Document Zj14xG46Dd2Z2aKpoMRDw070

To: Jackson, Ryan[jackson.ryan@epa.gov] Cc: apatterson@ameresco.com[apatterson@ameresco.com]; marcus@rngcoalition.com[marcus@rngcoalition.com]; johannes@rngcoalition.com[johannes@rngcoalition.com]; David Jory[djory@capitolhillcg.com] From: Stratton Edwards Sent: Thur 7/6/2017 9:05:13 PM Subject: Meeting on Cellulosic Biofuel RNG Coalition Comments to Ryan Jackson on Regulatory Review.pdf OMB 2018 RVO Draft Rule Letter RNG Coalition.pdf Ryan, I write to request a meeting on behalf of our client Ameresco in regards to the proposed 2018 volume requirements under the Renewable Fuel Standard program for cellulosic biofuel. Ameresco is a member of the Coalition for Renewable Natural Gas. The Coalition's member companies generate cellulosic biofuel under the Renewable Fuel Standard and produce a predominant share of D3 RINs. Biofuel from RNG Coalition members comprised more than 90 percent of D3 RINs generated under the RFS in 2015 and 2016. Ameresco and the Coalition for Renewable Natural Gas would greatly appreciate the opportunity to meet with you to discuss the proposed 2018 RVO. Should it be useful, we have attached copies of the Coalition's comments submitted to the EPA and OMB earlier this year. I hope you had a great 4th and we look forward to seeing you soon. Regards, Stratton Stratton Edwards I. egislative Counsel 17cv1906 Sierra Club v. EPA ED_001523_00002559-00001 Capitol I.fill Consulting Group Government Relations Professionals 499 S. Capitol Street, SW Suite 608 Washington, DC 20003 Cell: (202) 740-8309 Office: (202)488-0101 Web: capitolhillcg.com 17cv1906 Sierra Club v. EPA ED_001523_00002559-00002 T H E FOR RENEWABLE NATURAL GAS d n Juned H,^1 H?017 Mr.d H^hadd Hhit|man Oliced F|fTM Hhifomiationd Qandd ^Bf^ulatoryd DFIAffairs Officed onManagementddnSIndd F|budgel 725d lWdH^ nWl Washington^ nTMMlW RE:d(HI?Sai$wabled I]Fueld OllVolume^HlliailW^ H The^ntiondito]i|wablelitii)raldasl|lW|^ sEiH&lri^^ ri] supportiSlrl|ili|M]igSi$wabledfiI]^^ sdffll]8fc|tdMI}sdiS^ DI] Renewable^ Cl]Fue^ COStandiajdSffilllQKK L0]dC]1|Eji^rai Protection^ I]Agency'sdci^(Eibfe)l^]nistrationd LtQdEl1Jenewabled rjFueld nrjStandard^ programd F|andd H^newabled F|volumed nbligatihd[ H(RV0]d F|Processes.d F] d an Wed E|lhankd l]thed EI^Hiced E|fTM OllManagementd ni]andd F|budgeld F|(MB)d F] il ford E|urd D^sugport Givend Flthed Fldatad Flwe'ved nd&N&BdatrfMa1Wtel3^ El productiond Sd-dL^^nilond Flga^figl.dhifd Flvolumed F|inEM6^idid1aftd FIFbrrentlyd F] producingd Hcellulosicd Flbiofuel.d Flandd FlthoiededKha^dibflhntiaS FTOprognsssd l]toi completion,dhpRoachingdk previouslyjLibllshedj^mii]etjonjhi^^ F| yieldd QaWOWa Ocellulosicd ngaBfiaai.Wm dni] Backgroundd !) dan ThedoaI]tionS)r^enI|wabledatt]raldas^dr| i)doi]prdtM'gfhizationdedI]:atedS)Si)e^ F| participatedijKLiliOjm ffjogasntonfiMG'ablenCNS/iNG^at^ways ,dsji|ciallydhoF]ed F| generatingSDQosicd Ul]biofueld HundetOiHHlhed E|KFS.d F| 17cv1906 Sierra Club v. EPA ED_001523_00002560-00001 RNG F|Goalilion DFJmembers FJp^oduce I]a Hp^-'dominant DFJshare F]of DFjtoda 2016,ioflQelori]N(I]oaFjtioneiFlbers3rrI3)risedoiH^aili]0%lW I] She^S^IN^ H generated F]under l]lhe DFjRFS, l]while I]RNG L9I]6ffl F|Slltl]tx3^^ such, I] die FJRNG HCoalilionS FJ is H uniquely I] positioned I]lo Hoompile regulators I]and DFJpolicy I] makers I]on DFJexpected Hdi^rldl^nel^irodffitii^ffiT RINs.SHU n The I]RFSaH<ii)g^ n I]ffitei]ded !) The DFjRFS l]i.s I]driving I] the HdevelopmenlS F|abldi^^Sl<Ilqalidymt)rd])ffibl]]i natural DF^GS!]:Ha mong I] die DFJcleanest FJiuels DFJavailable DFJtoday. Dl]Wher vehicles,NOE^elji|cuEjnd^hdl$lr^)llltion,id^brrf|)at irrite iafi^e.N(F^el}i| F| stabilizeHiel^rid^bld|ility,SdijlceepIlndenceh^rdi^nlilhd-irB)]nsnstainable F| waste F|PracWI n TheSE^j Qis F|creating l]U.S. I]jobs, DFjmvestment, Hand u^SrpHdeSiSrpQ^ becausef$^ESHIWGfyird]uctionl^l|FHf}n(Hi|^ FJ Equivalents, Qor 1]EGE) Qin FJ^O 14, F|lo l]139.8 DFJMillion DFJgallons I]m 2016.i'ei|ntly,iis^bliI|neelF]l%^)y^el^blif|ne)WSI^.