original 2020 standards could therefore cause significant disruptions
in the RIN market, especially in light of the fact that at least 30
obligated parties carried compliance deficits from 2019 into 2020.\89\
These parties must fully meet their 2020 obligations or they will be in
non-compliance with their RFS obligations. That is, they do not have
the option to carry forward a deficit for a second year in a row.\90\
It is possible that these parties could purchase additional RINs on the
market. However, given the shrinking size of the carryover RIN bank,
the current holders of additional RINs may choose to sell their RINs
only at very high costs or in the alternative choose to not sell their
RINs but retain them for their own compliance purposes. Thus, and as we
explain further in Section III.C, there is a substantial probability
that some parties would not be able to acquire sufficient RINs to
comply with the original 2020 standards.
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    \88\ See ``2019 RIN Holding Data as of March 1, 2022,''
available in the docket for this action. Carryover RIN holdings are
presented in relation to the 2019 total RVO as this is the most
recent year for which EPA has compliance data.
    \89\ This number is based on 2019 compliance reports submitted
to EPA to date. There is still some uncertainty in the number of
obligated parties that will carry a deficit into 2020 as EPA has
extended the deadline for small refineries to submit their 2019
compliance reports. See 87 FR 5969 (February 2, 2022).
    \90\ See 40 CFR 80.1427(b).
---------------------------------------------------------------------------

    However, by revising the 2020 standards to the actual volume of
renewable fuel consumed, additional 2019 RINs will likely become
available in the marketplace. Parties holding more 2019 RINs than are
needed or able to be used (i.e., above the 20 percent carryover limit)
after the revision of the 2020 standards are also more likely to trade
those RINs, making them available to other obligated parties for
compliance with the 2020 standards. These RINs can also be used by
small refineries to demonstrate compliance with their 2019 obligations,
potentially reducing the number of obligated parties that will need to
carry forward a deficit.
    The advanced biofuel and total renewable fuel standards we are
finalizing for 2022, moreover, are significantly higher than the volume
of renewable fuel used in 2020 and 2021. As we explain further in
Sections III.E and IV, while we believe that the market is capable of
achieving the 2022 standards (including the 2022 supplemental
standard), those standards are market-forcing and represent a
significant increase in renewable fuel use from the levels used in 2020
and 2021. The market may fall short of using such levels of biofuels,
in which case obligated parties may rely on carryover RINs to achieve
compliance. We believe that preserving the carryover RIN bank to
provide this buffer in the event of a shortfall is important. Given
these factors, as well as the uneven holding of carryover RINs among
obligated parties noted above, we believe that further increasing the
standards with the intent to draw down the carryover RIN bank could
lead to significant deficit carryovers and non-compliance by some
obligated parties that own relatively few or no carryover RINs. We do
not believe this is an appropriate outcome. Therefore, consistent with
the approach we have taken in recent annual rules, we are not setting
the 2020, 2021, and 2022 volume requirements (including the 2022
supplemental standard) at levels that would intentionally draw down the
bank of carryover RINs.
    We are not determining that 1.83 billion RINs is a bright-line
threshold for the number of carryover RINs that provides sufficient
market liquidity and allows the carryover RIN bank to play its
important programmatic functions. As in past years, we are instead
evaluating, on a case-by-case basis, the size of the carryover RIN bank
in the context of the RFS standards and the broader transportation fuel
market at this time. Based upon this holistic, case-by-case evaluation,
we are concluding that it would be inappropriate to intentionally
reduce the number of carryover RINs by establishing higher volumes than
what the market achieved in 2020 or 2021 or what we anticipate the
market is capable of achieving in 2022. Conversely, while an even
larger carryover RIN bank may provide greater assurance of market
liquidity, we do not believe it would be appropriate to set the
standards at levels specifically designed to increase the number of
carryover RINs available to obligated parties. As we explain further in
Sections III.D and E, for instance, given the market-forcing intent of
the RFS program, it would be inappropriate to establish the 2020 and
2021 volumes below the levels the market actually used simply to
increase the carryover RIN bank.
2. Consideration of Cellulosic Carryover RINs
    Section 211(o)(7)(D)(i) of the CAA requires EPA to set the
applicable volume of cellulosic biofuel at the ``projected volume
available during [the] calendar year.'' EPA has consistently
interpreted the statutory phrase ``projected volume available'' to
refer to the volume of qualifying cellulosic biofuel projected to be
produced or imported and available for use as transportation fuel in
the U.S. in that year. This is equivalent to the projected number of
cellulosic RINs generated in the year that are available for obligated
parties to use for compliance. Since we first exercised the cellulosic
waiver authority in the 2010 annual rule, we have never included
cellulosic carryover RINs in this projection.
    In the proposed rule we requested comment on whether to include
cellulosic carryover RINs as part of the ``projected volume
available.'' Under this interpretation of the cellulosic waiver
authority, the ``projected volume available'' would include the
projected volume of cellulosic biofuel plus the volume of available
cellulosic carryover RINs from the prior year. EPA received a number of
comments on this issue, including those supporting EPA's interpretation
of ``projected volume available'' in previous rules and those
supporting an interpretation of this phrase that would include
available carryover RINs. Both groups of commenters argued that their
preferred interpretation was more consistent with the statutory
language and the policy goals of the RFS program. Commenters opposed to
including cellulosic carryover RINs in the projected volume available
generally argued that cellulosic carryover RINs provided obligated
parties important compliance

flexibility, just like other categories of carryover RINs. They further
argued that cellulosic carryover RINs were especially important in
light of the uncertainty associated with cellulosic biofuel production
projections. Conversely, commenters that supported including cellulosic
carryover RINs in the projected volume available generally argued that
despite the continued rapid growth in cellulosic biofuel volumes,
excess cellulosic carryover RINs could result in lower cellulosic RIN
prices, as happened in 2019 and 2020. Lower cellulosic RIN prices in
turn could negatively affect investment in cellulosic biofuel
production. These commenters stated that adopting this new
interpretation would ensure that there was a strong market for
cellulosic biofuel and cellulosic RINs in the future and would result
in increased investment in cellulosic biofuel production and ultimately
increased cellulosic biofuel production. Finally, these commenters
generally suggested that the existence of cellulosic waiver credits
adequately addressed obligated parties' need for compliance
flexibility.
    In this rule we are finalizing cellulosic biofuel volumes for 2020-
2022 that are based on the volume of qualifying cellulosic biofuel
projected to be produced or imported and available for use as
transportation fuel in the U.S. in that year. This is equivalent to the
projected number of cellulosic RINs generated in the year that are
available for obligated parties to use for compliance. Consistent with
EPA's longstanding approach, we have not included available cellulosic
carryover RINs in our projection of the projected volume available. The
statutory term ``projected volume available'' does not directly address
the topic of carryover RINs. Indeed, the cellulosic waiver provision
(CAA section 211(o)(7)(D)(i)) does not mention carryover RINs at all,
or otherwise refer to the statutory basis for such RINs (CAA section
211(o)(5)). Thus, we believe there are multiple possible
interpretations of this ambiguous statutory provision, including the
interpretation adopted by EPA in previous years.
    We continue to believe that the interpretation EPA adopted in
previous years strikes an appropriate balance between the interests of
the cellulosic biofuel producers, those obligated to purchase and use
cellulosic biofuels and cellulosic RINs, and consumers; and best
ensures the ongoing smooth implementation of the RFS program.\91\ Below
we summarize the considerations we balanced in deciding to retain our
longstanding approach in this rulemaking; further discussion is
contained in the RTC document.
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    \91\ See Chevron USA, Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837 (1984).
---------------------------------------------------------------------------

    While we acknowledge that some aspects of the cellulosic biofuel
category (such as the cellulosic waiver authority and the cellulosic
waiver credits) \92\ are unique, we nevertheless believe the benefits
of carryover RINs, discussed in Section III.B.1, generally apply to
cellulosic carryover RINs. Cellulosic waiver credits can help obligated
parties satisfy their cellulosic biofuel volume obligation, but they
are not a full replacement for cellulosic RINs. Rather, to satisfy
their cellulosic biofuel obligation, obligated parties must retire
either a cellulosic RIN or a cellulosic waiver credit plus an advanced
RIN.\93\ In other words, in the event of a shortfall in cellulosic RIN
generation, absent cellulosic carryover RINs, the market must still
rely on the advanced carryover RIN bank in addition to cellulosic
waiver credits.
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    \92\ Cellulosic waiver credits may be purchased from EPA by
obligated parties in years when EPA uses the cellulosic waiver
authority to reduce the statutory volumes of cellulosic biofuel.
Regulations related to cellulosic waiver credits can be found in 40
CFR 80.1456.
    \93\ See 40 CFR 80.1456(c)(4).
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    Furthermore, because there are no statutory volume targets for
cellulosic biofuel in 2023, and because we are required to establish
the cellulosic biofuel volumes for 2023 and future years on the
assumption that the Administrator will not need to issue a waiver for
these years under CAA section 211(o)(2)(B)(iv), we do not anticipate
using the cellulosic waiver authority for 2023. This means that it is
unlikely that cellulosic waiver credits will be available in 2023.\94\
Including cellulosic carryover RINs in the projected volume available
through 2022 would also likely result in few to no cellulosic carryover
RINs available for use in 2023. Thus, changing our interpretation now
to draw down the cellulosic carryover RIN bank in this rule would
likely create a scenario where few or no cellulosic carryover RINs and
no cellulosic waiver credits would be available in 2023. Obligated
parties would thus effectively lose both important compliance
flexibilities in that year. We do not believe this would be
appropriate.
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    \94\ Moreover, unlike with carryover RINs, obligated parties are
not allowed to carry over cellulosic waiver credits for use in the
following year or use them to meet deficits from the prior year. See
40 CFR 80.1456(b)(1), (4). Thus, although cellulosic waiver credits
are available for 2022, obligated parties will not be able to carry
those over for use in 2023.
---------------------------------------------------------------------------

    We recognize that the potential for lower cellulosic RIN prices
could have a directionally negative impact on cellulosic biofuel
investment. The market circumstances that resulted in lower cellulosic
RIN prices in 2019-2020, however, appears to be the result of more than
just the availability of cellulosic carryover RINs. Similar volumes of
cellulosic carryover RINs, and higher levels of available cellulosic
carryover RINs as a percentage of the cellulosic biofuel requirement,
were available in prior years when cellulosic RIN prices were also much
higher relative to 2019-2020.\95\ EPA's assessment of the drop in
cellulosic RIN prices in 2019-2020 suggests that there were multiple
contributing factors, including a new projection methodology for
cellulosic biofuel that under-projected cellulosic biofuel production
in 2018 \96\ and the granting of a significant number of SREs for 2017
and 2018.
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    \95\ The number of cellulosic carryover RINs available for use
in 2016 and 2017 were 39 million RINs (17 percent of the 2016
cellulosic biofuel volume requirement) and 34 million RINs (11
percent of the 2017 cellulosic biofuel volume requirement)
respectively. These numbers are similar to the number of cellulosic
carryover RINs available for use in 2019 and 2020 (49 million RINs
or 12 percent of the 2018 cellulosic biofuel volume requirement and
38 million RINs or 6 percent of the 2020 cellulosic biofuel volume
requirement). In 2016 and 2017 cellulosic RIN prices averaged $1.89
and $2.78 per RIN. In 2019 and 2020 cellulosic RIN prices averaged
$1.15 and $1.49 per RIN.
    \96\ EPA has continued to apply this projection methodology in
years following 2018, including in this rule. This same projection
methodology resulted in an over-projection of cellulosic biofuel
production in 2019 and 2020. As such, the methodology does not
inherently result in under-projections (or over-projections) of
cellulosic biofuel generally or CNG/LNG derived from biogas more
specifically. Further discussion of EPA's cellulosic biofuel
projection methodology can be found in Chapter 5.1 of the RIA.
---------------------------------------------------------------------------

