[Federal Register Volume 77, Number 188 (Thursday, September 27, 2012)]
[Rules and Regulations]
[Pages 59457-59485]
[FR Doc No: 2012-23344]

Vol. 77

Thursday,

No. 188

September 27, 2012

Part II

Environmental Protection Agency

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40 CFR Part 80

Regulation of Fuels and Fuel Additives: 2013 Biomass-Based Diesel
Renewable Fuel Volume; Final Rule

Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 /
Rules and Regulations

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2010-0133; FRL-9678-7]
RIN 2060-AR55

Regulation of Fuels and Fuel Additives: 2013 Biomass-Based Diesel
Renewable Fuel Volume

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: Under the Clean Air Act Section 211(o), the Environmental
Protection Agency is required to determine the applicable volume of
biomass-based diesel to be used in setting annual percentage standards
under the renewable fuel standard program for years after 2012. We
proposed an applicable volume requirement for 2013 of 1.28 billion
gallons on July 1, 2011. In order to sufficiently evaluate the many
comments on the proposal from stakeholders as well as to gather
additional information to enhance our analysis, we did not finalize
this volume requirement in the January 9, 2012, rulemaking setting the
2012 percentage standards. In this action we are finalizing an
applicable volume of 1.28 billion gallons of biomass-based diesel for
calendar year 2013.

DATES: This final rule is effective on November 26, 2012.

ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-HQ-OAR-2010-0133. All documents in the docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in www.regulations.gov or in hard copy at the Air and Radiation Docket
and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution
Ave. NW., Washington, DC. The Public Reading Room is open from 8:30
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The
telephone number for the Public Reading Room is<PHONE_NUMBER>, and the
telephone number for the Air Docket is<PHONE_NUMBER>.

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:<PHONE_NUMBER>; Fax number:<PHONE_NUMBER>; Email
address<EMAIL_ADDRESS>or the public information line for
the Office of Transportation and Air Quality; telephone number (734)
214-4333; Email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    Entities potentially affected by this rule are those involved with
the production, distribution, and sale of transportation fuels,
including gasoline and diesel fuel or renewable fuels such as ethanol
and biodiesel. Potentially regulated categories include:

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                                                NAICS \1\                     Examples of potentially regulated
                  Category                        codes       SIC \2\ codes                entities
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Industry...................................          324110            2911  Petroleum Refineries.
Industry...................................          325193            2869  Ethyl alcohol manufacturing.
Industry...................................          325199            2869  Other basic organic chemical
                                                                              manufacturing.
Industry...................................          424690            5169  Chemical and allied products
                                                                              merchant wholesalers.
Industry...................................          424710            5171  Petroleum bulk stations and
                                                                              terminals.
Industry...................................          424720            5172  Petroleum and petroleum products
                                                                              merchant wholesalers.
Industry...................................          454319            5989  Other fuel dealers.
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\1\ North American Industry Classification System (NAICS).
\2\ Standard Industrial Classification (SIC) system code.

    This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
final action. This table lists the types of entities that EPA is now
aware could potentially be regulated by this final action. Other types
of entities not listed in the table could also be regulated. To
determine whether your activities will be regulated by this final
action, you should carefully examine the applicability criteria in 40
CFR part 80. If you have any questions regarding the applicability of
this final action to a particular entity, consult the person listed in
the preceding section.

Outline of This Preamble

I. Executive Summary
    A. Purpose of This Action
    B. Summary of Today's Action
    C. Impacts of This Action
II. Statutory Requirements
III. Factors Affecting Supply and Consumption
    A. Demand for Biomass-Based Diesel
    B. Availability of Feedstocks To Produce 1.28 Billion Gallons of
Biodiesel
    1. Grease and Rendered Fats
    2. Corn Oil
    3. Soybean Oil
    4. Effects on Food Prices
    5. Other Bio-Oils
    C. Production Capacity
    D. Consumption Capacity
    E. Biomass-Based Diesel Distribution Infrastructure
IV. Impacts of 1.28 Billion Gallons of Biomass-Based Diesel
    A. Consideration of Statutory Factors
    1. Climate Change
    2. Energy Security
    3. Agricultural Commodities and Food Prices
    4. Air Quality
    5. Deliverability and Transport Costs of Materials, Goods, and
Products Other Than Renewable Fuel
    6. Wetlands, Ecosystems, and Wildlife Habitats
    7. Water Quality and Quantity
    a. Impacts on Water Quality and Water Quantity Associated With
Soybean Production
    b. Impacts on Water Quality and Water Quantity Associated With
Biodiesel Production
    8. Job Creation and Rural Economic Development
    B. Consideration of Applicable Statutory Economic Factors
    1. Monetized Quantifiable Costs
    a. Impact on the Cost of Soybean Oil
    b. Cost of Displacing Petroleum-Based Diesel With Soybean-Based
Biodiesel
    c. Transportation Fuel Costs
    2. Monetized Quantifiable Benefits
    a. Energy Security
    b. Air Quality
    3. Quantifiable Benefits and Costs Compared
V. Final 2013 Volume for Biomass-Based Diesel
VI. Public Participation
VII. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act

    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer Advancement Act
    J. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    K. Congressional Review Act
VIII. Statutory Authority

I. Executive Summary

    The Renewable Fuel Standard (RFS) program began in 2006 pursuant to
the requirements in Clean Air Act (CAA) section 211(o) which were added
through the Energy Policy Act of 2005 (EPAct). The statutory
requirements for the RFS program were subsequently modified through the
Energy Independence and Security Act of 2007 (EISA), resulting in the
promulgation of revised regulatory requirements on March 26, 2010.\1\
The transition from the RFS1 requirements of EPAct to the RFS2
requirements of EISA generally occurred on July 1, 2010.
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    \1\ 75 FR 14670.
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A. Purpose of This Action

    While CAA section 211(o)(2)(B) specifies the volumes of biomass-
based diesel to be used in the RFS program through year 2012, it
directs the EPA to establish the applicable volume of biomass-based
diesel for years after 2012 no later than 14 months before the first
year for which the applicable volume will apply. On July 1, 2011, we
proposed that the applicable volume of biomass-based diesel for 2013
would be 1.28 billion gal.\2\
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    \2\ 76 FR 38844.
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    In a final rulemaking published on January 9, 2012, we specified
the 2012 standards for cellulosic biofuel, biomass-based diesel,
advanced biofuel, and total renewable fuel. Although we had intended to
also finalize the applicable volume of biomass-based diesel for 2013 in
that rulemaking, we did not do so. In that final rule we explained that
we were continuing to evaluate the many comments on the NPRM from
stakeholders as well as fulfilling other analytical requirements. We
indicated that we intended to gather additional information to enhance
our analysis including consideration of costs and benefits. In today's
notice we are finalizing the applicable volume of biomass-based diesel
for 2013. We believe that the volume we are finalizing today is
feasible and consistent with the overall analytic approach to the RFS2
program and also consistent with the overall intent of the Act to
expand the use of renewable fuels through the year 2022.
    While we did not finalize the 2013 applicable volume of biomass-
based diesel within 14 months before the first year for which the
applicable volume will apply as required by the statute, we do not
believe that this will create a difficulty in the ability of obligated
parties to meet the applicable volume that we are finalizing today. We
are finalizing the 2013 applicable volume about three months before it
will apply. As described in Section III.B, producers of biodiesel, the
largest contributor to biomass-based diesel, have significantly greater
production capacity than will be required by today's final rule, and in
general it only requires a few months to bring an idled biodiesel
facility back into production. Moreover, many facilities that are
producing volume currently are underutilizing their capacity, and can
ramp up production relatively quickly. Finally, the biodiesel industry
is already producing at a rate consistent with an annual volume of
about 1.3 billion gallons.

B. Summary of Today's Action

    In today's action we are finalizing an applicable volume of 1.28
billion gallons for biomass-based diesel for 2013. This is the volume
that was projected for 2013 in the March 26, 2010, RFS2 final
rulemaking, and we are requiring it in 2013 based on consideration of
the factors specified in the statute.
    Today's final rule does not specify the percentage standard for
biomass-based diesel in 2013, but only the applicable volume. The
percentage standards for cellulosic biofuel, biomass-based diesel,
advanced biofuel, and total renewable fuel that will be applicable in
2013 are being proposed in a separate Notice of Proposed Rulemaking.

C. Impacts of This Action

    The RFS program established by Congress is a long-term program
aimed at replacing fossil fuels used in the transportation sector with
low-GHG renewable fuels over time. In the March 26, 2010 RFS2 final
rule, EPA assessed the costs and benefits of this program as a whole
when the program would be fully mature in 2022. While this is an
appropriate approach to examining the costs and benefits of a long-term
program like the RFS2, for this final rulemaking we have estimated
costs and benefits in 2013 where such estimates can reasonably be made.
    Quantified estimates of benefits include $41 million in energy
security benefits and $19-52 million in air quality disbenefits. Other
benefits include GHG emissions reduction benefits and both direct and
indirect employment benefits in rural areas due to increased biodiesel
production. Impacts on water quality, water use, wetlands, ecosystems
and wildlife habitats are expected to be directionally negative but
modest due to both the small impact on crop acres planted necessary to
supply sufficient soy oil feedstock and due to the relatively small
impact on these measures of soybean production compared to other
potential crops.
    Biodiesel is produced from a variety of feedstocks, including
recycled cooking oil, agricultural oils such as soybean and canola oil,
and animal fats. Most biodiesel producers can switch from one feedstock
to another depending on price and availability. However, for the
purpose of analyzing the impacts of this action, we have assumed that
all of the 280 million gallon increment above the 2012 standard is met
through increased demand for soy oil. Using this assumption, we
estimate that soybean prices could increase up to 3 cents per pound in
2013 if all of the 280 million gallon increment above the 2012 standard
is met through increased demand for soy oil. Using these assumptions,
we estimate the cost of producing this increment in biomass-based
diesel would range from $253 to $381 million in 2013.\3\ Adding the
estimate of 2013 costs to the total 2013 fuel pool would suggest a
diesel fuel cost increase of less than 1 cent per gallon.
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    \3\ Cost estimates do not account for projections in recent
trends in crop yields and grain prices resulting from drought
conditions that are occurring in many areas of the country.
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II. Statutory Requirements

    Section 211(o)(2)(B)(i) of the Clean Air Act specifies the
applicable volumes of renewable fuel on which the annual percentage
standards must be based, unless the applicable volumes are waived or
adjusted by EPA in accordance with specific authority and directives
specified in the statute.\4\ Applicable volumes are provided in the
statute for years through 2022 for cellulosic biofuel, advanced
biofuel, and total renewable fuel. For biomass-based diesel, applicable
volumes are provided

