Vol. 77 Thursday, 

No. 188 September 27, 2012 

Part II 

Environmental Protection Agency 

40 CFR Part 80 

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

Renewable Fuel Volume; Final Rule 


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59458 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

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. 

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 

(202) 566–1744, and the telephone 

number for the Air Docket is (202) 566– 

1742. 

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: 734–214–4131; Fax number: 

734–214–4816; Email address: 

macallister.julia@epa.gov, or the public 

information line for the Office of 

Transportation and Air Quality; 

telephone number (734) 214–4333; 

Email address OTAQ@epa.gov. 

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: 

Category NAICS1 codes SIC 2 codes Examples of potentially regulated entities 

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. 

1 North American Industry Classification System (NAICS). 

2Standard 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 


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1 75 FR 14670. 

2 76 FR 38844. 

3Cost 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. 

4For example, EPA may waive a given standard 

in whole or in part following the provisions at 

section 211(o)(7). 

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. 

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

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 biomassbased 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. 

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 


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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: 

• 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 biomassbased 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 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59461 

5 77 FR 1320. 

6U.S. Energy Information Administration (EIA). 

‘‘AEO2011, Table 11’’ April 2011. http:// 

www.eia.doe.gov/forecasts/aeo/index.cfm. 

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. 

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 


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7Table ‘‘Ethanol Trade’’, Commodity Outlook/ 

Biofuels, FAPRI–ISU 2011 World Agricultural 

Outlook. http://www.fapri.iastate.edu/outlook/ 

2011/. 

8This NPRM will propose the applicable 2013 

percentage standards for cellulosic biofuel, 

biomass-based diesel, advanced biofuel, and total 

renewable fuel. 

9Communication between D. Korotney of EPA 

and W. Brown of EIA, 8/25/2011. 

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. 

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. 

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. 

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 biomassbased 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 ethanolequivalent 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 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59463 

10Table 2, ‘‘Biodiesel Production Prospects for 

the Next Decade,’’ IHS Global Insight, March 11, 

2011. 11EPA 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. 

12Current 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. 

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. 

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. 

TABLE III.B–1—FEEDSTOCK SOURCES (IN MILL GALLONS) THAT MAY CONTRIBUTE TO 2013 VOLUME OF 1.28 BILLION

GAL

Source RFS2 

final rule 

IHS global 

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 biomassbased 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

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. 

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 


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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. 

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. 

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 biomassbased 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. 

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 nonbiodiesel 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] 

Year starts October 1 Total supplies 

Domestic use 

for non-biodiesel purposes 

Supplies available for biofuel 

feedstock use 

or export 

Historical 

exports 

Historical 

biofuel 

feedstock use 

2006/07 ................................................................................ 23,536 15,813 7,723 1,877 2,762 


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16This 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. 

17 75 FR 59622. 

18EPA 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. 

TABLE III.B.3–1—HISTORICAL SUPPLIES AND USE OF SOYBEAN OIL IN THE U.S.—Continued 

[In million lbs] 

Year starts October 1 Total supplies 

Domestic use 

for non-biodiesel purposes 

Supplies available for biofuel 

feedstock use 

or export 

Historical 

exports 

Historical 

biofuel 

feedstock use 

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 ........................ ........................

aProjected. 

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 NonBiodiesel 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

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. 

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 


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59466 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

19Plant list from National Biodiesel Board, 2/7/ 

2012. 

20Based on construction times for new plants 

listed in Biodiesel Magazine from July 2006 through 

May 2009. 

21 ‘‘Automakers’ and Engine Manufacturers’ 

Positions of Support for Biodiesel Blends,’’ 

Biodiesel.org. 

22Assumes 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. 

23National Biodiesel Board, Retailing Fueling 

Sites, as of February 17, 2011. http://biodiesel.org/ 

buyingbiodiesel/retailfuelingsites/default.shtm. 

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. 

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 so20, 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. 

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. 

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. 

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 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59467 

24As 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. 

25NPRA 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 petroleumbased diesel fuel into a tank truck followed by 

biodiesel so that the final blend meets the desired 

blend ratio. 

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. 

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 


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59468 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

27NBB did not provide an analysis regarding the 

addition of new biodiesel distribution facilities. 

28http://www.eia.gov/biofuels/biodiesel/ 

production/table1.pdf. 

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. 

blending. We assumed that terminals 

would install in-line biodiesel blending 

equipment in our infrastructure 

analysis. 

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. 

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. 

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. 

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 biomassbased diesel, depending on the specific 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59469 

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 biomassbased 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 biomassbased 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 Nonadvanced 

biofuel Total 

renewable 

fuel 

Cellulosic biofuel Biomass-based diesel Other advanced biofuel 

Corn 

ethanol 

Cellulosic 

ethanol 

Cellulosic 

diesel 

FAMEa

biodiesel NCRD b Other biodiesel c

Imported 

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 singleyear 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 biomassbased 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 


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59470 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

30http://www.eia.gov/dnav/pet/hist/LeafHandler.

ashx?n=PET&s=WTTIMUS2&f=W. 

31http://www.eia.gov/dnav/pet/pet_move_

impcus_a2_nus_ep00_im0_mbblpd_a.htm. 