    In projecting cellulosic biofuel production for 2022 using the most
recent available data, and denying pending SRE petitions in a separate
action, we are addressing several of the factors that we believe led to
the drop in cellulosic RIN prices in 2019-2020. Most immediately, we
expect the size of the cellulosic carryover RIN bank to drop from 49
million to 38 million RINs following 2019 compliance. We are continuing
to project significant increases in cellulosic biofuel availability
through 2022, based upon a methodology that takes neutral aim at
accuracy. We do not expect the standards we set, moreover, to be
effectively reduced by future grants of SRE petitions as they have in
some past years. As discussed in Section VII, we are also finalizing
regulations to allow for the production of qualifying

renewable fuel, including cellulosic biofuel, from biointermediates.
While we cannot predict future RIN prices, this combination of actions
should provide a strong market signal of EPA's intention to support a
robust cellulosic biofuel market.
    Further, despite the drop in the cellulosic RIN price in 2019-2020,
cellulosic biofuel production has increased significantly each year
since 2014, demonstrating that cellulosic biofuel production can and
has continued to increase despite volatility in the cellulosic RIN
price.\97\ We do not believe that changing our interpretation of the
``projected volume available'' to include cellulosic carryover RINs is
at this point necessary in order to ensure future growth in cellulosic
biofuels. Instead, we believe that the existing policies described here
are sufficient to provide the market with adequate certainty for
investment and growth in cellulosic biofuels. EPA will continue to
monitor the cellulosic biofuel market closely and assess the efficacy
of the program in providing a sufficient investment environment for
cellulosic biofuels.
---------------------------------------------------------------------------

    \97\ See Section 5.1 of the RIA for more detail on annual
cellulosic biofuel production.
---------------------------------------------------------------------------

    Finally, we note that the legal arguments made by commenters
supporting a change to include cellulosic carryover RINs in the
cellulosic volume, while still relevant, are less so in the context of
this rulemaking. Commenters' legal arguments generally focused on an
interpretation of the cellulosic waiver authority. In this rulemaking,
however, we are concurrently exercising both the cellulosic waiver
authority and the reset authority. Under the reset authority, we have
broad discretion to establish volumes, including cellulosic biofuel
volumes lower than the volume required under the cellulosic waiver.
Even were EPA's interpretation of ``projected volume available''
erroneous, we would nonetheless reduce the cellulosic biofuel volumes
to the final volumes we are establishing in this document (not
including carryover RINs) utilizing the reset authority. Thus,
regardless of whether the commenters are correct about EPA's legal
authority under the cellulosic waiver, we have legal authority under
the reset authority to establish volumes at the projected volume
available of cellulosic biofuel, excluding any cellulosic carryover
RINs.
3. Ability for the RFS Volumes To Impact Renewable Fuel Supply
    In developing the volume requirements, we considered the timing of
this action and its ability to impact renewable fuel production,
imports, and use. Since only prospective requirements have a
significant chance of affecting actual renewable fuel use, we proposed
to establish higher volumes for 2022. By contrast, imposing higher
volumes for 2020 or 2021 would have no effect on the production or use
of renewable fuels in those years. The proposal noted that
retroactively requiring volumes higher than what the market has
actually supplied could create market disruption and thus interfere
with program implementation without advancing program goals.
    Commenters generally acknowledged that higher volume requirements
for 2020 and 2021 would not impact renewable fuel production and use in
those years. However, some commenters stated that revising the 2020
volumes after previously establishing them would reduce confidence in
the market-forcing nature of the RFS program and could negatively
impact renewable fuel production in future years. While we recognize
these concerns, we believe that the unique circumstances in 2020
(described throughout Section III and especially in Section III.C)
justify revising the 2020 volumes.\98\
---------------------------------------------------------------------------

    \98\ Further discussion of this topic can be found in Section 6
of the RTC document.
---------------------------------------------------------------------------

    In this rule we are finalizing volumes consistent with the proposed
approach: establishing volumes for 2020 and 2021 at the level of
renewable fuel used in these years and establishing higher renewable
fuel volumes for 2022. With respect to 2020 and 2021, these years have
already passed. Both common sense as well as our review of the
implementation of the RFS program indicate that this final rule cannot
retroactively affect the production or use of renewable fuels in 2020
or 2021, or consequently affect the statutory reset factors in CAA
section 211(o)(2)(B)(ii)(I)-(VI) insofar as they are based on renewable
fuel production or use that occurred during those years (e.g., the
impacts of the use of renewable fuels in 2020 and 2021 on cost, the
environment, and so forth). It is possible that the proposed rule,
which was signed on December 7, 2021, may have impacted renewable fuel
production and use during 2021. Given that the proposal came out in
December and was only a proposal and not a final rule, however, those
impacts were likely to be quite limited. Any market effects of the 2020
and 2021 volumes finalized in this rule will be felt after the rule is
promulgated and mediated through the carryover RIN bank. As we explain
below, these mediated market effects can be evaluated with regard to
the statutory factors and favor establishing 2020 and 2021 volumes at
those actually used.
    The situation for 2022, however, is different. We are issuing this
final rule with a significant portion of the year remaining. Moreover,
we are finalizing volumes using the same policy approach as in the
proposal, which was issued in December 2021, albeit with some small
changes due to updated data, allowing the proposal to have provided
regulated entities with additional notice of the potential
requirements. Thus, we believe that the RFS standards for 2022 will be
able to significantly affect market decisions for renewable fuel
production, import, and use in 2022, and consequently the related
statutory factors. In turn, we believe it is appropriate to increase
renewable fuel requirements in 2022, when this rule has a much greater
chance of actually increasing renewable fuel use and production, as
opposed to 2020 or 2021.
    Further, there are also disadvantages to requiring higher volumes
for 2020 and 2021 retroactively, or similarly, to maintaining the 2020
standards in the original final rule. Such higher volumes would cause
some combination of a drawdown of the carryover RIN bank, carryforward
deficits, or potentially even non-compliance by obligated parties.
While we have previously found an intentional drawdown of the carryover
RIN bank to be appropriate in one case, we do not think it is
appropriate to do so in this rule for reasons we described above in
Section III.B.1. We also do not think that intentionally relying on or
effectively compelling carryforward deficits or intentionally causing
non-compliance is generally appropriate.
    Renewable fuel production and use in 2020 was significantly lower
than what we projected in the original 2020 final rule. As discussed in
Section III.C, compliance with the original 2020 standards would likely
result in a significant drawdown in the number of carryover RINs
available for use in 2021 and 2022. As discussed in Section III.B.1, we
currently project that as a result of compliance with the 2019
standards, the number of carryover RINs available for compliance with
the 2020 standards will be approximately 1.83 billion RINs, a
considerable drop from the 3.48 billion total carryover RINs we
projected in the 2020 final rule. We expect that as a result of
revising the 2020 standards to equal the actual volume of renewable
fuels consumed, the number of carryover RINs available for compliance
with the 2021 and 2022

standards will remain at 1.83 billion RINs.
    Were we not to modify the 2020 standards, we anticipate that the
total number of carryover RINs available for compliance with the 2021
and 2022 standards would decrease substantially, to 680 million RINs,
or less than 4 percent of the 2022 total renewable fuel standard.\99\
This would be the lowest quantity of carryover RINs available since EPA
began projecting the size of the carryover RIN bank in 2013, far below
the levels of carryover RINs available to obligated parties in recent
years. A well-functioning RIN market is foundational for allowing
obligated parties to comply with their RFS mandates, particularly for
obligated parties that do not themselves produce or blend renewable
fuels. Drawing down the carryover RIN bank to this level could
significantly disrupt the functionality of the RIN market.
---------------------------------------------------------------------------

    \99\ The calculations performed to project the number of
carryover RINs that would be available if we did not revise the 2020
standards can be found in the memorandum, ``Carryover RIN Bank
Calculations for 2020-2022 Final Rule,'' available in the docket for
this action. Further discussion of the size of the advanced and
cellulosic carryover RIN banks is contained in the above-cited memo,
Section III.B.2, and Section 2.6 of the RTC document.
---------------------------------------------------------------------------

    This drawdown in the carryover RIN bank would be particularly
concerning given the uneven nature of carryover RIN holdings and the
number of obligated parties that carried deficits into 2020 discussed
in the previous section. Taken together, these facts present a
significant risk of market disruption were we to not revise the 2020
standards. A number of obligated parties that have not already carried
deficits into 2020 would likely have to carry deficits into 2021. Other
parties may have to carry deficits into 2022. Some parties, especially
those that have already carried a deficit into 2020, may not be able to
acquire sufficient RINs for compliance in 2021 or 2022.\100\ If we were
to leave the 2020 standards unchanged, we find that there would be a
substantial probability that some obligated parties would not be able
to comply with those standards or with the 2021 and 2022 standards we
are finalizing in this action.
---------------------------------------------------------------------------

    \100\ The regulations at 40 CFR 80.1427(b) allows obligated
parties to only carry forward a deficit if they did not carry
forward a deficit from the previous calendar year; thus, an
obligated party that carries forward a deficit from 2020 into 2021
may not carry forward a deficit from 2021 into 2022.
---------------------------------------------------------------------------

    We emphasize that the above risks arise from the unanticipated
shortfall in 2020 renewable fuel use and the inherent potential for
future unexpected market events. In turn, noncompliance may lead to
significant adverse business impacts on these parties as well as to
civil penalties. Particularly given our legal duty to consider burdens
on obligated parties when promulgating retroactive standards, we do not
think this outcome would be fair or appropriate.
    If these compliance difficulties occur, moreover, we believe that
the harms would not just be felt by directly affected obligated parties
but also extend to the entire fuels market and the RFS program. If
insufficient RINs are available to obligated parties to meet their
compliance obligations, this could negatively impact the regulatory and
market certainty critical to the investments needed to increase
renewable fuel volumes in 2022 and into the future. Uncertainty in the
RFS program specifically, and the broader fuels market more generally,
could negatively impact investment in increasing renewable fuel
production and accordingly the expected future rate of production of
renewable fuels. It could also negatively affect investment in the
infrastructure necessary to deliver and use of greater quantities of
renewable fuel. As discussed in greater detail in the RIA, biofuel
production and use generally have positive impacts on climate change,
energy security, job creation, and rural economic benefits. Reduced
production and use of renewable fuels would therefore be expected to
negatively impact these statutory factors. In particular, reduced
business certainty could also deter the commercialization of novel
advanced biofuels, which have the potential for lower costs and
superior environmental benefits.
    Retroactively reducing the 2020 volumes mitigates these concerns.
Specifically, reducing the 2020 required volumes to the volumes of
renewable fuel actually used in 2020 preserves an estimated carryover
RIN bank of 1.83 billion RINs for use in 2021, and establishing the
2021 volumes at the volumes of renewable fuel actually used in 2021
preserves the same estimated carryover RIN bank for compliance with the
market-forcing 2022 standards.
    We note lesser reductions to 2020 or 2021 would give rise to
similar concerns. The magnitude of those concerns would depend on how
high the 2020 and 2021 volume requirements are and the resulting impact
on the carryover RIN bank. We think that some of these concerns,
moreover, would remain even were we to make offsetting reductions to
the 2022 volumes (e.g., were we to increase the 2021 volumes by 500
million gallons and decrease the 2022 volumes by the same amount). In
that case, even though the aggregate incentive for renewable fuels
across all three years might remain the same, retroactively requiring
compliance for past years would increase the risk of market disruption.
This is because while we expect a significantly higher number of RINs
to be generated in 2022 than in either 2020 or 2021, compliance is
still conducted on a year-by-year basis. As noted above, there are
limitations on the ability of obligated parties to carry forward
deficits into 2022 and consequently to leverage 2022 RIN generation to
meet higher 2020 or 2021 standards.

