable
diesel. By focusing our assessment on the expected growth in the
production of advanced feedstocks (rather than the total supply of
these feedstocks in 2020, which would include feedstocks currently
being used for non-biofuel purposes), we are attempting to minimize the
incentives for the RFS program to increase the supply of advanced
biodiesel and renewable diesel through feedstock switching or diverting
biodiesel and renewable diesel from foreign markets to the U.S.
    Advanced biodiesel and renewable diesel feedstocks include both
waste oils, fats, and greases; and oils from planted crops. The
projected growth in these feedstocks is expected to be modest relative
to the volume of these feedstocks that are currently being used to
produce biodiesel and renewable diesel. Most of the waste oils, fats,
and greases that can be recovered economically are already being
recovered and used in biodiesel and renewable diesel production or for
other purposes. The availability of animal fats will likely increase
with beef, pork, and poultry production. Most of the vegetable oil used
to produce advanced biodiesel and renewable diesel that is sourced from
planted crops comes from crops primarily grown for purposes other than
providing feedstocks for biodiesel and renewable diesel, such as for
livestock feed, with the oil that is used as feedstock for renewable
fuel production a co-product or by-product.\96\ This is true for
soybeans and corn, which are the two largest sources of feedstock from
planted crops used for biodiesel production in the U.S.\97\ We do not
believe that the increased demand for soybean oil or corn oil caused by
a higher 2020 advanced biofuel standard would result in an increase in
soybean or corn prices large enough to induce significant changes in
agricultural activity.\98\ However, we acknowledge that production of
these feedstocks is likely to increase as crop yields, oil extraction
rates, and demand for the primary products increase in 2020.
---------------------------------------------------------------------------

    \96\ For example, corn oil is a co-product of corn grown
primarily for feed or ethanol production, while soy and canola are
primarily grown as livestock feed.
    \97\ According to EIA data 7,542 million pounds of soy bean oil
and 2,085 million pounds of corn oil were used to produce biodiesel
in the U.S. in 2018. Other significant sources of feedstock were
yellow grease (1,668 million pounds), canola oil (total volume
withheld, but monthly data suggests greater than 700 million
pounds), and white grease (618 million pounds). Numbers from EIA's
April 2019 Monthly Biodiesel Production Report (With data for
February 2019).
    \98\ This position is supported by several commenters, including
the South Dakota Soybean Association (EPA-HQ-OAR-2018-0167-0389),
the International Council on Clean Transportation (EPA-HQ-OAR-2018-
0167-0531), and the Union of Concerned Scientists (EPA-HQ-OAR-2018-
0167-0535).
---------------------------------------------------------------------------

    We believe the most reliable source for projecting the expected
increase in vegetable oils in the U.S. is USDA's World Agricultural
Supply and Demand Estimates (WASDE). At the time of our assessment for
this proposed rule, the most current version of the WASDE report
(February 2019) only projects domestic vegetable oil production through
2018/2019. Based on domestic vegetable oil production from 2010/2011
through 2018/2019 as reported by WASDE, the average annual increase in
vegetable oil production in the U.S. was 0.34 million metric tons per
year.\99\ Assuming a similar increase in domestic vegetable oil
production from 2018/2019 to 2019/2020, this additional quantity of
vegetable oils could be used to produce approximately 97 million
additional gallons of advanced biodiesel or renewable diesel in 2020
relative to 2018.\100\
---------------------------------------------------------------------------

    \99\ According ot the February 2019 WASDE report, U.S. vegetable
oil production in the 2018/2019 agricultural marketing year is
projected to be 12.48 million metric tons. According to the January
2013 WASDE report, U.S. vegetable oil production in the 2010/2011
agricultural marketing year was 9.76 million metric tons.
    \100\ To calculate this volume, we have used a conversion of 7.7
pounds of feedstock per gallon of biodiesel or renewable diesel.
This is based on the expected conversion of soybean oil (http://extension.missouri.edu/p/G1990), which is the largest source of
feedstock used to produce advanced biodiesel and renewable diesel.
Conversion rates for other types of vegetable oils used to produce
biodiesel and renewable diesel are similar to those for soybean oil.
---------------------------------------------------------------------------

    In the 2019 final rule we also noted that the WASDE projected a
decrease in trade of both oilseeds and vegetable oils. This projected
decrease in oilseed trade is likely due to tariffs enacted by China on
soybean exports from the U.S. As noted in the 2019 final rule, the
duration and ultimate impacts of these tariffs on total exports of U.S.
soybeans are highly uncertain. As in the 2019 final rule, we did not
include the potential biodiesel or renewable diesel that could
theoretically be produced from the oilseeds and vegetable oil projected
to remain in the U.S. due to reduced trade of these products in our
projection of the reasonably attainable volumes. This is because any
biodiesel and renewable diesel produced from soybeans previously
exported to China are necessarily diverted from other uses (even if the
reason for this diversion is the tariffs, rather than the RFS program),
and biodiesel produced from these diverted feedstocks is therefore more
likely to have the adverse unintended effects as previously discussed.
    In addition to virgin vegetable oils, we also expect increasing
volumes of distillers corn oil \101\ to be available for use in 2020.
The WASDE report does not project distillers corn oil production, so
EPA must use an alternative source to project the growth in the
production of this feedstock. For this proposed rule we use results
from the World Agricultural Economic and Environmental Services (WAEES)
model to project the growth in the production of distillers corn
oil.\102\ In assessing the

likely increase in the availability of distillers corn oil from 2019 to
2020, the authors of the WAEES model considered the effects of an
increasing adoption rate of distillers corn oil extraction technologies
at domestic ethanol production facilities, as well as increased corn
oil extraction rates enabled by advances in this technology. The WAEES
model projects that production of distillers corn oil will increase by
approximately 120 million pounds from the 2018/2019 to the 2019/2020
agricultural marketing year. This quantity of feedstock could be used
to produce approximately 15 million gallons of biodiesel or renewable
diesel. We believe it is reasonable to use these estimates from the
WAEES model for these purposes based on the projected increase in the
use of corn oil extraction and corn oil yield increases.
---------------------------------------------------------------------------

    \101\ Distillers corn oil is non-food grade corn oil produced by
ethanol production facilities.
    \102\ For the purposes of this rule, EPA relied on WAEES
modeling results submitted as comments by the National Biodiesel
Board on the 2019 proposed rule (Kruse, J., ``Implications of an
Alternative Advanced and Biomass Based Diesel Volume Obligation for
Global Agriculture and Biofuels,'' August 13, 2018, World
Agricultural Economic and Environmental Services (WAEES)).
---------------------------------------------------------------------------

    While much of the increase in advanced biodiesel and renewable
diesel feedstocks produced in the U.S. from 2019 to 2020 is expected to
come from virgin vegetable oils and distillers corn oil, increases in
the supply of other sources of advanced biodiesel and renewable diesel
feedstocks, such as biogenic waste oils, fats, and greases, may also
occur. The WAEES model projects an increase of only 14 million gallons
in the volume of biodiesel produced from feedstocks other than soybean
oil, canola oil, and distillers corn oil from 2019 to 2020.\103\
Conversely, an assessment conducted by LMC in 2017 and submitted in
comments on our 2018 proposed rule projected that the waste oil supply
in the U.S. could increase by approximately 2.4 million metric tons
from 2016 to 2022.\104\ This estimate represents a growth rate of
approximately 0.4 billion tons per year, or enough feedstock to produce
approximately 115 million gallons of biodiesel and renewable diesel per
year. This estimate, however, only accounts for potential sources of
feedstock and not for the economic viability of recovering waste oils.
---------------------------------------------------------------------------

    \103\ Kruse, J., ``Implications of an Alternative Advanced and
Biomass Based Diesel Volume Obligation for Global Agriculture and
Biofuels,'' August 13, 2018, World Agricultural Economic and
Environmental Services.
    \104\ LMC International. Global Waste Grease Supply. August 2017
(EPA-HQ-OAR-2017-0091-3880).
---------------------------------------------------------------------------

