81 FR 83776 - Notice of Opportunity to Comment on Proposed Denial of Petitions for Rulemaking To Change the RFS Point of Obligation
ENVIRONMENTAL PROTECTION AGENCY Federal Register Volume 81, Issue 225 (November 22, 2016)
Federal Register Volume 81, Issue 225 (November 22, 2016)
| Page Range | 83776-83777 | |
| FR Document | 2016-27854 |
[Federal Register Volume 81, Number 225 (Tuesday, November 22, 2016)] [Proposed Rules] [Pages 83776-83777] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-27854] [[Page 83776]] ----------------------------------------------------------------------- ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 80 [EPA-HQ-OAR-2016-0544; FRL-9955-36-OAR] Notice of Opportunity to Comment on Proposed Denial of Petitions for Rulemaking To Change the RFS Point of Obligation AGENCY: Environmental Protection Agency (EPA). ACTION: Petitions for rulemaking. ----------------------------------------------------------------------- SUMMARY: The Environmental Protection Agency (EPA) is proposing to deny several petitions requesting that EPA initiate a rulemaking process to reconsider or change its regulations that identify refiners and importers of gasoline and diesel fuel as the entities responsible for complying with the annual percentage standards adopted under the Renewable Fuel Standard (RFS) program. EPA is providing an opportunity for the public to comment on the petitions we have received and on our proposed denial of the requests to initiate rulemaking. DATES: Written comments must be received on or before January 23, 2017. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ- OAR-2016-0544, to the Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or withdrawn. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (i.e. on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets. FOR FURTHER INFORMATION CONTACT: Julia MacAllister, Office of Transportation and Air Quality, Assessment and Standards Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: 734-214-4131; email address: [email protected]. SUPPLEMENTARY INFORMATION: I. General Information (A) What should I consider as I prepare my comments for EPA? Submitting CBI. Do not submit this information to EPA through www.regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. Tips for Preparing Your Comments. When submitting comments, remember to:Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number). Follow directions--The agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes. Describe any assumptions and provide any technical information and/or data that you used. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced. Provide specific examples to illustrate your concerns, and suggest alternatives. Explain your views as clearly as possible, avoiding the use of profanity or personal threats. Make sure to submit your comments by the comment period deadline identified. II. Background On March 26, 2010, the EPA issued a final rule (75 FR 14670) establishing regulatory amendments to the renewable fuel standards (``RFS'') program regulations to reflect statutory amendments to Section 211(o) of the Clean Air Act enacted as part of the Energy Independence and Security Act of 2007. These amended regulations included 40 CFR 80.1406, imposing the obligation for compliance with the RFS annual standards on refiners and importers of gasoline and diesel fuel. These entities are referred to in the RFS regulations as ``obligated parties.'' Beginning in 2014, and continuing to the present, obligated parties and other stakeholders have questioned whether 40 CFR 80.1406 should be amended, and a number of them have filed formal petitions for reconsideration or revision of the definition of ``obligated party'' in 40 CFR 80.1406, or petitions for rulemaking to amend the provision. On January 27, 2014, Monroe Energy LCC (``Monroe'') filed a ``petition to revise'' 40 CFR 80.1406 to change the RFS point of obligation, and on January 28, 2016, Monroe filed a ``petition for reconsideration'' of the regulation. On February 11, 2016, Alon Refining Krotz Springs, Inc.; American Refining Group, Inc.; Calumet Specialty Products Partners, L.P.; Lion Oil Company; Ergon-West Virginia, Inc.; Hunt Refining Company; Placid Refining Company LLC; U.S. Oil & Refining Company (the ``Small Refinery Owners Ad Hoc Coalition'') filed a petition for reconsideration of 40 CFR 80.1406. On February 12, 2016, Valero Energy Corporation and its subsidiaries (``Valero'') filed a ``petition to reconsider and revise'' the rule. On June 13, 2016, Valero submitted a petition for rulemaking to change the definition of ``obligated party.'' On August 4, 2016, the American Fuel and Petrochemical Manufacturers (``AFPM'') filed a petition for rulemaking to change the definition of ``obligated party.'' On September 2, 2016, Holly Frontier also filed a petition for rulemaking to change the definition of ``obligated party.'' The petitions, comments received to date on the petitions, and EPA's draft analysis are available in a public docket that EPA has established for this Notice under Docket ID No. EPA-HQ-OAR-2016-0544. III. What information is EPA particularly interested in? The petitioners all seek to have the point of obligation shifted from refiners and importers, but differ somewhat in their suggestions for alternatives. Some request that EPA shift the point of obligation from refiners and importers to those parties that blend renewable fuel into transportation fuel. Others suggest that it be shifted to those parties that hold title to the gasoline or diesel fuel immediately prior to the sale of these fuels at the terminal (these parties [[Page 83777]] are commonly called the position holders), or to ``blenders and distributors.'' All petitioners argue, among other things, that shifting the point of obligation to parties downstream of refiners and importers in the fuel distribution system would align compliance responsibilities with