C. Volume Requirements for 2020

    We proposed to revise previously finalized 2020 total renewable
fuel, advanced biofuel, and cellulosic biofuel volumes to equal the
volume of such fuels actually consumed in the U.S. in 2020. We also
proposed to make corresponding adjustments to the percentage standards
applicable to obligated parties.\101\
---------------------------------------------------------------------------

    \101\ As discussed in Section V, the adjustments to the
percentage standards would also include changes to the non-renewable
gasoline and diesel volumes to reflect actual 2020 consumption.
---------------------------------------------------------------------------

    As discussed previously, commenters generally acknowledged that
higher volume requirements for 2020 would not impact renewable fuel
production and use in 2020, but expressed concerns that revising the
2020 volumes after previously establishing them would reduce confidence
in the market-forcing nature of the RFS program and could negatively
impact renewable fuel production and use in future years. Many of these
commenters stated that the structure of the RFS program automatically
adjusted to the lower than expected demand for gasoline and diesel
fuel, and that further modification of the 2020 percentage standards
was thus unnecessary, especially in light of the availability of
carryover RINs. Other commenters supported our proposed revisions to
the previously established 2020 volume requirements, noting the impact
of the COVID-19 pandemic and the shortfall in renewable fuel use
relative to projections in the original 2020 final rule.
    In this rule we are finalizing revised 2020 volumes and percentage
standards based on the actual volumes of renewable fuel, gasoline, and
diesel fuel used in 2020, consistent with the proposed rule. While we
recognize the concerns raised by commenters opposing these changes, we
believe that the unique circumstances in 2020 justify revising the 2020
volumes, and that we

have the authority to do so as discussed in Sections II.C and D.
    We acknowledge that we are reconsidering and revising the already
finalized 2020 standards \102\ after the November 30, 2019, statutory
deadline for the 2020 standards in CAA section 211(o)(3)(B)(i). The
revised 2020 standards are also retroactive. Barring unusual
circumstances, we generally do not believe it is appropriate to
reconsider and revise previously finalized RFS standards, particularly
where we are doing so retroactively.\103\ Nonetheless, we are doing so
for 2020 because, in compliance with the statutory requirement that we
review the implementation of the RFS program, we have determined that
critical and unanticipated events have occurred which affected fuels
markets in that year and consequently affect compliance with the RFS
program. Specifically, there was a significant, unprecedented, and
unforeseen shortfall in renewable fuel use in 2020 relative to the
volumes that we required in the original 2020 final rule. Actual use of
qualifying renewable fuel in 2020 (17.13 billion RINs) was nearly 3
billion RINs lower than the 20.09 billion RINs that the 2020 final rule
projected the market could achieve. That is, the actual shortfall is
14.9 percent of the total renewable fuel volume in the original 2020
rule. This is the largest shortfall on record, in both absolute and
percentage terms, since Congress enacted the RFS program.\104\ This
shortfall was largely due to two factors: (1) the COVID-19 pandemic,
which caused an unforeseen and drastic fall in transportation fuel
demand generally and in biofuel demand more specifically; and (2) EPA's
projection in the 2020 rule that we would grant a large number of SREs
for 2020 and our consequent decision to deny all pending 2020 SRE
petitions.
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    \102\ 85 FR 7016 (February 6, 2020).
    \103\ We have in the past modified previously finalized RFS
standards, including in response to court decisions (see 80 FR 77420
(December 14, 2015), modifying the cellulosic biofuel standards),
and in response to new information and petitions for reconsideration
(see 79 FR 25025 (May 2, 2014)), also modifying the cellulosic
biofuel standard).
    \104\ See Figure 1.2-4 in the RIA.
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    In general, under the RFS program, a shortfall in gasoline and
diesel fuel consumption relative to the projected volumes results in a
corresponding decrease in the volume of renewable fuel required. This
self-adjusting nature of the program is a function of the fact that the
RFS standards are applied as a percentage to an obligated party's
gasoline and diesel fuel production; the obligation to acquire RINs for
compliance rises and falls along with the sum of gasoline and diesel
fuel production volume. Further, historical deviations before 2020
between the volumes of gasoline and diesel fuel actually used relative
to their projected volumes have been relatively small, on the order of
a few percent.\105\ As a result, we have historically not adjusted the
RFS standards after they have been established to account for updated
gasoline and diesel fuel consumption levels. This is consistent with
our general policy of not reconsidering and revising previously
finalized RFS standards.
---------------------------------------------------------------------------

    \105\ See Figure 1.2-1 in the RIA.
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    However, the situation in 2020 was different. As explained further
in Section III.B, the shortfalls in 2020 were both significantly larger
than in any previous year (about 12 percent) and disproportionately
affected gasoline more than diesel fuel.\106\ This is important
because, on average, finished gasoline contains more renewable content
than finished diesel. The vast majority of gasoline contains at least
10 percent ethanol, mostly in the form of E10, whereas the average
concentration of renewables in diesel is considerably less than 10
percent.\107\ Thus, while the decrease in transportation fuel demand in
2020 proportionally decreased the required renewable fuel volume, the
decrease in the demand for renewable fuel was greater given the larger
drop in gasoline versus diesel fuel demand. In other words, despite the
self-adjusting nature of the RFS standards in response to
transportation fuel demand, the disproportionate fall in gasoline
demand meant actual RIN generation still fell short of what was
ultimately required for compliance.
---------------------------------------------------------------------------

    \106\ See Figure 1.2-1 in the RIA.
    \107\ According to EIA's January 2022 STEO diesel consumption in
the U.S. in 2020 was 3.51 million barrels per day (54.0 billion
gallons). Biodiesel and renewable diesel in 2020 totaled 2.50
billion gallons, which generated 3.87 billion RINs. Thus, the
average gallon of diesel in the U.S. was blended with renewable fuel
that generated 0.07 RINs (3.87 billion RINs/54.0 billion gallons),
while the average gallon of gasoline was blended with renewable fuel
that generated 0.10 RINs.
---------------------------------------------------------------------------

    In addition, when we promulgated the 2020 volume requirements, we
did so while projecting for the first time that we would be granting a
large number of SREs for 2020. Specifically, the 2020 final rule
projected that EPA would grant exemptions of 7.26 billion gallons of
gasoline and diesel, equivalent to approximately 770 million RINs.\108\
We reallocated the projected exempted volumes onto the remaining
obligated parties, thereby significantly increasing the obligations on
those parties. However, EPA recently announced that we were denying
pending SRE petitions before the agency, including all petitions for
2020.\109\ In other words, the actual exempted volume of gasoline and
diesel fuel in 2020 is zero. Were we to leave the 2020 standards
unchanged, this discrepancy between projected and actual exemptions
would significantly raise the effective volume obligations for all
obligated parties. This effect is independent from the COVID-related
transportation fuel demand effects described above.
---------------------------------------------------------------------------

    \108\ 85 FR 7053, February 6, 2020.
    \109\ See ``June 2022 Denial of Petitions for RFS Small Refinery
Exemptions,'' EPA-420-R-22-011, June 2022.
---------------------------------------------------------------------------

    Accounting for these factors, actual renewable fuel use in 2020
(17.13 billion RINs) was approximately 1.23 billion RINs lower than the
estimated obligation for 2020 were we to leave the original 2020
percentage standards unchanged, based on available data of obligated
gasoline and diesel fuel production in 2020 (18.35 billion RINs). As
such, compliance with the original 2020 standards would likely result
in a significant drawdown of the number of carryover RINs available for
use in 2021. As we discussed in Section III.B, this would present a
substantial probability of market disruption, including of
noncompliance by some obligated parties.
    While our analyses have focused on the availability of RINs for RFS
compliance in 2020, the risks we describe must be considered in the
broader context of the fuels market. As we explain in Chapter 1 of the
RIA, in our review of the implementation of the RFS program, we find
that the RFS program, the biofuels market, and the broader
transportation fuels market are highly intertwined. This broader
consideration of the larger fuels market further supports our concerns
regarding maintaining the original 2020 standards. For one, 2020
follows a year (2019) in which the market already relied heavily on
carryover RINs to meet the RFS obligations. As noted above, we
anticipate the market to draw down the carryover RIN bank from 3.48
billion to 1.83 billion RINs to meet compliance obligations for 2019.
While the 3.48 billion carryover RIN bank going into 2019 reflected a
historical high, it was the result of roughly three years of
accumulation.\110\ That accumulation occurred during a period when EPA
had incrementally raised the total renewable fuel volume each year and
maintained the conventional volume at the full implied statutory volume
of 15 billion gallons. At the same time, EPA had

granted large numbers of SREs that were not accounted for in setting
the standards and significantly reduced the effective RFS requirements
below the volumes we established in our annual rules. More recently, we
have denied pending SRE petitions, including all petitions for 2019 and
2020, and we are not aware of any circumstances that would warrant EPA
granting SREs in the future that would increase the size of the
carryover RIN bank akin to what occurred leading up to 2019.\111\
---------------------------------------------------------------------------

    \110\ See ``Carryover RIN Bank Calculations for 2020-2022 Final
Rule,'' available in the docket for this action.
    \111\ See ``June 2022 Denial of Petitions for RFS Small Refinery
Exemptions,'' EPA-420-R-22-011, June 2022.
---------------------------------------------------------------------------

    Were we to leave the 2020 standards unchanged, as noted above, we
would expect a further drawdown of the carryover RIN bank to the lowest
historical levels since we began tracking the carryover RIN bank in
2013. The associated shortfall in renewable fuel production and use in
2020 comes on the heels of an already large shortfall in renewable fuel
production and use in 2019. As noted above, the dramatic reduction in
the carryover RIN bank in 2019 eliminated much of the flexibility the
carryover RIN bank might have otherwise provided for 2020. Moreover, a
significant reduction to the number of carryover RINs for two
consecutive years would only increase the general concerns associated
with relying on carryover RINs to meet the RFS obligations, especially
for parties that generally do not own significant quantities of
carryover RINs.
    Additional factors regarding the larger transportation fuels market
also support our decision to revise the 2020 standards. The drop in
demand for transportation fuel due to the COVID-19 pandemic had a
significant impact on refiners. Refining margins (often referred to as
the ``crack spread'') dropped sharply in 2020, resulting in broad
losses across the refining industry in 2020.112 113 In
response to this economic environment many refiners sought to minimize
expenses to preserve available capital, taking actions such as delaying
or cancelling capital expenditures.\114\ At the same time, biofuel
producers were also impacted by a dramatic reduction in transportation
fuel demand and challenges across the supply chain for agricultural
commodities, including biofuel feedstocks.\115\ This combination of
factors made the acquisition of the renewable fuel volumes necessary to
meet the RFS obligations in 2020 uniquely challenging, both
economically and practically.
---------------------------------------------------------------------------

    \112\ Q4 2020: U.S. Refining Margins Remain Depressed; Refining
Industry in Focus. Baker & O'Brien Inc.; March 12, 2021.
    \113\ Somasekhar, Arathy. ``U.S. oil refiners set for first
profit since onset of pandemic.'' Reuters. July 28, 2021.
    \114\ Agarwal, Bharti. ``Effect of COVID-19 pandemic on refining
and refiners.'' IHS Markit. August 2020.
    \115\ Aday, Serpil and Aday, Mehmet Seckin. ``Impact of COVID-19
on the food supply chain.'' Food Quality and Safety. Volume 4, Issue
4. December 2020.
---------------------------------------------------------------------------

    Given the above reasons, we have decided to reconsider and revise
the 2020 volumes to those actually used. In doing so, we recognize that
since 2020 has already passed, this rulemaking has no ability to affect
actual production, imports, and use of renewable fuel in 2020. As such,
the impact of the rule on those statutory factors related to renewable
fuel production and use during 2020 is similarly limited. Rather, this
final rule seeks to ensure sufficient RINs are available for
compliance. It acts to relieve burdens on obligated parties, and in
some cases the potentially onerous burden of non-compliance with the
RFS program, the possibility of civil penalties, and associated market
disruptions. This approach also seeks to mitigate related negative
impacts on the regulatory and market certainty critical to the
investments needed to increase renewable fuel volumes in 2022 and into
the future. As discussed in Section III.B.3, this market certainty has
an impact on many of the statutory factors, including the expected
future rate of production of renewable fuels, the development of
infrastructure to distribute and use increased volumes of such fuels,
climate change, energy security, job creation, and rural economic
benefits.
    As our reconsideration of the 2020 standards is retroactive, we
have considered and mitigated burdens on obligated parties as required
by the D.C. Circuit's caselaw on retroactive RFS standards. To begin
with, as noted above, we have ensured sufficient RINs for compliance,
and this factor has been key in our decision to reconsider and revise
the standards to actual supply. We have also considered several other
factors:
     Adequate lead time for obligated parties to comply with
the revised standards.
     The availability of compliance flexibilities.
     The impact of the revised standards on those parties that
may have relied on the original standards in making business decisions.
     Alternatives to revising the 2020 volume requirements to
be equal to the volumes actually consumed.
    Each of these factors is discussed below.
    Regarding lead time for obligated parties, we note that relatively
less lead time is needed given that we are reducing the stringency of
their obligations, as opposed to increasing their stringency.
Nonetheless, we are providing significant lead time. Earlier this year
we extended the 2020 compliance deadline for obligated parties to the
next quarterly reporting deadline after the 2019 compliance reporting
deadline for small refineries, which in turn was extended in that same
action to the next quarterly reporting deadline that is after the
effective date of this rule.\116\ In other words, obligated parties
will have no less than 5 months after the publication of this final
rule in the Federal Register, and no less than 11 months after the
publication of the 2020-2022 proposal,\117\ to comply with their 2020
obligations. Had we not adjusted the 2020 compliance deadline,
obligated parties would have needed to demonstrate compliance by March
31, 2021.
---------------------------------------------------------------------------