32http://www.eia.gov/dnav/pet/pet_pri_rac2_

dcu_nus_m.htm. 

33RFS2 Final Rulemaking. 

34This figure is calculated as 0.50 + 0.50*0.9 = 

0.50 + 0.45 = 0.95. 

35Leiby, 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). 

36The 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). 

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-based diesel, EPA 

would actually promote increased 

volumes of renewable fuels (rather than 

ethanol-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. 

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 petroleumbased products from this program to 

projected total U.S. imports for the year 

2013. 

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. petroleum-based import 

reductions from the rule 

(million barrels/yr) 

U.S. total petroleum-based 

imports without 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. 

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 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59471 

37U.S. Energy Information Administration (EIA). 

‘‘Short-Term Energy Outlook’’, Table 4a, June 2012. 

http://205.254.135.7/forecasts/steo/tables/pdf/

4atab.pdf . 

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. 

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

Monopsony Macroeconomic disruption/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$) 

U.S. oil imports reduced 

(million barrels/yr) 

Benefits 

($ 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 longterm 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 


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59472 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

38CARD 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. 

39 ‘‘Biodiesel Production Prospects for the Next 

Decade,’’ IHS Global Insight, March 11, 2011. 

40 75 FR 14670, March 26, 2010. 41U.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 3.1.1.2.4. 

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. 

43U.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. 

44While 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. 

based on historical data analysis, 

current academic research, and a 

reliance on accepted economic, 

agronomic, and biological relationships 

in agricultural production and 

markets.38

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. 

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

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. 

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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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59473 

45U.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. 

46Emissions 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. 

47The RFS2 air quality analysis reflects EPA’s 

most recent air quality analysis applicable to 

changes in renewable fuel types and volumes. 

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. 

49See sections 1.6.4 and 1.6.5 of the RFS2 RIA. 

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 (D 1.44 billion gal biodiesel) Percent RFS2 

total U.S. 

inventory Upstream a c

(tons) 

Downstream b

(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. cWhile 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

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. 

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 


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59474 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

50U.S. EPA (Environmental Protection Agency). 

February 2012. ‘‘Biofuels and the Environment: 

First Triennial Report to Congress.’’ Office of 

Research and Development, Washington, DC. EPA/ 

600/R–10/183F. 

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. 

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 provide 

qualitative assessments and reasonable 

expectations of trends which can be 

used to consider the environmental 

impacts of increases in biodiesel 

production and use. These trends are 

only summarized here while the final 

report provides extensive detail.50

The assessment focuses on the use of 

oil from soybeans as the feedstock for 

biodiesel production. Other oil seed 

feedstock sources represent a very small 

portion of biofuel production in 2013 so 

will be expected to have much less of 

an impact than soy oil. Corn oil 

extracted during the ethanol production 

process is increasing, adding a small 

increment of supply for biofuel 

production by 2013 that will offset 

demands for soy and other oil seed 

crops, thus reducing potential 

agricultural impact of biodiesel 

production. Corn as a feedstock for 

biofuel production is driven primarily 

by the demand for corn ethanol, not the 

demand for the corn ethanol co-product 

of extracted, non-food grade corn oil. 

Therefore the impact of the supply of 

extracted corn oil is not considered 

here. Finally, waste fats, oils and greases 

are expected to have negligible 

environmental impact as a feedstock 

since they do not impact agricultural 

land use and would otherwise be used 

for some lower value purpose or simply 

discarded. 

Wetlands can be adversely affected by 

agricultural production through runoff 

that can result in nutrient loading 

(particularly from fertilizers) or from 

sedimentation (from erosion). Soy 

production tends to use less fertilizer 

than corn production (the most likely 

alternative crop) and can reduce the 

amount of fertilizer required for corn 

when planted in rotation with corn. 

However, compared to other crops, 

erosion can be higher from fields 

planted in row crops such as corn and 

soy beans. While the impacts of nutrient 

loading and erosion tend to be site 

specific, good farming practices 

including the optimum fertilizer use 

and the set aside of sensitive lands via 

the Conservation Reserve Program (CRP) 

can significantly help control these 

adverse affects. Wetlands can also be 

adversely affected through diversion of 

surface and ground water for 

agricultural irrigation. Soybean 

production less frequently relies on 

irrigation than corn and some other 

crops. More discussion on water usage 

is included below in the section on 

water use and water quality impacts. 

Ecosystems and wildlife habitat can 

be adversely affected if CRP lands are 

converted to crop production, if row 

crops such as soybeans replace grassy 

crops and in general if new lands with 

diverse vegetation are converted to crop 

production. As explained in the RFS2 

final rule, we do not expect the RFS 

program production to result in an 

increase in total acres of agricultural 

land under production in the U.S. 

compared to a reference case without 

the impact of the RFS2 volumes. The 

relatively small increase of 0.28 billion 

gall should not appreciably affect the 

amount of land devoted to oil seed 

production. Additionally, the USDA 

commitment to support the CRP 

program should minimize the likelihood 

of any significant change in the amount 

of CRP land. Therefore, while some very 

local changes may result due to 

individual farmer’s planting decisions, 

since no new crop land are expected in 

the U.S. due to this increase in the 

biomass-based diesel standard and 

sensitive lands will be protected via 

programs such as CRP, no measureable 

impact in aggregate ecosystems or 

wildlife habitat due to cropland 

expansion is expected. 

