US EPA direct final, proposed rules amend heating oil definition

You may or may not have noticed that the U.S. EPA released a direct final rule and proposed rule on Sept.17 modifying the definition of heating oil in the renewable fuel standard (RFS2). Previously, the EPA used the definition of heating oil given in 40 CFR §80.2(ccc). This definition boiled down to meeting the spec for No. 1 or No. 2 heating oil or being a nonpetroleum diesel blend. According to 40 CFR §80.2(sss), nonpetroleum diesel is a diesel fuel with at least 80 percent mono-alkyl esters of long chain fatty acids  from vegetable oils or animal fats (biodiesel). If a producer already meets the No. 1 or No. 2 spec for heating oil or makes nonpetroleum diesel, their RIN reporting and registration requirements stay the same.

The direct final and proposed rules expand the definition to also include “fuel oil” that is used to heat buildings occupied by people and that is flowable at standard temperature and pressure. The new definition opens the door for many more producers of renewable heating oil, but also adds more registration and reporting requirements.

When the producer of fuel oil registers with the EPA, two more types of documents must be submitted and reviewed by the professional engineer conducting the independent engineering review. An affidavit from the producer stating that the fuel will be sold for heating interior spaces of homes or buildings to control ambient climate for human comfort and no other purpose. The producer must also supply affidavits from “existing final end users” stating that the fuel is being used for the same purpose listed previously. Fuel oil used for any other purpose, such as process heat, electricity generation, or even co-generation of electricity and heat, is not eligible for RIN generation under this rule. One question that has already come up is what the EPA means by “existing final end users.” In the case of home heating oil, this would imply an affidavit from each home or office building owner. Hopefully the EPA will accept an affidavit from the final distributor, similar to separated food waste affirmations supplied by grease collectors instead of the individual restaurants.

The reporting requirements are also increased for fuel oil producers covered under this rule. The product transfer documents (PTDs) used to transfer ownership of the renewable fuel must include an additional statement that says, “This volume of renewable fuel is designated and intended to be used to heat interior spaces of homes or buildings to control ambient climate for human comfort. Do NOT use for process heat or any other purpose, pursuant to 40 CFR § 80.1460(g).” The section referenced covers prohibited acts under the RFS program, and the EPA added a statement covering use of renewable fuel oil for anything other than heating interior spaces of homes or buildings to control ambient climate for human comfort.

On a batch basis, in addition to the PTD modification, the producer must obtain affidavits from the end user of the fuel that includes the following information:

-Quantity of fuel oil received from the producer

-Quantity of fuel oil used for purposes of heating interior spaces of homes or buildings to control ambient climate for human comfort, and no other purpose

-Date the fuel oil was received from producer

-Blend level of the fuel oil in petroleum based fuel oil when received (if applicable)

-Quantity of assigned RINs received with the renewable fuel (if applicable)

-Quantity of assigned RINs that the end user separated from the renewable fuel (if applicable)

On a quarterly basis, renewable fuel oil producers must report to the EPA on the total volumes of fuel oil produced and sold to end users and the heating content of the fuel. They must also report the volume of the fuel oil that was assigned RINs, the number of RINs assigned to each batch, and the names and locations of every building that used the fuel oil to heat interior spaces to control ambient climate control for human comfort.

The EPA issued a direct final rule because the changes may be viewed as a noncontroversial action that would not receive adverse comment. They also issued a proposed rule in case adverse comments or a hearing request are filed on the direct final rule. The EPA estimates that the renewable fuel oil producers will have an additional annual reporting burden of 21 hours and an additional annual recordkeeping burden of 24 hours, for a total of 45 hours. If you would like to submit a comment to the EPA about this direct final rule, www.regulations.gov has online instructions for submitting comments.