    \116\ 87 FR 5696 (February 2, 2022).
    \117\ 86 FR 72436 (December 21, 2021).
---------------------------------------------------------------------------

    Regarding the availability of compliance flexibilities, obligated
parties continue to have access to carryover RINs and carryforward
deficits to facilitate compliance. As discussed above, the revision of
the 2020 volumes to those actually supplied preserves the carryover RIN
bank and the availability of this flexibility.
    Regarding potential reliance interests, we recognize that
retroactively adjusting the 2020 standards may disrupt market
expectations created by the prior final rule, for instance on the part
of biofuel producers that made investments or other parties who
transacted biofuels or RINs, based on the higher standards originally
finalized. As a general matter, these expectations may not rise to the
level of reliance interests recognized by the courts.\118\ As discussed
in Section II, EPA generally has authority to reconsider and revise
prior rulemakings. Congress also specifically granted EPA multiple
waiver authorities. Moreover, as shown in Section 1.9 of the RIA, RIN
prices have fluctuated significantly over time. Thus, market actors may
not possess legally cognizable reliance interests in specific RFS
volumes or

standards or specific RIN prices. Even hypothetically assuming that
some market expectations amounting to legally cognizable reliance
interests exist, those expectations and interests were already
confounded by the significant and unanticipated events described above,
including the COVID-19 pandemic's impact on the fuels markets.
---------------------------------------------------------------------------

    \118\ See Monroe Energy, LLC v. EPA, 750 F.3d 909, 919-20 (D.C.
Cir. 2014) (holding that the litigant ``had no legally settled
expectation'' regarding how EPA exercised its waiver authority to
adjust the renewable volume obligations). See also AFPM, 937 F.3d
577-78 (finding it far from obvious that biofuel producers had
serious reliance interests in the annual volumes).
---------------------------------------------------------------------------

    Furthermore, obligated parties who obtained additional RINs in
response to the original, higher 2020 standards are not penalized in
any way. To the contrary, these parties will continue to have
sufficient RINs to comply with the revised, lower standards and may
sell excess RINs or carry them over for 2021 compliance consistent with
EPA's regulations. Similarly, biofuel producers who made investments in
response to the original 2020 standards and generated additional RINs
are also able to sell these RINs in the market and may continue to
obtain returns on their investments as the market demands additional
RINs needed to meet the 2022 standards. Although this action may reduce
the market value of 2020 RINs, maintaining the current 2020 standards
would force other obligated parties into noncompliance. We do not
believe any potential reliance interests of RIN-holders would justify
imposing the burden of non-compliance on obligated parties who had no
reason to anticipate the unprecedented events of 2020. Additionally, we
have extended the 2020 compliance deadline so that all parties are
still able to trade and acquire RINs for compliance with the 2020
standards.\119\ In all cases, we believe that revising the standards is
warranted based on the events and factors described above and that we
have set forth a sufficiently detailed justification for doing so.
---------------------------------------------------------------------------

    \119\ 87 FR 5696 (February 2, 2022).
---------------------------------------------------------------------------

    Finally, we also considered alternatives to our final action,
including revising the 2020 volumes to volumes lesser or greater than
the volume of renewable fuel that was supplied, as well as leaving the
original volumes from the 2020 final rule in place. We do not believe
it is appropriate to retroactively modify the volumes to be lower than
what the market actually used. We acknowledge that reducing the 2020
volumes further would allow the market to build up the carryover RIN
bank so as to provide even greater market liquidity. This would benefit
obligated parties, particularly those that carried forward deficits
into 2020 or have very few or no carryover RINs. However, we do not
believe this would be appropriate since the general purpose of the RFS
program is to incentivize increasing production and use of renewable
fuels over time. Doing so, moreover, would be unprecedented. While EPA
has previously set the RFS standards at what the market actually used
(like for 2014 and 2015 in the 2014-2016 rule), we have never
intentionally reduced the standards with the express intent to inflate
the size of the carryover RIN bank. We further discuss this issue in
the RTC document.
    At the same time, we do not believe that requiring higher volumes
than what was actually used is appropriate. As explained above, doing
so would result in some combination of potentially disruptive outcomes:
(1) a reduction in the size of the carryover RIN bank; (2) obligated
parties carrying deficits into 2021; and/or (3) obligated parties being
out of compliance with their RFS obligations. Given the intertwined
nature of compliance from year to year, we acknowledge that requiring
higher volumes in 2020 may increase demand for renewable fuels in 2022.
However, this rule achieves the same result simply by requiring higher
volumes in 2022. Given that this rule cannot affect past years such as
2020 but can affect the future, we believe it is more appropriate to
drive increasing renewable fuel demand prospectively, in 2022. Doing so
also mitigates the compliance concerns, including the potential for
non-compliance, described above. We discussed this issue further in
Section III.B.
    The above reasons also support our decision to act after the
statutory deadlines for waiving the volumes and establishing the 2020
standards. We have also further and specifically assessed whether it is
appropriate to exercise the reset authority after the passage of the
statutory deadline and have concluded that it is. We received comments
from certain stakeholders suggesting either that EPA lacked the
authority to utilize the reset authority after the deadline had passed,
or that our discretion is limited when utilizing the reset authority
after the deadline. Commenters suggested that the reset authority only
provides for a prospective waiver and cannot be used to modify volumes
that have already been established. As explained in Section II.A.2, the
statutory deadline for resetting the total renewable fuel volume was in
December 2019 (i.e., one year after the promulgation of the 2019
standards final rule).\120\ The statutory deadlines for resetting the
advanced biofuel and cellulosic biofuel volumes occurred even earlier.
Despite being late to meet our statutory obligations, we are exercising
the reset authority for several reasons.
---------------------------------------------------------------------------

    \120\ We received comments suggesting that the lead time
requirement in CAA section 211(o)(2)(B) also applied, such that EPA
was required to promulgate modified standards by October 31, 2019
(i.e., 14 months prior to the year in which the standards would take
effect). Since the reset provision in CAA section 211(o)(7) provides
the timing requirement specific for the reset rule (one year after
the last triggering action), we believe that specific provision
controls over the more general 14-month provision in CAA section
211(o)(2)(B), which applies to establishing standards under that
provision more generally (including for BBD after 2012 and for all
other fuel categories after 2022). In any event, whether we utilize
the October 31, 2019 deadline, or the December 2019 deadline, our
exercise of the reset authority is late.
---------------------------------------------------------------------------

    First, doing so satisfies our statutory obligation to reset the
statutory volumes. Second, we have already notified the public that we
intended to exercise the reset authority.\121\ This rule makes good on
that intent and meets our statutory obligation. Third, the reset
authority also provides EPA broad discretion to modify the renewable
fuel volumes and to establish biofuel volume requirements at the
volumes actually consumed in 2020. Such 2020 volumes for advanced
biofuel and total renewable fuel could not be established under the
cellulosic waiver authority, which was the legal basis for the original
2020 final rule.\122\ Nonetheless, we believe that these are the
appropriate volumes for the reasons explained above. Fourth, we
acknowledge that the text of the statutory reset provision does
contemplate a prospective waiver of the applicable volumes. This is
not, however, different from other statutory authorities in the RFS
program, which also contemplate prospective actions.\123\ This includes
the authority to establish volumes for 2023 and beyond under CAA
section 211(o)(2)(B)(ii), which requires EPA to establish volume
requirements 14 months in advance of when they apply based on the same

statutory factors as the reset authority. The D.C. Circuit has reviewed
EPA's belated exercise of authority under that and other RFS provisions
and has held that EPA does not lose authority to act merely as a result
of a missed deadline \124\ and upheld our prior rulemakings as
reasonable. Finally, EPA generally has the authority to reconsider past
actions establishing the RFS standards and in doing so can utilize
explicit waiver authorities provided in the statute to modify volumes
that we declined to use at the time of the initial promulgation of the
rule to reduce volumes beyond initial reductions. Nothing in the
statute indicates that the various waiver authorities (such as the
reset and cellulosic waiver authorities) cannot be used together, nor
does anything indicate that EPA's authorities are limited upon
reconsideration of a rule. Further discussion of this topic is provided
in Section 2 of the RTC document.
---------------------------------------------------------------------------

    \121\ See 84 FR 36766 (July 29, 2019), 86 FR 72436 (December 21,
2021).
    \122\ The cellulosic waiver authority limits reductions in the
statutory total renewable fuel and advanced biofuel volumes to no
more than the reduction in the cellulosic biofuel volume. In the
2020 final rule, we exercised the cellulosic waiver to the maximum
extent, resulting in an implied conventional renewable fuel volume
of 15 billion gallons and an implied non-cellulosic advanced biofuel
volume of 4.5 billion gallons. However, the volumes of advanced
biofuel and total renewable fuel actually supplied in 2020 fell
short of these numbers.
    \123\ See, e.g., CAA section 211(o)(3)(B)(i) (requiring EPA to
establish standards by November 30 of the preceding year), section
(o)(7)(D)(i) (requiring EPA to determine whether or not to exercise
the cellulosic waiver authority by November 30 of the preceding
year), and section (o)(2)(B)(ii) (requiring EPA to establish volumes
14 months before they apply).
    \124\ See ACE at 718-9, NPRA at 154-158, Monroe at 920.
---------------------------------------------------------------------------

    The revised 2020 volumes, along with the original volumes, are
shown in Table III.C-1. The revised 2020 percentage standards are
provided in Section V.D.

           Table III.C-1--Revised Volume Requirements for 2020
                             [Billion RINs]
------------------------------------------------------------------------
                                             Original
                Standard                      volume      Revised volume
------------------------------------------------------------------------
Cellulosic Biofuel......................            0.59            0.51
Biomas-Based Diesel.....................        \a\ 2.43        \a\ 2.43
Advanced Biofuel........................            5.09            4.63
Total Renewable Fuel....................           20.09           17.13
------------------------------------------------------------------------
Source: EMTS (EPA Moderated Transaction System). See ``RIN supply as of
  2-17-22''
\a\ The BBD volume for 2020 is in physical gallons (rather than RINs)
  and was established in the 2019 final rule (83 FR 63704, December 11,
  2018). We are not revising the 2020 BBD volume in this action.

D. Volume Requirements for 2021

    We proposed to establish the cellulosic biofuel, advanced biofuel,
and total renewable fuel volumes for 2021 at the volumes of these fuels
projected to be supplied to the U.S. in 2021. Commenters generally
supported this proposed approach. Many commenters submitted updated
data on renewable fuel use in 2021, or referenced publicly available
data on renewable fuel use and asked that the 2021 volumes reflect this
updated data. Some commenters suggested that the 2021 volumes should be
set at the implied statutory levels despite the retroactive nature of
the 2021 volumes and the anticipated shortfall in renewable fuel use
relative to the implied statutory volumes. In this final rule we are
establishing cellulosic biofuel, advanced biofuel, and total renewable
fuel volumes for 2021 at the volumes of these fuels supplied to the
U.S. in 2021, as proposed. However, instead of basing the 2021 volumes
on a projection of the supply in 2021 as in the proposed rule, we now
have and are updating the volumes based on data on the actual supply of
these fuels in 2021. While this results in some changes relative to the
proposed volumes for 2021, these changes are relatively small, and are
consistent with our stated intent in the proposed rule to finalize
volumes for 2021 consistent with the most current data available.
    Given that we are establishing 2021 volumes on the same basis as
the 2020 volumes (i.e., at the volumes of biofuels actually used), the
rationale for our 2021 volumes is similar to the rationale for our 2020
volumes. Below we present some of the key similarities and also note
differences where they exist. As with 2020, because this rule is being
finalized after the end of 2021, there is no longer any ability for the
rule to affect renewable fuel production, imports, and consumption in
the U.S. in 2021. As such, the impact of the rule on each of the
statutory factors with regard to renewable fuel use and production
during 2021 is similarly limited. Also, as with 2020, we could have set
volumes for 2021 that were greater or lesser than the volume of
renewable fuel that was actually consumed in 2021, but we do not
believe that doing so would be appropriate for similar reasons. We do,
however, believe that the RFS program should drive increases in
renewable fuel volumes over time. Given that we are setting volumes for
2020-2022 in this rule and the fact that retrospective volumes have
limited ability to affect biofuel use, we believe that increases in
volume requirements are more appropriate in 2022. That is when this
rule applies prospectively for part of the year and has the potential
to affect actual biofuel consumption. We discuss this relationship
between the three years further in Section III.B.3.
    As with 2020 standards, the 2021 standards are both late (relative
to the statutory deadline of November 30, 2020) and retroactive. Unlike
for 2020, however, we are not modifying previously finalized standards
for 2021. The lateness and retroactivity of the 2021 standards are
appropriate for similar reasons as for 2020. We believe that
establishing the 2021 volumes at the volumes actually used properly
balances the statutory goal of increasing renewable fuel use with
mitigating burdens on obligated parties. It ensures that the obligated
parties should have sufficient RINs to comply. In a separate action, we
have extended the compliance reporting deadline for 2021, providing
additional lead time. Obligated parties will have at least 9 months
after the publication of this action in the Federal Register before
having to demonstrate compliance with their 2021 obligations.\125\ We
also maintain the existing compliance flexibilities for obligated
parties including access to carryover RINs and carryforward deficits.
As discussed above, the revision of the 2020 volumes to those actually
supplied preserves the carryover RIN bank that helps facilitate
compliance, including for 2021. In addition, we note that this
approach, of setting volumes at those actually used, is consistent with
our approach in the 2014 and 2015 standards rulemakings, which the D.C.
Circuit upheld in ACE.
---------------------------------------------------------------------------