^e H diumid^afMit}F^ F| trucks, Hausses F|and F|ther F|vehicle.s F|diat F|>'un F|n F|Fompressed L Natural HGas1]^!). H H Q n Due Hin DFllarge F|parl F|lo F|die DF1RFS, Hlhe OF1RNG F|iuduslry F|has^ five DHyears n(31^ FH|Me3U]ffiIQlife n Uf[22). FJ RNG FJhas F|seen EJiuore F|vohime Hgrowlh F]iu Hlhe Hlast H^-S F|y the F|ih'st F|iive DFIyears F|f F]RFS irjceliulosic F|hiofuel F|grawlh. F| n The4T]4WilIi)Dn^llflns ^ElIf)fM|BiQipated(n^ pfbductionepHirtedly^|e^iNffi] !] industryi$iil| F|lhan Q16 F|dmes Hlhe F|^014 n F|cHulosic H^iofue] Twentyntw^2J^ddF|ionalNG^'ojl|cts'e^'ei|ntlyhdflrfevJopment. ed|useie^ F) average FJRNG F|Project H^Muires F|$16 HMillion F|iu F|d7]^)rri^dbct^inf] and F|iudirect DFljobs, DFJRNG Fl is DEJincreasingly DFlbecoming Ha H major Q America. SIDHU n Analysis Dl]Production HUnderll1 F|lg017 DI]RVO DI) As Hof HApril H2017, Dl]the DF1RNG Dl]Coalition F| is Dl]tracking F|294,382,4 qualify Dl]for F|2017 DEJRINS. DFJThis F|volume F|would Dl]fall DI] 17 F|milliotr production Dl](not r]avai]abili)3] l]basis. DI] H >_4}>M]-4]^^i]^ai]j|n^n^n^ii^n^n^n^n^n^ii^n^w ^qcomparisoi ^I]ofS ^qEPA'sE!A|sffl]Dl]iEiTSllaMPtiIE3]]]tiffl l|]\nnual D 17cv1906 Sierra Club v. EPA ED_001523_00002560-00002 ljTFT Thisi slFght^i] Habovifflf^di H2016 Hmonlhlyi Hvolumei OHofi H16,030,003,i Qd marginalieW^ Hvolumei Haddedi Hthcoughi H1 h iio^[Ffr^jacFj^lia HHte7^0ip RI N i Hgcnerationi Hwuldi Hoccdi Hioi Haveragei DH29 HMiHioni EGIIJli Hpc in Loweri HlhanS Hcxpecledi nnprodtofl^^Hffififr^f^ Hio -- H^daysi Qres three^elllominantictQrsii QissuesS DFlpertaining^in(D5)i F|and W H Cellulosici H(D3)i nf^d^oenkrtaintyi Hlcadingi HUP -- DHthei Presidentiali HElcclion;i Handi Hmosli Hpcominenlly.i H-doweri Hlhani Hanlicipat applicationsi Hbyi HJlEPA.i F| RNGi u I] Coalition S Hdatai uJ^inni^^Lto^SiEa^nrwi&MH HElection,i H20%i Hol- Hnew 2in01n8. WU RNGi Hlndih Thei DHRNGi HCoalition^Slf|WtittnBon^ nilgaE^|)0^iI^LHRNGi t>r(i]ects ini H?WlL}ding^ H22iy Hnew -- l^tNI}i Hprojecls.S H Asi OEJirfWirn^^lW HKNG DlBflitiiedi ntoiiaf^PlRenewfilbSinandi HRen^le LNGi Flproduclioni DOshoSMi WW^^aHonsi^ili>(pffil)i DFluffl^! nF|RFSi H in W F|2 Thisi I]incl|ildH$aryi Hsourcei Dilatai HsuhinittKdSniind3Shf F|Infm^tion.i F| 000 in Table 0 01.-0 0 RNG^OBBa^itMBted 0 0 02MH (The H aifijllowingei El WnformationB El nnaccountinpHH 0waspilSftared0B0w//0 B SEPA __________________________________ Product!on2''11 n1 1Estimate'" Produceri Hr^Wgtran^^ n inn inn TOTALS:inr| 541,409,690iLH Thisi H^porledi n T] n^^^1TTHipn i Hdalai DFlfromi QRNGi Hpn^ectsi F|currenlly^ renewablei F|naturali Hgas,i Hfonii Hexislingi FlProjeclsi Hundergoingi F|expansic comingi F|olfi Hcontracti DnfromitElWpteiM Dllfindi Inapplications i F|andi DFItra] toi ntrartqliioni Fjiueli Happlication.i Qandi Hiromi Hplannedi Handi Hadvancin: projectsi DB^Hnscheduledi Honlinei R^MQi^ltTHfflnil n H 2 018 in EPA'si Hpciori H^VOi Hnilesi DHhavei nHutilizedi Hai Hpn'jcctioni nmelhodology reportedi HdFiha.i IHinethodologyi niHfea&H^i|laila^ DHati Haccuracyi Handi Hacc RNGi DHmarketi PyjilSini^ininundeS&faiOELniitgiiBilIpk^ Hfi Hprir* volumei Hihati Hshwsi Hvidencei DHofi Hconsislenli DHRINi Hgneration;i HaPl RFS^fC^ctsiaE^ii^igt^r yiOEpS^ureable^s^rii|uctionii^5fi|'iifl nRFSSB H 17cv1906 Sierra Club v. EPA ED_001523_00002560-00003 application; EJand EJapplie.s Ha^ 01150% Hmultiplier EJfor IT'uew" Elvolume history.1 If] n Applying EJthis UEjmethodology, Hwe^ Hcan nxpecl E]an uElRVO EJin EJ201 at n 