Increased water withdrawals for soy 

biodiesel production can lead to more 

frequent low-flow conditions that 

reduce the availability for aquatic 

habitat. Additionally, waste water from 

biodiesel production can adversely 

affect surface water quality if not 

properly treated. 

7. Water Quality and Quantity 

The water quality and quantity 

impacts of biodiesel are primarily 

related to the type of feedstock and the 

production practices used both to 

produce the feedstock and to convert 

the feedstock into biodiesel. Soybeans 

are the principal feedstock used for 

biodiesel production and are predicted 

to account for 600 million gallons of the 

1.28 billion gallons evaluated for 2013. 

Non-food grade corn oil extracted 

during ethanol production, animal fats 

and recycled fats account for most of the 

remaining biodiesel feedstock. Since 

these fats and greases are the byproduct 

of another use and are not produced 

specifically for biodiesel manufacture, 

their production and primary use is not 

related to the level of biodiesel so their 

indirect impacts are not considered 

here. While non-food grade corn oil is 

extracted for its use as a feedstock for 

biodiesel production, it is a by-product 

of corn ethanol production. The corn 

used for biofuel production is primarily 

grown for the purpose of producing 

ethanol, not as a source of extracted 

non-food grade oil so the water impacts 

of corn production are primarily a 

concern for ethanol produced from the 

corn starch, not the by-product of 

extracted corn oil. Thus, this analysis 

will focus on soybeans as a primary 

source of vegetable oil used in biodiesel 

production. No specific public 

comments on these impacts were 

received so the following discussion 

updates the analyses provided in the 

proposal. 

From a water quality perspective, the 

primary pollutants of concern from 

soybean production are fertilizers 

(nitrogen and phosphorus) and 

sediment. Additional pollutants such as 

from pesticides have the potential to 

impact water quality to a lesser degree. 

There are three major pathways for 

these potential pollutants to reach water 

from agricultural lands: runoff from the 

land’s surface, subsurface tile drains, or 

leaching to ground water. Climate, 

hydrological, and management factors 

influence the potential for these 

contaminants to reach water from 

agricultural lands. 

a. Impacts on Water Quality and Water 

Quantity Associated With Soybean 

Production 

After corn, soybeans are the second 

largest agricultural crop in terms of 

acreage in the U.S. In 2010, American 

farmers planted 77.7 million acres of 


erowe on DSK2VPTVN1PROD with 
Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59475 

51U.S. EPA (United States Environmental 

Protection Agency). Renewable fuel standard 

program (RFS2) regulatory impact analysis. EPA– 

420–R–10–006. Available at: http://www.epa.gov/ 

otaq/renewablefuels/420r10006.pdf. 

52 Dinnes, DL; Karlen, DL; Jaynes, DB; Kaspar, TC; 

Hatfield, JL; Colvin, TS; Cambardella, CA. 2002. 

Nitrogen management strategies to reduce nitrate 

leaching in tile-drained midwestern soils. 

Agronomy Journal 94(1): 153–171. 

53NASS (United States Department of 

Agriculture, National Agricultural Statistics 

Service). 2007. Agricultural chemical usage 2006 

field crops summary. Ag Ch 1 (07)a. Available at: 

http://usda.mannlib.cornell.edu/usda/nass/ 

AgriChemUsFC//2000s/2007/AgriChemUsFC-05-16- 

2007_revision.pdf. 

54Simpson, TW; Sharpley, AN; Howarth, RW; 

Paerl, HW; Mankin, KR. 2008. The new gold rush: 

Fueling ethanol production while protecting water 

quality. Journal of Environmental Quality 37(2): 

318–324. 

55 Dinnes, DL; Karlen, DL; Jaynes, DB; Kaspar, TC; 

Hatfield, JL; Colvin, TS; Cambardella, CA. 220 2002. 

Nitrogen management strategies to reduce nitrate 

leaching in tile-drained 221 midwestern soils. 

Agronomy Journal 94(1): 153–171. 56U.S. Department of Agriculture, National 

Resources Conservation Service. 2010. Assessment 

of the effects of conservation practices on cultivated 

cropland in the Upper Mississippi River Basin. 

Available at: http://www.nrcs.usda.gov/technical/ 

NRI/ceap/umrb/index.html. 57U.S. Department of Agriculture. 2010. 2007 

Census of agriculture, Farm and ranch irrigation 

survey (2008). http://www.agcensus.usda.gov/ 

Publications/2007/Online_Highlights/ 

Farm_and_Ranch_Irrigation_Survey/fris08.pdf. 

58U.S. Department of Energy. 2006. Energy 

demands on water resources: Report to Congress on 

the interdependency of energy and water. Available 

at: http://www.sandia.gov/energy-water/docs/121- 

RptToCongress-EWwEIAcomments-FINAL.pdf. 

59Secchi, S; Gassman, PW; Williams, JR; 

Babcock, BA. 2009. Corn-based ethanol production 

and environmental quality: A case of Iowa and the 

conservation reserve program. Environmental 

Management 44(4): 732–744. 

