SUPPORTING STATEMENT FOR THE RENEWABLE FUEL S STANDARD (RFS2) PROGRAM (Draft) January 8 , 2013

A. JUSTIFICATION 1. Id entification of the Information Collection
a. Title: Renewable Fuels Standard (RFS2) Program, EPA I CR No. 2333. 03 , OMB Control Number 2 060
- 0640
. b. Short characterization: The Energy

Policy Act (EPAct) of 2005 amended the Clean Air Act, section 211(o), and required the existing RFS program. The existing RFS program is referred to in this supporting statement as "RFS1". The RFS1 prog ram started in 2006 and was covered b y EPA I CR No. 2242.02, OMB Control Number 2060
- 0600. Please refer to “Regulation of Fuels and Fuel Additives: Renewable Fuel Standard Program

– Notice of Proposed Rulemaking” and “Regulation of Fuels and Fuel Additives: Renewable Fuel Standard Program

– Final Rule” (both available in docket number EPA
- HQ
- OAR
- 2005
- 0161) for a detailed discussion of the RFS1 program ”
. The Energy

Independence and Securit y Act (EISA) of 2007 further amends the Clean Air Act, section 211(o ), and has required EPA to propose new regulations for renewable fuels. The new RFS program is referred to in this supporting statement as "RFS2." Under RFS2, the volume requirement and ty pes of renewable fuels are expanded; non
- road uses are included (RFS1 only affected motor vehicle fuel); there are additional ty

pes of waivers and special provisions for renewable fuel t ypes; and EPA will implement an EPA
- Moderating Transaction Sy stem (EMTS) for RINs. Additional parties will be required to register, kee p records, and report. Please refer to the Final Rule (available in docket number EPA
- HQ
- OAR
- 2005
- 0161) for a detailed discussion of the RFS2 program. For compliance purposes, under both RFS1 and RFS2, volumes of renewable fuel are identified through the use of renewable identification numbers (RINs) that are initially generated by

the producer of the renewable fuel. However, under RFS2, there are additional t ypes of RINs and the volume of RINs traded is expected to be greater. This supporting statement provides tables that break down reporting items by party (e.g. producer, importer, refiner, etc.) Parties who are interested in recordkeeping and reporting burden will want to review the tables containing our estimates carefully
. The RFS2 program includes provisions for EMTS for RINs, which was not a feature of RFS1
. Italso includes third
- part y disclosure provisions applicable to biofuel feedstock producer‘s who were not covered b y recordkeeping and reporting under RFS1.The Regulatory Impac t Analy sis (RIA), which was prepared for the Final Rule , has been placed in the public docket. This document was consulted to provide additional detailed information about the regulated universe (see Chapter 1 of the draft RIA). We also considered the ac tual number of reporting parties under RFS1 and similar reporting programs. 2. Need For, and Use of, the Collection
a. Authority

for the Collection Sections 114 and 208 of the Clean Air Act (CAA), 42 U.S.C. §§ 7414 and 7542, auth orize EPA to require recordkeeping and reporting regarding enforcement of the provisions of Title II of the CAA. b. Practical Utility

/Uses of the Data The reporting requirements of this regulation will allow EPA to monitor compliance with the RFS p rogram. 3. Non
- duplication, Consultation, and other Collection Criteria
a. Non
- duplication Efforts have been made to eliminate duplication in this information collection. b. Public Notice EPA is seeking comment on reporti ng requirements via the NPRM. We h ave also docketed a cop y of our draft ICR supporting statement
. c. Consultations We have drawn upon our experience with RFS1 and with similar fuels regulations to develop the estimates in this supporting statement. Interested parties may also be interested in reviewing "Chapter 1

– Industry Characterization" of the draft Regulatory Impact Anal ys is (RIA) available in the public docket. d. Effects of Less Frequent Data Collection We have designed the reportin g schedule to coincide with existing reporting deadlines applicable to many of the same parties under such programs as RFG and anti
dumping and diesel fuel. L ess frequent collection of data would make it impossible to carry out the provisions of the CAA and EISA.e. General Guidelines This rule does not exceed any of the OMB guidelines. f. Confidentiality We inform respondents that they may assert claims of business confidentiality (CBI) for information they submit. Under RFS2, actual RINs s hould not be treated as confidential business information under RFS2, as they are necessary

identifiers to accompan y renewable fuels. Any information claimed as confidential will be treated in accordance with 40 CFR Part 2 and established Agency procedure s. Information that is received without a claim of confidentialit y ma y be made available to the public without further notice to the submitter under 40 CFR § 2.203. g. Sensitive Information This information collection does not require submission of any sensitive information. 4. The Respondents and the Information Requested
a. Respondents/with NAI CS and SI C Codes The respondents to this information collection fall into the following general industry categories: petroleum refi neries (324110/2911), ethyl alcohol manufacturers (325193/2869), other basic organic chemical manufacturing (325110/2869), chemical and allied products merchant wholesalers (426990/5169), petroleum bulk stations and terminals (422710/5171), petroleum and p etroleum products merchant wholesalers (422720/5172), and other fuel dealers (454319/5989).