100%; HMWonii)iia[|ff^iipiMiWir^^ on uEjprtidn El(nol EJavailabilit^ T|EJ factors. n Conclusion !) n TheMq DllCoaim^I)estsiurm Mffi|re DqthBSoqie Ol]Fuel Ol]Volume Ol]Standi Draft Ol]Rule d^hflesig1OEf]Biofuel ni]volumes RaiiriH>MiSs^^pq im18H WeecQgnizehaH^i^^erhri]sholdiaf| 3e^Vaf|anteds]^Mp(HqidersBIs EJ aggregation-Wb 11orfi|)tH|rarIl)us|3pFbvedSlliIilosicof]L|el)uf|:esidf|lhvi]a] H objection EJlo OHaiSddWiglW^^^ EJ n EPA'sdhlnistration^ES^iling|^ growth ^^d$ousllilf|osicofHel EJ production. M| OEjprojects F|a re Hcurrenlly DEjoperating EJin H27 F| U.S. DEjSt is H110 n>'eason Hevery DHState Hcould nf]hlii(gtlOlT[]qn)midfflic@l^^ With Hmere Hslability DHto F|lhe HRES F|(no Hiroeze, Hdelay, orjor F| anddr|ional35E|ilHl)n^ib^ctni]:ructionvd|tmentid^8Q$bW^lireI()tid^ F| indirect DFljobs F|in ^20|8 F|alone. F| F| FJ F| Thank D^MpFladvance Hfor E|your F|lhoughlful F|consideration FJof F|lhis RNG DHindustry, Hand Hespecially Ld^fianFjtls^^lClliMS' rnatn F^Fl^ Qptop volume Htar^ts.^ F|TM H n We FJlook Fjlorward FJ10 F|conlinuing nto nHwod^onilwde^fflHlEIIAi!^*^ more Hdiverse Elidei FJsuPPly DlWr^j DF|all DF|Americans. FJ FJ FJ FJ F| n Sincerely, Marcus D. DiHette Director of Public and Dovemment Affairs Coalition for Renewable Natural Das David A. Cox Director of Operations & Deneral Counsel Coalition for Renewable Natural Das Cc: Paul Argyropoulos U.S. EPA Office of Transportation and Air Quality FJ 17cv1906 Sierra Club v. EPA ED_001523_00002560-00004 RENF"" E NATURAL GAS May 15, 2017 Via Electronic Transmission: regulations.gov Mr. Ryan Jackson Chairman, Regulatory Reform Task Force Office of Policy Regulatory Reform Mail Code 1803A 1200 Pennsylvania Ave, NW Washington, DC 20460 Re: ID No. EPA-HQ-OA-2017-0190 Executive Order 13777, "Enforcing the Regulatory Reform Agenda," Dear Mr. Jackson: These comments respond to the April 13, 2017 , request for input on regulations that may be appropriate for repeal, replacement or modification. We thank the U.S. Environmental Protection Agency (EPA) and EPA's Reform Task Force for the opportunity to provide this feedback on behalf of the renewable natural gas industry in North America. I. ABOUT US The Coalition for Renewable Natural Gas (RNG Coalition) is a non-profit association of companies and organizations dedicated to the advancement of renewable natural gas (RNG, or biomethane). RNG is natural-gas-quality biomethane, derived from the biogas that emits from decomposing organic waste. Our nation's landfills, dairies, hog farms, and waste water treatment plants, for example, produce a significant volume of methane that iscaptured and refined using traditional natural gas treatment technologiesbefore being used to generate electricity, heat, and fuel. RNG Coalition members include producers of more than 90% of all the RNG in North America, including producers of baseload renewable electricity and the predominate volume of cellulosic biofuel in the U.S. RNG is a domestic complement to geologic natural gas . RNG utilizes North America's extensive network of common-carrier, natural gas pipelines and fueling stations. The development, deployment and utilization of EPA-HQ-OAR-2017-0190 1 of 8 17cv1906 Sierra Club v. EPA ED_001523_00002561 -00001 RNG creates domestic, blue-collar jobs and produces significant economic stimulus across the country. II. RNG COALITION INPUT The RNG Coalition supports the continuation of the EPAadministered Renewable Fuel Standard (RFS) because the RFS is creating U.S. jobs, investment, and a clean and diverse fuels portfolio. Since 2014, RNG has accounted for 98% of RFS -qualified, cellulosic biofuel. Because of the RFS, RNG production has grown from 33 Million gallons (Ethanol Gallon Equivalents, or EGE) in 2014, to 139.8 Million