60ERS (United States Department of Agriculture, 

Economic Research Service). 2008. 2008 farm bill 

side-by-side. Available at: http://www.ers.usda.gov/ 

FarmBill/2008/Titles/ 

TitleIIConservation.htm#conservation. 

soybeans and harvested 3.4 billion 

bushels. As with the production of any 

agricultural crop, the impact on water 

quality depends on a variety of factors 

including production practices, use of 

conservation practices and crop 

rotations by farmers, and acreage and 

intensity of tile drained lands. 

Additional factors outside agricultural 

producers’ control include soil 

characteristics, climate, and proximity 

to water bodies. 

Soybeans are typically grown in the 

same locations as corn since farmers 

commonly rotate between the two crops. 

Nutrients are applied to fewer soybean 

acres than corn and at much lower rates 

because soybean is a legume.51 Legumes 

have associations in their roots with 

bacteria that can acquire atmospheric 

nitrogen and convert it into bioavailable forms, reducing the need for 

external addition of nitrogen fertilizer. 

However, losses of nitrogen and 

phosphorus from soybeans can occur at 

quantities that can degrade water 

quality.52 In 2006, USDA’s NASS 

estimated that nitrogen was applied to 

18 percent of the 2006 soybean planted 

acres in the Program States at an average 

rate of 16 pounds per acre per year. 

Phosphate was applied to 23 percent of 

the planted acres, at an average rate of 

46 pounds per acre (NASS, 2007).53 The 

quantity of nitrogen fertilizer applied to 

soybean fields ranged from 0 to 20 

pounds per acre, while the quantity of 

phosphate ranged from 0 to 80 pounds 

per acre. As with corn, the conversion 

of idled acreage to soybeans is estimated 

to result in losses of nitrogen and 

phosphorus from the soil through 

cultivation.54

Agricultural conservation systems can 

reduce the impact of soybean 

production on the environment. The 

systems components include (1) 

Controlled application of nutrients and 

pesticides through proper rate, timing, 

and method of application, (2) 

controlling erosion in the field (i.e., 

reduced tillage, terraces, or grassed 

waterways), and (3) trapping losses of 

soil and fertilizer runoff at the edge of 

fields or in fields through practices such 

as cover crops, riparian buffers, 

controlled drainage for tile drains, and 

constructed/restored wetlands.55

The effectiveness of conservation 

practices, however, depends upon their 

adoption. The USDA‘s Conservation 

Effects Assessment Project (CEAP) 

quantified the effects of conservation 

practices used on cultivated cropland in 

the Upper Mississippi River Basin. It 

found that, while erosion control 

practices are commonly used, there is 

considerably less adoption of proper 

nutrient management to mitigate 

nitrogen loss to water bodies.56

However, as noted above, the relatively 

low amount of fertilizer used for soy 

bean production tends to lessen the 

potential for nitrogen loss to water 

bodies. Additionally, soybean 

production can reduce the amount of 

biomass left on the field compared to a 

corn case where much of the stover is 

left to protect the soil and enhance 

biomass content. In such a case, there 

could be more soil erosion with soybean 

production compared to corn 

production and potentially greater 

nutrient runoff. Proper soil management 

can reduce this erosion concern. 

Water for soybean cultivation 

predominately comes from rainfall, 

although about 11 percent of soybean 

acres in the U.S. are irrigated.57 Water 

use for irrigated soybean production in 

the U.S. varies from 0.2 acre-feet per 

acre in Pennsylvania to about 1.4 acrefeet per acre in Colorado, with a 

national average of 0.8 acre-feet of 

water.58 Water used for irrigation is at 

least temporarily not available for other 

uses and if pumped from deep aquifers, 

may not return to those aquifers for 

centuries. 

There is some concern that the 

demand for corn and soybeans as 

biofuel feedstocks may lead to high 

prices of these commodities, inducing 

farmers with land currently enrolled in 

USDA’s CRP to return to intensive 

agricultural production (e.g., Secchi et 

al., 2009).59 The CRP provides farmers 

with financial incentives to set aside a 

certain portion of their cropland in 

order to conserve or improve wildlife 

habitat, reduce erosion, protect water 

quality, and support other 

environmental goals. Biomass produced 

from CRP lands is considered 

‘‘renewable biomass’’ as defined under 

the RFS regulations and is therefore 

eligible for use in the production of 

renewable fuel under the RFS program. 

The Food, Conservation, and Energy Act 

of 2008 (known as the Farm Bill) capped 

CRP acreage at 32 million acres, 

reducing enrollment by 7.2 million 

acres from the 2002 Farm Bill with the 

potential for making more acreage 

available for the production of row 

crops. However, even if the aggregate 

total of CRP protected lands does not 

change significantly, individual farmers 

have the opportunity to move specific 

land in and out of CRP such that the 

specific lands in the program do not 

necessarily remain fixed. Historically, 

land entering and exiting the CRP 

program has been more vulnerable to 

erosion than other cultivated land, but 

also less productive.60 So while the 

conversion of a specific piece of land 

from CRP to intensive feedstock 

production is possible, such a land use 

conversion is less likely than land 

already in crop production given 

practical economic and agronomic 

considerations. 

b. Impacts on Water Quality and Water 

Quantity Associated With Biodiesel 

Production 

Biological oxygen demand (BOD), 

total suspended solids, and glycerin 

pose the major water quality concerns in 

wastewater discharged from biodiesel 

facilities. Actual impacts depend on a 

range of factors, including the type of 

feedstock processed, bio-refinery 

technology, effluent controls, and water 

re-use/recycling practices, as well as the 

facility location and source and 

receiving water. Discharge water quality 

requirements of local and regional 

governments can help assure best 


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59476 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

61U.S. EPA. 2010b. Renewable fuel standard 

program (RFS2) regulatory impact analysis. EPA– 

420–R–10–006. Available at: http://www.epa.gov/ 

otaq/renewablefuels/420r10006.pdf. 