    \125\ See 40 CFR 80.1451(f)(1)(i)(B)(3); 87 FR 5696 (February 2,
2022).
---------------------------------------------------------------------------

    As with the 2020 volumes, the 2021 volumes also depend upon an
exercise of the reset authority. We believe using the reset authority
is appropriate for similar reasons as for 2020, including that we are
statutorily obligated to reset 2021 volumes, we have previously
informed the public that we intended to reset the volumes, and the
reset authority gives us discretion to reduce the total renewable fuel
volume beyond what we could establish under the

cellulosic waiver. As with resetting the 2020 standards, we do not
believe that the passage of time or the retroactive nature of this rule
deprive us of our ability to exercise the reset authority.
Additionally, the statute indicates that when we reset the volumes, we
must do so for all remaining years in the statutory volume tables,
which extend through 2022. Thus, in resetting the 2020 volumes, we are
obligated to reset the 2021 and 2022 volumes.\126\
---------------------------------------------------------------------------

    \126\ See CAA section 211(o)(7)(F) (``the Administrator shall
promulgate a rule . . . that modifies the applicable volumes set
forth in the table concerned for all years following the final year
to which the waiver applies'').
---------------------------------------------------------------------------

    The volumes of cellulosic biofuel, advanced biofuel, and total
renewable fuel that we are establishing for 2021 are shown in Table
III.D-1. The BBD volume for 2021 was previously established in the 2020
final rule and is included in Table III.D-1 for context. These volumes
are based on the actual consumption of renewable fuels in the U.S., as
discussed in greater detail in Chapter 5 of the RIA.

                   Table III.D-1--RFS Volumes for 2021
                             [Billion RINs]
------------------------------------------------------------------------
                        Category                              Volume
------------------------------------------------------------------------
Cellulosic Biofuel......................................            0.56
Biomass-Based Diesel....................................        \a\ 2.43
Advanced Biofuel........................................            5.05
Total Renewable Fuel....................................           18.84
------------------------------------------------------------------------
\a\ The BBD volume for 2021 is in physical gallons (rather than RINs)
  and was established in the 2020 final rule (85 FR 7016, February 6,
  2020). We are not revising the 2021 BBD volume in this action.

E. Volume Requirements for 2022

    For 2022 we proposed a cellulosic biofuel volume that was equal to
the volume of qualifying cellulosic biofuel projected to be used in the
U.S. in 2022 and volumes of non-cellulosic advanced biofuel and
conventional renewable fuel that were consistent with the implied
statutory targets for these categories.\127\ The proposed volumes for
2022 were significantly higher than the proposed volumes for 2020 and
2021.
---------------------------------------------------------------------------

    \127\ The implied statutory volume for non-cellulosic advanced
biofuel in 2022 (5 billion gallons) is the difference between the
statutory volumes for advanced biofuel (21 billion gallons) and
cellulosic biofuel (16 billion gallons) in 2022. Similarly, the
implied statutory volume for conventional renewable fuel in 2022 (15
billion gallons) is the difference between the statutory volumes for
total renewable fuel (36 billion gallons) and advanced biofuel (21
billion gallons) in 2022.
---------------------------------------------------------------------------

    We received numerous comments on the proposed volumes for 2022.
Many commenters supported the proposed volumes and the incentives those
volumes provide for increased renewable fuel production and use in the
U.S. Some of these commenters suggested that even higher volumes may be
appropriate, particularly higher volumes of advanced biofuel. We also
received many comments arguing that the proposed volumes were too high.
These comments generally raised concerns that the implied volume for
conventional renewable fuel (15 billion gallons) was far above the E10
blendwall. To address these concerns these parties requested that we
reduce the total renewable fuel volume by 1.2-1.5 billion gallons so
that the implied conventional volume reflected the estimates of the E10
blendwall in the proposed rule. As an alternative means of reducing the
implied volume of conventional renewable fuel below the blendwall, some
commenters suggested that we retain the proposed volume for total
renewable fuel, but increase the advanced biofuel volume requirement by
1.2-1.5 billion gallons. Finally, some commenters requested that we
reduce the advanced biofuel volume. These commenters generally raised
concerns about the availability and/or cost of advanced biofuel
feedstocks, and the environmental impacts associated with increased use
of these feedstocks to produce higher volumes of advanced biofuels.
    After considering these comments and updated data on biofuel
production and use, we are establishing 2022 total renewable fuel,
advanced biofuel, and cellulosic biofuel volumes using the same general
approach as in the proposed rule. We are establishing the cellulosic
biofuel volume at the volume of qualifying cellulosic biofuel projected
to be used in the U.S. in 2022. We are establishing the advanced
biofuel and total renewable fuel volumes consistent with the cellulosic
biofuel volume and the implied statutory targets for non-cellulosic
advanced biofuel and conventional renewable fuel (5 billion gallons and
15 billion gallons, respectively). These volumes represent significant
growth compared to historical volumes and compared to the volumes of
these fuels used in 2020 and 2021. The cellulosic biofuel volume we are
finalizing for 2022 represents a 70 million gallon increase over the
volume of cellulosic biofuel used in 2021. This increase is based on
the expected continued growth in biogas use. We also anticipate
significant growth in the use of non-cellulosic advanced biofuels,
especially in advanced renewable diesel.\128\ While we expect that
conventional ethanol use will fall short of the implied 15 billion
gallon volume in 2022 by roughly 800 million gallons, we project that
greater volumes of biodiesel and renewable diesel will be produced and
imported to offset this shortfall. We discuss the 2022 BBD volume
separately in Section III.F. The remainder of this section discusses
our rationale for finalizing these volumes. Additional discussion,
including more detailed responses to the comments mentioned above, can
be found in the RIA and the RTC document.
---------------------------------------------------------------------------

    \128\ See Chapters 2 and 5 of the RIA.
---------------------------------------------------------------------------

    The cellulosic biofuel volume for 2022 is equal to the projected
available volume of cellulosic biofuel.\129\ This volume represents the
highest volume of cellulosic biofuel we can establish for 2022 given
the cellulosic waiver provision, which requires EPA to reduce the
statutory cellulosic biofuel volume to the projected volume
available.\130\ While EPA does have the authority to establish a lower
cellulosic biofuel volume under the reset authority, we do not believe
this would be appropriate for 2022, as discussed below.
---------------------------------------------------------------------------

    \129\ See Chapter 5.1 of the RIA.
    \130\ The projected volume available must represent a ``neutral
aim at accuracy'' API v. EPA, 706 F.3d 476 (D.C. Cir. 2013).
---------------------------------------------------------------------------

    EPA's approach to the cellulosic biofuel volume for 2022 seeks to
realize the potential for GHG benefits associated with increased
cellulosic biofuel production despite the relatively high costs of
liquid cellulosic biofuels, and in the case of CNG/LNG derived from
biogas, the impact on the price of transportation fuel. Because
cellulosic biofuels through 2022 are projected to be produced from
wastes or residues, their production is not expected to have
significant adverse impacts on several of the statutory factors such as
the price and supply of agricultural commodities, water quality and
supply, and the conversion of wetlands, ecosystems, and wildlife
habitat. Thus, while some of the statutory factors (such as the cost to
consumers of transportation fuel and the cost to transport goods) may
suggest that a volume of cellulosic biofuel lower than the volume
projected to be produced in 2022 would be appropriate, we have
determined that these factors are outweighed by other factors (such as
climate change).
    The advanced biofuel and total renewable fuel volumes strike a
balance between numerous competing statutory factors. They reflect the
potential for growth in the volume of renewable fuel produced and
consumed in the U.S., and the potential energy security and climate
change benefits that producing and consuming increasing volumes of
qualifying renewable fuels provide.

They also take into consideration the potential negative impacts of
renewable fuels produced from crops such as corn or soybeans on
environmental factors such as the conversion of wetlands, ecosystems,
and wildlife habitat, water quality, and water supply.
    We acknowledge that the implied conventional renewable fuel volume
is higher than the volume of these fuels projected to be consumed in
the U.S. in 2022. This may help incentivize the continued expansion of
the infrastructure necessary to expand the use higher-level blends of
ethanol, which remains the dominant form of conventional renewable
fuel. In recent years, ethanol consumption beyond the E10 blendwall in
the U.S. has been limited by infrastructure constraints--as well as
other factors--to a volume significantly lower than the volume of
ethanol produced in the U.S. and the total production capacity of the
U.S. ethanol industry. If these infrastructure constraints can be
overcome, domestic ethanol consumption and ultimately domestic ethanol
production could increase, and this could result in job creation, rural
economic development, higher corn prices, and a greater supply of
agricultural commodities. Despite the incentive for higher-level
ethanol blends, it is our expectation that ethanol use will fall short
of 15 billion gallons. We project that additional volumes of
conventional biodiesel and renewable diesel could be supplied in 2022
to fulfill a portion of that shortfall, including renewable fuels that
are grandfathered under 40 CFR 80.1403 and are thus not required to
meet the minimum 20 percent GHG reduction required for all qualifying
renewable fuel. These fuels would most likely be produced in foreign
facilities and from foreign grown feedstocks. This may cause additional
adverse environmental impacts and would not provide the same benefits
to domestic job creation and rural economic development but could still
provide energy security benefits.
    In addition, based on past experience, the shortfall in
conventional renewable fuel volumes needed to meet 15 billion gallons
means that obligated parties will likely need to look to other sources
of renewable fuel beyond conventional renewable fuels to meet their
compliance obligations for 2022. While we are establishing the non-
cellulosic portion of the advanced biofuel standard at the full implied
statutory volume of 5 billion gallons, our assessment of potential
supply indicates that additional volume, particularly of advanced
renewable diesel, will likely be used in 2022. This means that if, as
expected, the market falls short of the implied volume of conventional
renewable fuel in 2022, as has happened in several years in the past,
excess volumes of advanced biofuel beyond what is needed to meet the
advanced biofuel volume will likely be used to fulfill some portion of
the shortfall.
    Finally, while we are projecting that sufficient biodiesel and
renewable diesel, both advanced and conventional, will be available to
help meet the 2022 volume requirements, the market may fall short. In
that case, the carryover RIN bank can still enable compliance and help
avoid or mitigate potential market disruptions. As noted above, our
decisions to establish the 2020 and 2021 volumes at those actually
supplied preserve the carryover RIN bank. Obligated parties may use
these carryover RINs to help them comply with the 2022 standards. See
Section III.B for a more detailed discussion of carryover RINs.
    We acknowledge that in lieu of relying on higher volumes of
advanced biofuel to fulfill an expected shortfall in conventional
biofuel, we could instead establish a higher advanced biofuel volume
and corresponding lower conventional biofuel volume, while keeping the
total renewable fuel volume the same. While this alternative would
require larger volumes of potentially lower GHG fuels (i.e., advanced
biofuels), we expect the actual impact on GHG emissions to be minimal
given that much of the shortfall in conventional biofuel is expected to
be made up with additional volumes of advanced biofuels regardless.
Moreover, since the vast majority of ethanol is made from corn starch
and therefore cannot qualify as advanced biofuel regardless of its GHG
reductions,\131\ this alternative would reduce incentives for increased
use of higher-level ethanol blends and may negatively affect investment
in infrastructure for the distribution of such blends. By contrast,
maintaining the statutory implied volume of conventional renewable fuel
preserves greater incentives for investment in the infrastructure for
higher-level ethanol blends and therefore has the potential to induce
greater renewable fuel consumption in future years. Moreover, the
advanced carryover RIN bank going into 2022 is expected to be very low,
further favoring a lower advanced biofuel standard.\132\
---------------------------------------------------------------------------