gallons in 2015 to 188.5 Million gallons in 2016. Presently, this volume fuels 21% (by fuel volume) of U.S. medium and heavy duty trucks, busses and other vehicles that run on Compressed Natural Gas (CNG) and Lquefied Natural Gas (LNG).1 Due in large part to the RFS, the RNG industry has built more production facilities in the last five years (31) than in the previous twenty-five years (22). RNG has seen more volume growth in the last 2.5 years than the 2005 Congress forecast for the first five years of RFS cellulosic biofuel growth. Twenty-two (22) additional RNG projects are presently under development. The RNG Coalition is tracking 294 Million gallons of RNG production in 2017, and 541 Million gallons in 2018 (more than 16x the 2014 RFS volume). Because the average RNG project requires $16 Million in development investment and creates 173 direct and indirect jobs, RNG is increasingly becoming a major job creator in communities across America. A recent study conducted by ICF International analyzed various scenarios involving 172,000 to 516,000 low-nitrogen oxide (NOx) natural gas vehicle (NGV) trucks and more than 500 Million diesel gallon equivalents (DGE) of RNG produce d in California, and concluded that 81,000 to 134,000 jobs could be added in that state alone between 2018 and 2030. The ICF study reported that "for every job created through the investment in low NOx NGV trucks, fueling infrastructure, and RNG production facilities, two jobs are create d in supporting industries (indirect) and via spending by employees that are directly or indirectly supported by these industries (induced)." Finally, the ICF study concluded that there are "few comparable opportunities" for developing "a robust alternative transportation fuel production industry," adding that low-NOx trucks, combined with the use of California -produced RNG have the potential to displace 1 billion DGE annually. 1 Based on a comparison of EPA's 2016 EMTS data and EIA's 2016 data in the 2017 Annual Energy Outlook. EPA-HQ-OAR-2017-0190 17cv1906 Sierra Club v. EPA 2 of 8 ED_001523_00002561-00002 RNG projects are currently operating in 27 U.S. States. With a strong RFS, there is no reason every State could not experience the jobs and other economic benefits of RNG. With mere stability to the RFS (no freeze, d elay, or significant modification) , we anticipate an additional $352 million in project construction investment and 3,806 new direct and indirect jobs in 2018 alone. RNG possesses all of the clean air attributes of geologic natural gas. On a life -cycle basis, RNG is the lowest carbon fuel available. More importantly, in the context of the RFS, Congress has mandated year-over-year growth in cellulosic biofuel volume. Although RNG is not the only cellulosic biofuel in production, its growth is a major sue cess story of the Renewable Fuel Standard. Of the 26,502,120 MMBTU per year of RNG in the U.S. common -carrier natural gas pipeline system, 74% is presently dedicated to transportation fuel.The remaining 26% of RNG in the pipe (81 Million EGE) is potential cellulosic biofuel that may become RFS volume if the program remains stable and there is greater RIN price predictability. As such, we direct our comments today to the portion of the request for input on potential modification. For the avoidance of doubt, we support continuation of the RFS. Any suggestion we make for modification herein is meant as constructive to the strengthening of the program and to further enhance the effectiveness of the RFS, especially project development, job creation, and economic stimulus. Further, we are conscious that many of the items we have included below are already the subject of a pending rulemaking and or great EPA