through 2012. For years after those specified in the statute (i.e.,
2013+ for biomass-based diesel and 2023+ for all others), EPA is
required under section 211(o)(2)(B)(ii) to determine the applicable
volume, in coordination with the Secretary of Energy and the Secretary
of Agriculture, based on a review of the implementation of the program
during calendar years for which the statute specifies the applicable
volumes and an analysis of the following:
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    \4\ For example, EPA may waive a given standard in whole or in
part following the provisions at section 211(o)(7).
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     The impact of the production and use of renewable fuels on
the environment, including on air quality, climate change, conversion
of wetlands, ecosystems, wildlife habitat, water quality, and water
supply;
     The impact of renewable fuels on the energy security of
the United States;
     The expected annual rate of future commercial production
of renewable fuels, including advanced biofuels in each category
(cellulosic biofuel and biomass-based diesel);
     The impact of renewable fuels on the infrastructure of the
United States, including deliverability of materials, goods, and
products other than renewable fuel, and the sufficiency of
infrastructure to deliver and use renewable fuel;
     The impact of the use of renewable fuels on the cost to
consumers of transportation fuel and on the cost to transport goods;
and
     The impact of the use of renewable fuels on other factors,
including job creation, the price and supply of agricultural
commodities, rural economic development, and food prices.
    While EPA is given the authority to determine the appropriate
volume of renewable fuel for those years that are not specified in the
statute based on a review of program implementation and analysis of the
factors listed above, the statute also specifies that the applicable
volume of biomass-based diesel cannot be less than the applicable
volume for calendar year 2012, which is 1.0 billion gallons (see CAA
211(o)(2)(B)(v)).
    It is useful to note that the statutory provisions described above
are silent in two important areas. For instance, the statute does not
provide numerical criteria or thresholds that must be attained when EPA
determines the applicable volume of biomass-based diesel for years
after 2012 (other than specifying a minimum volume of 1.0 billion gal),
nor does it describe any overarching goals for EPA to achieve in
setting the applicable volumes for biofuels in years after those
specifically set forth in the statute. Instead, the statute provides a
list of factors we must consider. Due to this ambiguity in the statute,
commenters differed in their perspectives on the intent of Congress in
allowing EPA to determine the appropriate applicable volume for
biomass-based diesel for years after 2012.
    Some expressed the belief that Congress intended the required
volumes of biomass-based diesel to increase every year, with EPA's role
being that of determining an achievable size of that increase. Others
expressed their belief that Congress intended for the statutory minimum
volume of 1.0 billion gallons to be used to set the applicable volume
for all years after 2012, with higher volumes being required only if
EPA could demonstrate that those higher volumes were already being
produced. Given that all biomass-based diesel counts towards the
advanced biofuel requirement, and that the statute requires annual
increases in advanced biofuel through 2022, we believe that it is
appropriate that biomass-based diesel play an increasing role in
supplying advanced biofuels to the market between 2012 and 2022.
However, the determination of whether to increase the volume
requirement for biomass-based diesel in any given year is subject to a
consideration of a number of factors in the statute as described above.
    We also note that the statute does not provide authority to raise
the applicable volumes of advanced biofuel or total renewable fuel
above those specified in the statute for years up to and including
2022. Thus, any increase in the biomass-based diesel volume requirement
above that specified for 2012 would not have any impact on the advanced
biofuel or total renewable fuel volume requirements. While increasing
the biomass-based diesel volume requirement above the 1.0 billion
gallons minimum value specified in the statute could result in a change
in the makeup of biofuels used to meet the advanced biofuel and the
total renewable fuel standards, doing so would not change the total
required volumes of those fuels (in terms of ethanol-equivalent
gallons).
    We received one comment in response to the NPRM requesting that we
prohibit increases in biomass-based diesel above 1.0 billion gallons in
years after 2012. We disagree. As described in this preamble, we
believe it is appropriate to require 1.28 billion gal of biomass-based
diesel in 2013, and that we should consider further increases in the
future by evaluating the factors specified in the statute.
    The statute also specifies the timeframe within which these volumes
must be promulgated: the rules establishing the applicable volumes must
be finalized no later than 14 months before the first year for which
such applicable volume will apply. For the biomass-based diesel volume
requirement applicable in 2013, the deadline for promulgation was
November 1, 2011. As described in the January 9, 2012, final rule that
set the applicable percentage standards for 2012, we delayed issuing
this final rule to allow additional time to evaluate the many comments
on the NPRM from stakeholders as well as to fulfill other analytical
requirements. To this end, we did in fact gather additional information
to enhance our analysis of the factors required in the statute, and we
considered costs and benefits. Our assessment is provided in Sections
III and IV. We do not believe that the delay in issuing this final rule
will materially affect the regulated community, however, since we are
setting the final volume requirement several months prior to the date
when it will be applicable.
    The statute requires that in evaluating and establishing renewable
fuel volumes in years beyond those for which volumes are specified in
the statute, that EPA must coordinate with the Departments of
Agriculture and Energy. EPA has coordinated with these agencies in
developing this final rule through a series of telephone exchanges and
meetings. Consistent with the statute, EPA will coordinate with these
agencies in future rules in setting fuel volumes.

III. Factors Affecting Supply and Consumption

    As described in Section II, we are required to review the
implementation of the RFS program for years prior to 2013 and to use
information from this review in determining the applicable volume of
biomass-based diesel for 2013. In the NPRM we indicated our belief that
this review is of limited value due to the short history of the RFS
program. Not only did the RFS1 program have no volume requirement
specific to biomass-based diesel, but even in 2010 under the RFS2
program several unique factors hindered biodiesel production volumes
from increasing substantially above historical levels. For instance,
RFS1 RINs from both 2008 and 2009 could be carried over to 2010 and
used to meet a combined 2009/2010 volume requirement for biomass-based
diesel.
    Since release of the NPRM, however, some information has become
available on the implementation of the RFS program in 2011. The
available data provide some indication as to how the biomass-based
diesel standard for 2011

is affecting the market for biodiesel. Based on information provided
through the EPA-Moderated Transaction System (EMTS), reported biodiesel
production increased significantly to about 1.07 billion gal in 2011.
This is a significant increase over the 2010 production volume of about
400 mill gal and exceeds the applicable volume requirement of 800 mill
gal for 2011. 2011 biomass-based diesel RINs were available to meet the
higher advanced biofuel volume requirement. Based on these results, we
believe that the RFS program is driving production of biomass-based
diesel, and that higher applicable volume requirements in future years
would likewise drive increases in production volumes.
    In the NPRM we indicated that, based on the limited information
available on the current and historical operation of the RFS program,
it would be prudent for 2013 to consider only moderate increases in
biomass-based diesel above the statutory minimum of 1.0 billion
gallons. We cited the annual increments in biomass-based diesel volumes
specified in the statute for years 2009 through 2012 and conveyed our
belief that our proposed applicable volume of 1.28 billion gallons for
2013 was not a dramatic change from the trend in increments in the
statute. In addition, since this biomass-based diesel volume had
already been partially evaluated in the RFS2 rule, we decided to
evaluate the appropriateness of setting an applicable volume of 1.28
billion gallons for 2013 by considering whether 1.28 billion gal of
biomass-based diesel was reasonable given likely market demand,
availability of feedstocks, production capacity, storage, distribution,
and blending capacity, the capability of the existing diesel fleet to
consume this volume of biodiesel, and the impacts of biomass-based
diesel in a variety of areas as required under the statute.
    In responding to the NPRM, some commenters took issue with our
characterization of the proposed volume of 1.28 billion gallons as a
``moderate'' increase consistent with the annual increments in biomass-
based diesel volumes specified in the statute for years 2009 through
2012. These comments also suggested that any comparison to volume
requirements in the statute is not appropriate. However, we did not
base our proposed volume of 1.28 billion gallons on this comparison but
referred to past statutory increments to put our proposal in context.
Regardless of the size of these past statutory increments, however, we
find the final 280 mill gal increment to be moderate and achievable, as
described below, especially in light of the substantial increases in
production volume that occurred in 2011 which were approximately twice
the amount of the 280 mill gal increase we are adopting for 2013. Other
commenters agreed with the comparison and agreed that the 0.28 billion
gallons increment can appropriately be characterized as moderate.
    In some cases commenters opposed the proposed volume requirement of
1.28 billion gallons, citing concerns that the 2012 applicable volume
of 1.0 billion gallons is not achievable. As noted above, our
evaluation indicates that biodiesel production exceeded 1.0 billion
gallons in 2011, confirming our projection that the 1.0 billion gallon
applicable volume for 2012 is achievable. Therefore, concerns about the
industry's ability to meet the applicable volume in 2012 are not a
reasonable basis for concerns about achieving 1.28 billion gallons in
2013. Other commenters agreed with our assessment of 2012 and agreed
that an increase of 0.28 billion gallons over the statutory minimum for
2013 is moderate given the capabilities of the industry.
    Several commenters suggested that 1.28 billion gallons is an
infeasible target for 2013 and requested that we set the biomass-based
diesel standard at the statutory minimum of 1.0 billion gallons.
Commenters taking this view generally did not offer any data or
information to support their belief that 1.28 billion gal is not
achievable in 2013 beyond references to historical biodiesel production
rates. As described in the NPRM, we believe that the use of biodiesel
production data from 2010 and earlier is of limited value, and
production capacity as well as more recent data on actual production
volumes does in fact demonstrate that the industry is capable of
significant increases in production when demand for it exists. As
described more fully in the sections below, we continue to believe that
1.28 billion gallons is achievable based on production capacity,
availability of feedstock, recent trends in production volumes, and
efforts to update infrastructure for storage, transport, and blending.
We also believe that this volume is likely to encourage continued
investment and innovation in the biodiesel industry. Our consideration
of other impacts, such as fuel costs and environmental impacts, can be
found in Section IV.

A. Demand for Biomass-Based Diesel

    The demand for biomass-based diesel in 2013 will be a function of a
number of factors, including not only the biomass-based diesel
standard, but also the advanced biofuel standard, since the standards
under the RFS2 program are nested. For purposes of the analysis and
discussion in this rule, we have assumed that the applicable volume of
advanced biofuel for 2013 will remain at the 2.75 billion gal level
specified in the Act. While EPA is authorized to reduce the applicable
volume of advanced biofuel pursuant to CAA section 211(o)(7)(D)(i) in
years that it reduces the cellulosic biofuel applicable volume, any
decision to do so will be made in the rule establishing the 2013
renewable fuel standards, and EPA is not currently in a position to
pre-judge the results of that future rulemaking.
    In addition to biomass-based diesel, biofuels that are likely to be
available for meeting the advanced biofuel standard would include
cellulosic biofuel, imported sugarcane ethanol, and other domestically
produced advanced biofuels. As described in the January 9, 2012
rulemaking establishing the 2012 standards,\5\ cellulosic biofuels will
be a very small fraction of the 2.0 billion gallon advanced biofuel
requirement in 2012, and we expect the same to be true in 2013 with
respect to the 2.75 billion gal advanced biofuel requirement. Regarding
other domestically produced advanced biofuels, volumes reached about 60
mill gal in 2011, and we have projected for the applicable 2013
standards that they could reach 150 mill gal or more in 2013. As a
result, most of the 2.75 billion gal advanced biofuel requirement will
be met with biodiesel and imported sugarcane ethanol.
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    \5\ 77 FR 1320.
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    Recent market projections suggest that the volume of sugarcane
ethanol that can be imported into the U.S. from Brazil in 2013 could be
on the order of historical import volumes prior to 2010, with the
potential to reach the historical maximum or more. However, there is
considerable variability in the projections for 2013. For instance, one
source that evaluates trends and issues for U.S. energy markets is the
U.S. Energy Information Administration's (EIA) Annual Energy Outlook
(AEO).\6\ This report projects U.S. net ethanol imports in 2013 to be
306 million gallons. Another source for U.S. and world commodity
projections is the Food and Agricultural Policy Research Institute's
(FAPRI) U.S. and World Agricultural Outlook. The most current version
of the FAPRI 2011 Agricultural Outlook projects for the year 2013 that
the U.S. will have net ethanol imports