62U.S. EPA. 2010b. Renewable fuel standard 

program (RFS2) regulatory impact analysis. EPA– 

420–R–10–006. Available at: http://www.epa.gov/ 

otaq/renewablefuels/420r10006.pdf. 

63 Kimble, J. n.d. Biofuels and emerging issues for 

emergency responders. U.S. EPA. Available at: 

http://www.epa.gov/oem/docs/oil/fss/fss09/ 

kimblebiofuels.pdf. 

64 Kahn, N; Warith, MA; Luk, G. 2007. A 

comparison of acute toxicity of biodiesel, biodiesel 

blends, and diesel on aquatic organisms. Journal of 

the Air and Waste Management Association 57(3): 

286–296. 

65Renewable Fuels Standard Program (RFS2), 

Regulatory Impact Analysis (RIA). EPA–420–R–10– 

006. Available at: http://www.epa.gov/otaq/ 

renewablefuels/420r10006.pdf. 

66Schmalensee, Richard, and Robert N. Stavins. 

‘‘A Guide to Economic and Policy Analysis of EPA’s 

Transport Rule.’’ White paper commissioned by 

Excelon Corporation, March 2011 (Docket EPA– 

HQ–OAR–2010–0799). 

control practices and reduce water 

quality concerns. 

Despite the existing commercial 

market for glycerin and the likely 

expanded uses for glycerin as 

mentioned in the RFS2 final rule, the 

rapid development of the biodiesel 

industry has caused a glut of glycerin 

production, resulting in many facilities 

disposing of glycerin. Glycerin disposal 

may be regulated under several EPA 

programs, depending on the practice. 

However, there have been instances of 

glycerin dumping, including an incident 

in Missouri that resulted in a large fish 

kill.61 Some biodiesel facilities 

discharge their wastewater to municipal 

wastewater treatment systems for 

treatment and discharge. There have 

been several cases of municipal 

wastewater treatment plant upsets due 

to high BOD loadings from releases of 

glycerin.62 BOD can lead to methane 

emissions during the water treatment 

process. To mitigate wastewater issues, 

some production systems reclaim 

glycerin from the wastewater. Closedloop systems in which water and 

solvents can be recycled and reused can 

reduce the quantity of water that must 

be pretreated before discharge. Others 

employ anaerobic digesters to mitigate 

the release of methane to the 

atmosphere. 

Biodiesel can also impact water 

bodies as a result of spills. However, 

biodiesel degrades approximately four 

times faster than petroleum diesel 

including in aquatic environments.63

Results of aquatic toxicity testing of 

biodiesel indicate that it is less toxic 

than regular diesel.64 Biodiesel does 

have a high oxygen demand in aquatic 

environments and can cause fish kills as 

a result of oxygen depletion. Water 

quality impacts associated with spills at 

biodiesel facilities generally result from 

discharge of glycerin, rather than 

biodiesel itself. 

Biodiesel facilities use much less 

water than ethanol facilities to produce 

biofuel. The primary consumptive water 

use at biodiesel plants is associated with 

washing and evaporative processes. 

Water use is variable but is usually less 

than one gallon of water for each gallon 

of biodiesel produced; some facilities 

recycle wash water, which reduces 

overall water consumption.65

8. Job Creation and Rural Economic 

Development 

The Energy Independence and 

Security Act (EISA) requires analyses of, 

among other factors, the impact of 

renewable fuel use on ‘‘* * * job 

creation [and] rural economic 

development * * *’’ to help inform 

each annual determination of applicable 

volumes. In the RFS2 final rule, we 

anticipated employment to increase and 

income to expand in rural areas and 

farming communities as a result of the 

increased use of renewable fuel. Income 

expansion in rural areas from renewable 

fuel production will contribute to rural 

economic development. As mentioned 

above, industry activities are currently 

progressing, ramping up biodiesel 

production from the approximately 0.38 

billion gallons estimated to have been 

used in the U.S. in 2010 to over 1.0 

billion gallons that was produced in 

2011. This increase in biodiesel 

production was in large part due to 

bringing on line existing capacity idled 

due to lack of demand, a trend that we 

expect will continue into the near 

future. 