the parties best positioned to make decisions on how much renewable fuel is blended into the transportation fuel supply in the United States. Some of the petitioners further claim that changing the point of obligation would result in an increase in the production, distribution, and use of renewable fuels in the United States and would reduce the cost of transportation fuel to consumers. In the draft analysis available in the docket referenced above (Docket ID No. EPA-HQ-OAR-2016-0544), we present our rationale for proposing to deny the requests to initiate a rulemaking on the issue. In evaluating this matter, EPA's primary consideration is whether or not a change in the point of obligation would improve the effectiveness of the program to achieve Congress's goals. At the same time, EPA believes that a change in the point of obligation would be a substantial disruption that has the potential to undermine the success of the RFS program, as a result of increasing instability and uncertainty in programmatic obligations. We believe that the proponents of such a change bear the burden of demonstrating that the benefits are sufficiently large and likely that the disruption associated with such a transition would be worthwhile. We believe that the current structure of the RFS program is working to incentivize the production, distribution, and use of renewable transportation fuels in the United States, while providing obligated parties a number of options for acquiring the RINs they need to comply with the RFS standards. We do not believe that petitioners have demonstrated that changing the point of obligation would likely result in increased use of renewable fuels. Changing the point of obligation would not address challenges associated with commercializing cellulosic biofuel technologies and the marketplace dynamics that inhibit the greater use of fuels containing higher levels of ethanol, two of the primary issues that inhibit the rate of growth in the supply of renewable fuels today. Changing the point of obligation could also disrupt investments reasonably made by participants in the fuels industry in reliance on the regulatory structure the agency established in 2007 and reaffirmed in 2010. While we do not anticipate a benefit from changing the point of obligation, we do believe that such a change would significantly increase the complexity of the RFS program, which could negatively impact its effectiveness. In the short term we believe that initiating a rulemaking to change the point of obligation could work to counter the program's goals by causing significant confusion and uncertainty in the fuels marketplace. Such a dynamic would likely cause delays to the investments necessary to expand the supply of renewable fuels in the United States, particularly investments in cellulosic biofuels, the category of renewable fuels that Congress envisioned would provide the majority of volume increases in future years. In addition, changing the point of obligation could cause restructuring of the fuels marketplace as newly obligated parties alter their business practices to purchase fuel under contract ``below the rack'' instead of ``above the rack'' to avoid the compliance costs associated with being an obligated party under the RFS program. We believe these changes would have no beneficial impact on the RFS program or renewable fuel volumes and would decrease competition among parties that buy and sell transportation fuels at the rack, potentially increasing fuel prices for consumers and profit margins for refiners, especially those not involved in fuel marketing. EPA is also not persuaded, based on our analysis of available data, including that supplied by petitioners, by their arguments that they are disadvantaged compared to integrated refiners in terms of their costs of compliance, nor that other stakeholders such as unobligated blenders are receiving windfall profits. EPA specifically requests comments that address whether or not changing the point of obligation in the RFS program would be likely to significantly increase the production, distribution, and use of renewable fuels as transportation fuel in the United States, as well as any data that can substantiate such claims. We also seek comment on any of the issues discussed here and in the more complete draft analysis of the petitions available in the docket referenced above, including EPA's authority to place the point of obligation on distributors and position holders; the significance of limiting the number and nature of obligated parties; the number of parties that are currently blenders or position holders; the extent to which blenders and position holders may be small businesses for whom designation as an obligated party would be particularly burdensome; whether it is likely that current renewable fuel blenders and/or position holders would reposition themselves in the market to avoid RFS obligations if designated as obligated parties and the likely impact of such repositioning; the significance of transitional issues and potential regulatory uncertainty that would result from changing the point of obligation; and the extent to which a change in the point of obligation could lead to unintended market changes or consequences. Dated: November 10, 2016. Janet McCabe, Acting Assistant Administrator, Office of Air and Radiation. [FR Doc. 2016-27854 Filed 11-21-16; 8:45 am] BILLING CODE 6560-50-P
![83776 Federal Register / Vol. 81, No. 225 / Tuesday, November 22, 2016 / Proposed Rules
ENVIRONMENTAL PROTECTION Protection Agency, 2000 Traverwood Clean Air Act enacted as part of the
AGENCY Drive, Ann Arbor, MI 48105; telephone Energy Independence and Security Act
number: 734–214–4131; email address: of 2007. These amended regulations
40 CFR Part 80 macallister.julia@epa.gov. included 40 CFR 80.1406, imposing the
[EPA–HQ–OAR–2016–0544; FRL–9955–36– SUPPLEMENTARY INFORMATION: obligation for compliance with the RFS