of 768 million gallons.\7\ Based on historical trends, virtually all
imported ethanol is expected to be sugarcane ethanol. As a result,
while there is good reason to believe that there will be increased
volumes of imported sugarcane ethanol in 2013 to help meet the advanced
biofuel standard, there may also be a demand for volumes of biodiesel
in excess of 1.0 billion gallons.
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    \6\ U.S. Energy Information Administration (EIA). ``AEO2011,
Table 11'' April 2011. http://www.eia.doe.gov/forecasts/aeo/index.cfm.
    \7\ Table ``Ethanol Trade'', Commodity Outlook/Biofuels, FAPRI-
ISU 2011 World Agricultural Outlook. http://www.fapri.iastate.edu/outlook/2011/.
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    If we do not set the biomass-based diesel standard above 1.0
billion gallons, biodiesel producers will be less certain of the demand
for their product given the opportunities that are also created by the
advanced biofuel standard for imported sugarcane ethanol. Despite the
fact that monthly production rates in the middle of 2012 are consistent
with an annual production volume of about 1.28 billion gal, the
selection of facilities producing biodiesel at any given time is highly
variable. Without a regulatory requirement for 1.28 billion gal, the
biodiesel industry is less likely to maintain online production
capabilities for this volume. Instead, many producers will wait until
late in 2013 to determine if imported sugarcane ethanol volumes will
fall short of what is needed to meet the advanced biofuel volume
requirement of 2.75 billion gal in 2013. While much of the idled
capacity in the biodiesel industry can be brought back online
relatively quickly, waiting until the end of 2013 to do so may reduce
the time available and could result in the biodiesel industry being
unable to make up the difference between the advanced biofuel
requirement and shortfalls in imported sugarcane ethanol.
    Thus in setting the biomass-based diesel volume requirement at 1.28
billion gallons rather than at the statutory minimum of 1.0 billion
gallons, we are creating greater certainty for both producers of
biomass-based diesel and obligated parties and increasing certainty
that the intended GHG emissions reductions and energy security benefits
associated with the use of advanced biofuels will be realized. It is
possible that there may be some additional cost for compliance with the
advanced biofuel requirement of 2.75 billion gallons under a biomass-
based diesel requirement of 1.28 billion gallons, as compared to
setting the biomass-based diesel requirement at the statutory minimum
of 1.0 billion gallons and allowing the market to determine the
relative volumes of each type of advanced biofuel that will be produced
in 2013 to meet the advanced biofuel standard of 2.75 billion gallons.
However, setting the biomass-based diesel applicable volume requirement
at 1.28 billion gallons will provide greater certainty that the 2.75
billion gal advanced biofuel applicable volume requirement can be
achieved. We believe that the potential for somewhat increased costs is
appropriate in light of the additional certainty of GHG reductions and
enhanced energy security provided by the advanced biofuel volume
requirement of 2.75 billion gallons.
    Among the parties that submitted comments in response to the NPRM,
none contested our assessment of the volumes of sugarcane ethanol that
might be expected to be imported into the U.S. from Brazil in 2013.
Nevertheless, parties that were opposed to setting the biomass-based
diesel applicable volume at 1.28 billion gallons in 2013 raised doubts
about the projected demand for biomass-based diesel in 2013. In some
cases commenters ignored the fact that much of the advanced biofuel
standard can be met with biomass-based diesel or implicitly assumed
that EPA would waive some portion of the advanced biofuel requirement.
The American Trucking Association (ATA) explicitly requested that we
lower the 2013 advanced biofuel standard in order to ensure that demand
for biomass-based diesel would not exceed 1.0 billion gallons in 2013.
As described in a separate Notice of Proposed Rulemaking,\8\ we are
proposing to not reduce the 2013 advanced biofuel requirement of 2.75
billion gal.
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    \8\ This NPRM will propose the applicable 2013 percentage
standards for cellulosic biofuel, biomass-based diesel, advanced
biofuel, and total renewable fuel.
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    The American Petroleum Institute cited projections from AEO 2011 in
support of their argument that biodiesel volumes will not reach 1.28
billion gallons in 2013. For instance, Table 11 of AEO 2011 projects a
total biodiesel consumption of 1.04 billion gal in 2013. However, we do
not believe that the projections provided in AEO 2011 can be used in
this way, since EIA assumes that the required volume of advanced
biofuel in any given year will be reduced concurrently with reductions
in the required volume of cellulosic biofuel.\9\ As a result, the total
projected volume of biodiesel and imported ethanol in the 2013 EIA
projections falls far short of what would be necessary to meet the
applicable volume of 2.75 billion gal of advanced biofuel set forth in
the statute.
---------------------------------------------------------------------------

    \9\ Communication between D. Korotney of EPA and W. Brown of
EIA, 8/25/2011.
---------------------------------------------------------------------------

    Some parties that were opposed to setting the biomass-based diesel
applicable volume at 1.28 billion gallons in 2013 did recognize that
the advanced biofuel requirement of 2.75 billion gal could place
pressure on the industry to produce volumes of biodiesel in excess of
1.0 billion gal but questioned the need to set the biomass-based diesel
standard above the statutory minimum of 1.0 billion gallons. They
argued that the market should be allowed to determine the relative
volumes of biomass-based diesel, imported sugarcane ethanol, and other
advanced biofuels needed to meet the advanced biofuel standard of 2.75
billion gallons. This approach, they argued, could potentially minimize
the overall cost of compliance with the advanced biofuel standard in
2013. However, as noted above, the statute does not provide any
overarching goals for EPA to achieve in setting the applicable volumes
for biofuels in years after those specifically set forth in the
statute. Instead, the statute provides a list of factors we must
consider. While one of those factors is cost, other factors must also
be considered as described in Section II. Additionally, setting the
biomass-based diesel standard at 1.28 billion gallons instead of at the
statutory minimum of 1.0 billion gallons will provide more certainty
that the applicable volume of advanced biofuel set forth in the statute
will not need to be reduced, since it guarantees that an additional 420
million ethanol-equivalent gallons of advanced biofuel will be
available. This, in turn, means that there will be more certainty of
reduced GHG emissions through the use of more advanced biofuels and
increased certainty of energy security benefits in terms of reduced
reliance on fossil fuels. In addition, increasing the biomass-based
diesel volume requirement to 1.28 billion gal in 2013 provides an
incentive for continued investment and innovation in the biodiesel
industry and serves the long term goal of the statute to increase
volumes of renewable fuels over time such that in the longer term they
are more likely to be available to offset the need for crude oil.

B. Availability of Feedstocks To Produce 1.28 Billion Gallons of
Biodiesel

    In the NPRM, we provided our assessment of the types and amounts of
feedstock that could be used to produce 1.28 billion gallons of
biomass-based diesel in 2013. This assessment included references both
to the work that had been done in the RFS2 final

rule as well as a recent report released by IHS Global Insight.\10\ The
feedstock estimates from these two sources are shown in Table III.B-1.
---------------------------------------------------------------------------

    \10\ Table 2, ``Biodiesel Production Prospects for the Next
Decade,'' IHS Global Insight, March 11, 2011.

 Table III.B-1--Feedstock Sources (in Mill Gallons) That May Contribute
                   to 2013 Volume of 1.28 Billion Gal
------------------------------------------------------------------------
                                                RFS2  final   IHS global
                    Source                          rule       insight
------------------------------------------------------------------------
Grease and rendered fats......................          380          272
Corn oil......................................          300          185
Soybean oil...................................          600          624
Canola oil....................................            0           68
Palm oil......................................            0            7
Other.........................................            0          185
                                               -------------------------
    Total.....................................        1,280        1,340
------------------------------------------------------------------------

    As some comments pointed out, these two sources used fundamentally
different approaches. In the case of the RFS2 final rule, projections
of feedstock volumes were determined first, and then summed to conclude
that 1.28 billion gal is a reasonable volume of biomass-based diesel
that could be achieved in 2013. In contrast, the IHS Global Insight
report began with the aim of reaching 1.3 billion gallons in 2013, and
then conducted modeling to determine the likely mix of feedstock
sources that would support that volume. Nevertheless, we believe that
these sources suggest two similar ways that the market could meet the
demand for feedstock under a required volume of 1.28 billion gallons of
biomass-based diesel. The actual mix of feedstock sources used to
produce 1.28 billion gallons of biomass-based diesel could also differ
substantially from the values shown in Table III.B-1 as the market
adjusts to the new mandate.
    One commenter stated that we relied too heavily on these sources
without additional analysis. We did in fact conduct a more up-to-date
analysis of these feedstock sources and, as described below, the
updated analysis confirms our belief that the projections in Table
III.B-1 are reasonable projections for the mix of feedstock sources
that could be used to reach 1.28 billion gallons of biomass-based
diesel. We will continue to coordinate with USDA in the future on RFS
related rulemakings. Other comments agreed with our assessment of
available feedstock and our conclusions that there would be sufficient
volumes to meet a biomass-based diesel volume requirement of 1.28
billion gallons. A summary of our updated assessment of feedstock
sources is included below.
    It should be noted that the projections in Table III. B-1 do not
account for recent trends in crop yields and grain prices resulting
from drought conditions that are occurring in many areas of the
country. Given the wide range of feedstocks from which biodiesel can be
produced, the ultimate impact of these drought conditions on the mix of
biodiesel feedstocks in 2013 is difficult to predict at this time.\11\
---------------------------------------------------------------------------

    \11\ EPA has received requests for a waiver of RFS volumes under
CAA section 211(o)(7) based on the impact of the drought, and has
invited comment on the requests.
---------------------------------------------------------------------------

1. Grease and Rendered Fats
    According to the U.S. Census Bureau, the total volume of yellow
grease and other greases (most likely trap grease) produced in 2010 was
about 340 mill gallons \12\. In the first half of 2011, production of
greases was about 10% higher than for the same period in 2010,
suggesting that total 2011 production could reach 370 mill gallons or
more, similar to the production rates in 2008 and 2009.
---------------------------------------------------------------------------

    \12\ Current Industrial Reports, U.S. Census Bureau, M311K--Fats
and Oils: Production, Consumption, and Stocks, Table 2b. Assumes 7.5
lb/gal. http://www.census.gov/manufacturing/cir/historical_data/m311k/index.html. The U.S. Census Bureau terminated collection of
data for this report as of July 2011 so updated data is not
available.
---------------------------------------------------------------------------

    With regard to inedible tallow, the volume produced in 2010 was
about 440 mill gallons, and indications from the first half of 2011 are
that a similar volume will be generated in 2011 as well.
    Taken together, the total volume of grease and rendered fats
produced annually is over 800 mill gallons. This is significantly more
than was estimated in the RFS final rule and the report from IHS Global
Insight for use in the production of biomass-based diesel in 2013.
Moreover, we have not included in our estimate other potential sources,
such as edible tallow, lard, and poultry fats. While these other
potential feedstocks currently have existing markets, it may become
economical for them to be used in the production of biomass-based
diesel.
    In their comments on the NPRM, the America Cleaning Institute
raised concerns about the diversion of animal fats from the
oleochemical industry for the production of biofuels. We do not have
the authority to prevent feedstocks that meet the statutory definition
of renewable biomass from being used in the production of renewable
fuel. The choice of which feedstocks will be used to produce biomass-
based diesel will be determined by the market. We also note that in
responding to comments to the rule establishing the RFS2 program, we
acknowledged that animal fat can be used in other markets such as the
soap industry, but that the diversion of some portion of this feedstock
to the biofuels industry was both not prohibited and would not
significantly impact the GHG assessment of biofuel made from this
feedstock.\13\ However, based on our assessment, it is possible that
the 1.28 billion gall requirement could be met without the use of
animal fats. As noted above, the total volume of grease and rendered
fats is estimated at 800 mill gallons, far above the volumes listed in
Table III.B-1. It is therefore possible that the industry may produce
biodiesel predominately from waste grease instead of animal fats.
Moreover, the volumes of other feedstock sources, such as corn oil and
vegetable oils as described more fully below, may exceed the volumes
needed to produce 1.28 billion gal biodiesel, further reducing the need
to rely on animal fats for biodiesel production. Finally, EPA has
received inquiries from industry regarding the use of additional
sources

of waste oils often from the food processing industry as biodiesel
feedstock, indicating the sources of feedstock are likely to continue
expanding, improving the availability of alternatives to animal fat as
a biofuel feedstock.
---------------------------------------------------------------------------

    \13\ ``Renewable Fuel Standard Program (RFS2) Summary and
Analysis of Comments,'' February 2010, EPA-420-R-003, pages 6-15 and
7-304. Docket number EPA-HQ-OAR-2005-0161.
---------------------------------------------------------------------------

    Since the market will determine the specific amount of animal fats
used in the production of biofuels, we cannot project how their
availability for the production of oleochemicals might be affected. We
agree with the American Cleaning Institute that increases in the use of
animal fats to produce biofuel could increase the price of those animal
fats and/or reduce their availability for the production of
oleochemicals. Such circumstances could in turn compel the oleochemical
industry to use a greater fraction of alternative feedstock sources
such as cottonseed oil. However, as discussed in Section IV.A.8, there
could be sufficient sources of other feedstocks to produce 1.28 billion
gallons of biomass-based diesel without using any animal fats.
Moreover, the cost of animal fat is dependent on the general demand for
this material which is only in part impacted by its potential use as a
biofuel feedstock. As a result, and as discussed more fully in Section
IV.A.8, we do not believe oleochemical production facility location
will be significantly impacted by the potential use of rendered fats as
a biofuel feedstock if some portion of the 280 million gallon increase
in the biomass-based diesel standard is produced from rendered fats.
2. Corn Oil
    The RFS2 final rule projected that by 2013, 34% of all dry mill
ethanol facilities in the U.S. would extract inedible corn oil from the
by-products of ethanol production using advanced extraction
technologies. This estimated extraction rate led us to conclude that
the volume of corn oil could reach 300 mill gallons in 2013. While
currently available technologies have not been able to reach the oil
extraction rates that we assumed in the RFS2 final rule, these lower
extraction rates have been offset by a higher number of ethanol plants
utilizing some form of extraction technology. For instance, according
to a recent article in Ethanol Producer Magazine, up to 55 percent of
plants may be extracting corn oil by the end of 2012.\14\ Similarly, in
an article in Biodiesel Magazine, Dave Elsenbast, vice president of
supply chain management for REG stated that as of July 2011 about 35%
of U.S. corn ethanol plants had implemented corn oil extraction and
that he expected that number to double within the next couple of
years.\15\ In the NPRM we stated our expectation that the percentage of
dry mill ethanol facilities using some form of corn oil extraction
technology will increase to 60% by 2013. Given the information from
Ethanol Producer Magazine and Biodiesel Magazine, this estimate appears
reasonable.
---------------------------------------------------------------------------