    In the proposal we are not simply using the results from the WAEES
model to project increases in the use of biogenic waste fats, oils, and
greases (FOG), but have conducted our own analysis. To project the
likely increase in the use of biogenic FOG we used historical data to
determine the increase in the use of these feedstocks to produce
biodiesel and renewable diesel. From 2015-2017 biodiesel and renewable
diesel produced from biogenic FOG increased by an average of 32 million
gallons per year.\105\ This annual increase is higher than the increase
in the use of these feedstocks projected by the WAEES model, but lower
than the potential increase projected by LMC. We have included an
additional 32 million gallons of advanced biodiesel and renewable
diesel from FOG in our assessment of the reasonably attainable volume
for 2020, consistent with the observed annual increase in advanced
biodiesel and renewable diesel produced from these feedstocks in recent
years.
---------------------------------------------------------------------------

    \105\ ``Projections of FOG biodiesel and renewable diesel,''
memorandum from David Korotney to EPA Docket, EPA-HQ-OAR-2019-0136.
---------------------------------------------------------------------------

    In total, we expect that increases in feedstocks produced in the
U.S. are sufficient to produce approximately 144 million more gallons
of advanced biodiesel and renewable diesel in 2020 relative to 2019.
This number includes 97 million gallons from increased vegetable oil
production, 15 million gallons from increased corn oil production, and
32 million gallons from increased waste oil collection. This number
does not include additional volumes related to decreases in exported
volumes of soybeans or soybean oil to China as a result of tariffs.
Decreased exports of soybeans and soybean oil represent feedstocks
diverted from use in other countries, while any additional in the
collection of waste oils is highly uncertain. Our projection also does
not consider factors which could potentially decrease the availability
of advanced biofuel feedstocks that could be used to produce biodiesel
or renewable diesel, such as an increase in the volume of vegetable
oils used in food markets or other non-biofuel industries. In our 2019
final rule, we determined that 2.61 billion gallons of advanced
biodiesel and renewable diesel were reasonably attainable in 2019,\106\
therefore our projection of the reasonably attainable volume of
advanced biodiesel and renewable diesel in 2020 is 2.75 billion
gallons.
---------------------------------------------------------------------------

    \106\ 83 FR 63704 (December 11, 2018).
---------------------------------------------------------------------------

    EPA's projections of the growth of advanced feedstocks does not,
however, suggest that the total supply of advanced biodiesel and
renewable diesel to the U.S. in 2020 will be limited to 2.78 billion
gallons. Rather, this is the volume of these fuels that we project
could be supplied while seeking to minimize diversions of advanced
feedstocks or biofuels from existing uses. The March 2019 WASDE
projects that production of vegetable oil in the U.S. in the 2018/2019
market year will be sufficient to produce approximately 3.6 billion
gallons of biodiesel and renewable diesel (including both advanced and
conventional biofuels) if the entire volume of vegetable oil was used
to produce these fuels. Additional advanced biodiesel and renewable
diesel could be produced from waste fats, oils, and greases. The global
production of vegetable oil projected in the 2018/2019 marketing year
would be sufficient to produce approximately 58.0 billion gallons of
biodiesel and renewable diesel (including both advanced and
conventional biofuels).\107\ While it would not be reasonable to assume
that all, or even a significant portion, of global vegetable oil
production could be available to produce biodiesel or renewable diesel
supplied to the U.S. for a number of reasons,\108\ the large global
supply of vegetable oil indicates that 2.83 billion gallons of advanced
biodiesel and renewable diesel is attainable in 2019. Reaching this
level, however, may result in the diversion of advanced feedstocks
currently used in other markets and/or the import of biodiesel and
renewable diesel from these feedstocks.
---------------------------------------------------------------------------

    \107\ The March 2019 WASDE projects production of vegetable oils
in 2018/19 in the U.S. and the World to be 12.54 and 203.93 million
metric tons respectively. To convert projected vegetable oil
production to potential biodiesel and renewable diesel production we
have used a conversion of 7.7 pounds of feedstock per gallon of
biodiesel or renewable diesel.
    \108\ These reasons include the demand for vegetable oil in the
food, feed, and industrial markets both domestically and globally;
constraints related to the production, import, distribution, and use
of significantly higher volumes of biodiesel and renewable diesel;
and the fact that biodiesel and renewable diesel produced from much
of the vegetable oil available globally would not qualify as an
advanced biofuel under the RFS program.
---------------------------------------------------------------------------

    Further, the attainable volume of advanced biodiesel and renewable
diesel to the U.S. in 2020 could be increased by approximately 163
million gallons if all of the exported volumes of these fuels were used
domestically. Diverting this fuel to markets in the U.S. may be
complicated, however, as doing so would likely require higher prices
for these fuels in the U.S. to divert the fuels from foreign markets
that are presumably more profitable currently. It may also be more
difficult and costly to distribute this additional volume of biodiesel
and renewable diesel to domestic markets than the current foreign
markets. Finally, reducing advanced biodiesel and renewable diesel
exports may indirectly result in the decreased availability of imported

volumes of these fuels, as other countries seek to replace volumes
previously imported from the U.S.
c. Biodiesel and Renewable Diesel Imports and Exports
    EPA next considered potential changes in the imports of advanced
biodiesel and renewable diesel produced in other countries. In previous
years, significant volumes of foreign produced advanced biodiesel and
renewable diesel have been supplied to markets in the U.S. (see Table
IV.B.2-1). These significant imports were likely the result of a strong
U.S. demand for advanced biodiesel and renewable diesel, supported by
the RFS standards, the low carbon fuel standard (LCFS) in California,
the biodiesel blenders tax credit, and the opportunity for imported
biodiesel and renewable diesel to realize these incentives. We have not
included the potential for increased (or decreased) volumes of imported
advanced biodiesel and renewable diesel in our projection of the
reasonably attainable volume for 2020. There is a far higher degree of
uncertainty related to the availability and production of advanced
biodiesel and renewable diesel in foreign countries, as this supply can
be impacted by a number of unpredictable factors such as the imposition
of tariffs and increased incentives for the use of these fuels in other
countries (such as tax incentives or blend mandates). EPA also lacks
the data necessary to determine the quantity of these fuels that would
otherwise be produced and used in other countries, and thus the degree
to which the RFS standards are simply diverting this fuel from use in
other countries as opposed to incentivizing additional production.
    In addition to EPA's assessment of the market's ability to produce,
import, distribute, and use the 2.83 billion gallons of advanced
biodiesel and renewable diesel projected to be used in 2020 to meet the
advanced biofuel volume requirement, EPA compared the projected
increase in these fuels to the increases observed in recent years. A
projected increase comparable to past increases further confirms that
the volume is attainable. Domestic production of advanced biodiesel and
renewable diesel, which averaged approximately 1.85 billion gallons in
2016 and 2017, increased to approximately 2.15 billion gallons in 2018.
Of this total, approximately 163 million gallons of domestically
produced biodiesel and renewable diesel was exported in 2018. If
imported biodiesel and renewable diesel volumes remain constant at
approximately 350 million gallons per year (the total volume of
advanced biodiesel and renewable diesel imported in 2018) domestic
production would need to increase by approximately 240 million gallons
annually in 2019 and 2020 to reach a total advanced biodiesel and
renewable diesel supply of 2.83 billion gallons by 2020.\109\ This
growth is attainable, as it is only slightly higher than the average
annual increase in the domestic production of advanced biodiesel and
renewable diesel from 2011 to 2018 (approximately 160 million gallons),
and lower than the rate of growth observed from 2017 to 2018
(approximately 320 million gallons) and in previous years (for example
the increase of 443 million gallons from 2012 to 2013 or the increase
of 431 million gallons from 2015 to 2016). We note, however, that using
this volume of advanced biodiesel and renewable diesel in the U.S. may
result in the diversion of advanced biodiesel and renewable diesel and/
or feedstocks used to produce these fuels, as what is currently
exported may instead be used in the U.S. and alternative sources would
be needed to replace these volumes.
---------------------------------------------------------------------------