attention. To that end, we encourage EPA to expedite resolution. A. Primary Opportunity for RFS Modification: FINALIZE REGS The RNG Coalition supports the approval of the Renewables Enhancement and Growth Support Rule ("REGS") amendments to the Renewable Fuels Standard (RFS) program. REGS is not a regulation in the traditional sense. It removes barriers to renewable fuel production, distribution and consumption. It gives American small business more options. It opens opportunities for ingenuity that are long overdue. i. Bio-Intermediate Options Provide Important Opportunities for Cellulosic Biofuel Growth The RNG Coalition supports EPA's proposal to allow bio -intermediates in existing pathways in Table 1 to 40 CFS 80.1426. We further agree that the original lifecycle analysis for those renewable pathways is appropriately carried forward. However, to stop this bio - EPA-HQ-OAR-2017-0190 17cv1906 Sierra Club v. EPA 3 of 8 ED_001523_00002561 -00003 intermediates rule at an approval of only existing Table 1 pathways misses an incredible opportunity for EPA to grow cellulosic biofuel production without delay. In the same way that EPA currently approves RIN generation from biogas feedstocks when used in transportation fuel as Renewable LNG based on the BTU input, EPA should approve conversion to other liquid fuels and liquid chemical fuel blend stocks. Similarly, EPA curr ently approves pathways from biogas feedstocks for gaseous transportation fuel in the form of Renewable CNG. These pathway options should be extended to allow RIN generation when the gaseous transportation fuel is renewable hydrogen or renewable hydrogen fuel blend stocks. The direct transportation fuel pathways should be automatic. The RNG Coalition sees no reason why those same qualified feedstocks are not allowed to generate RI Ns when serving a qualified end use. Further, great opportunities exist to use qualified advanced or cellulosic biofuel (like biogas-derived RNG) as blend stock content in conventional and gasoline fuel. Such action is consistent with the purpose of the RFS and will help grow the development and deployment of advanced and cellul osic biofuels while diversifying our country's fuel portfolio, lowering emissions, and reducing dependence on foreign oil. We understand that the adoption of the bio-intermediate framework in this rule opens the door to such approval in the future, but w ithout clear direction from EPA that these pathways will be approved (or at least will receive favored status since they incorporate previously qualified feedstock and fuels), cellulosic biofuel production will be unnecessarily stifled. Finally, EPA should not limit bio-intermediate pathways to two facility processes. EPA proposed that the processing of a feedstock listed in an approved pathway into a bio - intermediate may only occur at a single facility. This limitation is arbitrary and should not be imposed. The RNG Coalition supports a multi -facility framework to bio -intermediates. This approach maximizes the potential production of cellulosic biofuels by taking advantage of existing infrastructure. Today, we have transport capabilities and commercial f acilities that can handle bio-intermediates without additional capital expenditures. By allowing applicants to use more than one facility, EPA will maximize the growth opportunities of bio-intermediate use and thus for demand of cellulosic biofuels like RNG. ii. Renewable Electricity Options Provide Important Opportunities for Cellulosic Biofuel Growth The RNG Coalition supports an expedient resolution of remaining barriers to e -RIN pathway approval. The renewable electricity pathway represents a major opportunity to advance the goals of the RFS program and accelerate