Employment impacts of federal rules 

are of particular concern in the current 

economic climate of sizeable 

unemployment. The recently issued 

Executive Order 13563, ‘‘Improving 

Regulation and Regulatory Review’’ 

(January 18, 2011), states, ‘‘Our 

regulatory system must protect public 

health, welfare, safety, and our 

environment while promoting economic 

growth, innovation, competitiveness, 

and job creation’’. Executive Order 

13563 also states that ‘‘[i]n applying 

these principles, each agency is directed 

to use the best available techniques to 

quantify anticipated present and future 

benefits and costs as accurately as 

possible’’ and that ‘‘* * * each agency 

may consider (and discuss qualitatively) 

values that are difficult or impossible to 

quantify * * *’’ Consistent with the 

Executive Order, and consistent with 

recent efforts to characterize the 

employment effects of economically 

significant rules, the Agency has 

provided this analysis to inform the 

discussion of labor demand and 

employment impacts in rural areas and 

farming communities. Estimates of this 

particular rule’s effects on labor markets 

beyond the biodiesel production sector 

are ‘‘difficult or impossible to quantify’’ 

to an acceptable degree of accuracy 

using currently available methodologies, 

Therefore, the Agency has not 

quantified the rule’s effects on labor in 

other sectors, including conventional 

diesel production and sales, nor has the 

agency attempted to estimate the effects 

induced by changes in workers’ incomes 

or changes in food and fuel prices. 

When the economy is at full 

employment, an environmental 

regulation is unlikely to have much 

impact on net overall U.S. employment; 

instead, labor would primarily be 

shifted from one sector to another. 

These shifts in employment impose an 

opportunity cost on society, 

approximated by the wages of the 

employees, as regulation diverts 

workers from other activities in the 

economy. In this situation, any effects 

on net employment are likely to be 

transitory as workers change jobs (e.g., 

some workers may need to be retrained 

or require time to search for new jobs, 

while shortages in some sectors or 

regions could bid up wages to attract 

workers). 

On the other hand, if a regulation 

comes into effect during a period of high 

unemployment, a change in labor 

demand due to regulation may affect net 

overall U.S. employment because the 

labor market is not in equilibrium. 

Schmalansee and Stavins point out that 

net positive employment effects are 

possible in the near term when the 

economy is at less than full employment 

due to the potential hiring of idle labor 

resources by the regulated sector to meet 

new requirements (e.g., to install new 

equipment) and new economic activity 

in sectors related to the regulated 

sector.66 In the longer run, the net effect 

on employment is more difficult to 

predict and will depend on the way in 

which the related industries respond to 

the regulatory requirements. For this 

reason, Schmalensee and Stavins urge 

caution in reporting and interpreting 

partial employment effects since it can 

‘‘paint an inaccurate picture of net 

employment impacts if not placed in the 

broader economic context.’’ 

This rule is expected to primarily 

affect employment in the United States 

through the biodiesel plants and 

distributors, and through several related 

sectors, specifically, industries that 

supply inputs in the production of 

biodiesel. To provide a partial picture of 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59477 

67Presentation from National Biodiesel Board, 

‘‘Biodiesel Forecasts, Infrastructure, and Economic 

Impacts’’, February 14, 2012. 

68 Ibid. 

69 Ibid. 

the employment consequences of this 

rule, EPA investigated the expected 

consequences for rural areas and 

farming communities. Assuming the 

current average of 30 to 40 people to 

operate a biodiesel plant of 30 million 

gallons (a typical capacity for a 

standalone transesterification plant), an 

expansion of 280 million gallons is the 

equivalent of adding about 4 plants 

representing the addition of around 350 

direct jobs for biodiesel production.67

Providing soy oil feedstock would 

require an estimated 120 additional 

truck trips per day or an addition of 120 

delivery drivers per day assuming one 

trip per delivery truck per day to 

account for driving and loading/ 

unloading time.68 Expansions to the fuel 

distribution infrastructure (i.e., more 

fuel terminals, rail cars, tank trucks, 

barges etc.) would also be needed to 

support the use of an additional 280 

million gallon increase in the 2013 

volume requirement for biomass-based 

diesel. Necessary support to a 

functioning biodiesel plant such as the 

delivery of methanol to allow 

processing of vegetable oil into biodiesel 

as well as additional handling at 

biodiesel distribution centers will also 

add directly to the employment impacts. 

Most large biodiesel plants in the U.S. 

are located in rural communities near 

feedstock (soybean oil or corn oil) 

sources. Urban biodiesel plants tend to 

be smaller with more diffuse feedstock 

suppliers. In 2011, approximately 71 

percent of biodiesel producers were 

located in rural areas, defined as towns 

of less than 50,000. A 30 million gallon 

per year (MGY) biodiesel plant will 

spend nearly $140 million on goods and 

services with feedstocks accounting for 

more than 80 percent of expenditures.69

The size of the economic impact on the 

local economy of spending by an 

individual biodiesel plant will depend 

on location (e.g., state) and how much 

feedstock is sourced locally. Moreover, 

our analysis cannot determine the 

extent to which new capital invested in 

biodiesel production displaces 

investments that otherwise would have 

occurred in rural areas. 

In addition to the employment effects 

from increased biodiesel production, 

this rule would also result in reductions 

in conventional diesel fuel use, which 

could affect employment in the diesel 

fuel supply chain. The loss of 

expenditures to diesel fuel suppliers 

throughout the diesel fuel supply chain, 

from the petroleum refiners to diesel 

fuel distributors, is likely to result in 

some loss in employment in these 

sectors. The potential impacts on the 

diesel industry and other sectors of the 

economy are not quantified in this 

analysis because available data and 

methodologies are insufficient to 

support reasonably accurate estimates of 

the incremental employment effects of 

this rule. 