OAR] annual standards on refiners and
I. General Information importers of gasoline and diesel fuel.
Notice of Opportunity to Comment on (A) What should I consider as I prepare These entities are referred to in the RFS
Proposed Denial of Petitions for my comments for EPA? regulations as ‘‘obligated parties.’’
Rulemaking To Change the RFS Point Beginning in 2014, and continuing to
Submitting CBI. Do not submit this the present, obligated parties and other
of Obligation
information to EPA through stakeholders have questioned whether
AGENCY: Environmental Protection www.regulations.gov or email. Clearly 40 CFR 80.1406 should be amended,
Agency (EPA). mark the part or all of the information and a number of them have filed formal
ACTION: Petitions for rulemaking. that you claim to be CBI. For CBI petitions for reconsideration or revision
information in a disk or CD–ROM that of the definition of ‘‘obligated party’’ in
SUMMARY: The Environmental Protection you mail to EPA, mark the outside of the 40 CFR 80.1406, or petitions for
Agency (EPA) is proposing to deny disk or CD–ROM as CBI and then rulemaking to amend the provision. On
several petitions requesting that EPA identify electronically within the disk or January 27, 2014, Monroe Energy LCC
initiate a rulemaking process to CD–ROM the specific information that (‘‘Monroe’’) filed a ‘‘petition to revise’’
reconsider or change its regulations that is claimed as CBI. In addition to one 40 CFR 80.1406 to change the RFS point
identify refiners and importers of complete version of the comment that of obligation, and on January 28, 2016,
gasoline and diesel fuel as the entities includes information claimed as CBI, a Monroe filed a ‘‘petition for
responsible for complying with the copy of the comment that does not reconsideration’’ of the regulation. On
annual percentage standards adopted contain the information claimed as CBI February 11, 2016, Alon Refining Krotz
under the Renewable Fuel Standard must be submitted for inclusion in the Springs, Inc.; American Refining Group,
(RFS) program. EPA is providing an public docket. Information so marked Inc.; Calumet Specialty Products
opportunity for the public to comment will not be disclosed except in Partners, L.P.; Lion Oil Company;
on the petitions we have received and accordance with procedures set forth in Ergon-West Virginia, Inc.; Hunt Refining
on our proposed denial of the requests 40 CFR part 2. Company; Placid Refining Company
to initiate rulemaking. Tips for Preparing Your Comments. LLC; U.S. Oil & Refining Company (the
DATES: Written comments must be When submitting comments, remember ‘‘Small Refinery Owners Ad Hoc
received on or before January 23, 2017. to: Coalition’’) filed a petition for
• Identify the rulemaking by docket reconsideration of 40 CFR 80.1406. On
ADDRESSES: Submit your comments,
number and other identifying February 12, 2016, Valero Energy
identified by Docket ID No. EPA–HQ–
information (subject heading, Federal Corporation and its subsidiaries
OAR–2016–0544, to the Federal
Register date and page number). (‘‘Valero’’) filed a ‘‘petition to reconsider
eRulemaking Portal: http:// • Follow directions—The agency may
www.regulations.gov. Follow the online and revise’’ the rule. On June 13, 2016,
ask you to respond to specific questions Valero submitted a petition for
instructions for submitting comments. or organize comments by referencing a
Once submitted, comments cannot be rulemaking to change the definition of
Code of Federal Regulations (CFR) part ‘‘obligated party.’’ On August 4, 2016,
edited or withdrawn. The EPA may or section number.