Using the terminology

associated with the RFS2 Final Rule, we have assumed the following classes of party , with the number of each in parenthesis:

 Producers of renewable fuels ( 500 , of which 3 00 are biodiesel producers )  Importers ( 75 , of which 20 are biodiesel importers )  Obligated Parties ( 150 )  Parties who own RINs ( 950 )  Foreign Refiners (10)  [Note: The above estimates are derived from the number of registere d parties as of December , 2012 , rounded up. The number of biodiesel producers is the number registered as of December , 2012 , rounded up. ]For biofuel feedstock producers, we have assumed the following classes of party , with the number of each in parenthesis:

 ( 1,000,000 ) out of 10 million plantation and private forest owners in United States  ( 30,966 ) foreign biofuel feedstock producers ( Estimated 3 % of Domestic plantation and private forest owners )  [Note: The above estimates are derived from the f ollowing sources : A presentation given b y Brent Butler, United States Forest Service in conj un ction with the U.S. Department of Agriculture , entitled “ Who Owns America’s Forest? ,” dated May , 2008 estimates a 10,000,000 population of plantation and private forest owners. We have a s sumed 1 million owners or 10% to participate in RFS2. The Bur eau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2012
- 13 Edition, Farmers, Ranchers, and other Agricultural Managers, on the Interne t at http://www.bls.gov/ooh/management/farmers
ranchers
- and
- other agricultural
- managers.htm Estimated 1,106,400 persons who claim farming as an occupation and for our purposes can be possible producers of feedstock for producers of renewable fuel. We estimated the number of foreign biofuel feedstock producers to be 30, 1 92 which is 3% of the total of domestic feedstock producers (i.e., 3% of 1, 006 , 400 .)] This supporting statement includes estimates reporting involving biofuel feedstock producers and plantation/private forest owners. These parties must provide certain information about their feedstock and lumber b yproducts re source s to biofuel producers and to EPA upon request . The RFS2 final rule contains provisions requiring recordkeeping/reporting and the mapping of certain plots of land (e.g. generating a Google map or similar representation), based upon an aggregate baseline approach. At this stage in the program, this information is required for foreign biofuel feedstock producers , domestic plantation/private forest owners and foreign plantation/private forest owners
. Although we expect that this could lead to future burden on the part of certain b iofuel producers who use croplands and wood by products , we do not expect that the domestic biofuels feedstock producers or those from Canada will be required to engage in recordkeeping and reporting activities under this provision at this time. Therefore, we are provid ing estimate s related to this provision for the above named biofuels feedstock producers
. W e expec t this to result in added burden during the three ye ar period covered by

this I CR. Estimates for future recordkeeping and reporting will be prov ided when the recordkeeping and reporting is expected to occur. See Table Vl: Biofuels Feedstock Producers.b. In formation Requested A) Reporting: The individual reports required from regulated parties are described in the preamble. The foll owing reports are required b y the Final Rule: Annual Compliance Reports (obligated parties only) , see table Vll l : Bio fuels Feedstock Producers , required to provide information on the land used to provide feedstock to fuel producers, see table Vl: Quarterly Reports of Biofuels Part y require s the submission of quarterl y reports regarding generation and assignment of RINs (producers and importers only), See Table V l l : and Q uarterl y R IN Reports summarizing transactions and activity , and “real time” RIN transa ctional activity reporting within EMTS , see table Vllll
. Reporting items include registration of parties engaged in activities covered by the RFS2 regulation and reporting related to transactions involving RINs and associated volumes of fuel. The exact r eports filed will depend upon the activity engaged in by

the party . A party must file reports appropriate for each activity it engages in

– for example, if a part y is both an exporter of renewable fuel and a producer of renewable fuel, then that party must file the reports applicable to both activities. In the Final Rule , we establish that “real time” reporting within EMTS will be construed as within five ( 5 ) business day s of a reportable event (e.g. generation and assignment of RINs, transfer of RINs). This means that some parties may elect to “batch” real time reports, similar to how businesses batch credit card transactions at the end of the day . We estimate that an average party would report dail y, resulting in 365 instances of reporting in EMTS pe r y ear . Quarterl y reports are due as follows:

Quarterl y Reporting Schedule for RFS2 Program **Quarter Covered by Quarterly Report Due Date for Quarterly Report**  January
- March May 31 April
- June August 31 July
- September November 30 October
- Dece mber February 28 Annual reports are due on February 28 for the preceding y ear. For some reports, e.g. involving biofuel feedstock producers the frequency of reporting is “on occasion” (i.e., when a transaction requiring disclosure occurs). A s discussed above, for EMTS purpose, we have assumed one instance of reporting per day for each day

of the y ear , or 365 instances of reporting).Tables I
- V estimate the recordkeeping and reporting burden by part y. We will provide respondents th e opportunity to engage in simplified, secure, electronic reporting via the Agency 's Central Data Exchange (CDX) and its exchange network protocol. An attachment explaining the exchange network protocol is provided with this supporting statement. Respond ents must keep copies of all reports filed for five (5) years.

