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Renewable Fuels Standard Program (RFS2), May 26, 2009 Federal Register, Proposed Rule - This proposal would modify the current program by changing the rules for tracking renewable fuel credits. A 38-character Renewable Identification Number (RIN) is given to each unique gallon of fuel entering the supply chain. Presently, when a renewable fuel producer transfers a gallon of fuel, the fuel along with its associated RIN must be transferred together. After this first transfer, e.g. to a refinery, the acquirer may “decouple” the RIN from the fuel and sell or trade the RIN and the gallon of fuel as separate assets. Any party that registers as a fuel dealer or trader may currently acquire RINS, regardless of whether custody of any fuel is taken. EPA proposed that RINs may be decoupled from the fuel by the produce before the first transfer. Two alternatives are offered as to who may acquire them. The first is any registered party. This would replicate the current process following the first transaction. Second, the producer could transfer RINs only to an “obligated party.” Currently, obligated parties are limited to large refiners and gasoline importers. EPA is considering an expansion of the definition to include blenders and marketers. Finally, the proposal contains new specific volume standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel by year. Click here to view a chart of the proposed levels. Comments are due July 27, 2009.

40 CFR 80 Prescribes regulations for the control and/or prohibition of fuels and additives for use in motor vehicles and motor vehicle engines. It also establishes a credit and trading system, compliance mechanisms, and record keeping and reporting requirements.

This standard, published in the May 1, 2007 Federal Register, requires an increasing amount of renewable fuels in the transportation pool, up to 7.5 billion gallons by 2012. Specifically, the RFS requires refiners, importers, and blenders (other than oxygenated blenders) to show that a required volume of renewable fuel is used in gasoline. Small refiners and refineries are exempt from the requirements through 2010, and all gasoline producers located in Alaska, Hawaii and noncontiguous U.S. territories are exempt indefinitely.

Energy Policy Act of 2005, Title XV: Ethanol & Motor Fuels, Subtitle A: General Provisions, § 1501 Renewable Content & Gasoline, August 8, 2005 This policy creates the Renewable Fuels Program within the Environmental Protection Agency (EPA) and gives EPA the authority to establish regulations to “ensure that gasoline…in the United States on an annual average basis, contain the applicable volume of renewable fuel.” The legislation set renewable fuel volume requirements (measured in gallons) as follows:

2006	4 billion	2010	6.8 billion
2007	4.7 billion	2011	7.4 billion
2008	5.4 billion	2012	7.5 billion
2009	6.1 billion

Updates, Comments & Other Reports

August 2008 EPA denied a request submitted by the state of Texas to reduce the federal Renewable Fuels Standard (RFS) set forth in the Energy Independence and Security Act of 2007. The decision also laid out the agency’s general expectations for future waiver requests, including the types of information and analysis that should be included. Click here to view EPA’s decision and guidance on requesting waivers.

March 2008 EPA recently amended the 2008 renewable fuels standard to comply with the Energy Independence and Security Act of 2007. This new legislation amends the Clean Air Act to mandate that at least 9 billion gallons of renewable fuels be blended into transportation gasoline in 2008.

February 2008 Magellan Midstream Partners, L.P. and Buckeye Partners, L.P. have begun a joint assessment to determine the feasibility of constructing a dedicated ethanol pipeline. The proposed pipeline could have the capacity to supply more than 10 million gallons of ethanol per day. It would gather ethanol from production facilities in Iowa, Illinois, Minnesota and South Dakota to serve terminals in major markets such as Pittsburgh, Philadelphia and the New York harbor. The project, which preliminarily has been estimated to cost in excess of $3 billion, would span approximately 1,700 miles and would take several years to complete.

December 2007 EPA is setting a new renewable fuels standard of 4.66 percent to meet the 2005 Energy Policy Act’s mandate that at least 5.4 billion gallons of renewable fuels be blended into transportation gasoline in 2008. The standard for 2007 was 4.02 percent, equating to roughly 4.7 billion gallons.

September 2007 September 1 marks the deadline when obligated parties, such as major refiners, blenders, and importers must meet reporting, registration, and other key compliance requirements. For assistance with registration related questions, contact the EPA RFS Helpline at (202) 343-9755. For more information on the RFS rule, visit http://www.epa.gov/otaq/renewablefuels.

May 2007 EPA issued its final regulations for its renewable fuel standard (RFS) credit trading system. It requires an increasing amount of renewable fuels in the transportation pool, up to 7.5 billion gallons by 2012. Specifically, the RFS requires refiners, importers, and blenders (other than oxygenated blenders) to show that a required volume of renewable fuel is used in gasoline. Small refiners and refineries are exempt from the requirements through 2010, and all gasoline producers located in Alaska, Hawaii and noncontiguous U.S. territories are exempt indefinitely.

It appears that this rule will not materially impact the traditional 3^rd party terminal industry. However, if during the custody transfer the terminal at some point owns the product, the rule will indeed apply. ILTA has produced a template for EPA’s RFS Required Activity Report for terminal review and use.

For calendar year 2007, EPA is calling for the RFS compliance period to be from September 1 through December 31. For 2007, 4.7 billion gallons of renewable fuel is required. Click here to view the final rule as published in the Federal Register.

Related ILTA Articles

ILTA provides a monthly newsletter to its membership. Members may log in to the Member Resources page to access archived newsletters. The following is a list of articles ILTA has published in its newsletter relating to Alternative Fuels.

The Cellulosic Ethanol Mandate for Next Year: An Impossible Goal, March 2010 Issue (p.2)
EPA Seeks Comments on RIN Rule Alternatives in Renewable Fuel Standard, June 2009 Issue (p.3)
EPA May Increase the Allowable Level of Ethanol Blended into Retail Gasoline, May 2009 Issue (p.2)
New Educational Video Focuses on Ethanol Emergency Response Considerations, April 2009 Issue (p.2)
California’s 10 Percent Ethanol Mandate: Update on Tesoro’s Legal Challenge, January 2009 Issue (p.5)
As Fuel Prices Decline Sharply, the Ethanol Industry Faces a Profit Squeeze, November 2008 Issue (p.6)
Environmental Groups and Food Producers Escalate Their Criticism of Ethanol, June 2008 Issue (p.4)
ILTA Adds Reality Check to Discussion of the Renewable Fuel Standard, May 2008 Issue (p.2)
Missouri Considers Biodiesel Blanding Mandate for All Diesel Terminals in the State, March 2008 Issue (p.3)
Cellulosic Ethanol: The Unwanted Government Commodity, January 2008 Issue (p.2)
Biofuels Bill Introduced, June 2006 Issue (p.1)
Chevron Invests in Soy-Based Diesel Fuel, June 2006 Issue (p.6)
EPA Amends Designate & Track Requirements for Non-Petroleum (Biodiesel) Fuel, May 2006 Issue (p.2)
Internet Visionaries Bet on Eco-Fuels: Ethanol & Biodiesel, May 2006 (p.6)
Is Biodiesel Covered by the ULSD Rules? EPA Regulations Say Yes; EPA Staff Says No, April 2006 Issue (p.6)
Renewable Fuel Mandate Requires a New Layer of Reporting & Enforcement Rules, January 2006 Issue (p.3)
Ethanol Mandate, August 2005 Issue (p.1)
House Alternative & Renewable Fuels Bill: Senate Renewable Energy Bill, July 2005 Issue (p.1)