    \131\ CAA section 211(o)(1)(B)(i).
    \132\ See ``Carryover RIN Bank Calculations for 2020-2022 Final
Rule,'' available in the docket for this action.
---------------------------------------------------------------------------

    We note that this approach of maintaining the statutory implied
conventional and non-cellulosic advanced biofuel volumes is inherently
consistent with the volumes Congress itself established in EISA. It is
also consistent with EPA's policy in prior years, during which we have
never established prospective volume requirements lower than the
implied statutory volume targets, with a single exception.\133\ While
we have discretion to establish different volumes, we continue to
believe that maintaining the implied statutory volumes strikes the
proper balance based upon our consideration of the reset factors.
---------------------------------------------------------------------------

    \133\ We prospectively established a volume for conventional
renewable fuel for 2016 (14.5 billion gallons) that was lower than
the statutory implied volume (15 billion gallons). In doing so, we
exercised our ``inadequate domestic supply'' waiver authority based
largely on the limited demand for ethanol in the United States. That
decision that was subsequently set aside by the D.C. Circuit in ACE,
as exceeding our waiver authority. We further discuss the ACE
decision and our response to the Court's remand in Section IV.
---------------------------------------------------------------------------

    As with 2020 and 2021, the 2022 standards are being promulgated
late; that is, after the statutory deadline of November 30, 2021. Since
this rule is being finalized during 2022, the 2022 standards will be
partially retroactive and partially prospective. Despite the lateness
and partial retroactivity of this rule, we nonetheless believe it is
appropriate to establish increased volumes for 2022. First, the 2022
volumes appropriately balance the statutory goal of increasing
renewable fuel use with mitigating burdens on obligated parties. Since
the 2022 standards are partially prospective, we expect it will induce
the market to produce, import, and consume additional biofuels in 2022.
This is in contrast to the 2020 and 2021 standards, which as noted
above, are entirely retroactive. Moreover, we find that the market is
capable of meeting the increased 2022 volumes through increased biofuel
use, and any shortfall can be met by carryover RINs. Overall, we think
the 2020-2022 volumes in the aggregate strike the proper policy balance
overall between the statutory purpose of increasing biofuel use with
mitigating burdens on obligated parties. We further discuss the
intertwined nature of these standards in Section III.B.3.
    Second, we are providing significant lead time for 2022. Obligated
parties will have at least 11 months after the publication of this
action in the Federal Register before having to demonstrate compliance
with their 2022 obligations.\134\ Moreover, the proposed rule provided
parties with additional

advance notice. We proposed the 2022 volumes in late 2021 and are
finalizing very similar volumes in this action. Specifically, we are
finalizing the same implied conventional and non-cellulosic advanced
biofuel volumes and a slightly lower cellulosic biofuel volume based on
the same methodology with updated data.
---------------------------------------------------------------------------

    \134\ See 40 CFR 80.1451(f)(1)(i)(B)(4); 87 FR 5696 (February 2,
2022).
---------------------------------------------------------------------------

    We also continue to provide compliance flexibilities such as access
to carryover RINs and carryforward deficits. As discussed above, the
revision of the 2020 volumes to those actually supplied preserves the
carryover RIN bank and helps facilitate compliance, including for 2022.
    Finally, we have considered and rejected multiple alternatives to
the 2022 volumes we are finalizing. As discussed above, these include
requiring lower 2022 volumes while not revising the 2020 standards,
requiring lower 2022 volumes but higher 2020 and 2021 volumes, and
requiring higher 2022 advanced biofuel volumes but lower 2022 implied
conventional volumes. We address additional alternatives raised by
commenters for volumes for all three years in the RTC document.
    We also acknowledge that we are late in resetting the 2022 volumes.
We nonetheless believe that this late exercise of the reset authority
is appropriate for similar reasons as for 2020 and for 2021, including
that we are obligated to reset the 2022 volumes, we have previously
told the public that we intended to do so, and the statute requires us
to reset 2022 if we reset 2020 and 2021. Moreover, all the 2022 volumes
we are resetting are also independently justified under our cellulosic
waiver authority. The exercise of that authority is also late, but it
is justified for substantively the same reasons as the retroactive
establishment of the 2022 standards described above.
    The volumes of cellulosic biofuel, BBD, advanced biofuel, and total
renewable fuel we are finalizing for 2022 are shown in Table III.E-1.
The BBD volume for 2022 is also included in Table III.E-1 for context,
although we discuss it in Section III.F.

                   Table III.E-1--RFS Volumes for 2022
                             [Billion RINs]
------------------------------------------------------------------------
                        Category                              Volume
------------------------------------------------------------------------
Cellulosic Biofuel......................................            0.63
Biomass-Based Diesel....................................        \a\ 2.76
Advanced Biofuel........................................            5.63
Total Renewable Fuel....................................           20.63
------------------------------------------------------------------------
\a\ The BBD volume for 2022 is in physical gallons (rather than RINs).

F. BBD Volume for 2022

    As described above, we are finalizing an advanced biofuel volume
consistent with the statutory implied non-cellulosic advanced biofuel
volume of 5 billion gallons. This represents an increase of 500 million
gallons from the statutory implied non-cellulosic advanced biofuel
volume of 4.5 billion gallons in prior years. Consistent with this and
with the proposed rule, we are also increasing the BBD volume
requirement by the same energy-equivalent amount (330 million physical
gallons) to 2.76 billion gallons.
    As in recent years, we believe that excess volumes of BBD (above
2.76 billion gallons) will be used in 2022 to satisfy the advanced
biofuel standard. Historically, the BBD standard has not independently
driven the use of BBD in the market. This is due to the nested nature
of the standards and the competitiveness of BBD relative to other
advanced biofuels. Instead, the advanced biofuel standard, and
occasionally the total renewable fuel standard, have driven the use of
BBD in the market. We believe this trend will continue in 2022, and
that the 2022 advanced biofuel and total renewable standards will drive
the use of BBD in the market in 2022.
    At the same time, we think it is important to maintain space for
other advanced biofuels to participate in the RFS program. Although the
BBD industry has matured over the past decade, the production of other
advanced biofuels continues to be relatively low and uncertain.
Maintaining this space for other advanced biofuels can facilitate in
the long-term increased commercialization and use of other advanced
biofuels, which may have superior environmental benefits and lower
costs relative to BBD. Conversely, we do not think that increasing the
size of this space is necessary for 2022 given that only small
quantities of these other advanced biofuels have been used in recent
years relative to the space we have already provided.
    The BBD volume for 2022 is consistent with our policy in recent
annual rules, where we set the BBD volume consistent with the change,
if any, in the non-cellulosic advanced biofuel volume. In the 2019
final rule, we set the 2020 BBD volume at 2.43 billion gallons. This
was an increase from the prior year's BBD volume by the same energy-
equivalent amount (330 million physical gallons) as the increase in the
2019 non-cellulosic advanced biofuel volume, which had increased by 500
million ethanol-equivalent gallons from 4 to 4.5 billion gallons. By
contrast, in the 2020 final rule, when the 2020 non-cellulosic advanced
biofuel volume remained constant at 4.5 billion gallons, we also
maintained the 2021 BBD volume at 2.43 billion gallons. In both rules,
we preserved a significant space for other advanced biofuels to
compete, approximately equal to 850 million RINs (approximately equal
to 566 million physical gallons). In reality, only 334 million RINs of
other advanced biofuel was available in 2020 and 227 million RINs in
2021, suggesting that we do not need to further increase the space for
other advanced biofuels. In this rule, we are continuing to maintain
space for other advanced biofuels. Since the non-cellulosic advanced
biofuel volume is increasing by 500 million gallons to 5 billion
gallons in 2022, we are increasing the BBD volume by the same energy-
equivalent amount, or 330 million physical gallons.\135\
---------------------------------------------------------------------------

    \135\ We acknowledge that this increase in the 2022 BBD volume
is slightly different than our actions in the 2019 and 2020 final
rules. In those rules, we were setting the BBD volumes for the
subsequent year. For instance, in the 2019 rule, we increased the
2020 BBD volume based on increases in the 2019 non-cellulosic
advanced volume. In this rule, we are setting the 2022 BBD and
advanced volumes at the same time. In addition, because we
established the 2021 cellulosic biofuel and advanced biofuel volumes
retroactively at the levels actually consumed, the increase in non-
cellulosic advanced biofuel from 2021 to 2022 is actually about 490
million gallons, or slightly less than the change in the implied
statutory non-cellulosic advanced biofuel volume of 500 million
gallons. Regardless of these differences, EPA's goal is to maintain
approximately the same space for other advanced biofuels as in
recent prospective annual rules. We accomplish this by raising the
BBD volume by 330 million physical gallons (equivalent to 500
million ethanol-equivalent gallons). We note that even were we to
raise the BBD volume by only 490 million ethanol-equivalent gallons,
we expect no impact on the market given that the advanced biofuel
and total renewable fuel standards are driving BBD use in 2022.
---------------------------------------------------------------------------

    We acknowledge that in finalizing the 2022 BBD volume in this
action, we are establishing a late BBD volume. CAA section
211(o)(2)(B)(ii) provides that EPA shall determine the applicable
volume 14 months prior to the year for which the standard will apply.
That deadline (October 31, 2020) has already passed. The D.C. Circuit
in ACE has affirmed EPA's ability to promulgate late BBD standards as
long as those standards are reasonable.\136\ In evaluating the
reasonableness of EPA's standards, the court stated that EPA must
``consider[] various ways to minimize the hardship caused to obligated
parties.'' \137\ As in this case of previous annual rules, we believe
that

the advanced biofuel and total renewable fuel standards for 2022 will
drive the use of BBD in the market, and thus, the BBD standard we
establish is unlikely to result in additional burdens on obligated
parties. Moreover, as with the other 2022 standards, we have provided
parties with significant lead time. Additionally, the volume
requirement we are finalizing is consistent with our treatment of the
BBD volume requirement in the past (i.e., increasing the BBD volume
requirement in accordance with increases in the implied statutory non-
cellulosic advanced volume so as to preserve space for other advanced
biofuels). Further, the same compliance flexibilities available for the
other standards also apply to BBD. We further discuss the BBD standard
in Chapter 10 of the RIA and in the RTC document.
---------------------------------------------------------------------------

    \136\ ACE at 721.
    \137\ Id. (quoting Monroe Energy, LLC v. EPA, 750 F.3d 909, 920
(D.C. Cir. 2014)).
---------------------------------------------------------------------------

G. Summary of the RFS Volumes for 2020-2022

    The volumes for 2020, 2021, and 2022 are summarized in Table III.G-
1.

                               Table III.G-1--RFS Volumes for 2020, 2021, and 2022
                                                 [Billion RINs]
----------------------------------------------------------------------------------------------------------------
                            Category                                   2020            2021            2022
----------------------------------------------------------------------------------------------------------------
Cellulosic Biofuel..............................................            0.51            0.56            0.63
Biomass-Based Diesel \a\........................................        \b\ 2.43        \c\ 2.43            2.76
Advanced Biofuel................................................            4.63            5.05            5.63
Total Renewable Fuel............................................           17.13           18.84           20.63
----------------------------------------------------------------------------------------------------------------
\a\ The BBD volumes are in physical gallons (rather than RINs).
\b\ The BBD volume for 2020 was established in the 2019 final rule (83 FR 63704, December 11, 2018).
\c\ The BBD volume for 2021 was established in the 2020 final rule (85 FR 7016, February 6, 2020).