    \109\ This estimate assumes that the U.S. continues to export
approximately 100 million gallons of biodiesel per year in 2020.
Alternatively, if the U.S. consumes all domestically produced
biodiesel and renewable diesel, rather than exporting any of this
fuel, domestic production of advanced biodiesel and renewable diesel
would have to increase by approximately 150 million gallons annually
in 2019 and 2020.
---------------------------------------------------------------------------

d. Attainable Volume of Advanced Biodiesel and Renewable Diesel
    After a careful consideration of the factors discussed above, EPA
has determined that the 2.83 billion gallons of advanced biodiesel and
renewable diesel projected to be needed to satisfy the implied
statutory volume for non-cellulosic advanced biofuel in 2020 (4.5
billion gallons) are attainable. The total production capacity of
registered biodiesel and renewable diesel producers is significantly
higher than 2.83 billion gallons, even if only those facilities that
generated RINs for advanced biodiesel and renewable diesel in 2018 are
considered (2.9 billion gallons). This volume (2.83 billion gallons) is
only 200 million gallons higher than the total volume of biodiesel and
renewable diesel supplied in 2016 (approximately 2.6 billion gallons),
strongly suggesting that production capacity and the ability to
distribute and use biodiesel and renewable diesel will not limit the
supply of advanced biodiesel and renewable diesel to a volume below
2.83 billion gallons in 2020. Sufficient feedstocks are expected to be
available to produce this volume of advanced biodiesel and renewable
diesel in 2020. However, doing so may result in some level of diversion
of advanced feedstocks and/or advanced biodiesel and renewable diesel
from existing uses. Finally, the increase in the production and import
of advanced biodiesel and renewable diesel projected from 2018 to 2020
to supply a volume of 2.83 billion gallons in 2020 is comparable to (or
has been exceeded) by the increases observed in the past. While we do
not believe it will be necessary, in the event that the supply of
advanced biodiesel and renewable diesel falls short of the projected
2.83 billion gallons in 2020, obligated parties could rely on the
available supply of carryover advanced RINs projected to be available
in 2020 (See Section II.B for a further discussion of carryover RINs).

C. Volume Requirement for Advanced Biofuel

    In exercising the cellulosic waiver authority for 2017 and earlier,
we determined it was appropriate to require a partial backfilling of
missing cellulosic volumes with volumes of non-cellulosic advanced
biofuel we determined to be reasonably attainable, notwithstanding the
increase in costs associated with those decisions.\110\ For the 2018
standards, in contrast, we placed a greater emphasis on cost
considerations in the context of balancing the various considerations,
ultimately concluding that the applicable volume requirement should be
based on the maximum reduction permitted under the cellulosic waiver
authority. In the 2019 standards final rule, we also concluded that it
would be appropriate to exercise the maximum reduction permitted under
the cellulosic waiver authority to set the advanced biofuel volume
requirement at 4.92 billion gallons. We did this based on similar cost
considerations as for 2018, as well as a shortfall in the reasonably
attainable volume of advanced biofuels. We acknowledged it may be
possible that more than 4.92 billion gallons of advanced biofuel is
attainable in 2019, but did not believe that requiring higher volumes
would be appropriate based on our expectation that doing so would lead
to higher costs and feedstock switching and/or diversion of foreign
advanced biofuels that would not be appropriate.
---------------------------------------------------------------------------

    \110\ See, e.g., Renewable Fuel Standards for 2014, 2015 and
2016, and the Biomass-Based Volume for 2017: Response to Comments
(EPA-420-R-15-024, November 2015), pages 628-631, available in
docket EPA-HQ-OAR-2015-0111-3671.

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

    For 2020, the implied statutory volume target for non-cellulosic
advanced biofuel is identical to that for 2019 at 4.5 billion gallons,
and this is the level that would result from application of the maximum
reduction permitted under the cellulosic waiver authority. Moreover,
the concerns we expressed for the 2019 standards regarding impacts on
costs and feedstock switching and/or diversion of foreign advanced
biofuels remain valid for 2020. As in 2019, the reasonably attainable
volume of advanced biofuel for 2020 falls short of the volume resulting
from the maximum exercise of the cellulosic authority, although that
volume is likely to be attainable. Moreover, while there is some
uncertainty in the volume of advanced biofuel that may be attainable or
reasonably attainable in 2020, even if greater volumes of advanced
biofuel are attainable or reasonably attainable, the high cost of these
fuels provides sufficient justification to reduce the advanced biofuel
volume for 2020 by the maximum amount under the cellulosic waiver
authority. In the 2019 final rule we presented illustrative cost
projections for sugarcane ethanol and soybean biodiesel in 2019, the
two advanced biofuels that would be most likely to provide the marginal
increase in volumes of advanced biofuel in 2020 in comparison to 2019.
Sugarcane ethanol results in a cost increase compared to gasoline that
ranges from $0.39-$1.04 per ethanol-equivalent gallon. Soybean
biodiesel results in a cost increase compared to diesel fuel that
ranges from $0.74-$1.23 per ethanol-equivalent gallon. The cost of
these renewable fuels is high as compared to the petroleum fuels they
displace.
    Based on the information presented above, we believe that 5.04
billion gallons of advanced biofuel is attainable in 2020. After a
consideration of the projected volume of cellulosic biofuel and
reasonably attainable volumes of imported sugarcane ethanol and other
advanced biofuels, we determined that 2.83 billion gallons of advanced
biodiesel and renewable diesel would be needed to reach 5.04 billion
gallons of advanced biofuel. Based on a review of the factors relevant
to the supply of advanced biodiesel and renewable diesel as discussed
in Section IV.B.2, including historic production and import data, the
production capacity of registered biodiesel and renewable diesel
producers, and the availability of advanced feedstocks, we have
determined that 2.83 billion gallons of advanced biodiesel and
renewable diesel is attainable in 2020. This is similar to the
conclusions we reached for 2019, where we also determined that the same
volume of non-cellulosic advanced biofuel would be attainable.
    We acknowledge that there is some uncertainty regarding whether the
market will actually supply 5.04 billion gallons of advanced biofuel in
2020. In the event that the market does not supply this volume, the
carryover RIN bank represents a source of RINs that could help
obligated parties meet an advanced biofuel volume requirement of 5.04
billion gallons in 2020 if the market fails to supply sufficient
advanced biofuels. As discussed in greater detail in Section II.C.1,
carryover RINs provide obligated parties compliance flexibility in the
face of substantial uncertainties in the transportation fuel
marketplace and provide a liquid and well-functioning RIN market upon
which success of the entire program depends. We currently estimate that
there are approximately 390 million advanced carryover RINs available.

D. Volume Requirement for Total Renewable Fuel

    As discussed in Section II.A.1, we believe that the cellulosic
waiver provision is best interpreted as requiring that the advanced
biofuel and total renewable fuel volumes be reduced by equal amounts.
For the reasons we have previously articulated, we believe this
interpretation is consistent with the statutory language and best
effectuates the objectives of the statute, including the environmental
objectives that generally favor the use of advanced biofuels over non-
advanced biofuels and the legislative intent reflected in the statutory
volume tables.\111\ If we were to reduce the total renewable fuel
volume requirement by a lesser amount than the advanced biofuel volume
requirement, we would effectively increase the opportunity for
conventional biofuels to participate in the RFS program beyond the
implied statutory volume of 15 billion gallons. Applying an equal
reduction of 9.96 billion gallons to both the statutory target for
advanced biofuel and the statutory target for total renewable fuel
results in a total renewable fuel volume of 20.04 billion gallons as
shown in Table IV.A-1.\112\ This volume of total renewable fuel results
in an implied volume of 15 billion gallons of conventional fuel, which
is the same as in the 2019 final rule.
---------------------------------------------------------------------------

    \111\ See 81 FR 89752-89753 (December 12, 2016). See also 78 FR
49809-49810 (August 15, 2013); 80 FR 77434 (December 14, 2015).
    \112\ EPA also considered the availability of carryover RINs in
determining whether reduced use of the cellulosic waiver authority
would be warranted. For the reasons described in Section II.B, we do
not believe this to be the case.
---------------------------------------------------------------------------

    We note that because we are proposing to use the maximum reduction
possible under the cellulosic waiver authority, no additional
reductions are possible under that authority. While the general waiver
authority does provide a means for further reductions in the applicable
volume requirement for total renewable fuel, the record before us does
not indicate that such a waiver is justified. In particular, in a
separate memorandum we provide a description of the ways in which the
market could make 20.04 billion gallons of total renewable fuel
available in 2020.\113\ In light of the total volume of ethanol that
could be used in 2020,\114\ along with the potential for conventional
biodiesel and renewable diesel, we find that there would be sufficient
volumes of conventional renewable fuel to reach 15 billion gallons and
of total renewable fuel to reach 20.04 billion gallons.
---------------------------------------------------------------------------

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

V. Response to Remand of 2016 Rulemaking

    In addition to proposing the applicable volume requirements and
percentage standards for 2020, in this

rulemaking we are also proposing to address the remand of the 2016
annual rule by the D.C. Circuit Court of Appeals, in ACE. In light of
the fact that we can no longer incent additional renewable fuel
generation in 2016, and the significant burden on obligated parties of
imposing an additional standard, we are proposing to retain the
original 2016 total renewable fuel standard. This section describes the
relevant aspects of the 2016 annual rule, the court's decision, EPA's
responsibilities following the court's remand, and our proposed
approach.