    \14\ Joseph Riley, ``Customized Coproducts Needed as Industry
Matures,'' June 6, 2011. Ethanol Producer Magazine.
    \15\ Dave Elsenbast quoted in Ron Kotrba, ``Biodiesel from corn
oil: a growing force,'' July 6, 2011. Biodiesel Magazine.
---------------------------------------------------------------------------

    If 60% of all dry mill corn ethanol facilities in the U.S. were
extracting inedible corn oil at rates capable with current technology,
the amount of corn oil available for biodiesel production would be
approximately 270 million gallons. However, as described in the RFS2
final rule, we expect that by 2013 technology improvements will
increase corn oil production levels to 300 million gallons. Additional
corn oil could come from ethanol production facilities using corn
fractionation or wet milling technology. This corn oil was not
considered as a biodiesel feedstock in the RFS2 rule, but market
conditions may result in its availability to the biodiesel industry.
The higher adoption rate of corn oil extraction in comparison to our
projections from the RFS final rule, and the promise of ever-increasing
oil extraction yields, indicate that the 300 million gallons of corn
oil extraction projected in the RFS2 rule in 2013 remains a reasonable
projection. Comments from the Renewable Energy Group support this view.
3. Soybean Oil
    While a number of parties commented on the use of soybean oil for
the production of biomass-based diesel, none provided data or
information suggesting that there would be insufficient supplies to
meet the need for 1.28 billion gallons of biomass-based diesel as well
as other traditional markets for soybeans. Instead, comments on the use
of soybean oil were focused on costs. We have addressed these comments
separately in Section III.B.3. The rest of this section summarizes our
assessment of soybean oil availability, updated since the NPRM.
    Since the RFS2, other oilseeds (e.g., canola oil) have emerged as
potential sources of biodiesel feedstock. However, the U.S. market for
soybean oil biodiesel is significantly more mature than for biodiesel
made from other oilseeds. Because of this, we anticipate that soybeans
will remain the primary source of U.S. biodiesel from oilseeds in 2013.
It is possible that biodiesel production from other oilseeds such as
canola could achieve a significant level of production by 2013. If
other oilseeds with approved pathways are able to contribute to the
biodiesel volumes, achieving the biomass based diesel mandate would be
facilitated. For the purposes of this analysis, EPA is making the
conservative assumption that there will be no biodiesel production from
other oilseeds in 2013.
    We examined historical and projected soybean oil supplies and use
to verify that the volumes shown in Table III.B-1 are achievable in
2013. Our analysis concludes that there will be sufficient supplies of
soybean oil to meet the needs of both biodiesel production and other
domestic uses in 2013. Producing 600 million gallons of soybean-based
biodiesel will require 4,530 million pounds of soybean oil.
    Table III.B.3-1 below lists U.S. Department of Agriculture (USDA)
historical data and current projections for U.S. supply and use of
soybean oil from the 2006/2007 crop year to the 2013/2014 year. Since
2006/2007, domestic use of soybean oil for non-biodiesel purposes has
ranged from 14,134 million pounds to 15,813 million pounds. USDA
projects non-biodiesel use will stay above 14,000 million lbs through
the 2013/2014 year.

                     Table III.B.3-1--Historical Supplies and Use of Soybean Oil in the U.S.
                                                [In million lbs]
----------------------------------------------------------------------------------------------------------------
                                                                     Supplies
                                                   Domestic use    available for                    Historical
      Year starts October 1       Total supplies     for non-         biofuel       Historical        biofuel
                                                     biodiesel     feedstock use      exports      feedstock use
                                                     purposes        or export
----------------------------------------------------------------------------------------------------------------
2006/07.........................          23,536          15,813           7,723           1,877           2,762

2007/08.........................          23,730          15,089           8,641           2,911           3,245
2008/09.........................          21,319          14,196           7,123           2,193           2,069
2009/10.........................          22,578          14,134           8,444           3,359           1,680
2010/11.........................          22,452          14,244           8,208           3,233           2,550
2011/12 \a\.....................          21,215          14,100           7,115  ..............  ..............
2012/13 \a\.....................          21,075          14,200           6,875  ..............  ..............
2013/14 \a\.....................          21,290          14,400           6,890  ..............  ..............
----------------------------------------------------------------------------------------------------------------
\a\ Projected.
Sources: USDA, Agricultural Marketing Service, Oil Crops Outlook, February 10th, 2012. USDA, Economic Research
  Service, Agricultural Long-Term Projections, February 2012.

    Historical values for exports and biofuel feedstocks in the above
table are provided for context only. The remaining values are related
as follows:

Total Supplies = Domestic Use for Non-Biodiesel Purposes + Supplies
Available for Biofuel Feedstock Use or Export

    USDA projects that 6,875 million pounds of soybean oil will be
available for biofuel feedstock use or export in the 2012/2013 crop
year and that 6,890 million pounds will be available in the 2013/2014
year (see Table III.B.3-1). This is considerably more than the
approximately 4,530 million pounds needed to meet the soybean-based
biodiesel portion of the 1.28 billion gallon mandate.\16\
---------------------------------------------------------------------------

    \16\ This calculation assumes a vegetable oil to biodiesel
conversion rate of approximately 7.6 pounds of oil per gallon of
biodiesel. Actual conversion rates vary depending on the technology
used and the purity of the virgin oil. As a result, the actual
amount of soybean oil required to produce 600 million gallons of
biodiesel could be slightly higher or lower than the amount we have
estimated in this rulemaking.
---------------------------------------------------------------------------

4. Effects on Food Prices
    In order to determine the likelihood of a substantial increase in
food prices, EPA projected the effects of a 1.28 billion gallon mandate
using the CARD stochastic modeling framework discussed in Section
IV.B.1. of this final rule. Assuming that the 280 million gallon
increment is met entirely with soybean oil biodiesel in 2013, we
project that the price of soybean oil will be $0.45 per pound under
this mandate, compared to $0.42 under a 1.0 billion gal volume
requirement. This represents a price increase of 3 cents per pound
(about 7 percent). The increase in demand for soybean oil is also
expected to have a small impact on the price of soybeans. We project
that the price of soybeans will be $10.39 per bushel under this
mandate, compared to $10.21 per bushel under a 1.0 billion gal volume
requirement. This represents a price increase of 18 cents per bushel
(about 1.8 percent). Both of these projections are within the recent
historical range of prices (see Table III.B.4-1).

                  Table III.B.4-1--Historical and Projected Prices of Soybeans and Soybean Oil
                                              [2010 dollars per lb]
----------------------------------------------------------------------------------------------------------------
                                                     Soybean oil                           Soybeans
----------------------------------------------------------------------------------------------------------------
2006-2011 Low Annual Average Price.....  $0.33 per lb.......................  $9.70 per bushel.
2006-2011 High Annual Average Price....  $0.54 per lb.......................  $12.36 per bushel.
2013 Projected Price...................  $0.45 per lb.......................  $10.39 per bushel.
----------------------------------------------------------------------------------------------------------------
Sources: USDA, Agricultural Marketing Service, Oil Crops Outlook, February 10th, 2012. USDA, Economic Research
  Service, Agricultural Long-Term Projections, February 2012.

    The timeframe of this rulemaking did not permit large-scale
modeling of the impacts of this mandate on the agricultural sector. We
therefore cannot predict the exact impact that these increases in
soybean and soybean oil prices will have on food prices in general.
    As noted above, these results assume that 600 mill gal of this
mandate is soybean-based. To the extent that this increment is met with
other feedstocks, the overall effect of this mandate on the price of
soybeans and soybean oil would be smaller.
5. Other Bio-Oils
    Although the modeling we conducted for the RFS2 final rule assumed
that the only form of bio-oil used to make biomass-based diesel would
be from soybeans, in fact other seed oils may contribute meaningful
volumes to the pool. For instance, on September 28, 2010, we approved a
RIN-generating pathway for biodiesel made from canola oil.\17\ The
volume of biodiesel made from canola oil was 96 mill gallons in
2008.\18\ In addition, we are evaluating other pathways for the
production of biodiesel from oilseeds which could potentially be
approved for RIN generation by 2013. On January 5, 2012 we proposed to
include oil from camelina as an approved feedstock for producing
biodiesel (77 FR 462). Algal oil could also provide additional
feedstocks if promising technologies for production are commercialized.
---------------------------------------------------------------------------

    \17\ 75 FR 59622.
    \18\ EPA memorandum, ``Summary of Modeling Input Assumptions for
Canola Oil Biodiesel for the Notice of Supplemental Determination
for Renewable Fuels Produced Under the Final RFS2 Program,''
Document  EPA-HQ-OAR-2010-0133-0049.
---------------------------------------------------------------------------

    Nevertheless, even if none of these other sources of bio-oil were
available, we believe that the total volume of grease, fats, corn oil,
and soybean oil would be sufficient to produce 1.28

billion gallons of biomass-based diesel in 2013.

C. Production Capacity

    Total production capacity of the biodiesel industry has exceeded
1.28 billion gallons for a number of years. As of February 2012, total
production capacity was more than 2.5 billion gallons for 191
companies.\19\ According to the EPA registration database, 216
facilities have registered with the EPA under the RFS2 program as of
March 15, 2012. Plants that are currently not registered under RFS2 are
either producing extremely low volumes that fall under the regulatory
threshold for RIN generation, are producing products other than
biodiesel such as soaps or cosmetics, or have shut down until such time
as the demand for biodiesel rises.
---------------------------------------------------------------------------

    \19\ Plant list from National Biodiesel Board, 2/7/2012.
---------------------------------------------------------------------------

    While comments generally did not disagree that sufficient
production capacity exists to reach 1.28 billion gallons in 2013, some
questioned how quickly idled plants can be brought back online. We note
that most of the production capacity exists at plants that are already
producing some volume, and that many operating biodiesel plants are
currently producing at less than their full capacity. As a result,
these facilities typically do not need to go through the additional
steps that are associated with starting up an idled plant, such as
securing new financing, establishing contracts with feedstock suppliers
and customers, hiring and retraining employees, and testing and proving
the equipment. Nevertheless, since many new plants can be built and
started within a year or so\20\, we also believe that pre-existing but
idled plants can be restarted in considerably less than a year. Given
the time between release of this action and when the 1.28 billion gal
requirement will become effective, there is no reason to believe that
idled plants cannot be restarted in time to contribute meaningfully to
total volumes in 2013.
---------------------------------------------------------------------------

    \20\ Based on construction times for new plants listed in
Biodiesel Magazine from July 2006 through May 2009.
---------------------------------------------------------------------------

D. Consumption Capacity

    Biodiesel is registered with the EPA under 40 CFR Part 79 as a
legal fuel for use in highway vehicles. Under this registration, it can
legally be used at any blend level, from 1% (B1) to 100% (B100) in
highway diesel fuel. As there are no equivalent registration
requirements for non-highway fuels, biodiesel can legally be used at
any blend level in nonroad diesel and heating oil. However, other
factors typically limit the concentration of biodiesel in conventional
diesel fuel. To the extent that the consumption of biodiesel occurs
only at lower blend levels, the geographic area where biodiesel must be
marketed would correspondingly be greater, impacting both how much
biodiesel can be consumed in the U.S. as a whole as well as how the
infrastructure may need to change to accommodate 1.28 billion gallons
in 2013. As described below, we believe that there are no impediments
to consuming an additional 280 mill gal of biodiesel.
    Most engine manufacturers have explicit statements in their engine
warranties regarding acceptable biodiesel blend levels. Although a few
permit B100 to be used in their engines without any adverse impact on
their warranties, most limit biodiesel blends to B20 or less, and of
those, about half allow no more than B5.\21\ For specific applications
where a party knows which engines will be using biodiesel blends,
higher concentrations of biodiesel may be possible. However, for
general distribution such as at retail facilities, these warranty
conditions create a disincentive to blend or sell biodiesel at higher
concentrations and would tend to drive most blends towards low
concentrations of biodiesel such as B5. Those parties that commented on
this issue agreed with this assessment.
---------------------------------------------------------------------------