publish any comment received to its the American Fuel and Petrochemical
• Explain why you agree or disagree; Manufacturers (‘‘AFPM’’) filed a
public docket. Do not submit suggest alternatives and substitute
electronically any information you petition for rulemaking to change the
language for your requested changes. definition of ‘‘obligated party.’’ On
consider to be Confidential Business • Describe any assumptions and September 2, 2016, Holly Frontier also
Information (CBI) or other information provide any technical information and/ filed a petition for rulemaking to change
whose disclosure is restricted by statute. or data that you used. the definition of ‘‘obligated party.’’ The
Multimedia submissions (audio, video, • If you estimate potential costs or petitions, comments received to date on
etc.) must be accompanied by a written burdens, explain how you arrived at the petitions, and EPA’s draft analysis
comment. The written comment is your estimate in sufficient detail to are available in a public docket that EPA
considered the official comment and allow for it to be reproduced. has established for this Notice under
should include discussion of all points • Provide specific examples to Docket ID No. EPA–HQ–OAR–2016–
you wish to make. The EPA will illustrate your concerns, and suggest 0544.
generally not consider comments or alternatives.
comment contents located outside of the • Explain your views as clearly as III. What information is EPA
primary submission (i.e. on the web, possible, avoiding the use of profanity particularly interested in?
cloud, or other file sharing system). For or personal threats. The petitioners all seek to have the
additional submission methods, the full • Make sure to submit your point of obligation shifted from refiners
EPA public comment policy, comments by the comment period and importers, but differ somewhat in
information about CBI or multimedia deadline identified. their suggestions for alternatives. Some
sradovich on DSK3GMQ082PROD with PROPOSALS
submissions, and general guidance on request that EPA shift the point of
making effective comments, please visit II. Background obligation from refiners and importers
http://www2.epa.gov/dockets/ On March 26, 2010, the EPA issued a to those parties that blend renewable
commenting-epa-dockets. final rule (75 FR 14670) establishing fuel into transportation fuel. Others
FOR FURTHER INFORMATION CONTACT: Julia regulatory amendments to the suggest that it be shifted to those parties
MacAllister, Office of Transportation renewable fuel standards (‘‘RFS’’) that hold title to the gasoline or diesel
and Air Quality, Assessment and program regulations to reflect statutory fuel immediately prior to the sale of
Standards Division, Environmental amendments to Section 211(o) of the these fuels at the terminal (these parties
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![Federal Register / Vol. 81, No. 225 / Tuesday, November 22, 2016 / Proposed Rules 83777
are commonly called the position anticipate a benefit from changing the blenders and/or position holders would
holders), or to ‘‘blenders and point of obligation, we do believe that reposition themselves in the market to
distributors.’’ All petitioners argue, such a change would significantly avoid RFS obligations if designated as
among other things, that shifting the increase the complexity of the RFS obligated parties and the likely impact
point of obligation to parties program, which could negatively impact of such repositioning; the significance of
downstream of refiners and importers in its effectiveness. In the short term we transitional issues and potential
the fuel distribution system would align believe that initiating a rulemaking to regulatory uncertainty that would result
compliance responsibilities with the change the point of obligation could from changing the point of obligation;
parties best positioned to make work to counter the program’s goals by and the extent to which a change in the
decisions on how much renewable fuel causing significant confusion and point of obligation could lead to
is blended into the transportation fuel uncertainty in the fuels marketplace. unintended market changes or
supply in the United States. Some of the Such a dynamic would likely cause consequences.
petitioners further claim that changing delays to the investments necessary to Dated: November 10, 2016.
the point of obligation would result in expand the supply of renewable fuels in
Janet McCabe,
an increase in the production, the United States, particularly
distribution, and use of renewable fuels investments in cellulosic biofuels, the Acting Assistant Administrator, Office of Air
and Radiation.
in the United States and would reduce category of renewable fuels that
the cost of transportation fuel to Congress envisioned would provide the [FR Doc. 2016–27854 Filed 11–21–16; 8:45 am]
consumers. majority of volume increases in future BILLING CODE 6560–50–P
In the draft analysis available in the years.