A. Reevaluating the 2016 Annual Rule

1. The 2016 Renewable Fuel Standard
    On December 14, 2015, we promulgated a rulemaking establishing the
volume requirements and percentage standards for 2014, 2015, and
2016.\115\ In establishing those standards, we utilized the cellulosic
waiver authority under CAA 211(o)(7)(D) to lower the cellulosic
biofuel, advanced biofuel, and total renewable fuel volume requirements
for 2016, and the general waiver authority under CAA 211(o)(7)(A) to
lower total renewable fuel by an additional increment.
---------------------------------------------------------------------------

    \115\ 80 FR 77420.
---------------------------------------------------------------------------

    As an initial step, under CAA 211(o)(7)(D), we lowered the
cellulosic biofuel volume requirement by 4.02 billion gallons, to the
projected production of cellulosic biofuel for 2016, as required by the
statute.\116\ Using that same authority, we then elected to reduce the
advanced biofuel and total renewable fuel volumes. We did not reduce
the advanced biofuel volume requirement by the full 4.02 billion
gallons that was permitted under this authority, but rather by a lesser
3.64 billion gallons that resulted in an advanced biofuel volume
requirement that was ``reasonably attainable.'' \117\ This allowed some
advanced biofuel to ``backfill'' for the shortfall in cellulosic
biofuel. We then reduced the total renewable fuel volume by an amount
equivalent to the reduction in advanced biofuel in accordance with our
longstanding interpretation that when making reductions to advanced
biofuel and total renewable fuel under CAA 211(o)(7)(D), the best
reading of the statute is to reduce them both by the same amount.\118\
---------------------------------------------------------------------------

    \116\ See Id. at 77499.
    \117\ Id at 77442-43.
    \118\ Id.
---------------------------------------------------------------------------

    As a second step, under CAA 211(o)(7)(A), under a finding of
inadequate domestic supply, we further lowered the total renewable fuel
standard by 500 million gallons for 2016.\119\ In assessing
``inadequate domestic supply,'' we considered the availability of
renewable fuel to consumers. Based on such demand-side considerations,
we made the additional 500 million gallon reduction in the total
renewable fuel requirement.
---------------------------------------------------------------------------

    \119\ Id. at 77444.
---------------------------------------------------------------------------

    The 2016 total renewable fuel standard was challenged in court. In
an opinion issued on July 28, 2017, the D.C. Circuit vacated our use of
the general waiver authority under a finding of inadequate domestic
supply to reduce the 2016 total renewable fuel standard, the second
step of setting the 2016 total renewable fuel standard.\120\ The court
in ACE held that we had improperly focused on supply of renewable fuel
to consumers, and that the statute instead requires a ``supply-side''
assessment of the volumes of renewable fuel that can be supplied to
refiners, blenders, and importers.\121\ Other components of our
interpretation of ``inadequate domestic supply'' were either upheld by
the court in ACE (e.g., our interpretation that carryover RINs are not
part of the ``supply'' for purposes of this waiver authority) or were
not challenged (e.g., our consideration of biofuel imports as part of
the domestic supply). Our use of the cellulosic waiver authority to
provide the initial reduction in total renewable fuel was also upheld
by the court.
---------------------------------------------------------------------------

    \120\ ACE, 864 F.3d 691.
    \121\ Id. at 696.
---------------------------------------------------------------------------

2. Agency Responsibility
    The court in ACE upheld our volume requirements for advanced
biofuel and cellulosic biofuel, so there is therefore no need for the
agency to adjust those 2016 final volume requirements. The court also
upheld EPA's use of the cellulosic waiver authority to reduce the 2016
total renewable fuel volume requirement. The court only vacated our
decision to further reduce that requirement under the ``inadequate
domestic supply'' waiver authority, remanding this issue to the Agency
for further consideration consistent with the court's opinion.\122\ Our
obligation is thus to reevaluate the 2016 total renewable fuel volume
requirement in accordance with the court's decision.
---------------------------------------------------------------------------

    \122\ Id. at 703.
---------------------------------------------------------------------------

B. Consideration of the Burdens of a Retroactive Standard

    We propose to find that imposing an additional burden on obligated
parties for the 2016 volume requirements through a higher standard at
this time would be unduly burdensome and inappropriate. In the ACE
decision, and two previous decisions,\123\ the court stated that in
imposing a retroactive standard, we must balance the burden on
obligated parties of a retroactive standard with the broader goal of
the RFS program to increase renewable fuel use.\124\ We believe that in
the case of the 2016 renewable fuel volumes, any approach that requires
additional volumes of renewable fuel use would impose a significant
burden on obligated parties, without any corresponding benefit as any
additional standard cannot result in additional renewable fuel use in
2016. Thus, we are proposing to retain the original 2016 total
renewable fuel standard.
---------------------------------------------------------------------------

    \123\ Monroe Energy, LLC v. EPA, 750 F.3d 909 (D.C. Cir. 2014);
NPRA v. EPA, 630 F.3d 145 (D.C. Cir. 2010).
    \124\ E.g., in Monroe, the court held that EPA's action was
reasonable because it ``considered various ways to minimize the
hardship caused to obligated parties.'' Monroe at 920.
---------------------------------------------------------------------------

    We believe the burdens associated with altering the 2016 standard
are high. In order to revise the 2016 standard EPA would need to
rescind the 2016 standard and return the RINs used for compliance
returned to the original owners. Once those RINs were unretired, a
process that could take several months, trading of those RINs could
resume for a designated amount of time before retirements would again
be required to demonstrate compliance. Obligated parties could then
comply with a new, higher standard that includes an adjustment to the
required total renewable fuel volume to address the ACE decision.
    Under our current regulations, only 2015 and 2016 RINs can be used
to demonstrate compliance with the 2016 standard.\125\ However, there
are far fewer 2015 and 2016 RINs available today (i.e., RINs that are
valid but have not already been retired to comply with the 2015, 2016,
or 2017 standards) than would be needed to comply with a supplemental
standard commensurate with our exercise of the general waiver
authority, that is, 500 million gallons. Additionally, the few 2015 and
2016 RINs available are unevenly held between obligated parties;
because of the small number of RINs, any parties who held excess 2015
and 2016 RINs could attempt to sell them at a high price, creating
dysfunction within the RIN market. These high prices would create a
burden on obligated parties, without providing any incentive for
additional renewable fuel use.
---------------------------------------------------------------------------

    \125\ 40 CFR 80.1427(a).
---------------------------------------------------------------------------

    We also considered and rejected two alternative approaches for
addressing the remand. First, we considered an

approach where 2016 RINs used for compliance with the 2017 standards
could be unretired and used for compliance with the increased 2016
standard, but this would essentially also reopen 2017 compliance, and
likely 2018 compliance for the same reason.\126\ Reopening compliance
would impose a significant burden on both obligated parties and EPA as
described above. Moreover, stakeholders have expressed strong desires
for consistent compliance requirements on an annual basis,\127\ and
having compliance for the prior year complete before requiring
compliance with the subsequent year is essential to properly account
for the status of RINs, due to the 2-year RIN lifespan. Reopening
compliance for 2016-2018 could have cascading effects on compliance for
2019 and subsequent years. Compliance with an additional standard would
also necessarily result in a drawdown of the carryover RIN bank. It is
no longer possible to generate 2016, 2017, or 2018 RINs; an additional
standard would require the use of carryover RINs and drawdown of the
carryover RIN bank, which as explained in Section II, we do not believe
to be appropriate. Therefore, we do not find that it would be
appropriate or reasonable to reopen compliance with the entire 2016
total renewable fuel standard.
---------------------------------------------------------------------------