H. Quantitative Impacts of the Volumes

    As one aspect of our analysis, we estimated certain quantitative
impacts of the volumes. As explained in Chapter 2.2 of the RIA, we have
used a baseline of the volumes actually supplied in 2020 to
quantitatively assess the impacts of this rule, and thus the 2020
volumes have no costs or benefits. We therefore focus on the
quantitative impacts of the 2021 and 2022 volumes.\138\ We recognize
that there are other possible baselines that could be used as a point
of comparison, and that the choice of baseline significantly influences
our impact analyses. A potential alternative baseline is the volumes of
renewable fuels that would be used each year from 2020-2022 in the
absence of RFS obligations (a ``No RFS baseline''). While we have
generally not used this alternative baseline in this rule for purposes
of our quantitative analysis, Chapter 2.2 of the RIA contains a brief
description of what such a baseline might look like, and how using such
a baseline might affect our analysis of the impacts of this rule.
Moreover, many of the qualitative analyses do consider a No RFS
baseline.
---------------------------------------------------------------------------

    \138\ The below costs and benefits for both 2021 and 2022 are
calculated relative to the actual volumes of renewable fuel used in
2020. The 2022 values therefore reflect the incremental volumes for
both 2021 and 2022.
---------------------------------------------------------------------------

    For some of the statutory factors (fuel costs, cost to transport
goods, and energy security benefits), we were able to quantify the
expected impacts and also monetize the associated societal
impacts.\139\ Information and specifics on how fuel costs and the cost
to transport goods are calculated are presented in Chapter 9 of the
RIA, while energy security benefits are discussed in Chapter 4 of the
RIA. A summary of the fuel costs to society and energy security
benefits are shown in Tables III.H-1 and 2. As noted above, these
numbers estimate the impacts of the 2021 and 2022 volumes relative to a
2020 volumes baseline; that is, the impacts of the use of renewable
fuel in 2021 and 2022 relative to the use of renewable fuel in 2020.
This is not the same as estimating the causal impacts of this rule. As
described earlier in this section, because this rule is retroactive, it
is not expected to affect renewable fuel use or production in 2020 or
2021 or to affect the statutory factors (including costs and energy
security) insofar as they are based on renewable fuel use or production
in those years. While this rule is expected to cause changes in
renewable fuel use and production in 2022, the renewable fuel volumes
analyzed for 2022 are also impacted by other factors. These include,
for instance, the increased use of ethanol as E10 given the projected
increase in gasoline consumption in 2022. We further discuss these
issues in Chapter 2 of the RIA.
---------------------------------------------------------------------------

    \139\ Due to the uncertainty related to the GHG emission impacts
of this rule (discussed in further detail in Chapter 3.2 of the RIA)
we have not included a quantified projection of the GHG emission
impacts of the rule. However, to provide perspective regarding the
scope of the potential benefits, Chapter 3.2.2 of the RIA
illustrates potential GHG benefits associated with the volumes in
this rule using the lifecycle GHG values calculated in the 2010 RFS
final rule and other prior actions.
    \140\ Office of Management and Budget (OMB). Circular A-4.
September 17, 2003.

             Table III.H-1--Fuel Costs of the Final Volumes
                      [2021 dollars, millions] \a\
------------------------------------------------------------------------
                          Year                               Costs \b\
------------------------------------------------------------------------
2021....................................................           1,257
2022:
    Excluding Supplemental Volumes......................           5,260
    Including Supplemental Volumes......................           5,720
------------------------------------------------------------------------
\a\ These costs represent the costs of producing and using biofuels
  relative to the petroleum fuels they displace. They do not include
  other factors, such as the potential impacts on soil and water
  quality.
\b\ In the proposal, costs for 2022 were also presented using 3 percent
  and 7 percent discount rates, following guidance to federal agencies
  on development of regulatory analyses.\140\ Since 2022 is now the
  current year, no discounting of future benefits is necessary for this
  final rule.

      Table III.H-2--Energy Security Benefits of the Final Volumes
                        [2021 dollars, millions]
------------------------------------------------------------------------
                          Year                             Benefits \a\
------------------------------------------------------------------------
2021....................................................              67
2022:
    Excluding Supplemental Volumes......................             217
    Including Supplemental Volumes......................             227
------------------------------------------------------------------------
\a\ In the proposal, energy security benefits for 2022 were also
  presented using 3 percent and 7 percent discount rates, following
  guidance to federal agencies on development of regulatory
  analyses.\141\ Since 2022 is now the current year, no discounting of
  future benefits is necessary for this final rule.

    Other factors, such as job creation, the price and supply of
agricultural commodities, and the impact on food prices are quantified
but the societal impacts have not been monetized. We also provided a
quantitative estimate of the expected annual rate of future commercial
production of renewable fuels. Further information can be found in the
RIA. We were not able to quantify many of the impacts of this
rulemaking, including those of statutory factors such as environmental
impacts and rural economic development. Regardless of whether or not we
were able to quantify or monetize a particular impact, we considered
each of the statutory factors. As we explained in Section II, the
statute does not require quantification. We also did not rely solely on
the quantitative impacts to determine the policy in this rulemaking.
Rather, we find that the volumes established in this rulemaking are
appropriate under the reset authority when we balance all of the
relevant factors, which are described throughout this preamble and the
RIA.
---------------------------------------------------------------------------

    \141\ Office of Management and Budget (OMB). Circular A-4.
September 17, 2003.
---------------------------------------------------------------------------

IV. Response to ACE Remand

    In addition to finalizing the applicable volume requirements and
percentage standards for 2020, 2021, and 2022, in this rulemaking we
are also addressing the remand of the 2014-2016 annual rule \142\ by
the D.C. Circuit in ACE.\143\ Previously, in the 2020 proposal, we
proposed to address the D.C. Circuit's remand by retaining the original
2016 total renewable fuel standard.\144\ We received many comments both
in support of and against this approach.\145\ In the 2020 final rule,
we deferred taking action in response to the remand.\146\ We are now
addressing the remand through supplemental total renewable fuel volume
requirements totaling 500 million gallons spread over two years.\147\
We are finalizing a 250-million-gallon supplemental standard to be
applied in 2022 coupled with the intention of proposing an additional
250-million-gallon supplemental standard in a subsequent action for
2023. We are establishing the supplemental total renewable fuel volume
requirement and the corresponding percentage standard for 2022 in this
rulemaking. This section describes the relevant aspects of the 2014-
2016 annual rule, the court's decision, EPA's responsibilities
following the court's remand, and our approach.
---------------------------------------------------------------------------

    \142\ 80 FR 77420 (December 14, 2015).
    \143\ 864 F.3d 691 (2017).
    \144\ 84 FR 36762 (July 29, 2019).
    \145\ See Docket No. EPA-HQ-OAR-2019-0136.
    \146\ 85 FR 7016 (February 6, 2020).
    \147\ We also refer to the supplemental total renewable fuel
volume requirement as a ``supplemental standard'' throughout this
preamble.
---------------------------------------------------------------------------

A. Reevaluating the 2014-2016 Annual Rule

1. The 2016 Renewable Fuel Standard
    On December 14, 2015, EPA promulgated a rulemaking establishing the
volume requirements and percentage standards for 2014, 2015, and
2016.\148\ In establishing those standards for 2016, we utilized the
cellulosic waiver authority under CAA section 211(o)(7)(D) to lower the
cellulosic biofuel, advanced biofuel, and total renewable fuel volume
requirements, and the general waiver authority under CAA section
211(o)(7)(A) to lower total renewable fuel by an additional
increment.\149\
---------------------------------------------------------------------------

    \148\ 80 FR 77420 (December 14, 2015). The rule also established
BBD volume for 2017.
    \149\ 80 FR 77439 (December 14, 2015).
---------------------------------------------------------------------------

    As an initial step, under CAA section 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.\150\ 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.'' \151\ 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 section 211(o)(7)(D), the
best reading of the statute is to reduce them both by the same
amount.\152\
---------------------------------------------------------------------------

    \150\ 80 FR 77499 (December 14, 2015).
    \151\ 80 FR 77427.
    \152\ Id.
---------------------------------------------------------------------------

    As a second step, under CAA section 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.\153\ 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.
---------------------------------------------------------------------------

    \153\ 80 FR 77444.
---------------------------------------------------------------------------

    The 2016 total renewable fuel standard was challenged in court. In
an opinion issued on July 28, 2017, the D.C. Circuit vacated EPA's 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.\154\ The court
in ACE held that EPA had improperly focused on the availability of
renewable fuel to consumers for use in their vehicles, 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.\155\ Other components of EPA's interpretation of
``inadequate domestic supply'' were either upheld by the court in ACE
(e.g., EPA need not consider carryover RINs as a ``supply source of
renewable fuel for purposes of determining the supply of renewable fuel
in a given year'') or were not challenged (e.g., EPA's consideration of
biofuel imports as part of the domestic supply). EPA's use of the
cellulosic waiver authority to provide the initial reduction in total
renewable fuel was also upheld by the court. In establishing volume
requirements for subsequent years, EPA has applied the court's holding
and not reduced volumes under a finding of inadequate domestic
supply.\156\
---------------------------------------------------------------------------

    \154\ ACE, 864 F.3d 691.
    \155\ Id. at 696, 707.
    \156\ 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).
---------------------------------------------------------------------------

2. Agency Responsibility
    The court in ACE upheld EPA's volume requirements for advanced
biofuel, BBD, and cellulosic biofuel; there is, therefore, no need for
EPA to adjust those 2016 final volume requirements, or to take further
action with regard to these standards in light of the court's decision.
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 EPA's decision to further reduce that requirement under the
``inadequate domestic supply'' waiver authority,

remanding this issue to EPA for further consideration consistent with
the court's opinion.\157\ EPA's obligation is thus to reevaluate the
2016 total renewable fuel volume requirement in accordance with the
court's decision.
---------------------------------------------------------------------------

    \157\ Id. at 703.
---------------------------------------------------------------------------

B. Consideration of Approaches for Responding to the ACE Remand

    As discussed in the previous section, EPA waived 500 million
gallons of total renewable fuel volume associated with the 2016 volume
requirements. In 2017, after the compliance year had passed, and after
obligated parties had demonstrated compliance with those requirements,
we received the ACE court's decision rejecting EPA's use of the general
waiver authority under a finding of inadequate domestic supply to
reduce volumes as being beyond our statutory authority and remanding
the rulemaking action back to EPA. Given that compliance demonstrations
had already occurred, and we had proposed volume requirements for 2017
factoring in the 2016 standards as originally promulgated,\158\ we were
faced with the question of whether we should reopen 2016 compliance, or
factor the waived volume into a future standard, as discussed further
in this section. In this action, we are taking an initial step to
address the court's remand through a supplemental standard of 250
million gallons of total renewable fuel in 2022, with the intent of
proposing an additional supplemental standard of 250 million gallons of
total renewable fuel to be required in 2023 in a subsequent action. As
the court invalidated only the 500 million gallon total renewable fuel
reduction, we are therefore limiting our response to the remand to only
the 2016 total renewable fuel standard and the corresponding 500
million gallon reduction stemming from our use of the general waiver
authority. Since total renewable fuel is not a subcategory nested
within any other volume category, this approach will not affect the
other standards.
---------------------------------------------------------------------------

    \158\ 81 FR 34778 (May 31, 2016).
---------------------------------------------------------------------------

