EPA finalizes RFS rules establishing new pathways, QAP
On July 2, the U.S. EPA published two final rules pertaining to the renewable fuel standard (RFS) program. The first establishes new fuel pathways, while the second finalizes the voluntary quality assurance plan for the RFS.
The pathway rule, officially titled “Regulation of Fuels and Fuel Additives: RFS Pathways II, and Technical Amendments to the RFS Standards and E15 Misfueling Mitigation Requirements,” amends the RFS in several ways. The proposed rule was first published in May 2013.
Notably, it qualifies a number of new cellulosic and advanced fuel pathways under the RFS, including those for compressed and liquefied natural gas produced from biogas from landfills, municipal waste-water treatment facility digesters, agricultural digesters and separated MSW. It also qualifies electricity used to power electric vehicles produced from the same biogas sources.
The rule clarifies several regulations that define terms or address registration, recordkeeping, or reporting requirements. Regarding crop residue feedstocks, the rule specifies that producers must include information on the types of residues will be used in their registration. They must also record and report quantities and specific types of residues used during production to the EPA. In addition, the rule specifies that corn kernel fiber does qualify as a crop residue.
For obligated parties, the pathway rule modifies the definition of small refinery so that the crude threshold throughput threshold of 75,000 barrels per day must apply in the most recent full calendar year for an application for hardship. According to information released by the EPA, the threshold is also changed for smaller blenders of renewable fuels that want to delegate renewable identification numbers (RIN) responsibilities. That threshold is increased from 125,000 gallons to 250,000 gallons.
Additional changes include the use of nameplate capacity for the use of registration purposes for certain production facilities that do not claim exemption from the 20 percent greenhouse gas (GHG) reduction threshold, clarification of what penalties apply under the RFS program, and the number of cellulosic biofuel RINs that may be generated for fuel made from feedstocks of varying cellulosic content.
The pathway rule also makes various changes to E15 misfueling mitigation regulations. This includes technical corrections and amendments to sections of the regulation that deal with labeling, E15 surveys, product transfer documents, and prohibited acts. In addition, the ultra-low sulfur diesel survey provisions have been amended in a way that reduces the number of required samples.
According to the EPA, several amendments included in the proposed pathway rule are not being finalized at this time. This includes the advanced butanol pathway and proposed pathways for the production of renewable diesel, naptha and renewable gasoline from biogas.
The second rulemaking, officially titled “RFS Renewable Identification Number (RIN) Quality Assurance Program,” finalizes a rule first proposed in January 2013.
The new program provides an affirmative defense against liability for civil violations under certain conditions for the transfer or use of invalidly generated RINs. The rule also specifies the conditions under which an invalid RIN must be replaced with a valid RINs, and by whom. According to the EPA, the program includes elements to allow verification of RINs beginning Jan. 1, 2013. Within a fact sheet, the EPA explained it is finalizing both proposed QAP program options included in the proposed fuel for an interim period that spans from Feb. 21, 2013 through Dec. 31, 2015. After that time, the program will consist of a single QAP option.
The quality assurance program (QAP) rule primarily establishes a third-party quality assurance program option for RINs that regulated parties may use as a supplement to the buyer beware liability prescribed under the RFS regulations. Information released by the EPA indicates the QAP rule establishes minimum requirements for feedstock verification, the verification that volumes produced are consistent with the amount of feedstock processed, and verification that RINs are appropriately categorized. The rule also establishes qualification for independent third-party auditors, and sets requirements for audits of biofuel production facilities.
Additionally, the QAP rule includes modifications to the exporter provisions of the RFS. According to the EPA, these changes will help ensure that an appropriate number and type of RINs are retired when renewable fuel is exported. Finally, the rule finalizes changes to components of the RFS regulation that governs the transfer and use of RINs that become invalid downstream from the producer.
The QAP rule becomes effective 60 days following publication in the Federal Register. The pathways rule goes into effect 30 days after it is published in the Federal Register. Full copies of the rules and fact sheets that outline major provisions of each rule can be downloaded from the EPA website.