    \126\ If 2017 compliance is reopened, 2018 compliance would then
also need to be reopened due to the 2-year lifespan of RINs.
    \127\ See, e.g., Comments from API/AFPM on the 2014-2016 annual
rule suggesting that delayed compliance can make it difficult to
assess the size of the RIN bank, Docket ID: EPA-HQ-OAR-2015-0111-
1948.
---------------------------------------------------------------------------

    Second, we also considered imposing an additional obligation as a
supplement to the 2020 standards and allowing compliance with 2019 and
2020 RINs. Under this approach, there would likely be sufficient RINs
to comply with an additional 500 million gallon standard. However, as
we believe there are very limited opportunities to use biofuels beyond
the volumes we are proposing for 2020,\128\ we believe that this is
unlikely to incent significant new biofuel generation in 2020. Instead,
it would likely lead to a significant draw-down of the carryover RIN
bank, which as explained in section II, we do not believe to be
appropriate.
---------------------------------------------------------------------------

    \128\ See section IV (finding that the advanced biofuel volume
resulting from the full reduction under the cellulosic waiver
authority is not reasonably attainable, and further noting
uncertainties relating to the attainable volume) and ``Market
impacts of biofuels in 2020,'' available in the docket (describing
limitations on the ability of the market to use biofuels).
---------------------------------------------------------------------------

    For the forgoing reasons, we are proposing to retain the 2016 total
renewable fuel in response to the court's remand in ACE.\129\
---------------------------------------------------------------------------

    \129\ In addition to today's response to the remand, we note
that the precedential effect of the ACE decision has governed
subsequent RFS annual rules. Compare, e.g., 82 FR 34229 & n.82 (July
21, 2017) (2018 annual rule proposal, issued prior to ACE)
(soliciting comment on whether it would be appropriate to exercise
the inadequate domestic supply waiver authority based on the
``maximum reasonably achievable volume'' of renewable fuel, which
incorporates demand-side considerations), with 82 FR 46177 (Oct. 4,
2017) (2018 annual rule availability of supplemental information and
request for comment, issued after ACE) (recognizing, under ACE, that
EPA may not consider demand-side constraints in determining
inadequate domestic supply).
---------------------------------------------------------------------------

VI. Impacts of 2020 Volumes on Costs

    In this section, EPA presents its assessment of the illustrative
costs of this proposed rulemaking. It is important to note that these
illustrative costs do not attempt to capture the full impacts of this
proposed rule. We frame the analyses we have performed for this rule as
``illustrative'' so as not to give the impression of comprehensive
estimates. These estimates are provided for the purpose of showing how
the cost to produce a gallon of a ``representative'' renewable fuel
compares to the cost of petroleum fuel. There are a significant number
of caveats that must be considered when interpreting these illustrative
cost estimates. For example, there are many different feedstocks that
could be used to produce biofuels, and there is a significant amount of
heterogeneity in the costs associated with these different feedstocks
and fuels. Some renewable fuels may be cost competitive with the
petroleum fuel they replace; however, we do not have cost data on every
type of feedstock and every type of fuel. Therefore, we do not attempt
to capture this range of potential costs in our illustrative estimates.
    The volumes for which we have provided cost estimates are described
in Sections III and IV. In this section, we examine the illustrative
costs of two different cases. In the first case, we provide
illustrative cost estimates by comparing the proposed 2020 renewable
fuel volumes to 2020 statutory volumes. In the second case, we examine
the proposed 2020 renewable fuel volumes to the final 2019 renewable
fuel volumes to estimate changes in the annual costs of the proposed
2020 volumes in comparison to the 2019 volumes.\130\
---------------------------------------------------------------------------

    \130\ This action imposes renewable fuel standards only for
2020. However, solely for E.O. 13771 purposes in this section, we
estimate the costs of the relevant volumes as though they applied in
future years as well. Therefore, we use the term ``annual costs'' in
this section.
---------------------------------------------------------------------------

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

    In this section, EPA provides illustrative cost estimates that
compare the proposed 2020 cellulosic biofuel volume requirements to the
2020 cellulosic statutory volume that would be required absent the
exercise of our cellulosic waiver authority under CAA section
211(o)(7)(D)(i). As described in Section III, we are proposing a
cellulosic volume of 540 million gallons for 2020, using our cellulosic
waiver authority to waive the statutory cellulosic volume of 10.5
billion gallons by 9.96 billion gallons. Estimating the cost savings
from renewable fuel volumes that are not projected to be produced is
inherently challenging. EPA has taken the relatively straightforward
methodology of multiplying this waived cellulosic volume by the
wholesale per-gallon costs of cellulosic biofuel production relative to
the petroleum fuels they displace. Since the implied non-cellulosic
advanced biofuel and implied conventional renewable fuel volumes are
unchanged from the statutory implied volumes, there is no need to
estimate cost impacts for these volumes.
    While there may be growth in other cellulosic renewable fuel
sources, we believe it is appropriate to use cellulosic ethanol
produced from corn kernel fiber at an existing corn starch ethanol
production facility as representative of all liquid cellulosic
renewable fuel. Even though there is no increase in liquid cellulosic
biofuels in this proposed annual 2020 RFS rule, we believe it is
appropriate to use these costs to estimate the cost savings from the
statutory volumes. The majority of liquid cellulosic biofuel in 2020 is
expected to be produced using this technology. In addition, as
explained in Section III, we believe that production of the major
alternative cellulosic biofuel--CNG/LNG derived from biogas--is limited
in 2020 due to a limitation in the number of vehicles capable of using
this form of fuel.\131\
---------------------------------------------------------------------------

    \131\ See Section III.C.2 for a further discussion of the
quantity of CNG/LNG projected to be used as transportation fuel in
2020.
---------------------------------------------------------------------------

    EPA uses a ``bottom-up'' engineering cost analysis to quantify the
costs of producing a gallon of cellulosic ethanol derived from corn
kernel fiber. There are multiple processes that could yield cellulosic
ethanol from corn kernel fiber. EPA assumes a cellulosic ethanol
production process that generates biofuel using distiller's grains, a
co-product of generating corn starch ethanol that is commonly dried and
sold into the feed market as distillers dried

grains with solubles (DDGS), as the renewable biomass feedstock. We
assume an enzymatic hydrolysis process with cellulosic enzymes to break
down the cellulosic components of the distiller's grains. This process
for generating cellulosic ethanol is similar to approaches currently
used by industry to generate cellulosic ethanol at a commercial scale,
and we believe these cost estimates are likely representative of the
range of different technology options being developed to produce
ethanol from corn kernel fiber. We then compare the per-gallon costs of
the cellulosic ethanol to the petroleum fuels that would be replaced at
the wholesale stage, since that is when the two are blended together.
    These cost estimates do not consider taxes, retail margins, or
other costs or transfers that occur at or after the point of blending.
Transfers are payments within society and are not additional costs
(e.g., RIN payments are one example of a transfer payment). We do not
attempt to estimate potential cost savings related to avoided
infrastructure costs (e.g., the cost savings of not having to provide
pumps and storage tanks associated with higher-level ethanol blends).
When estimating per-gallon costs, we consider the costs of gasoline on
an energy-equivalent basis as compared to ethanol, since more ethanol
gallons must be consumed to travel the same distance as on gasoline due
to the ethanol's lower energy content.
    Table VI.A-1 below presents the cellulosic fuel cost savings with
this proposed rule that are estimated using this approach.\132\ The
per-gallon cost difference estimates for cellulosic ethanol ranges from
$0.28-$3.28 per ethanol-equivalent gallon ($/EEG).\133\ Given that
commercial cellulosic ethanol production is at an early stage in its
deployment, these cost estimates have a significant range. Multiplying
the per-gallon cost differences by the amount of cellulosic biofuel
waived in this proposed rule results in approximately $2.8-$33 billion
in cost savings.
---------------------------------------------------------------------------

    \132\ Details of the data and assumptions used can be found in a
Memorandum available in the docket entitled ``Cost Impacts of the
Proposed 2020 Annual Renewable Fuel Standards'', Memorandum from
Michael Shelby, Dallas Burkholder, and Aaron Sobel available in
docket EPA-HQ-OAR-2019-0136.
    \133\ For the purposes of the cost estimates in this section,
EPA has not attempted to adjust the price of the petroleum fuels to
account for the impact of the RFS program, since the changes in the
renewable fuel volume are relatively modest in comparison to the
quantity of fuel associated with the petroleum market. Rather, we
have simply used the wholesale price projections for gasoline and
diesel as reported in EIA's April 2019 STEO.