1. Response to the ACE Remand
    We proposed to address the ACE decision by applying a 250-million-
gallon supplemental standard in 2022 with the intention of proposing an
additional 250-million-gallon supplemental standard for 2023 in a
subsequent rulemaking action. We received comments both in support of
such an approach, and against such an action. Despite comments
suggesting we should not impose a supplemental standard, or that we
should impose a lesser supplemental standard, we are finalizing the
supplemental standard as proposed.
    Under this approach, the original 2016 standard for total renewable
fuel will remain unchanged and the compliance demonstrations that
obligated parties made for it will likewise remain in place. A
supplemental standard for 2022 will thus avoid the difficulties
associated with reopening 2016 compliance, as discussed below. This
supplemental standard will have the same practical effect as increasing
the 2022 total renewable fuel volume requirement by 250 million
gallons, as compliance will be demonstrated using the same RINs as used
for the 2022 standard. The percentage standard for the supplemental
standard is calculated the same way as the 2022 percentage standards
(i.e., using the same gasoline and diesel fuel projections), such that
the supplemental standard is additive to the 2022 total renewable fuel
percentage standard. This approach will provide a meaningful remedy in
response to the court's vacatur and remand in ACE and will effectuate
the Congressionally determined renewable fuel volume for 2016, modified
only by the proper exercise of EPA's waiver authorities, as upheld by
the court in ACE and in a manner that can be implemented in the near
term. It is with emphasis on these considerations that we are taking a
different approach from the one proposed in the 2020 proposal.\159\
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    \159\ See FCC v. Fox, 556 U.S. 502 (2009), acknowledging an
agency's ability to change policy direction.
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    We are treating such a supplemental standard as a supplement to the
2022 standards, rather than as a supplement to standards for 2016,
which has passed. In order to comply with any supplemental standard,
obligated parties will need to retire available RINs; it is thus
logical to require the retirement of available RINs in the marketplace
at the time of compliance with this supplemental standard. As discussed
below, it is no longer possible for obligated parties to comply with a
500-million-gallon 2016 obligation using 2015 and 2016 RINs as required
by our regulations. Thus, compliance with a supplemental standard
applied to 2016 would be impossible barring EPA reopening compliance
for all years from 2016 onward. By applying the supplemental standard
to 2022 instead of 2016, RINs generated in 2021 and 2022 will be used
to comply with the 2022 supplemental standard. Additionally, as
provided by our regulations, RINs generated in 2015 and 2016 could only
be used for 2015 and 2016 compliance demonstrations,\160\ and obligated
parties had an opportunity at that time to utilize those RINs for
compliance or sell them to other parties, while ``banking'' RINs that
could be utilized for future compliance years.
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    \160\ 2016 RINs could also be used for up to 20 percent of an
obligated party's 2017 compliance demonstrations.
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    In applying the supplemental standard to 2022, we are treating the
supplemental standard like a 2022 standard in all respects. That is,
producers and importers of gasoline and diesel fuel that are subject to
the 2022 standards are also subject to the supplemental standard. The
applicable deadlines for attest engagements and compliance
demonstrations that apply to the 2022 standards also apply to the
supplemental standard. Due to the 2022 supplemental standard being
administratively included in the 2022 standard, the gasoline and diesel
fuel volumes used by obligated parties to calculate their obligations
to satisfy the 2022 supplemental standard will be their 2022 gasoline
and diesel production and importation. Additionally, obligated parties
may effectively use 2021 RINs for up to 20 percent of their 2022
supplemental standard as allowed under the RFS regulations.\161\ We
intend to provide more guidance for obligated parties regarding
submitting annual compliance reports for the 2022 compliance year on
our website closer to the 2022 annual compliance reporting
deadline.\162\
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    \161\ See 40 CFR 80.1427(a)(5).
    \162\ Information and guidance related to annual compliance
reporting instructions for obligated parties will be available at:
https://www.epa.gov/fuels-registration-reporting-and-compliance-help/how-report-quarterly-and-annually-renewable-fuel.
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    As described more fully in Section III, the volume requirements for
2022 are market-forcing, requiring a growth in renewable fuel volumes
that we believe is achievable. We nevertheless believe that compliance
with the 2022 supplemental standard in addition to the 2022 annual
standards is feasible and can be achieved through the actual use of
renewable fuels, including imports, in 2022 as opposed to carryover
RINs. However, if the 2022 supplemental standard cannot be fully met
through the supply of additional renewable fuel volumes in 2022, it
could be met through a drawdown of the carryover RIN bank.\163\ After
compliance with the 2019-2021 standards, the carryover RIN bank is
expected to consist of approximately

1.83 billion total carryover RINs for compliance in 2022.\164\ We
acknowledge that the size of the carryover RIN bank may change somewhat
by the 2022 compliance deadline. However, given the projected size of
the carryover RIN bank in light of the revised 2020 standards, we think
it is virtually certain that more than 250 million total carryover RINs
will be available in 2022.
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    \163\ See Section III.B for a discussion of carryover RINs.
    \164\ As noted in Section III.B, we project that there will be
1.83 billion total carryover RINs after compliance with the 2019
standards. Since we are setting both the 2020 and 2021 volume
requirements at the actual volume of renewable fuel consumed in
those years, 1.83 billion total carryover RINs will be available for
compliance with the 2022 standards as well. The calculations
performed to estimate the number of carryover RINs currently
available can be found in the memorandum, ``Carryover RIN Bank
Calculations for 2020-2022 Final Rule,'' available in the docket for
this action.
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    We recognize that in the 2020 proposal, we indicated that a
supplemental standard would result in a drawdown of the carryover RIN
bank. We do not believe that is the case today, with a 250-million-
gallon supplemental standard as opposed to the full 500 million
gallons, and supported by our analysis in Chapter 5 of the RIA,
demonstrating that the market is capable of achieving the supplemental
volumes with increased biofuel use. Nonetheless, we acknowledge that
the market has the option of using carryover RINs to meet the
supplemental standard. Such use would be consistent with a purpose of
the carryover RIN bank. As we stated in the 2020 final rule, ``[t]he
current bank of carryover RINs provides an important and necessary
programmatic and cost spike buffer that will both facilitate individual
compliance and provide for smooth overall functioning of the program.''
\165\ As discussed in Section III.B, we continue to believe that a
significant carryover RIN bank is fundamental to the functionality and
success of the RFS program.
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    \165\ 85 FR 7020-22 (February 6, 2020).
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    Attempting to restore waived volumes many years after the close of
the compliance period brings with it significant challenges,
particularly in the context of this final action where we are already
setting market-forcing standards for 2022. By phasing in the 500
million gallons of total renewable fuel associated with the ACE remand
through the implementation of two supplemental standards over two
compliance years, we believe that we can lessen both the disruption to
the market and the burden on obligated parties and maintain the
functionality of the carryover RIN bank. Imposing two 250-million-
gallon supplemental standards in two compliance years, as opposed to
one 500-million-gallon supplemental standard in a single compliance
year, provides additional notice for both obligated parties and the
renewable fuel industry about the additional volume requirements and
lessens the additional requirements for each compliance year. This
should increase the likelihood that the volumes are met with additional
renewable fuel use and, in turn, lessen the likelihood that the
carryover RIN bank is drawn down.
    In summary, we are implementing a 250-million-gallon supplemental
standard in 2022 and intend to propose an additional 250-million-gallon
supplemental standard in 2023, totaling 500 million gallons, which
represent the reduction in the 2016 total renewable fuel volume
improperly waived under the general waiver authority. This approach
addresses our obligation to respond to the ACE remand while accounting
for the unique timing of imposing a 2016 requirement in 2022. This
approach allows obligated parties to comply with the 2022 supplemental
standard using 2021 and 2022 RINs.
2. Consideration of Alternatives
    In the proposed rule, we laid out our thinking regarding an
alternative approach of reopening 2016 compliance. We also considered
maintaining the 2016 standards, as finalized in 2016, and as proposed
in the 2020 proposal. Finally, we considered additional reductions in
2016 volumes utilizing our cellulosic or general waiver authority as
suggested by several commenters. These alternatives are further
discussed, and rejected, in Section 8 of the RTC document.

C. Demonstrating Compliance With the 2022 Supplemental Standard

    We will prescribe formats and procedures as specified in 40 CFR
80.1451(j) for how obligated parties will demonstrate compliance with
the 2022 supplemental standard that simplifies the process in this
unique circumstance.\166\ Although the 2022 supplemental standard is a
regulatory requirement separate from and in addition to the 2022 total
renewable fuel standard, obligated parties will submit a single annual
compliance report for both the 2022 annual standards and the
supplemental standard. Obligated parties will only report a single
number for their total renewable fuel obligation in the 2022 annual
compliance report.\167\ Obligated parties only need to submit a single
annual attest engagement report for the 2022 compliance period that
covers both the 2022 annual standards and the 2022 supplemental
standard.\168\ If we set a 2023 supplemental standard as intended, we
intend to use the same approach for the annual compliance demonstration
for the 2023 compliance period as well.
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    \166\ We note that we are not changing the reporting regulations
at 40 CFR 80.1451(a), as we do not believe that regulatory changes
are needed to accommodate annual compliance demonstration for the
2022 supplemental standard.
    \167\ Obligated parties demonstrate annual compliance by
following the reporting instructions entitled, ``Instructions for
RFS0304: RFS Annual Compliance Report'' (RFS0304 report). A copy of
these reporting instructions is available in the docket of this
action. Obligated parties will combine the 2022 total renewable fuel
standard with the 2022 supplemental standard in ``Field 18'' of the
RFS0304 report. This combined value is then multiplied by the
obligated gasoline and diesel fuel volume reported as specified in
reporting instructions for ``Field 20'' of the RFS0304 report.
    \168\ We are not modifying the deadline for the attest
engagement reports for the 2022 compliance period in this action.
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    To assist obligated parties with this unique compliance situation,
we intend to issue guidance with instructions on how to calculate and
report the values to be submitted in the 2022 compliance reports.\169\
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    \169\ A link to this guidance will be available at: https://www.epa.gov/fuels-registration-reporting-and-compliance-help/how-report-quarterly-and-annually-renewable-fuel.
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D. Authority and Consideration of the Benefits and Burdens

    In establishing the 2016 total renewable fuel standard, EPA waived
the required volume of total renewable fuel by 500 million gallons
using the inadequate domestic supply general waiver authority. The use
of that waiver authority was vacated by the court in ACE and the rule
was remanded to the EPA. In order to remedy our improper use of the
inadequate domestic supply general waiver authority, we find that it is
appropriate to treat our authority to establish a supplemental standard
at this time as the same authority used to establish the 2016 total
renewable fuel volume requirement--CAA section 211(o)(3)(B)(i)--which
requires EPA to establish percentage standard requirements by November
30 of the year prior to which the standards will apply and to
``ensure'' that the volume requirements ``are met.'' EPA exercised this
authority for the 2016 standards once already. However, the effect of
the ACE vacatur is that there remain 500 million gallons of total
renewable fuel from the 2016 statutory volumes that were not included
under the original exercise of EPA's authority under CAA section
211(o)(3)(B)(i). We are now utilizing the same authority to correct our
prior action, and ``ensure'' that the

volume requirements ``are met,'' and we are doing so significantly
after November 30, 2015. Therefore, we have considered how to balance
benefits and burdens and mitigate hardship by our late issuance of this
standard. Additionally, as we have in the past, we rely on our
authority in CAA section 211(o)(2)(A)(i) to promulgate late
standards.\170\ CAA section 211(o)(2)(A)(i) requires that EPA
``ensure'' that ``at least'' the applicable volumes ``are met.'' \171\
Because the D.C. Circuit vacated our waiver of 500 million gallons of
total renewable fuel from the original 2016 standards, we are now
taking action to ensure that at least the applicable volumes from 2016
are ultimately met. We have determined that the appropriate means to do
so is through the use of two 250 million gallon supplemental standards,
one in 2022, as finalized in this action, and in 2023, as we intend to
propose in a subsequent action.
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    \170\ In promulgating the 2009 and 2010 combined BBD standard,
upheld by the D.C. Circuit in NPRA v. EPA, 630 F.3d 145 (2010), we
utilized express authority under section 7545(o)(2). 75 FR 14670,
14718.
    \171\ See also CAA section 211(o)(2)(A)(iii)(I), requiring that
``regardless of the date of promulgation,'' EPA shall promulgate
``compliance provisions applicable to refineries, blenders,
distributors, and importers, as appropriate, to ensure that the
requirements of this paragraph are met.''
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    We have sought to mitigate the burdens of a late and partially
retroactive standard by implementing a supplemental standard that
applies for the 2022 compliance year. Although we established a total
renewable fuel standard in 2016, we did so while erroneously waiving
500 million gallons of total renewable fuel through the use of our
general waiver authority. In this action, we are beginning to remedy
that error by requiring an additional 250 million gallon total
renewable fuel volume requirement in the 2022 compliance year.\172\
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    \172\ As noted earlier, we intend to propose an additional 250-
million-gallon supplemental standard for 2023 in a subsequent
action.
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    As noted in Section II.C, in ACE and two prior cases, the court
upheld EPA's authority to issue late renewable fuel standards, even
those applied retroactively, so long as EPA's approach is
reasonable.\173\ EPA must consider and mitigate the burdens on
obligated parties associated with a delayed rulemaking.\174\ When
imposing a late or 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.\175\ The approach we
are taking in this action would implement a late standard, with
partially retroactive effects, as described in these cases. Obligated
parties made their RIN acquisition decisions in 2016 based on the
standards as established in 2016 and they may have made different
decisions had we not reduced the 2016 total renewable fuel standard by
500 million gallons using the general waiver authority. Were EPA to
create a supplemental standard for 2016 designed to address the use of
the general waiver authority in 2016, we would be imposing a wholly
retroactive standard on obligated parties, but because the supplemental