To summarize, we anticipate that 

bringing idle biodiesel plants back 

online and expanding biodiesel 

distribution infrastructure in the U.S. 

will increase employment and 

investment in the renewable fuels and 

related industries, consistent with the 

EISA directive to assess impact on rural 

economic development. These increases 

in employment are similar to what we 

anticipated when we analyzed the 

volume requirements in RFS2 final rule. 

These employment impacts may be 

offset to some degree by decreases in 

other sectors and/or locations (e.g., from 

the reduced production and transport of 

conventional diesel fuel); however 

sufficiently reliable data and a 

satisfactory methodology supporting 

quantitative evaluation of the 

employment impacts beyond the 

biodiesel sectors are not currently 

available. 

One commenter raised the issue of the 

impacts of the potential increased use of 

animal fats to produce biodiesel under 

a 1.28 billion gallon requirement on 

employment within the oleochemical 

industry. According to the commenter, 

with renewable fuel production 

consuming an increasingly significant 

amount of the total supply of animal fats 

produced in the U.S., this may limit the 

availability of animal fats for 

oleochemical production. According to 

the commenter, the price of animal fats 

recently exceeded the price of 

Malaysian palm oil. If the oleochemical 

industry switched to palm oil as a 

feedstock to make its products and 

located near palm oil supply, there 

could be a possible loss of U.S. 

employment in this industry. 

As the same commenter 

acknowledged, we cannot prevent any 

feedstocks from being used to produce 

RIN-generating renewable fuel if they 

meet the regulatory definition of 

renewable biomass and are otherwise 

valid. Nevertheless, while Table III.B–1 

lists grease and fats as one likely source 

of feedstocks for the production of 

biomass-based diesel, we noted in 

Section III.B that there could be 

sufficient sources of other feedstocks to 

produce 1.28 billion gallons of biomassbased diesel without using any animal 

fats. The comment implies that 

feedstock used in the oleochemical 

industry depends significantly on 

relative costs which can vary over time 

in part due to changes in demand. 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. The general 

supply of animal fat is not expected to 

be impacted significantly by its 

alternative use as a biofuel feedstock or 

the range of other uses of this material. 

Thus the choice of feedstock(s) used by 

the oleochemical industry already 

depends on market prices of multiple 

feedstock sources. Since feedstock such 

as rendered fats or, as suggested by the 

commenter, palm oil are readily 

marketed and transportable, we do not 

expect the industry to relocate 

production every time feedstock market 

conditions change. Therefore we do not 

believe 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. 

B. Consideration of Applicable Statutory 

Economic Factors 

The RFS program established by 

Congress is primarily a long-term 

program aimed at replacing substantial 

volumes of fossil-based transportation 

fuels with low GHG renewable fuels 

over time. Congress established a list of 

factors to be considered in setting the 

annual biomass-diesel mandate, and 

these factors include consideration of 

some aspects of economic costs and 

some aspects of economic benefits 

(among other impacts and factors). In 

the final rulemaking for the RFS2, EPA 

assessed the costs and benefits of this 

program as a whole when the program 

was fully mature, which we continue to 

believe is the appropriate approach to 

examining the costs and benefits of a 

long term program like the RFS2. 

However, the annual standard-setting 

process is part of the program. The 

annual standard-setting process 

encourages consideration of the program 

on a piecemeal (i.e., year to year) basis, 

which may not reflect the long-term 

economic effects of the program. 

EPA received comments requesting 

that we consider costs and benefits for 

the 1.28 billion gallon biomass-based 

diesel mandate in 2013. This mandate is 

an interim step within the larger RFS 

program, so any examination of shortterm impacts separate from that larger 

effort must be kept in context. Further, 

many of the impacts of this rule are 

difficult to fully quantify, which makes 

any comprehensive consideration of 


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59478 Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 

70U.S. Department of Energy, Energy Information 

Administration. 2012. Short Term Energy Outlook, 

March 2012. Available at: http://www.eia.gov/

forecasts/steo/index.cfm. 

71U.S. Department of Energy, Energy Information 

Administration. 2012. Annual Energy Outlook 2012 

(Early Release). Available at: http://www.eia.gov/

forecasts/aeo/er/. 

costs and benefits difficult to undertake 

in the limited timeframe of the RFS 

annual rule. In spite of these limitations, 

EPA has analyzed some of the costs and 

has estimated the monetary value of 

some of the benefits of the 2013 

biomass-based diesel mandate to 

provide more information on this 

rulemaking. 

1. Monetized Quantifiable Costs 

Our analysis of costs focuses on the 

sector most likely to be impacted by an 

increase in biomass-based diesel 

volumes—the agricultural commodity 

market. To assess some of the impacts 

of the 1.28 billion gallon biodiesel 

mandate, EPA used a stochastic 

economic model developed by the 

Center for Agricultural and Rural 

Development (CARD) at Iowa State 

University to conduct this analysis. The 

CARD stochastic model approximates 

U.S. and Brazilian biofuel production, 

consumption, and trade. Using a 

relatively small set of input assumptions 

about petroleum prices, commodity 

yields, and ethanol production, the 

CARD model examines what the U.S. 

and Brazilian biofuels markets may look 

like under different combinations of 

parameters (e.g., low petroleum prices, 

low soybean yields, and high Brazilian 

ethanol production). 