   Table VI.A-1--Illustrative Costs Analysis of 2020 Proposed Volumes
             Compared to the 2020 Statutory Volumes Baseline
------------------------------------------------------------------------

------------------------------------------------------------------------
Cellulosic Volume Required (Million Ethanol-                         540
 Equivalent Gallons)..............................
Change in Required Cellulosic Biofuel from 2020                  (9,960)
 Statutory Volume (Million Ethanol-Equivalent
 Gallons).........................................
Cost Difference Between Cellulosic Corn Kernel               $0.28-$3.28
 Fiber Ethanol and Gasoline Per Gallon ($/Ethanol-
 Equivalent Gallons) \134\ ($/EEG)................
Annual Change in Overall Costs (Million $) \135\..    $(2,800)-$(33,000)
------------------------------------------------------------------------

B. Illustrative Costs Analysis of the 2020 Proposed Volumes Compared to
the 2019 Volumes Baseline
---------------------------------------------------------------------------

    \134\ For this table and all subsequent tables in this section,
approximate costs in per-gallon cost difference estimates are
rounded to the cents place.
    \135\ For this table and all subsequent tables in this section,
approximate resulting costs (other than in per-gallon cost
difference estimates) are rounded to two significant figures.
---------------------------------------------------------------------------

    In this section, we provide illustrative cost estimates for the
proposed 2020 volumes compared to the final 2019 RFS volumes. This
results in an increase in cellulosic volumes for the 2020 RFS of 126
gallons (ethanol-equivalent).\136\
---------------------------------------------------------------------------

    \136\ The implied non-cellulosic advanced biofuel and
conventional renewable fuel volumes are the same for both years, so
we do not need to estimate cost impacts for these volumes.
---------------------------------------------------------------------------

Cellulosic Biofuel
    We anticipate that the increase in the proposed 2020 cellulosic
biofuel volumes is composed of 126 million gallons of CNG/LNG derived
from landfill biogas. Unlike past RFS annual rulemakings, there is no
projected increase in liquid cellulosic biofuel in this proposed annual
2020 RFS rulemaking. Thus, we provide costs estimates for cellulosic
biofuel solely based upon the costs of using CNG/LNG-derived cellulosic
biogas.\137\ For CNG/LNG-derived cellulosic biogas, we provide
estimates of the cost of displacing natural gas with CNG/LNG derived
from landfill biogas to produce 126 million ethanol-equivalent gallons
of cellulosic fuel. To estimate the cost of production of CNG/LNG
derived from landfill gas (LFG), EPA uses Version 3.2 of the Landfill
Gas Energy Cost Model, or LFG cost-Web. EPA ran the financial cost
calculator for landfill projects with a design flow rate of 1,000 and
10,000 cubic feet per minute with the suggested default data. LFGcost-
Web assumes that larger projects will result in lower fuel production
costs, which in some cases are lower than the cost of fossil-fuel
derived natural gas that is displaced due to economies of scale. The
costs estimated for this analysis exclude any pipeline costs to
transport the pipeline quality gas, as well as any costs associated
with compressing the gas to CNG/LNG. These costs are not expected to
differ significantly between LFG or natural gas. In addition, the cost
estimates excluded the gas collection and control system infrastructure
at the landfill, as EPA expects that landfills that produce high BTU
gas in 2020 are likely to already have this infrastructure in
place.\138\
---------------------------------------------------------------------------

    \137\ Although there is no increase for liquid cellulosic
biofuel in this proposed RFS annual 2020 rule, it is unknown if this
volume may change in the final rule. While we do not present
associated costs in this document, the methodology and assumptions
we would use to represent liquid cellulosic biofuel can be found in
a Memorandum available in the docket entitled, ``Cost Impacts of the
Proposed 2020 Annual Renewable Fuel Standards'', Memorandum from
Michael Shelby, Dallas Burkholder, and Aaron Sobel available in
docket EPA-HQ-OAR-2019-0136.
    \138\ Details of the data and assumptions used can be found in a
Memorandum available in the docket entitled ``Cost Impacts of the
Proposed 2020 Annual Renewable Fuel Standards'', Memorandum from
Michael Shelby, Dallas Burkholder, and Aaron Sobel available in
docket EPA-HQ-OAR-2019-0136.
---------------------------------------------------------------------------

    To estimate the illustrative cost impacts of the change in CNG/LNG
derived from LFG, we compared the cost of production of CNG/LNG derived
from LFG in each case to the projected price of natural gas in 2020 in
EIA's April 2019 STEO.\139\ Finally, we converted these costs to an
ethanol-equivalent gallon ($/EEG) basis. The resulting cost estimates
are shown in Table VI.B-1. The total costs of the proposed 2020
cellulosic volume compared to 2019 RFS cellulosic volume range from
$(3.2)-$10 million. The lower end of this range reflects a cost savings
due to the estimated costs

of producing 10,000 cubic feet per minute of CNG/LNG landfill gas being
lower than the projected cost of natural gas in EIA's STEO.
---------------------------------------------------------------------------

    \139\ Henry Hub Spot price estimate for 2020. EIA, Short Term
Energy Outlook (STEO), April 2019, available in docket EPA-HQ-OAR-
2019-0136.

 Table VI.B-1--Illustrative Costs Analysis of the 2020 Proposed Volumes
                  Compared to the 2019 Volumes Baseline
------------------------------------------------------------------------

------------------------------------------------------------------------
                            Cellulosic volume
------------------------------------------------------------------------
CNG/LNG Derived from Biogas Costs:
    Cost Difference Between CNG/LNG Derived from           $(0.03)-$0.08
     Landfill Biogas and Natural Gas Per Gallon ($/
     Ethanol-Equivalent Gallons) ($/EEG)...............
    Change in Volume (Million Ethanol-Equivalent                     126
     Gallons)..........................................
    Annual Increase in Overall Costs (Million $).......       $(3.2)-$10
Range of Annual Increase in Costs with Cellulosic             $(3.2)-$10
 Volume (Million $)....................................
------------------------------------------------------------------------

    The annual volume-setting process encourages consideration of the
RFS program on a piecemeal (i.e., year-to-year) basis, which may not
reflect the full, long-term costs and benefits of the program. For the
purposes of this proposed rule, other than the estimates of costs of
producing a ``representative'' renewable fuel compared to cost of
petroleum fuel, EPA did not quantitatively assess other direct and
indirect costs or benefits of changes in renewable fuel volumes. These
direct and indirect costs and benefits may include infrastructure
costs, investment, climate change impacts, air quality impacts, and
energy security benefits, which all are to some degree affected by the
annual volumes. For example, we do not have a quantified estimate of
the lifecycle GHG or energy security benefits for a single year (e.g.,
2020). Also, there are impacts that are difficult to quantify, such as
rural economic development and employment changes from more diversified
fuel sources, that are not quantified in this rulemaking. While some of
these impacts were analyzed in the 2010 final rulemaking that
established the current RFS program, we have not analyzed these impacts
for the 2020 volume requirements.\140\
---------------------------------------------------------------------------

    \140\ RFS2 Regulatory Impact Analysis (RIA). U.S. EPA 2010,
Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis.
EPA-420-R-10-006. February 2010. Docket EPA-HQ-OAR-2009-0472-11332.
---------------------------------------------------------------------------

VII. Biomass-Based Diesel Volume for 2021

    In this section we discuss the proposed BBD applicable volume for
2021. We are setting this volume in advance of those for other
renewable fuel categories in light of the statutory requirement in CAA
section 211(o)(2)(B)(ii) to establish the applicable volume of BBD for
years after 2012 no later than 14 months before the applicable volume
will apply. We are not at this time proposing to set the BBD percentage
standards that would apply to obligated parties in 2021 but intend to
do so in late 2020, after receiving EIA's estimate of gasoline and
diesel consumption for 2021. At that time, we will also set the
percentage standards for the other renewable fuel types for 2021.
Although the BBD applicable volume sets a floor for required BBD use,
because the BBD volume requirement is nested within both the advanced
biofuel and the total renewable fuel volume requirements, any BBD
produced can be used to satisfy both of these other applicable volume
requirements, even beyond the mandated BBD volume.