    \21\ ``Automakers' and Engine Manufacturers' Positions of
Support for Biodiesel Blends,'' Biodiesel.org.
---------------------------------------------------------------------------

    Cold weather operability represents another reason for preferential
use of B5 and even B2. The most common measure of cold weather
operability is the fuel cloud point. The cloud point is the temperature
at which gelling begins (as indicated by solid crystals beginning to
form in the fuel), and thus is an indicator of when potential engine
filter plugging issues could arise. The higher the cloud point
temperature of the fuel, the more likely such problems are to be
experienced in cold weather. Biodiesel generally has a higher cloud
point than conventional, petroleum-based diesel fuel, with fat-based
biodiesel such as tallow having a higher cloud point than virgin oil-
based biodiesel such as a fuel made with soybean and canola oil. While
cloud point issues with conventional, petroleum-based diesel are
generally mitigated during the winter months through blending with
lighter grades (i.e., 1 diesel fuel), the cloud point of
biodiesel generally requires more dramatic interventions such as heated
storage tanks, lines, and blending equipment, as well as heating rail
cars and tank trucks. However, some of these biodiesel cloud point
mitigation efforts may be reduced through the use of low biodiesel
blend levels such as B2 or B5, since cloud point is strongly correlated
with biodiesel concentration in the final blend. Insofar as biodiesel
is blended into conventional diesel before being transported to its
final destination for sale, low biodiesel blend levels may reduce the
need for heated equipment at the final destination.
    Based on highway and nonroad diesel consumption projections for
2013 from the EIA, a biodiesel volume of 1.28 billion gallons would
represent about 2.9% of all diesel fuel.\22\ If all biodiesel were to
be blended as B5, almost 60% of the diesel fuel consumed nationwide in
2013 would contain biodiesel. However, today some biodiesel is blended
at concentrations higher than B5, and we expect that some blending at
these higher concentrations would continue in the future. One commenter
disagreed that blends higher than B5 will be marketed in any but niche
markets. We agree with this comment. However, since biodiesel prices
have been higher than conventional diesel prices in the recent past,
and yet blends above B5 have in fact been sold, we believe that the
existing markets for blends such as B20 are niche markets that will
continue into the future. The sale of biodiesel blends higher than B5
will reduce the total amount of diesel fuel that will contain some
biodiesel. Directionally, then, this will also reduce the geographical
areas to which biodiesel must be distributed. Based on the number of
retail stations offering different biodiesel blend levels in 2010, we
estimate that about 30% of biodiesel was sold at retail in blends with
biodiesel concentrations as high as 20%. Another 17% of biodiesel was
sold in blends with biodiesel concentrations between 10% and 20%.\23\
If the volumes of biodiesel currently sold as B10 and higher were to
continue to be sold in 2013, such blends would account for about one
quarter of the 1.28 billion gal mandate, and 45% of the diesel fuel
consumed nationwide in 2013 would contain biodiesel.
---------------------------------------------------------------------------

    \22\ Assumes total diesel volume consumed in the transportation
sector in 2013 is 44.86 billion gal, per Annual Energy Outlook (AEO)
2012 Early Release, Table A2.
    \23\ National Biodiesel Board, Retailing Fueling Sites, as of
February 17, 2011. http://biodiesel.org/buyingbiodiesel/retailfuelingsites/default.shtm.
---------------------------------------------------------------------------

    Heating oil represents another opportunity for large volumes of
biodiesel to be consumed. According to EIA's Annual Energy Outlook
2012, residential consumption of distillate fuel oil has been about 4
billion gal. Moreover, some of the practical issues

leading to warranty limits on engines regarding the use of biodiesel
are less of a concern when burning biodiesel for home heating purposes.
As a result, significant volumes of biodiesel can be consumed as
heating oil and count for compliance purposes under the RFS program.
    We believe that distributing and consuming 1.28 billion gallons of
biodiesel in 2013 are achievable. As shown in Table III.D-1, a number
of states already have mandates for the use of biodiesel in 2013,\24\
and efforts are underway by the production and distribution industries
to meet these mandates.
---------------------------------------------------------------------------

    \24\ As one commenter pointed out, some of these mandates have
not yet taken effect as in-state production volumes have not yet
reached specified thresholds. Nevertheless, the state mandates
represent incentives within those states to increase production.

              Table III.D-1--States With Biodiesel Mandates
------------------------------------------------------------------------

------------------------------------------------------------------------
Minnesota.............................  Diesel fuel for use in internal
                                         combustion engines must contain
                                         at least 5% biodiesel.
                                         Beginning May 1, 2012, during
                                         the months of April through
                                         October, diesel fuel must
                                         contain at least 10% biodiesel
                                         (B10).
Oregon................................  Diesel fuel sold in the state
                                         must be blended with at least
                                         5% biodiesel.
Washington............................  At least 2% of all diesel fuel
                                         sold in Washington must be
                                         biodiesel or renewable diesel.
                                         This requirement will increase
                                         to 5% after it is determined
                                         that in-state feedstock sources
                                         and oil-seed crushing capacity
                                         can meet a 3% requirement.
Pennsylvania..........................  All diesel fuel sold in
                                         Pennsylvania must contain at
                                         least 2% biodiesel one year
                                         after in-state production of
                                         biodiesel reaches 40 million
                                         gallons. The mandated biodiesel
                                         blend level will increase to 5%
                                         biodiesel one year after in-
                                         state production of biodiesel
                                         reaches 100 million gallons.
New Mexico............................  After July 1, 2012, all diesel
                                         fuel sold to consumers for use
                                         in on-road motor vehicles must
                                         contain at least 5% biodiesel.
                                         This requirement may be
                                         suspended for up to six months
                                         under certain conditions.
Louisiana.............................  Within six months following the
                                         point at which cumulative
                                         monthly production of biodiesel
                                         produced in the state equals or
                                         exceeds 10 million gallons, at
                                         least 2% of the total diesel
                                         volume must be biodiesel.
------------------------------------------------------------------------
Source: U.S. Department of Energy, Alternative Fuels and Advanced
  Vehicles Data Center.

    Collectively, these states currently account for approximately 13
percent of the nationwide consumption of diesel. Other states that have
implemented other forms of incentives are listed in Table III.D-2.

   Table III.D-2--States With Rebates, Refunds, Reduced Tax Rates, or
              Credits for Biodiesel Production or Blending
------------------------------------------------------------------------

-------------------------------------------------------------------------
Illinois.
Indiana.
Kansas.
Kentucky.
Maine.
Maryland.
Michigan.
Montana.
North Dakota.
Oklahoma.
Rhode Island.
South Carolina.
South Dakota.
Texas.
Virginia.
Washington.
------------------------------------------------------------------------
Source: U.S. Department of Energy, Alternative Fuels and Advanced
  Vehicles Data Center.
* Conditions and exemptions for all incentive programs vary by state.

    Collectively, the states listed in Table III.D-2 currently account
for approximately 37% of the nationwide consumption of biodiesel. A
variety of states also have requirements for the use of biodiesel in
state fleets, provisions that allow biodiesel to be used as an
alternative to meeting alternative fuel vehicle mandates, and credits/
rebates for the installation of biodiesel dispensing and blending
equipment. Altogether, therefore, more than half of the states in the
U.S. have mandates and/or incentives that will induce them to address
biodiesel infrastructure issues.
    One commenter pointed out that state-specific economic incentives
for the production of biodiesel do not necessarily eliminate cost
differences between biodiesel and conventional diesel. We agree with
this comment. Nevertheless, efforts to incentivize biodiesel production
and use in individual states will directionally help the nation to meet
a 1.28 billion gal biomass-based diesel requirement in 2013.
    Based on our review of the ability of diesel engines to use diesel
blended with biodiesel, and the various state requirements and
incentives to use biodiesel, we believe that consumption of 1.28
billion gal of biodiesel will not be problematic.

E. Biomass-Based Diesel Distribution Infrastructure

    The National Petroleum Refiners Association (NPRA) stated that an
analysis of the feasibility of meeting increased biodiesel use
requirements should be based on a maximum biodiesel blend ratio of
5%.\25\ We disagree, since there is no reason to expect that existing
consumption patterns involving higher concentrations of biodiesel will
not continue into the future, as described above. However, we have
assessed the additional biodiesel distribution infrastructure that will
be needed under a 1.28 billion gal mandate assuming a blend ratio no
higher than 5%. NPRA commented that the required increase in the use of
biodiesel will necessitate numerous installations of biodiesel storage
tanks (possibly heated) as well as the installation of biodiesel
receiving and blending capacity at the diesel fuel distribution
terminals throughout the U.S. markets. This is also consistent with our
analysis. In the proposal, we noted that some terminals may be able to
avoid or delay the installation of additional biodiesel storage
facilities by storing 50/50 biodiesel/diesel fuel blends that are then
further blended with diesel fuel to produce a finished fuel. However,
we assumed that all biodiesel blending facilities would install
segregated (heated and insulated) biodiesel storage facilities in our
infrastructure analysis. We further noted that some terminals may delay
the installation of biodiesel in-line blending equipment by splash
blending biodiesel.\26\ However, we stated that we expect that this
approach would be temporary due to the heightened concerns over
achieving a correct blend ratio and a fully mixed biodiesel blend that
accompanies splash

blending. We assumed that terminals would install in-line biodiesel
blending equipment in our infrastructure analysis.
---------------------------------------------------------------------------

    \25\ NPRA acknowledged that higher biodiesel blend ratios are
sometimes used but that this would not substantially increase the
capacity of the market to absorb additional biodiesel volume. NPRA
recently changed its name to the American Fuel & Petrochemical
Manufacturers (AFPM).
    \26\ In-line blending refers to the process of blending
biodiesel into petroleum-based diesel fuel in the delivery line that
feeds into the tank truck from the terminal storage tanks. Splash
blending refers to the process of first loading petroleum-based
diesel fuel into a tank truck followed by biodiesel so that the
final blend meets the desired blend ratio.
---------------------------------------------------------------------------

    We proposed finding that there will be sufficient fuel distribution
infrastructure available to support the use of 1.28 billion gal of
biomass-based diesel in 2013. NPRA stated that the rapid expansion in
B5 blending capability in the marketplace necessary to support the use
of the envisioned volumes of biodiesel is unrealistic and unachievable.
NPRA did not further support this statement. The National Biodiesel
Board (NBB) stated that there will be sufficient biodiesel distribution
infrastructure available to facilitate the use of the envisioned
volumes of biodiesel.\27\ NBB further stated that in most markets,
terminals can treat 5% biodiesel blends as a fungible commodity like
diesel fuel and that they believe that many terminals may be storing B5
blends. To the extent terminals store a finished B5 blend, it would
obviate the need for much of the segregated biodiesel storage and
blending capability that is assumed in our infrastructure analysis. The
Iowa Biodiesel Board stated that claims that industry cannot
accommodate the distribution of the target gallons are baseless and
cited various examples of recent biodiesel blending initiatives at Iowa
terminals.
---------------------------------------------------------------------------

    \27\ NBB did not provide an analysis regarding the addition of
new biodiesel distribution facilities.
---------------------------------------------------------------------------

    We acknowledge that the required expansion of the fuel distribution
infrastructure necessary to support the use of the 1.28 billion gal of
biomass diesel may pose challenges to industry. However, we continue to
believe that industry can respond effectively to this challenge to
support the use of the envisioned 2013 biodiesel volume. In fact, EIA
data suggests that much of the necessary infrastructure is already in
place. EIA data indicates that annual biodiesel production in 2011 was
nearly 1 billion gallons, and monthly biodiesel production from October
to December 2011, and from March to May 2012 averaged nearly 100
million gallons per month.\28\ These data indicate that significant
progress has already been made in expanding the fuel distribution
infrastructure necessary to support the use of the 1.28 billion gal of
biomass diesel. We anticipate such efforts will continue to be
successful in supporting the required biodiesel volume for 2013.
---------------------------------------------------------------------------

    \28\ http://www.eia.gov/biofuels/biodiesel/production/table1.pdf.
---------------------------------------------------------------------------