the development of biogas -derived resources and the deployment of electric vehicles (EVs) powered by electricity generated from EPA-HQ-OAR-2017-0190 17cv1906 Sierra Club v. EPA 4 of 8 ED_001523_00002561-00004 advanced and cellulosic biofuel. To that end, we support EPA's continuing efforts to remove the final roadblocks that have thus far prevented RIN generation for renewable electricity. In order to honor the Congressional intent of the RFS and survive court scrutiny, any resolution of this matter should incentivize the growth of advanced and cellulosic biofuels. We agree that EV adoption is a laudable goal. However, such considerations should be viewed as a favorable byproduct of the action, not a primary driver. Cellulosic biofuel RI Ns should be generated whenever electricity is produced from qualified cellulosic feedstocks, including biogas from landfills, muniqbal wastewater treatment facility digesters, agricultural digesters, separated MSW digesters, and biogas from the cellulosic components of biomass processed in other waste digesters, and regardless of whether first compressed, liquefied, pipeline injected, or not. To receive a D3 RIN, the biogas should be derived from cellulose, hemicellulose or lignin feedstocks and the electricity should be utilized in transportation application (including on -road vehicles, and other forms of transportation like trains, trollies, tractors, ferries, and forklifts, etc.) Ultimately, the RNG Coalition urges that EPA prioritize the use of good data, minimize potential RIN fraud, and look to adopt a framework that incentivizes the use of advanced and cellulosic biofuels in generating RINS for renewable electricity. B. Primary Opportunity for RFS Modification: ISSUE CWC ONLY ON SHORTFALL The RNG Coalition believes the provisions of the RFS allowing for alternative compliance through the use of the Cellulosic Waiver Credit (CWC) are important to maintain. However, EPA's policy decision to match CWC availability to the full cellulosic renewa ble volume obligation (RVO) creates market liquidity problems that are inhibiting growth. The Clean Air Act (CAA) requires the Administrator to "make available for sale cellulosic biofuel credits" whenever setting the cellulosic biofuel obligation below statutory levels,2 and promulgate regulations that govern the issuance of credits.3 CAA further directs that the CWC regulations assist market liquidity and transparency, to provide certainty for renewable fuel producers, and to limit any potential misuse of cellulosic biofuel credits.4 Leading up to the 2016 compliance deadline, many obligated parties opted to purchase cellulosic waiver credits from the EPA rather than physical D3 RINs despite D3 RINs being 4 CAA 211 (o)(7)(D)(ii). 3 CAA 211 (o)(7)(D)(iii). 4 "These regulations shall include such provisions, including limiting the credits uses and useful life, as the Administrator deems appropriate to assist market liquidity and transparency, to provide appropriate certainty for regulated entities and renewable fuel producers, and to limit any potential misuse of cellulosic biofuel credits to reduce the use of other renewable fuels, and for such other purposes as the Administrator determines will help achieve the goals of this subsection." CAA 211 (o)(7)(D)(iii). EPA-HQ-OAR-2017-0190 5 of 8 17cv1906 Sierra Club v. EPA ED_001523_00002561 -00005 offered for sale at prices significantly below the compliance cost of using a waiver credit. The presence of CWCs in a volume equal to 100% of the D3 mandate disincentives buyers from participating in D3 purchases thereby providing less revenue back to biofuel producers who generate D3's. The increased risk that physical D3's may go unsold is an impediment to