A. Statutory Requirements

    The statute establishes applicable volume targets for years through
2022 for cellulosic biofuel, advanced biofuel, and total renewable
fuel. For BBD, applicable volume targets are specified in the statute
only through 2012. For years after those for which volumes are
specified in the statute, EPA is required under CAA section
211(o)(2)(B)(ii) to determine the applicable volume of BBD, in
coordination with the Secretary of Energy and the Secretary of
Agriculture, based on a review of the implementation of the program
during calendar years for which the statute specifies the volumes and
an analysis of the following factors:
    1. The impact of the production and use of renewable fuels on the
environment, including on air quality, climate change, conversion of
wetlands, ecosystems, wildlife habitat, water quality, and water
supply;
    2. The impact of renewable fuels on the energy security of the
United States;
    3. The expected annual rate of future commercial production of
renewable fuels, including advanced biofuels in each category
(cellulosic biofuel and BBD);
    4. The impact of renewable fuels on the infrastructure of the
United States, including deliverability of materials, goods, and
products other than renewable fuel, and the sufficiency of
infrastructure to deliver and use renewable fuel;
    5. The impact of the use of renewable fuels on the cost to
consumers of transportation fuel and on the cost to transport goods;
and
    6. The impact of the use of renewable fuels on other factors,
including job creation, the price and supply of agricultural
commodities, rural economic development, and food prices.
    The statute also specifies that the volume requirement for BBD
cannot be less than the applicable volume specified in the statute for
calendar year 2012, which is 1.0 billion gallons.\141\ The statute does
not, however, establish any other numeric criteria, and provides EPA
discretion over how to weigh the importance of the often competing
factors and the overarching goals of the statute when the EPA sets the
applicable volumes of BBD in years after those for which the statute
specifies such volumes. In the period 2013-2022, the statute specifies
increasing applicable volumes of cellulosic biofuel, advanced biofuel,
and total renewable fuel, but provides no numeric criteria, beyond the
1.0 billion gallon minimum, on the level at which BBD volumes should be
set.
---------------------------------------------------------------------------

    \141\ See CAA section 211(o)(2)(B)(v).
---------------------------------------------------------------------------

    In establishing the BBD and cellulosic standards as nested within
the advanced biofuel standard, Congress clearly intended to support
development of BBD and especially cellulosic biofuels, while also
providing an incentive for the growth of other non-specified types of
advanced biofuels. In general, the advanced biofuel standard provides
an opportunity for other advanced biofuels (advanced biofuels that do
not qualify as cellulosic biofuel or BBD) to compete with cellulosic
biofuel and BBD to satisfy the advanced biofuel standard after the
cellulosic biofuel and BBD standards have been met.

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

    One of the considerations in determining the BBD volume for 2021 is
a review of the implementation of the program to date, as it affects
BBD. This review is required by the CAA, and also provides insight into
the capabilities of the industry to produce, import, export,
distribute, and use BBD. It also helps us to understand what factors,
beyond the BBD standard, may incentivize the availability of BBD. In
reviewing the program, we assess numerous regulatory, economic, and
technical factors, including the availability of BBD in past years
relative to the BBD and advanced standards; the prices of BBD,
advanced, and conventional RINs; the competition between BBD and other
advanced biofuels in meeting the portion of the advanced standard not
required to be met by BBD or cellulosic RINs; the maturation of the BBD
industry over the course of the RFS program; and the effects of BBD
standard on the production and development of both BBD and other
advanced biofuels.
    Table VII.B.1-1 shows, for 2011-2018, the number of BBD RINs
generated, the number of RINs retired due to export, the number of RINs
retired for reasons other than compliance with the annual BBD
standards, and the consequent number of available BBD RINs; for 2011-
2019, the BBD and advanced biofuel standards; and for 2020, the
proposed advanced biofuel standard, and the BBD standard.

             Table VII.B.1-1--Biomass-Based Diesel (D4) RIN Generation and Advanced Biofuel and Biomass-Based Diesel Standards in 2011-2019
                                                             [Million RINs or gallons] \142\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                BBD RINs
                                                                                retired,    Available       BBD          BBD        Advanced
                                                                 BBD RINs     Exported       non-       BBD RINs     standard     standard     biofuel
                                                                generated    BBD (RINs)   compliance      \a\       (gallons)    (RINs) \b\    standard
                                                                                reasons                     \b\                    (RINs) \b\
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011.........................................................        1,692           72           98        1,522          800        1,200        1,350
2012.........................................................        1,737          102           90        1,545        1,000        1,500        2,000
2013.........................................................        2,740          125           93        2,523        1,280        1,920        2,750
2014.........................................................        2,710          134           93        2,483        1,630    \c\ 2,490        2,670
2015.........................................................        2,796          143           30        2,622        1,730    \c\ 2,655        2,880
2016.........................................................        4,009          202           51        3,756        1,900        2,850        3,610
2017.........................................................        3,849          257           35        3,557        2,000        3,000        4,280
2018.........................................................        3,860          245           39        3,576        2,100        3,150        4,290
2019.........................................................          N/A          N/A          N/A          N/A        2,100        3,150        4,920
2020.........................................................          N/A          N/A          N/A          N/A        2,430        3,645        5,010
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Available BBD RINs may not be exactly equal to BBD RINs Generated minus Exported RINs and BBD RINs Retired, Non-Compliance Reasons, due to rounding.
\b\ The volumes for each year are those used as the basis for calculating the percentage standards in the final rule. They have not been retroactively
  adjusted for subsequent events, such as differences between projected and actual gasoline and diesel use and exempted small refinery volumes.
\c\ Each gallon of biodiesel qualifies for 1.5 RINs due to its higher energy content per gallon than ethanol. Renewable diesel qualifies for between 1.5
  and 1.7 RINs per gallon, but generally has an equivalence value of 1.7. While some fuels that qualify as BBD generate more than 1.5 RINs per gallon,
  EPA multiplies the required volume of BBD by 1.5 in calculating the percent standard per 80.1405(c). In 2014 and 2015 however, the number of RINs in
  the BBD Standard column is not exactly equal to 1.5 times the BBD volume standard as these standards were established based on actual RIN generation
  data for 2014 and a combination of actual data and a projection of RIN generation for the last three months of the year for 2015, rather than by
  multiplying the required volume of BBD by 1.5. Some of the volume used to meet the BBD standard in these years was renewable diesel, with an
  equivalence value higher than 1.5.

    In reviewing historical BBD RIN generation and use, we see that the
number of RINs available for compliance purposes exceeded the volume
required to meet the BBD standard in 2011, 2012, 2013, 2016 and 2017,
and 2018. Additional production and use of biodiesel was likely driven
by a number of factors, including demand to satisfy the advanced
biofuel and total renewable fuels standards, the biodiesel tax
credit,\143\ and various other State and local incentives and mandates
allowing for favorable blending economics. The number of RINs available
in 2014 and 2015 was approximately equal to the number required for
compliance in those years, as the standards for these years were
finalized at the end of November 2015 and EPA's intent at that time was
to set the standards for 2014 and 2015 to reflect actual BBD use.\144\
In 2016, with RFS standards established prior to the beginning of the
year and the blenders tax credit in place, available BBD RINs exceeded
the volume required by the BBD standard by 906 million RINs (32
percent), and exceeded the volume required by the advanced biofuel
standard. In 2017, the RFS standards were established prior to the
beginning of the year, and the blenders tax credit was only applied
retroactively; even without the certainty of a tax credit, the
available BBD RINs exceeded the volume required by the BBD standard by
557 million RINs (19 percent). In 2018, the RFS standards were again
established prior to the beginning of the year, and the blenders tax
credit was not in place; even without a tax credit, the available BBD
RINs exceed the volume required by the BBD standard by 426 million RINs
(14 percent). In the table VII.B.1-1, we excluded exported BBD RINs
from the calculation of ``available RINs.'' \145\ This indicates that
in certain circumstances there is demand for BBD

beyond the required volume of BBD. While EPA has consistently
established the required volume in such a way as to allow non-BBD fuels
to compete for market share in the advanced biofuel category, since
2016 the vast majority of non-cellulosic advanced biofuel used to
satisfy the advanced biofuel obligations has been BBD.
---------------------------------------------------------------------------