B) Recordkeeping: Respondents must retain underl yi ng records related to reports they

file for five (5) ye ars. This period is consistent with other fuels programs and with customary business practices (CBP) for the industry . Respondents must transfer volumes of fuel with product transfer documentation or bills of lading, which is alread y done in the course of business. 5. The Information Collected, Agency Activities, Collection Methodolog y, and In formation Management
a. Agency

Activities

 All reports and registrations will be reviewed b y EPA for completeness and for potential violations.  Potential violations will be referred to enforcement personnel.  Registration numbers will be issued fo r new registrants.  Contacting reporting parties if there is a problem with their submission.
b. Collection and Methodology and Management We anticipate receiving data in a simplified and secure fashion via the Agency 's CDX . Information claimed as CB I will be stored in appropriatel y controlled areas.
c. Small Entity

Flexibility This collection will not adversel y affect small entities. The Final Rule describes flexibility provisions available to small entities. d. Collection Schedule Registrati ons are received on a rolling basis, as updates may be sent in at any

time and new parties may

enter the regulated industry at any time. Reporting is as
- needed, monthly , quarterly , and annual. 6. Estimating the Burden and Cost of Collection
a. Estimati ng the Respondent Universe We drew upon experience implementing similar regulations among the same entities to develop estimates of the burden associated with this collection.b. Estimating the Respondent Burden and Cost Three labor categories are involved: managerial (includes legal and professional review), technical, and clerical. The estimates used the Bureau of Labor Statistics figures from "National Industry
- Specific Occupational Employ ment & Wa ge Estimate “Petroleum and Coal Products Manufa cturing” (May 201 1), with a 3% annual inflation factor applied to bring the values to the present. Using this method, the following wages and benefits appl y b y category :
Wa ges and Benefits Managerial $67.44 per hour Te chnical $65.56 per hour Clerical $22.17 per hour Doubling for compan y overhead beyond wages and benefits, and for convenience, rounding up to the dollar, gives the following rates for this I CR:

To tal Employ er Cost Managerial $135.00 per hour Te chnical $131.00 per hour C lerical $ 44.00 per hour It is assumed that for each hour of activit y the mix will be about 0.1 hour managerial, 0.7 hour technical, and 0.2 hour clerical. This gives an average labor cost of $103 per hour , which will be used in this I CR. For purchase d services related to attest engagements and some items of registration, we have doubled this hourly cost to $206 in order to more accuratel y reflect the cost of a certified public accountant (CP A) or licensed professional engineer's (PE) services.
c. E stimating the Agency Burden and Cost EP A must generate company and facility

registration number(s) for new registrants and notify

them of these numbers, which must appear on reports. Report formats and instructions/guidance must be prepared by Agency p ersonnel. Reports will be processed b y contractors and must be reviewed by Agency personnel. Reporting parties must be contacted if there is a problem with their submission. We have developed forms for RFS2 reporting to include four t ypes, rather than on e t ype, of RIN unlike the RFS1 templates. W

e have provided RFS2 reporting templates as an attachment to this document.This supporting statement considers all Agency costs associated with accepting

new r egistrants and new r

eports associated with RFS2, as expr essed in EP

A ICR Number 2333.02. Using the RFS1, and the RFG and anti
- dumping ICR, and other recent fuels
related ICRs as a guide in developing these initial estimates for RFS, we anticipate that RFS2 may

require the equivalent labor of one full time GS
- 13 technical employ ees for a total of $1 15,000, and labor costs of $54,875 in the clerical category and $19,438 in the management category

. 1 Since we are using the CDX, some costs incurred by the Agency will be tied to the number of registrants who sen d us reports. Specifically , there is an annual "subscription cost" associated with the use of CDX that is passed on to the EP A program office and we estimate that registrants due to RFS2 will cost our of fice approximately

$200,000 per y ear in 2013, 2014 and 2015. We anticipate $266,666 in annual contract costs related to registration and reporting activities. We anticipate IT development and testing costs at $ 600,000 divided by three y ears to yield an annual cost of $200,000. Adding the following value s results in an annual estimated Agency burden as follows: One GS
- 13 technical employee (full time) = $ 1 15,000 One GS
- 7 clerical worker (full
- time) = 54,875 One GS
- 15 manager (1/8 time) = 19,438 Annual CDX subscription fee = 200,000 Annual contract costs = 266,666 Te sting and development= 200,000 **TOT AL**  **= $855,979**  As with all items in this supporting statement, we strongl y encourage comment on the estimated Agency

burden and on the Agenc y activities associated with this proposed information collection. d. Estimating the Respondent Universe We were able to estimate the number of regulated entities drawing upon experience regulating the same or similar entities. We were able to estimate the number of regulated entities drawing upon experience regulating the same or similar entities.