biofuel producers looking to market their cellulosic fuel and secure a steady income of revenue to run their plant. This creates unnecessary headwinds for new project development and job creation and ultimately makes it that much harder to ramp up RNG volume to meet the RVOs. By their very nature CWCs exist to make up for the shortfall of actual production versus the OPs obligation.5 The RNG Coalition recommends EPA issue CWCs to match the delta between actual production and the RVO. C. Primary Opportunity for RFS Modification: SUPPORT PRIVATE FINANCING Financing is among the most significant challenges RNG Coalition producer-members face in their efforts to bring new biofuel to the U.S. market. Underwriting requires a degree of certainty that the RFS has not yet sufficiently provided. Cellulosic biofuel producers must be able to demonstrate to their financiers that there will be a sufficie nt market for the fuel they produce. To the extent it is within EPA's authority or influence, the RNG Coalition recommends that all revenue generated from the sale of CWCs be dedicated to the promotion of further cellulosic biofuel development, including payments to purchase unsold RINs. If for instance, EPA set up a RIN clearing house wherein EPA would guarantee cellulosic RINs would be purchased (using CWC revenue) at some floor price(i.e. $1.00 per D3/D7 RIN), it would go a long way toward growing new project development, since producers could more easily obtain private financing against a known minimum RIN price. D. Primary Opportunity for RFS Modification: SET RVO AT VOLUME AVAILABLE For several years, the RNG Coalition has advocated thaEPA has a statutory obligation to set the RVO at the "projected volume available during the calendar year." 13 In recent months, we have seen evidence that (at least some persons at) EPA agree with our interpretation of statue on this point. However, to da te, RVO Rulemakings have looked to cellulosic biofuel production, rather than volume available when determining the annual obligation. The RNG Coalition encourages EPA to set the Cellulosic Biofuel RVO at volume available, and not mere annual volume production. 5 "The regulations shall limit the number of cellulosic biofuel credits for any calendar year to the minimum applicable volume (as reduced under this subparagraph) of cellulosic biofuel for that year." CAA 211 (o)(7)(D)(iii). EPA-HQ-OAR-2017-0190 6 of 8 17cv1906 Sierra Club v. EPA ED_001523_00002561 -00006 RVO Rules should take into account prior year volume rollover due to excess production and/or CWC purchases. "Volume available" does not necessarily equate to "fuel production." Volumes produced in any year and not used for compliance in that year , under EPA precedent6,7,8,9 and court rulings10 are considered "volume available" for the subsequent year. In order to take a "neutral methodology" 11 that is a "prediction of what will actually happen"12 with respect to "volume available,"13 EPA should take into account any volumes expected to be produced and not used for compliance in the prior year (i.e. excess production in the prior year). EPA should also consider any actual or expected CWC purchases that lead to excess volume availability in the subject compliance year. In order to creategreater market certainty for renewable fuel producers and obligated parties, the RNG Coalition continues to advocate that EPA should clarify that its RVO methodology does and will include such considerations. E. Primary Opportunity for RFS Modification: FIX CO-DIGESTION DISINCENTIVE The RNG Coalition urges expedient resolution of the current disincentive for anaerobic digester (AD) operators to co-digest multiple feedstocks. Anaerobic digesters process predominantly