    \142\ Available BBD RINs Generated, Exported BBD RINs, and BBD
RINs Retired for Non-Compliance Reasons information from EMTS.
    \143\ The biodiesel tax credit was reauthorized in January 2013.
It applied retroactively for 2012 and for the remainder of 2013. It
was once again extended in December 2014 and applied retroactively
to all of 2014 as well as to the remaining weeks of 2014. In
December 2015 the biodiesel tax credit was authorized and applied
retroactively for all of 2015 as well as through the end of 2016. In
February 2018 the biodiesel tax credit was authorized and applied
retroactively for all of 2017. The biodiesel tax credit is not
currently in place for 2018 or 2019.
    \144\ See 80 FR 77490-92, 77495 (December 14, 2015).
    \145\ We have done so even though the exported RINs could have
been used for compliance prior to export.
---------------------------------------------------------------------------

    The prices paid for advanced biofuel and BBD RINs beginning in
early 2013 through December 2018 also support the conclusion that the
advanced biofuel, and in some periods the total renewable fuel
standards, provide a sufficient incentive for additional biodiesel
volume beyond what is required by the BBD standard. Because the BBD
standard is nested within the advanced biofuel and total renewable fuel
standards, and therefore can help to satisfy three RVOs, we would
expect the price of BBD RINs to exceed that of advanced and
conventional renewable RINs.\146\ If, however, BBD RINs are being used
(or are expected to be used) by obligated parties to satisfy their
advanced biofuel obligations, above and beyond the BBD standard, we
would expect the prices of advanced biofuel and BBD RINs to
converge.\147\ Further, if BBD RINs are being used (or are expected to
be used) to satisfy obligated parties' total renewable fuel obligation,
above and beyond their BBD and advanced biofuel requirements, we would
expect the price for all three RIN types to converge.
---------------------------------------------------------------------------

    \146\ This is because when an obligated party retires a BBD RIN
(D4) to help satisfy their BBD obligation, the nested nature of the
BBD standard means that this RIN also counts towards satisfying
their advanced and total renewable fuel obligations. Advanced RINs
(D5) count towards both the advanced and total renewable fuel
obligations, while conventional RINs (D6) count towards only the
total renewable fuel obligation.
    \147\ We would still expect D4 RINs to be valued at a slight
premium to D5 and D6 RINs in this case (and D5 RINs at a slight
premium to D6 RINs) to reflect the greater flexibility of the D4
RINs to be used towards the BBD, advanced biofuel, and total
renewable fuel standard. This pricing has been observed over the
past several years.
---------------------------------------------------------------------------

    When examining RIN price data from 2011 through December 2018,
shown in Figure VI.B.2-1, we see that beginning in early 2013 and
through December 2018 the advanced RIN (D5) price and BBD (D4) RIN
prices were approximately equal. Similarly, from early 2013 through
late 2016 the conventional renewable fuel (D6) RIN and BBD RIN prices
were approximately equal. This suggests that the advanced biofuel
standard, and in some periods the total renewable fuel standard, are
capable of incentivizing increased BBD volumes beyond the BBD standard.
The advanced biofuel standard has incentivized additional volumes of
BBD since 2013, while the total standard had incentivized additional
volumes of BBD from 2013 through 2016.\148\ While final standards were
not in place throughout 2014 and most of 2015, EPA had issued proposed
rules for both of these years.\149\ In each year, the market response
was to supply volumes of BBD that exceeded the proposed BBD standard in
order to help satisfy the proposed advanced and total biofuel
standards.\150\ Additionally, the RIN prices in these years strongly
suggests that obligated parties and other market participants
anticipated the need for BBD RINs to meet their advanced and total
biofuel obligations, and responded by purchasing advanced biofuel and
BBD RINs at approximately equal prices. We do note, however, that in
2011-2012 the BBD RIN price was significantly higher than both the
advanced biofuel and conventional renewable fuel RIN prices. At this
time, the E10 blendwall had not yet been reached, and it was likely
more cost effective for most obligated parties to satisfy the portion
of the advanced biofuel requirement that exceeded the BBD and
cellulosic biofuel requirements with advanced ethanol.
---------------------------------------------------------------------------

    \148\ Although we did not issue a rule establishing the final
2013 standards until August of 2013, we believe that the market
anticipated the final standards, based on EPA's July 2011 proposal
and the volume targets for advanced and total renewable fuel
established in the statute. (76 FR 38844, 38843 July 1, 2011).
    \149\ See 80 FR 33100 (2014-16 standards proposed June 10,
2015); 78 FR 71732 (2014 standards proposed Nov. 29, 2013).
    \150\ EPA proposed a BBD standard of 1.28 billion gallons (1.92
billion RINs) for 2014 in our November 2013 proposed rule. The
number of BBD RINs available in 2014 was 2.48 billion. EPA proposed
a BBD standard of 1.70 billion gallons (2.55 billion RINs) for 2015
in our June 2015 proposed rule. The number of BBD RINs available in
2015 was 2.62 billion.

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

[GRAPHIC] [TIFF OMITTED] TP29JY19.009

    In raising the 2013 BBD volume above the 1 billion gallon minimum
mandated by the statute, the EPA sought to ``create greater certainty
for both producers of BBD and obligated parties'' while also
acknowledging that, ``the potential for somewhat increased costs is
appropriate in light of the additional certainty of GHG reductions and
enhanced energy security provided by the advanced biofuel volume
requirement of 2.75 billion gallons.'' \151\ Unknown at that time was
the degree to which the required volumes of advanced biofuel and total
renewable fuel could incentivize volumes of BBD that exceeded the BBD
standard. In 2012 the available supply of BBD RINs exceeded the
required volume of BBD by a very small margin (1,545 million BBD RINs
were made available for compliance towards meeting the BBD requirement
of 1,500 million BBD RINs). The remainder of the 2.0 billion-gallon
advanced biofuel requirement was satisfied with advanced ethanol, which
was largely imported from Brazil.\152\ From 2012 to 2013 the statutory
advanced biofuel requirement increased by 750 million gallons. If EPA
had not increased the required volume of BBD for 2013, and the advanced
biofuel standard had proved insufficient to increase the supply of BBD
beyond the statutory minimum of 1.0 billion gallons, an additional 750
million gallons of non-BBD advanced biofuels beyond the BBD standard
would have been needed to meet the advanced biofuel volume requirement.
---------------------------------------------------------------------------

    \151\ 77 FR 59458, 59462 (September 27, 2012).
    \152\ 594 million advanced ethanol RINs were generated in 2012.
---------------------------------------------------------------------------

    The only advanced biofuel other than BBD available in appreciable
quantities in 2012 and 2013 was advanced ethanol, the vast majority of
which was imported sugarcane ethanol. We had significant concerns as to
whether or not the supply of advanced ethanol could increase this
significantly (750 million gallons) in a single year. These concerns
were heightened by the approaching E10 blendwall, which had the
potential to increase the challenges associated with supplying
increasing volumes of ethanol to the U.S. If neither BBD volumes nor
advanced ethanol volumes increased sufficiently, we were concerned that
some obligated parties might be unable to acquire the advanced biofuel
RINs necessary to demonstrate compliance with their RVOs in 2013.
Therefore, as discussed above, we increased the volume requirement for
BBD in 2013 to help create greater certainty for BBD producers (by
ensuring demand for their product above the 1.0 billion gallon
statutory minimum) and obligated parties (by ensuring that sufficient
RINs would be available to satisfy their advanced biofuel RVOs). Since
2013, however, we have gained significant experience implementing the
RFS program. As discussed above, RIN generation data has consistently
demonstrated that the advanced biofuel volume requirement, and in some
circumstances the total renewable fuel volume requirement, are capable
of incentivizing the supply of BBD above and beyond the BBD volume
requirement. The RIN generation data also show that while we have
consistently preserved the opportunity for fuels other that BBD to
contribute towards satisfying the required volume of advanced biofuel,
these other advanced biofuels have not been supplied in significant
quantities since 2013.

               Table VII.B.1-2--Opportunity for and RIN Generation of ``Other'' Advanced Biofuels
                                                 [Million RINs]
----------------------------------------------------------------------------------------------------------------
                                                                                Available BBD
                                                                    Opportunity                    (D4) RINs in
                                                                   for ``Other''     Available     excess of the
                                                                     advanced      advanced (D5)        BBD
                                                                   biofuels \a\        RINs         requirement
                                                                                \b\
----------------------------------------------------------------------------------------------------------------
2011............................................................             150             225             322
2012............................................................             500             597              45