1 These estimates are derived from "OPM Salary Table 2012
- DCB," effective January 2012. This table may be found at http://www.opm.gov/oca/06tables/indexGS.asp. The extreme of step 10 was assumed for all categories. We have assumed a full
- time GS
- 7 clerical worker, one full
- tim e GS
- 13 technical worker, and a GS
- 15 m anager working one
- eighth of his/her time managing this project (0.125). All values were multiplied by 1.6 (w

hich is a common factor utilized in ICRs to account for overhe ad costs). We rounded the resulting dollar value to the nearest thousand. This cost is per year.e. Bottom L ine Burden Hours and Costs From the tables, we estimate the following totals: **TOTAL NO. OF RESPONDENTS: 2,092,731**  **TOTAL N O. OF RESPONSES:**  **2,702,531 TOTAL BURDEN HOURS:**  **6,379,263 TOTAL COST TO RESPO**  **N DENTS:**  **$ 60,459,623** 

f. Reason for Change in Burden At the onset of the RFS2 program, EMTS for RINs were not a feature of RFS1. For the new EMTS sy stem, all parties who owned RI Ns were required to re
- submit their application, disclose feedstock sources, prepare quarterl y reports on RIN activity and submit annual compliance reports (obligated party only). Re
- submittal provisions are no longer required which will cause a decrease in total responses for this ICR. EMTS users will not be burdened to submit more reports in this information collection, unlike the previous. The total responses for industry dropped from 4,525,625 to 2,092,731 a difference of 2,432894, now that the final rule is no longer requiring re
- submissions or quarterl y reports for certain part y members. To date, biofuels producers and importers are required to submit quarterl y reports along with their third part y disclosure on feedstock producer s to EPA. All users of the EMTS sy stem are required to submit quarterl y R IN reports. The number of respondents or users of the EMTS sy stem has more than doubled from 1,059,326 to 2,092,731 an increase of 1,639,992, caused b y the additional response burden for mapping foreign and domestic plantation/forest land owners and foreign biofuels feedstock producers which was not reflected in the previous ICR reporting period. With an increase of respondents, total burden hours have increased by more than 4 m illion costing the industry $60,459,623 a decreased of $47,882,366. The reduction in the total cost for this renewal is due to the fact that the EMTS sy stem’s automation structure helps users to prepare reports instantly , lessening the amount of time and c ost needed to respond, even with more than a million added users. This notable factor increased the industry

burden hours but, will lower the total cost of this information collection request if renewed.
g. Burden Statement The annual public report ing and recordkeeping burden for this collection of information is estimated to be 2. 4 hours per response
. Burden means the total time, effort, or financial resources expended b y persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency . This includes the time neededto review instructions; develop, acquire, install, and utilize technology and sy stems for the purposes of collecting, validating, and verifying information, processing and maintaining information, an d disclosing and providing information; adjust the existing way s to comply

with any previously

applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the coll ection of information; and transmit or otherwise disclose the information. An agency

may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it display s a currently valid OMB control number. The OMB control numbers for EPA's regulations are listed in 40 CFR part 9 and 48 CFR chapter 15. To comment on the Agency 's need for this information, the accuracy of the provided burden estimates, and an y suggested methods for minimizing respondent burden, inc luding the use of automated collection techniques, EPA has established a public docket for this ICR under Docket ID number EPA
- HQ
- OAR
- 2005
- 0161, which is available for online viewing at www.regulations.gov , or in p erson viewing at the Air Docket in the EPA Docket Center in Washington, DC (EPA/DC). The docket is located in the EPA West Building, 1301 Constitution Avenue, NW, Room 3334, and is open from 8:30 a.m. to 4:30 p.m., Eastern Standard Time, Monday through Friday , excluding legal holiday s. The telephone number for the Reading Room is (202) 566
- 1744, and the telephone number for the Air Docket is (202) 566
- 1742. You may use www.regulations.gov to submit or view public comments, access the index listing of the contents of the public docket, and to access those documents in the public docket that are available electronically . When in the sy stem, select “search,” then key in the Docket ID Number EPA
- HQ
- OAR
- 2005
- 0161. Also, you can send comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW, Washington, D.C. 20503, Attention: Desk Officer for EPA. Please include the EPA Docket ID Number EPA
- HQ
- OAR
- 2005
- 0161 and OMB Control Number 2060
- NEW in any corr espondence.

.