cellulosic materials, but also some non-cellulosic materials. Presently, there is enormous potential for RNG production from separated municipal solid waste and otherorganic waste feedstocks. A predominant majority of the waste reaching 6 In the 2010 RFS2 Final Rule EPA noted that "it is ultimately the availability of qualifying renewable fuel, as determined in part by the number of RINs in the marketplace...". Federal Register Volume 75, Number 58 (Friday, March 26, 2010), at 14,698. In the 2010 RFS2 Final Rule EPA noted "These 2009 and 2010 RFS1 RINs will be available and can be used towards volume requirements of obligated parties" Federal Register Volume 75, Number 58 (Friday, March 26, 2010), at 14,676. 8 In a recentNPRM, EPA reiterated ts approach that carryover RINs representa component of available volume."We believe that the availability of this full volume of carryover RINs will be important for both obligated parties and the RFS program itself in addressing significant future unce rtainties." Federal Register Volume 80, Number 111 (Wednesday, June 10, 2015), at 33,130. 9 It should be noted that, in the June 10, 2015 NPRM, EPA's rationale for not including carryover RINs in the D6 RIN applicable volume was not because such RINs were not available volume for compliance, but rather that they were needed to avoid the risk of supply shortages and possible harm to the economy. In the case of cellulosic biofuels, the statute prescribes an alternative method to prevent harm - the Cellulosic Waiver Credit - which is a built-in relief valve to price impacts of volume shortages. 05 Monroe Energy v. Environmental Protection Agency, May 6, 2014. The D.C. Circuit indicated it was appropriate for EPA to consider the availability of carryover RINs when determining whether supply was adequate for the purposes of the general waiver authority. "EPA reasonably concluded that `the availability of carryo ver RINs was certainly relevant... to volume requirement." m American Petroleum Institute v. Environmental Protection Agency; January 25, 2013, at 10. n3CAA211(o)(7)(D)(i). EPA-HQ-OAR-2017-0190 17cv1906 Sierra Club v. EPA 7 of 8 ED_001523_00002561 -00007 these ADs is cellulosic feedstock. However, operators of AD projects who co-digest multiple feedstocks are burdened with complex and costly testing requirements (~$1 million annually) on each individual feedstock. A potential solution is to allow cellulosic testing on the aggregate feedstock mix on a monthly basis (consistent with each RIN batch), by the collection of multiple samples from the feedstock mix tank just prior to being fed to the digester.The composite sample can be tested to demonstrate that the aggregate feedstock meetsa 75% cellulosic threshold. Thisallowance for sampling would greatly reduce the regulatory burden while still accomplishingthe goals of the RFS to incentivize the deployment of cellulosic biofuel. An additional or alternative action that would alleviate the burden on some AD operators is for EPA to further expand the definition of animal waste material per 80.1401. III. CONCLUSION The RNG Coalition thanks the Regulatory Reform Task Force for your consideration of our comments. The RNG industry is thriving. The RFS is working. Yet there is still room for improvement. Your present undertaking has the potential to help grow the U.S. economy, create jobs, and ensuie the energy security that comes from a diverse domestic fuels portfolio. Please don't hesitate to contact us if we can be of any further assistance. Yours in Service, //de// David Cox General Counsel Coalition for Renewable Natural Gas david@rngcoalition.com 916.588.3003 EPA-HQ-OAR-2017-0190 17cv1906 Sierra Club v. EPA 8 of 8 ED_001523_00002561 -00008