docket referenced above (Docket ID No. In addition, changing the point of
EPA–HQ–OAR–2016–0544), we present obligation could cause restructuring of DEPARTMENT OF HEALTH AND
our rationale for proposing to deny the the fuels marketplace as newly obligated HUMAN SERVICES
requests to initiate a rulemaking on the parties alter their business practices to
issue. In evaluating this matter, EPA’s purchase fuel under contract ‘‘below the Centers for Medicare & Medicaid
primary consideration is whether or not rack’’ instead of ‘‘above the rack’’ to Services
a change in the point of obligation avoid the compliance costs associated
would improve the effectiveness of the with being an obligated party under the 42 CFR Part 438
program to achieve Congress’s goals. At RFS program. We believe these changes [CMS–2402–P]
the same time, EPA believes that a would have no beneficial impact on the
change in the point of obligation would RFS program or renewable fuel volumes RIN 0938–AT10
be a substantial disruption that has the and would decrease competition among
potential to undermine the success of parties that buy and sell transportation Medicaid Program; The Use of New or
the RFS program, as a result of fuels at the rack, potentially increasing Increased Pass-Through Payments in
increasing instability and uncertainty in fuel prices for consumers and profit Medicaid Managed Care Delivery
programmatic obligations. We believe margins for refiners, especially those not Systems
that the proponents of such a change involved in fuel marketing. EPA is also AGENCY: Centers for Medicare &
bear the burden of demonstrating that not persuaded, based on our analysis of Medicaid Services (CMS), HHS.
the benefits are sufficiently large and available data, including that supplied
ACTION: Proposed rule.
likely that the disruption associated by petitioners, by their arguments that
with such a transition would be they are disadvantaged compared to SUMMARY: This proposed rule addresses
worthwhile. integrated refiners in terms of their costs changes, consistent with the CMCS
We believe that the current structure of compliance, nor that other Informational Bulletin (CIB) concerning
of the RFS program is working to stakeholders such as unobligated ‘‘The Use of New or Increased Pass-
incentivize the production, distribution, blenders are receiving windfall profits. Through Payments in Medicaid
and use of renewable transportation EPA specifically requests comments Managed Care Delivery Systems,’’
fuels in the United States, while that address whether or not changing published on July 29, 2016, to the pass-
providing obligated parties a number of the point of obligation in the RFS through payment transition periods and
options for acquiring the RINs they need program would be likely to significantly the maximum amount of pass-through
to comply with the RFS standards. We increase the production, distribution, payments permitted annually during the
do not believe that petitioners have and use of renewable fuels as transition periods under Medicaid
demonstrated that changing the point of transportation fuel in the United States,
managed care contract(s) and rate
obligation would likely result in as well as any data that can substantiate
certification(s). The changes prevent
increased use of renewable fuels. such claims. We also seek comment on
increases in pass-through payments and
Changing the point of obligation would any of the issues discussed here and in
the addition of new pass-through
not address challenges associated with the more complete draft analysis of the
payments beyond those in place when
commercializing cellulosic biofuel petitions available in the docket
the pass-through payment transition
technologies and the marketplace referenced above, including EPA’s
periods were established in the final
dynamics that inhibit the greater use of authority to place the point of obligation
Medicaid managed care regulations.
fuels containing higher levels of on distributors and position holders; the
ethanol, two of the primary issues that significance of limiting the number and DATES: To be assured consideration,
sradovich on DSK3GMQ082PROD with PROPOSALS
inhibit the rate of growth in the supply nature of obligated parties; the number comments must be received at one of
of renewable fuels today. Changing the of parties that are currently blenders or the addresses provided below, no later
point of obligation could also disrupt position holders; the extent to which than 5 p.m. December 22, 2016.
investments reasonably made by blenders and position holders may be ADDRESSES: In commenting please refer
participants in the fuels industry in small businesses for whom designation to file code CMS–2402–P. Because of
reliance on the regulatory structure the as an obligated party would be staff and resource limitations, we cannot
agency established in 2007 and particularly burdensome; whether it is accept comments by facsimile (FAX)
reaffirmed in 2010. While we do not likely that current renewable fuel transmission.
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Document Created: 2018-02-14 08:29:28
Document Modified: 2018-02-14 08:29:28
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Petitions for rulemaking. | |
| Dates | Written comments must be received on or before January 23, 2017. | |
| Contact | Julia MacAllister, Office of Transportation and Air Quality, Assessment and Standards Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI | |
| FR Citation | 81 FR 83776 |
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