    The American Trucking Association (ATA) stated that EPA should have
provided a discussion of the costs of the infrastructure changes
contained in the proposed rule. These costs were accounted for in the
discussion of the overall impacts on transportation fuel price
contained in Section IV.B.1.d. Additional discussion of specific ATA
comments is included below.
    ATA commented that EPA underestimated the number of tank trucks
needed to distribute the additional amount of biodiesel in 2013
relative to volume used in 2012. ATA stated that the assumed 6 trips
per tank truck per day that EPA used in estimating the number of tank
trucks that would be needed was unrealistically high. ATA stated that
one large ATA member that transports biofuels reports that the average
length of haul (one way) is 141 miles. Based on this, ATA stated that 2
loads per day would be a more accurate estimate considering loading and
unloading times.
    ATA assumed a single shift tank truck delivery operation. Our
estimated number of tank trucks was based on a two shift operation. We
continue to believe that a two shift truck delivery model of operation
is appropriate to maximize the utilization of distribution system
resources. Given time for loading and unloading and lunch breaks for 2
shifts, our assumed 6 deliveries per day equates to an average one way
truck shipping distance of 40 miles. We project that a number of
additional biodiesel plants will be brought into production to meet the
2013 biodiesel volume. Biodiesel production plants tend to be
geographically dispersed. Hence, the opening of additional plants will
tend to reduce the average shipping distance from the biodiesel
production plant to the terminal compared to today. We also project
that the production volume will increase at a number of existing
biodiesel plants. This will facilitate the shipment by rail of
biodiesel volumes that previously were shipped by truck long distances.
Thus, we believe that biodiesel trucking distances will be
substantially reduced in the future.
    Nevertheless, we acknowledge that uncertainty exists regarding what
biodiesel shipping distances will be in the future. Therefore, we
believe that it is useful to evaluate the potential impacts of longer
shipping distances on the number of additional tank trucks that will be
needed to transport biodiesel. If we were to assume a 141 mile average
truck shipping distance per ATA and a two-shift operation, this would
translate to 4 loads per day per tank truck. At 4 loads per day, 38
additional number of tank trucks would be needed in 2013 relative to
2012 (as opposed to the 25 that we projected). If we were to assume
only 2 deliveries per day as ATA did, an additional 75 trucks would be
needed for the 2013 case. Even under this extreme case, the addition of
75 tank trucks would represent less than 0.3% of the total U.S. fleet
of petroleum products tank trucks (estimated at 27,000).\29\
Consequently, the possibility that biodiesel shipping distances might
be longer than we projected would not materially affect our conclusions
about the ability to accommodate the additional tank trucks and drivers
needed.
---------------------------------------------------------------------------

    \29\ Department of Transportation, Hazardous Materials, Safety
Requirements for External Product Piping on Cargo Tanks Transporting
Flammable Liquids, Notice of Proposed Rulemaking, 76 FR 4847,
January 27, 2011. http://www.gpo.gov/fdsys/pkg/FR-2011-01-27/pdf/2011-1695.pdf.
---------------------------------------------------------------------------

    In the proposal, we estimated that a total of 5 tank trucks will be
needed to transport 80 mill gallons/yr of renewable diesel that we
projected would be used annually in 2012 and 2013 to the locations
where it is blended with petroleum-based diesel fuel. This is based on
each tank truck carrying 7,800 gallons of renewable diesel fuel making
6 deliveries per day. We estimate that the production facility that
will account for the renewable diesel produced through 2013 will ship
its product 20 miles or less by tank truck to facilities that produce
blends with petroleum-based diesel fuel. Shipment of the projected
renewable diesel volume such short distances could likely be achieved
by making 6 deliveries during one shift without the need for a second
shift. We anticipate that the renewable diesel fuel will be blended
directly into storage tanks containing petroleum-based diesel fuel.
Consequently, we continue to believe that the distribution of renewable
diesel fuel could be accomplished without undue difficulty.

IV. Impacts of 1.28 Billion Gallons of Biomass-Based Diesel

    In order to evaluate the impacts of a biomass-based diesel volume
of 1.28 billion gal in the areas required under the statute (see
Section II), we first considered what the appropriate reference would
be. Since the statute requires that the biomass-based diesel volume we
set for 2013 be no lower than 1.0 billion gal, we believe that this is
an appropriate reference point. Therefore, in the discussion that
follows, we have focused on either a volume of 1.28 billion gal
biomass-based diesel or an increment of 0.28 billion gal biomass-based
diesel, depending on the specific

sources of information and analyses available.
    The statute requires that an applicable biomass-based diesel volume
for 2013 and other years be based on an analysis of specified
environmental and other impacts. These analyses can be conducted for
1.28 billion gal biomass-based diesel or an increment of 0.28 billion
gal. Most of the areas we are required to analyze were covered in the
RFS2 final rule in some form, and we believe that we can use this
information in satisfying our statutory obligations to analyze
specified factors in determining the applicable volume of biomass-based
diesel for 2013.
    Some of the analyses presented in the RFS2 final rule were for the
specific case of 1.28 billion gallons in 2013. These analyses included
an investigation of the expected annual rate of commercial production
of biomass-based diesel in 2013, impacts on agricultural commodity
supply and price, and the cost to consumers of transportation fuel.
Some of these were discussed in Section III above. Most of the analyses
in the RFS2 final rule, however, were conducted to represent full
implementation of the RFS2 program in 2022. In these analyses, the
biomass-based diesel volume was estimated to be 1.82 billion gallons,
which was compared to a reference case biodiesel volume of 380 mill
gallons. These cases are shown in Table IV-1.

                            Table IV-1--Primary 2022 Reference and Control Cases From RFS2 Final Rulemaking (billion gallons)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Advanced biofuel                                                             Non-
-------------------------------------------------------------------------------------------------------------------------------   advanced
                                                   Cellulosic biofuel        Biomass-based diesel      Other advanced biofuel     biofuel       Total
                                              ----------------------------------------------------------------------------------------------  renewable
                                                                                Other                                   fuel
                                                Cellulosic   Cellulosic     FAME \a\     NCRD \b\      biodiesel     Imported       Corn
                                                 ethanol       diesel      biodiesel                      \c\        ethanol      ethanol
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reference....................................         0.25          0            0.38          0             0            0.64        12.29        13.56
Control......................................         4.92          6.52         0.85          0.15          0.82         2.24        15.00        30.50
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Fatty acid methyl ester (FAME) biodiesel.
\b\ Non-Co-processed Renewable Diesel (NCRD).
\c\ Other Biodiesel is biodiesel produced in addition to the amount needed to meet the biomass-based diesel standard.

    The biomass-based diesel volume of 1.82 billion gallons analyzed
for 2022 in the RFS2 final rule is higher than the 1.28 billion gallons
we are required to evaluate for today's final rule for 2013. More
importantly, the change in biodiesel production in 2022 due to the
statutory mandates for biomass-based diesel plus other diesel
anticipated to meet the advanced biofuel volume (a total increase of
1.44 billion gallons compared to the reference case without the EISA
mandates) is much larger than the change we are evaluating for 2013
(0.28 billion gallons). The RFS2 final rule analysis considers impacts
from the entirety of the renewable fuel mandates, as opposed to impacts
resulting solely from the biodiesel portion of the mandates.
    In response to the NPRM, the American Petroleum Institute (API)
commented that comparing the analyses conducted in the RFS2 final rule
for the fully implemented RFS2 program in 2022 to a biodiesel increment
of 0.28 billion gal occurring in 2013 was misleading. They cited the
fact that the 2022 analysis between the control and reference cases
accounts for agricultural and market conditions that develop over
multiple years, while the proposed biomass-based diesel requirement of
1.28 billion gallons in 2013 would require those changes to occur over
a single year. They also cited the fact that the single-year growth
from 2012 to 2013 that would occur under a requirement for 1.28 billion
gallons (0.28 billion gallons in one year) is about twice as high as
the annualized growth rate in the RFS final rule (1.44 billion gal
increase over ten years, or about 0.14 billion gal per year).
    As described in Section III, we believe that the industry can
increase production to at least 1.28 billion gallons by 2013, that
sufficient feedstock will be available, and that the infrastructure
will be able to accommodate these higher volumes. Therefore, we do not
believe that API's concern about the different annual production growth
rates in the RFS2 final rule compared to our proposal for 2013 is
warranted.
    With regard to concerns about agricultural and market conditions,
we agree that the positive impacts of yield growth and foreign crop
production increases that may be reflected in the 2022 analysis from
the RFS final rule, and which develop over multiple years, may not be
representative of a single-year increase in biomass-based diesel of
0.28 billion gallons in 2013. However, the RFS is a forward-looking
program that focuses on long-term changes in the fuels sector. For this
reason, it is not appropriate to emphasize specific interim year
impacts in cases where these impacts are transient and continually
changing. However, in some cases we have been able to analyze a 2013
impact, which should then be compared to the 2022 impact analyzed for
the RFS2 final rule. In other cases we have used trends used to derive
our 2022 assessments to indicate likely impacts in 2013. Since the
NPRM, EPA has conducted a specific analysis of the effects of the 2013
mandate on the biofuels market. This analysis is detailed in Section
IV.B of this rulemaking. This analysis was conducted in response to
comment about quantifying some of the costs and benefits of this rule.
However, it also addresses API's concerns by providing a year-specific
analysis.
    We recognize that uncertainties remain regarding how markets for
soybeans and other crops will react to a mandate of 1.28 billion
gallons for biomass-based diesel. For instance, the volume of soybean
oil required to meet the mandate will likely be higher in 2013 than it
has been in 2011. As a result, there may be upward pressure on soybean
oil prices, which we consider in Section III.B of this rulemaking.
Nevertheless, we expect that RIN prices will adjust in the market to
provide the economic incentive for the mandate to be met. As described
in the rulemaking that established the RFS1 program, the RIN system was
designed with this end in mind.

A. Consideration of Statutory Factors

1. Climate Change
    Since biodiesel has a GHG benefit compared to the petroleum-based
diesel it is replacing, an increase in biomass-based diesel of 0.28
billion gal from 2012 to 2013 will lead to a displacement of
conventional diesel fuel, with corresponding GHG emissions reductions.
This increased use of biomass-based diesel will contribute to

lower climate change impacts in comparison to the petroleum-based
diesel it is replacing. The GHG lifecycle analysis of soybean biodiesel
presented in the final RFS2 rule was based on modeling and analysis
that estimated an annualized emissions stream over a 30-year averaging
period, starting in 2022 (the year when the RFS2 program will be fully
implemented). For the purpose of this annual rulemaking, we have not
quantified the GHG emissions benefits for the 280 mill gallon increase
in biomass-based diesel in 2013. At this time, we do not have a
quantified estimate of the GHG impacts for the single year 2013
standard. We also do not believe it would be appropriate to use the 30-
year average RFS2 estimate starting in 2022 as a surrogate for the
single year impact of the 2013 BBD standard. While we are not
quantifying the GHG emissions impact of this 2013 BBD rule,
qualitatively we believe that it will provide a reduction in GHGs.
    One commenter suggested that increased biodiesel use would also
reduce GHG emissions compared to sugarcane ethanol, an alternative
advanced biofuel that would be used to meet the mandate. This statement
is based on the specific GHG reductions associated with a gallon of
biodiesel produced in 2022 that we estimated in our lifecycle analysis
for different biofuels. However, for this rulemaking we are only
considering the GHG impacts of the biomass-based diesel standard.
Therefore, it is outside the scope of this rule to analyze the
potential GHG emission impacts of displacing sugarcane ethanol with
biodiesel.
    One commenter also suggested that by requiring 0.28 billion gallons
of biomass-based diesel above the statutory minimum of 1.0 billion
gallons, effectively shifting the biodiesel used for the ``other''
advanced biofuel category to biomass[hyphen]based diesel, EPA would
actually promote increased volumes of renewable fuels (rather than
ethanol[hyphen]equivalent gallons based on the 1.5 equivalence value),
allowing for the greater displacement of fossil fuels. However, this is
not the case. Although the requirement for a physical volume of
biomass-based diesel will be 1.28 billion gallons, the contribution of
this volume to compliance with the advanced biofuel requirement is
based on energy-equivalence with respect to ethanol, not physical
volumes. Thus there will be no additional quantities of other advanced
fuels produced.
2. Energy Security
    This final standard will assure an increased use of biomass-based
diesel in the U.S. and help to improve U.S. energy security. Reducing
U.S. petroleum imports and increasing the diversity of U.S. liquid fuel
supplies lowers both the financial and strategic risks caused by
potential sudden disruptions in the supply of imported petroleum to the
U.S. The economic value of reductions in these risks provides a measure
of improved U.S. energy security. This section summarizes EPA's
estimates of U.S. oil import reductions and energy security benefits
from this rule.
    In 2010, U.S. petroleum import expenditures represented 14 percent
of total U.S. imports of all goods and services.\30\ These expenditures
rose to 18 percent by April of 2011.\31\ In 2010, the United States
imported 49 percent of the petroleum it consumed,\32\ and the
transportation sector accounted for 71 percent of total U.S. petroleum
consumption. This compares to approximately 37 percent of total U.S.
petroleum supplied by imports and 55 percent of U.S. petroleum
consumption in the transportation sector in 1975. Requiring higher
volumes of renewable fuels to be used in the U.S. is expected to lower
U.S. oil imports.
---------------------------------------------------------------------------

