Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

would be relatively straightforward to implement, provide the industry with the certainty
they need to comply, and give them time to put in place their compliance plans and
actions. It also would be unlikely to have any negative impacts on renewable fuel use
given the expectations that total volumes in 2007 will exceed the national volume
required for 2007. This is the approach we are proposing today.
This “prospective” approach would not formally apply the standard to all of the
gasoline produced in the 2007 calendar year. As a result, it would not formally ensure
that the total volume of renewable fuel required to be used in 2007 would actually be
used. However, given the present circumstances, we believe this is an appropriate way to
implement the Act’s provisions. We are confident that the combined effect of the
proposed regulatory requirements for 2007 and the expected market demand for
renewable fuels will lead to greater renewable fuel use in 2007 than is called for under
the Act. Furthermore, refiners and importers are not required to meet any requirements
under the Act until EPA adopts the regulations, and EPA is authorized to consider
appropriate lead time in establishing the regulatory requirements. 12 Under this option we
believe there would be reasonable lead-time for regulated parties to meet their 2007
compliance obligations.
While we are proposing to apply the renewable fuel standard for 2007
prospectively only from the effective date of the final rule, we nevertheless request
comment on all these options for addressing compliance in calendar year 2007.
4. Renewable Volume Obligations
In order for an obligated party to demonstrate compliance, the percentage standards
described in Section III.A.2 which are applicable to all obligated parties must be converted
into the volume of renewable fuel each obligated party is required to satisfy. This volume of
renewable fuel is the volume for which the obligated party is responsible under the RFS
program, and is referred to here as its Renewable Volume Obligation (RVO).
The calculation of the RVO requires that the standard shown in Table III.A.2-1 for a
particular compliance year be multiplied by the gasoline volume produced by an obligated
party in that year. To the degree that an obligated party did not demonstrate full compliance
with its RVO for the previous year, the shortfall is included as a deficit carryover in the
calculation. The equation used to calculate the RVO for a particular year is shown below:
where
RVOi = Stdi x GVi + Di-1
RVOi = The Renewable Volume Obligation for the obligated party for year i, in gallons
12 The statutory default standard for 2006 is the one exception to this, since it directly establishes a
renewable fuel obligation applicable to refiners and importers in the event that EPA does not promulgate
regulations.
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