    \30\ http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTTIMUS2&f=W.
    \31\ http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a.htm.
    \32\ http://www.eia.gov/dnav/pet/pet_pri_rac2_dcu_nus_m.htm.
---------------------------------------------------------------------------

    This rule will require an additional 280 million gallons of
biodiesel to be produced, which equals about 255 million gallons of
diesel equivalent.\33\ Based on analysis of historical and projected
future variation in U.S. petroleum consumption and imports, we estimate
that approximately 50 percent of the reduction in fuel consumption
resulting from adopting renewable fuels is likely to be reflected in
reduced U.S. imports of refined fuel, while the remaining 50 percent is
expected to be reflected in reduced domestic fuel refining. Of this
latter figure, 90 percent is anticipated to reduce U.S. imports of
crude petroleum for use as a refinery feedstock, while the remaining 10
percent is expected to reduce U.S. domestic production of crude
petroleum. Thus, on balance, each gallon of fuel saved as a consequence
of the renewable fuel standards is anticipated to reduce total U.S.
imports of petroleum by 0.95 gallons.\34\ Therefore, based on these
assumptions, this rule is expected to reduce imports of petroleum by
about 242 million gallons. Table IV.A.2-1 below compares EPA's
estimates of the reduction in imports of U.S. crude oil and petroleum-
based products from this program to projected total U.S. imports for
the year 2013.
---------------------------------------------------------------------------

    \33\ RFS2 Final Rulemaking.
    \34\ This figure is calculated as 0.50 + 0.50*0.9 = 0.50 + 0.45
= 0.95.

  Table IV.A.2-1--Projected Import Reductions From This Rule and Total
                  U.S. Petroleum-Based Imports in 2013
                          [Millions of barrels]
------------------------------------------------------------------------
                                                            U.S. total
                                                         petroleum-based
  U.S. petroleum-based import reductions from the rule   imports without
                  (million barrels/yr)                       the rule
                                                             (million
                                                           barrels/yr)
------------------------------------------------------------------------
5.8....................................................           3,391
------------------------------------------------------------------------

    In order to understand the energy security implications of reducing
U.S. petroleum imports, EPA worked with Oak Ridge National Laboratory
(ORNL), which has developed approaches for evaluating the economic
costs and energy security implications of oil use. The energy security
estimates provided below are based upon a methodology developed in a
peer-reviewed study entitled, ``The Energy Security Benefits of Reduced
Oil Use, 2006-2015,'' completed in March 2008. This study is included
as part of the docket for this rule.35 36 When conducting
its analysis, ORNL considered the full economic cost of importing
petroleum into the United States.
---------------------------------------------------------------------------

    \35\ Leiby, Paul N., ``Estimating the Energy Security Benefits
of Reduced U.S. Oil Imports,'' Oak Ridge National Laboratory, ORNL/
TM-2007/028, Final Report, 2008. (Docket EPA-HQ-OAR-2010-0162).
    \36\ The ORNL study ``The Energy Security Benefits of Reduced
Oil Use, 2006-2015,'' completed in March 2008, is an updated version
of the approach used for estimating the energy security benefits of
U.S. oil import reductions developed in an ORNL 1997 Report by
Leiby, Paul N., Donald W. Jones, T. Randall Curlee, and Russell Lee,
entitled ``Oil Imports: An Assessment of Benefits and Costs.''
(Docket EPA-HQ-OAR-2010-0162).
---------------------------------------------------------------------------

    The economic cost of importing petroleum into the U.S. is defined
to include two components in addition to the purchase price of
petroleum itself. These are: (1) The higher costs for oil imports
resulting from the effect of increasing U.S. import demand on the world
oil price and on the market power of the Organization of Petroleum
Exporting Countries (i.e., the ``demand'' or ``monopsony'' costs); and
(2) the risk of reductions in U.S. economic output and disruption of
the U.S. economy caused by sudden disruptions in the supply of imported
petroleum to the U.S. (i.e., ``macroeconomic disruption/adjustment
costs'').
    An often-identified component of the full economic costs of U.S.
oil imports

is the cost to U.S. taxpayers of existing U.S. energy security
policies. The two primary components of this cost are likely to be (1)
the expenses associated with maintaining a U.S. military presence--in
part to help secure a stable oil supply--in potentially unstable
regions of the world; and (2) costs for maintaining the U.S. Strategic
Petroleum Reserve (SPR). The SPR is the largest stockpile of
government-owned emergency crude oil in the world.
    The EPA recognizes that potential national and energy security
risks exist due to the possibility of tension over oil supplies. Much
of the world's oil and gas supplies are located in countries facing
social, economic, and demographic challenges, thus making them even
more vulnerable to potential local instability. Thus, to the degree to
which this final rule increases the diversity of sources of liquid fuel
for U.S. consumption and/or reduces reliance upon imported energy
supplies that can be deployed by either consumers or the nation's
defense forces, the United States could expect benefits related to
national security and increased energy supply. Although the Agency
recognizes the clear benefit to the United States from reducing
dependence on foreign oil, the Agency has been unable to calculate the
monetary benefit that the United States will receive from the
improvements in national security expected to result from this program.
    Also, while the costs of building and maintaining the SPR are
clearly related to U.S. oil use and imports, these costs have not
varied historically in response to U.S. oil import levels. Thus, the
costs of maintaining the SPR are excluded from this analysis. In
addition, given the redistributive nature of this monopsony effect from
a global perspective, it is excluded in the energy security benefits
calculations for this rule. In contrast, the other portion of the
energy security premium, the U.S. macroeconomic disruption and
adjustment cost that arises from U.S. petroleum imports, does not have
offsetting impacts outside of the U.S. and, thus, is included in the
energy security benefits estimated for this rule. To summarize, EPA has
included only the macroeconomic disruption portion of the energy
security benefits to estimate the monetary value of the total energy
security benefits of this program.
    The U.S. is projected to be a net exporter of diesel fuel in
2013.\37\ Increased biodiesel production would likely result in less
domestic consumption of diesel fuel in the U.S. The reduced consumption
may be reflected in increased exports of diesel from the U.S. However,
regardless of the incremental effect of this rule on net imports,
increasing the diversification of the U.S. and global diesel fuel pools
would likely confer some reduction in the severity of a future
potential disruption in the world oil market. Our energy security
analysis does not evaluate the energy security benefits of individual
finished petroleum products; rather, our analysis takes into account
the energy security benefits of overall net petroleum product imports.
Although we believe such an approach provides a reasonable estimate of
energy security impacts, in future year evaluations of the biodiesel
volumes, we may consider whether to develop an estimate more specific
to the biodiesel market.
---------------------------------------------------------------------------

    \37\ U.S. Energy Information Administration (EIA). ``Short-Term
Energy Outlook'', Table 4a, June 2012. http://<IP_ADDRESS>/forecasts/steo/tables/pdf/4atab.pdf .
---------------------------------------------------------------------------

    The energy security premiums for the year 2013 are presented in
Table IV.A.2-2 as well as a breakdown of the components of the energy
security premiums for those years. These energy security premiums are
recorded on a dollar per barrel of oil imported reduced from this rule.
On a gallon of biodiesel fuel basis, these translate into an estimated
$0.15/gallon benefit in 2013 for the macroeconomic disruption and
adjustment costs component of the energy security premium (in 2010$).

            Table IV.A.2-2--Energy Security Premiums in 2013 (2010$/Barrel) Based on ORNL Methodology
----------------------------------------------------------------------------------------------------------------
                                                              Macroeconomic disruption/
                          Monopsony                               adjustment costs           Total mid-point
----------------------------------------------------------------------------------------------------------------
$11.40......................................................                    $7.13                    $18.53
($3.83-$19.40)..............................................            ($3.41-$10.35)           ($10.03-$26.74)
----------------------------------------------------------------------------------------------------------------
Note: Values in parentheses represent a 90% confidence interval around the central value.

    Using EPA's fuel consumption analysis in conjunction with ORNL's
energy security premium estimates, the agency has developed estimates
of the total energy security benefits for the year 2013 in Table
IV.A.2-3.

   Table IV.A.2-3--Estimated Energy Security Benefits in 2013 (2010$)
------------------------------------------------------------------------
                                                            Benefits ($
      U.S. oil imports reduced (million barrels/yr)          millions)
------------------------------------------------------------------------
5.8.....................................................           $41.2
------------------------------------------------------------------------

    One commenter suggested that an increase in biodiesel for the
mandate is statistically insignificant. EPA interprets this comment to
mean that the increase in biodiesel production due to this rule is not
a sufficiently large volume that it will add significantly to the
energy security position of the U.S. EPA's analysis of energy security
is conducted on a per gallon basis, and per gallon estimates are
extrapolated upwards to estimate the total energy security benefits
estimate in Table IV.A.2-3. Thus, we assume that each extra gallon of
biodiesel has an equal energy security benefit regardless of the
overall size of the renewable fuels volume requirement. Thus, total
energy security benefits are increasing with this rule.
3. Agricultural Commodities and Food Prices
    For the RFS2 final rule, we examined the impacts of increased
renewable fuels production on commodity prices, food prices and trade
in agricultural products which considered the impacts of all the
biofuel feedstock sources anticipated to meet the 2022 biofuel volume
requirements, not just biodiesel. For the RFS2, EPA used two primary
models for its agricultural economic impacts analysis, the Food and
Agriculture Sector Optimization Model (FASOM) and the Food and
Agricultural Policy Research Institute-Center for Agriculture and Rural
Development (FAPRI-CARD) models. The FASOM model is a long-term
economic model of the U.S. forest and agriculture sectors that
maximizes the net present value of the sum of producer and consumer
surplus across the two sectors over time subject to market, technology,
and other constraints. The FAPRI-CARD models are a system of
econometric models covering many agricultural commodities in the U.S.
and internationally. They are

based on historical data analysis, current academic research, and a
reliance on accepted economic, agronomic, and biological relationships
in agricultural production and markets.\38\
---------------------------------------------------------------------------

    \38\ CARD Staff, Technical Report: An Analysis of EPA Renewable
Fuel Scenarios with the FAPRI-CARD International Models, December,
2009. Docket : EPA-HQ-OAR-2005-0161-3177.
---------------------------------------------------------------------------

    To meet the RFS2 renewable fuel volumes, a number of price effects
on the agricultural commodities were estimated in the RFS2 final rule
for 2022. For instance, FASOM estimated that an increase in renewable
fuel volumes to meet the RFS2 will result in an increase in the U.S.
soybean prices of $1.02 per bushel (10.3 percent) above the Reference
Case price in 2022. FASOM also projected the price of soybean oil will
increase by $183 per ton (37.9 percent) over the 2022 Reference Case
price (all prices are in 2007$). Most of the additional soybeans needed
for increased biodiesel production are diverted from U.S. exports to
the rest of the world. In FASOM, soybean exports decrease by 135
million bushels (-13.6 percent) in 2022 relative to the AEO2007
Reference Case. This change represents a decrease of $453 million (-4.6
percent) in the total value of U.S. soybean exports in 2022. However,
these price effects are not attributed to the demand for biodiesel
feedstock alone, rather the compounding affect of all changes in
feedstock demand estimated to result from the total biofuel mandate in
2022. Since the impact on soybeans due to biodiesel demand was only a
portion of this total feedstock impact and since the impact in 2013
will be less than considered in 2022 (since the 2013 biodiesel volumes
are less than those considered for 2022), the impact on soybean prices
and exports from an increase to 1.28 billion gall in 2013 should also
be less. See Sections III.B.3 and IV.B.1.a of this rulemaking for
further information on the impact on soybean availability and prices.
    A recent report by IHS Global Insight \39\ also discusses potential
agricultural and economic impacts from increasing vegetable oil demand
for biodiesel production. According to this study, existing soybean
yield technologies are expected to be applied increasingly across the
U.S., resulting in roughly a 10% higher growth rate in soybean yields
than USDA's projections from 2010-2016 which were used by EPA in its
RFS2 analyses. Similarly, Global Insight predicts these higher yield
technologies will be implemented in other large soybean-producing
countries, such as Brazil and Argentina. If higher yields than modeled
for RFS2 indeed are realized, then it is likely that the price
increases for soybean oil will be less than estimated for RFS2.
Likewise, other price impacts, such as those on food prices, will still
move in the same direction (i.e., an increase in price resulting from
an increase in demand) but could be smaller than in the RFS2 analysis.
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    \39\ ``Biodiesel Production Prospects for the Next Decade,'' IHS
Global Insight, March 11, 2011.
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    For the analyses performed for the RFS2 final rule, EPA estimated a
$10 per person per year increase in food costs in the U.S. due to the
total annual impact of the RFS2 program by 2022 compared to a Reference
case that assumed no RFS2 renewable fuel requirements. Again, the
biodiesel impacts will represent only a small portion of these overall
impacts and will likely be even smaller in 2013 due to the smaller
volume of feedstock required. One commenter suggested that EPA should
conduct a more thorough analysis of food price impacts of this rule.
EPA has conducted an analysis projecting the amount of soybean oil that
will be required to meet this mandate and the effect this will have on
the prices of soybeans and soybean oil. The results of this analysis
are discussed in detail in Sections III.B.3 and IV.B.1.a of this rule.
4. Air Quality
    As described in the NPRM, we are relying on the analyses of
renewable fuel impacts conducted in support of the RFS2 rule \40\ to
qualitatively discuss the expected air quality impacts of a biomass-
based diesel volume of 1.28 billion gallons. The RFS2 analyses reflect
EPA's most current assumptions regarding biodiesel emission
impacts.\41\
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    \40\ 75 FR 14670, March 26, 2010.
    \41\ U.S. EPA 2010, Renewable Fuel Standard Program (RFS2)
Regulatory Impact Analysis. EPA-420-R-10-006. February 2010. Docket
EPA-HQ-OAR-2009-0472-11332. Section <IP_ADDRESS>.4.
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    In the RFS2 rule, we analyzed both changes in pollutant emissions
(measured in tons) and changes in ambient air quality associated with
the changes in pollutant emissions. The changes in pollutant emissions
were calculated by comparing the 2022 RFS2 renewable fuel volumes to
volumes if the RFS2 mandate were not in place (the reference
scenario).\42\ The analysis reflected full implementation of the RFS2
program in 2022 and accounted for impacts from multiple types of
renewable fuels, of which biodiesel was only one type. Specifically,
the RFS2 emissions inventory analysis assumed 1.82 billion gal of
biodiesel in the RFS2 scenario compared to 0.38 billion gal of
biodiesel in the reference scenario, reflecting a 1.44 billion gal
increase in biodiesel with the rule in place.
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    \42\ In the RFS2 Regulatory Impact Analysis, we analyzed the
mandated 2022 RFS2 renewable fuel volumes relative to volumes
required by two reference scenarios: RFS1 mandate (7.1 billion
gallons of renewable fuels) and AEO 2007 (13.6 billion gallons of
renewable fuels). Both reference scenarios assumed the same volume
of biodiesel, so the emission and air quality impacts described in
this section are the same for both reference scenarios.
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    Biodiesel emission impacts from the RFS2 rule emissions inventory
analysis are presented in Table IV.A.4-1. A complete discussion of the
emissions inventory analysis conducted for the RFS2 rule can be found
in Chapter 3 of the RFS2 Regulatory Impact Analysis (RIA).\43\ These
biomass-based diesel emission impacts (which reflect a 1.44 billion gal
increase in biodiesel) are all less than 1% of the total U.S. emissions
inventory for each pollutant.\44\ We expect the impacts of the 1.28
billion gal of biomass-based diesel volume relative to the 1.0 billion
gal statutory minimum volume (which reflect a 0.28 billion gal
increase) to be smaller.
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    \43\ U.S. EPA 2010, Renewable Fuel Standard Program (RFS2)
Regulatory Impact Analysis. EPA-420-R-10-006. February 2010. Docket
EPA-HQ-OAR-2009-0472-11332.
    \44\ While the national-level emissions and air quality impacts
may be small, there may still be local and regional impacts that are
larger in percentage terms. Our analysis is unable to capture this
local and regional variability.

Table IV.A.4-1--Biodiesel Emission Impacts of the RFS2 Renewable Fuel Volumes (1.82 Billion Gal) Relative to the
                                        Reference Case (0.38 Billion Gal)
----------------------------------------------------------------------------------------------------------------
                                                     Biodiesel impacts of RFS2 rule emissions
                                                   inventory analysis ([Delta] 1.44 billion gal
                                                                    biodiesel)                     Percent RFS2
                                                 ------------------------------------------------   total U.S.
                                                   Upstream \a\   Downstream \b\                   inventory \c\
                                                      (tons)          (tons)       Total (tons)
----------------------------------------------------------------------------------------------------------------
VOC.............................................          -1,049          -2,422          -3,471           -0.03
CO..............................................             913          -4,104          -3,191           -0.01
NOX.............................................            -290           1,346           1,056            0.01
PM10............................................           4,268            -569           3,699            0.10
PM2.5...........................................             632            -315             317            0.01
SO2.............................................           1,580               0           1,580            0.02
NH3.............................................           4,171               0           4,171            0.10
Benzene.........................................              10             -30             -20           -0.01
Ethanol.........................................               0               0               0            0.00
1,3-Butadiene...................................               0             -16             -17           -0.10
Acetaldehyde....................................               2             -66             -65           -0.14
Formaldehyde....................................               1            -182            -181           -0.21
Naphthalene.....................................              -1               0              -1           -0.01
Acrolein........................................              63              -9              54            0.84
----------------------------------------------------------------------------------------------------------------
\a\ U.S. EPA 2010, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. EPA-420-R-10-006. February
  2010. Docket EPA-HQ-OAR-2009-0472-11332. Table 3.2-11. Note: units in Table 3.2-11 were mislabeled as tons/
  mmBTU. Actual units are tons.
\b\ U.S. EPA 2010, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. EPA-420-R-10-006. February
  2010. Docket EPA-HQ-OAR-2009-0472-11332. Table 3.2-9.
\c\ While the national-level emissions and air quality impacts may be small, there may still be local and
  regional impacts that are larger in percentage terms. Our analysis is unable to capture this local and
  regional variability.

    The air quality analysis for the RFS2 rule used photochemical
modeling to characterize primary pollutants that are emitted directly
into the atmosphere and secondary pollutants that are formed as a
result of complex chemical reactions within the atmosphere. Included in
the air quality modeling scenarios for the RFS2 rule were large volumes
of ethanol as well as other renewable fuels, and the nature of these
complex chemical interactions makes it difficult to determine the air
quality impacts of biodiesel alone. Specifically, the RFS2 air quality
analysis reflects a roughly 21 billion gal increase in ethanol, far
outweighing the volume increase in biodiesel (0.43 billion gal). A
complete discussion of the RFS2 air quality analysis and its
limitations can be found in Chapter 3 of the RFS2 Regulatory Impact
Analysis (RIA).\45\
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    \45\ U.S. EPA 2010, Renewable Fuel Standard Program (RFS2)
Regulatory Impact Analysis. EPA-420-R-10-006. February 2010. Docket
EPA-HQ-OAR-2009-0472-11332.
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    The RFS2 air quality analysis was completed earlier than the final
emissions inventory analysis because of the length of time needed to
conduct photochemical modeling.46 47 The air quality
analysis assumed 0.81 billion gal of biodiesel in the RFS2 scenario
compared to 0.38 billion gal of biodiesel in the reference scenario,
reflecting a 0.43 billion gal increase in biodiesel use with the rule
in place. We use the 0.43 billion gal increase in biodiesel assumed in
the RFS2 air quality analysis to qualitatively discuss the potential
impacts of a 0.28 billion gal increase in biodiesel from this rule.
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    \46\ Emissions serve as inputs to the air quality modeling
analysis. However, the final fuel volume assumptions (upon which the
emission estimates were based) increased between the time that
emissions were estimated to support the air quality modeling
analysis and the time emissions were estimated to reflect the final
rulemaking.
    \47\ The RFS2 air quality analysis reflects EPA's most recent
air quality analysis applicable to changes in renewable fuel types
and volumes.
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    Given the small emissions impact of a 0.43 billion gal increase in
biodiesel on the total U.S. emissions inventory (the basis for our air
quality modeling scenarios), we expect the portion of air quality
impacts attributable to a move from 1.0 to 1.28 billion gal (a 0.28
billion gal biodiesel increase) to be small enough that on a nationwide
basis the air quality impact will likely not be noticeable.
    We note that Clean Air Act section 211(v) requires EPA to analyze
and mitigate, to the greatest extent achievable, adverse air quality
impacts of the renewable fuels required by the RFS2 rule. We intend to
investigate any potential adverse impacts from increased renewable fuel
use through that study and will promulgate appropriate mitigation
measures separate from today's final rule.
5. Deliverability and Transport Costs of Materials, Goods, and Products
Other Than Renewable Fuel
    EPA evaluated in the RFS2 final rule the impacts on the U.S.
transportation network from the distribution of the total additional
volume of biofuels that will be used to meet the RFS2 standards. Oak
Ridge National Laboratory (ORNL) conducted an analysis of biofuel
transportation activity from production plants to petroleum terminals
by rail, barge, and tank truck to identify potential distribution
constraints to help support the assessment in the RFS2 final rule.\48\
The ORNL analysis concluded that the increase in biofuel shipments due
to the RFS2 standards will have a minimal impact on U.S. transportation
infrastructure. The majority of biofuel transportation is projected to
be accomplished by rail. Nevertheless, it was estimated that the
biofuels transport will constitute only 0.4% of the total freight
tonnage for all commodities transported by the rail system through
2022.\49\ Given the small increase in freight shipments due to the
transport of biofuels to meet the RFS2 standards, we believe that the
distribution of biofuels

will not adversely impact the deliverability and transport costs of
materials, goods, and products other than renewable fuels. There were
no comments on the proposed rule to contradict this assessment.
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    \48\ ``Analysis of Fuel Ethanol Transportation Activity and
Potential Distribution Constraints'', Oak Ridge National Laboratory,
March 9, 2009. To simplify the ORNL analysis, biomass-based diesel
volumes were assumed to originate at the same points of production
and to be shipped to the same petroleum terminals as the ethanol
projected to be used to meet the RFS2 standards. This may tend to
overstate the potential impact on the transportation system from the
shipment of biomass-based diesel fuels since biomass-based diesel
production plants were projected to be more geographically dispersed
than ethanol production facilities. In any event, the simplifying
assumption was assessed to have little impact on the results from
the analysis given that biomass-based diesel represented only 8% of
the total projected biofuel volumes under the RFS2 final rule.
    \49\ See sections 1.6.4 and 1.6.5 of the RFS2 RIA.
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6. Wetlands, Ecosystems, and Wildlife Habitats
    As directed by CAA section 211(o)(2)(B)(ii), in setting the 2013
biodiesel volume requirements, EPA is to consider the impacts of
biodiesel production and use on wetlands, ecosystems and wildlife
habitat. No specific public comments on these impacts were received, so
the following updates the largely qualitative analyses provided in the
proposal.
    The most complete and up-to-date assessment of these impacts is
contained in the analysis prepared by EPA in response to the
requirements set out in CAA section 204. This report to Congress
considers a range of impacts but the focus of the discussion here is on
wetlands, ecosystems and wildlife habitats as directed by the CAA
amendments. This report does not attempt to quantify the impacts of
biofuel production and use as these impacts are dependent on local or
regional conditions. Nevertheless the analyses contained in the report