The model shows the probability of 

different outcomes by running 500 

different potential scenarios. This 

modeling approach provides a range of 

estimates which helps to bound 

uncertainty about possible impacts on 

the biofuels sector. Analysis of this 

range can indicate which outcomes are 

more likely than others and also provide 

a sense of the possible high and low 

estimates that should be considered for 

a given variable. The CARD model 

projects ranges for commodity yields 

and prices, fuel volumes and prices, and 

several other variables. For the biomassbased diesel standard, EPA analyzed the 

cost of mandating an additional 280 

million gallons for biodiesel in 2013, 

going from 1.0 billion gallons of 

biomass-based biodiesel to 1.28 billion 

gallons. For purposes of this analysis, 

EPA assumed that the additional 280 

million gallons of biodiesel we are 

mandating for 2013 will be entirely 

soybean-based and would not otherwise 

be produced. As we outline in Section 

III.B of this rulemaking, most of the 

additional 280 million gallons is likely 

to be soybean-based, but other sources 

are possible. Because soybean oil 

feedstock is more expensive than corn 

oil or waste feedstock, the cost impact 

of the extended volume requirement 

would decrease if biodiesel production 

from these other sources expands. We 

therefore consider the cost projections 

presented below to be potentially high 

estimates. 

a. Impact on the Cost of Soybean Oil 

One commenter suggested that the 

biodiesel mandate for 2013 will result in 

an increase of soybean oil prices. In 

response to this comment and other 

related comments, EPA modeled the 

change in soybean oil prices in 2013 

using the CARD stochastic model. 

Assuming that the 280 million gallon 

increment is met entirely with soybean 

oil biodiesel in 2013, EPA estimates that 

the price of soybean oil will be $0.45 

per pound (in 2010$) under this 

mandate, compared to approximately 

$0.42 under a 1.0 billion gallon mandate 

(see Section III.B of this rule for further 

discussion of feedstock availability and 

prices). The mandate is estimated to 

increase feedstock costs of soybeanbased biodiesel by about $0.22 per 

gallon of biodiesel. The effect of this 

increase on the cost of the additional 

280 million gallons is incorporated into 

the estimates in section IV.B.1.b. 

b. Cost of Displacing Petroleum-Based 

Diesel With Soybean-Based Biodiesel 

Producing an additional 280 million 

gallons of biodiesel will displace 

approximately 255 million gallons of 

petroleum-based diesel. Since biodiesel 

costs more to produce in the U.S. than 

diesel, this displacement has associated 

costs. In this analysis, we compare the 

cost of biodiesel and petrodiesel at the 

wholesale stage, since that is when the 

two are blended together. Therefore, this 

analysis does not consider taxes, retail 

margins, and any other costs and 

transfers that occur at or after the point 

of blending. 

On this basis, EPA estimated the cost 

of producing and transporting a gallon 

of biodiesel to the blender. For soybeanbased biodiesel, soybean oil feedstock 

costs generally represent the majority of 

the overall cost, usually somewhere 

between 70 and 90 percent. The soybean 

oil price estimates discussed in Section 

IV.B.1.a of this rule therefore had a 

strong impact on EPA’s cost estimates, 

though estimates of distribution and 

other production costs were also 

important. Estimating the cost to 

produce biodiesel and transport it to the 

blender presents considerable 

uncertainties, even in the near term. 

Unforeseen fluctuations in the prices of 

oil, for example, could have a very 

significant effect. 

After estimating the cost of biodiesel 

at the wholesale stage, EPA compared 

that to what it would cost to consume 

an equivalent amount of petroleumbased diesel instead. The Department of 

Energy’s Energy Information 

Administration (EIA) publishes two 

regular reports that make estimates of 

wholesale diesel prices in 2013. In 2013, 

costs are on the low-end of the range if 

we use the wholesale diesel estimate 

from DOE’s most recent Short-Term 

Energy Outlook (STEO).70 The high-end 

estimate utilizes DOE’s AEO12 ER 

wholesale diesel estimate.71 Both 

estimates are relevant for an analysis of 

fuel prices in 2013. On this basis, we 

estimate the increase in the cost of fuel 

for 280 million gallons of biodiesel will 

be between $0.91 and $1.36 per gallon 

in 2013. This translates into total cost 

estimates of $253 million to $381 

million from increased fuel cost in 2013. 

TABLE IV.B.1.b–1—ESTIMATED INCREASE IN WHOLESALE COST OF BIODIESEL IN COMPARISON TO PETRODIESEL IN 2013 

[In 2010 dollars] 

Petroleum assumption STEO March 

2012 

AEO 2012 early 

release 

Difference in biodiesel production cost (per gallon) .......................................................................................... $0.91 ................ $1.36. 

Cost of 280 million gallons ................................................................................................................................ 253 million ........ 381 million. 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59479 

72Babcock, B, Mandates, Tax Credits, and Tariffs: 

Does the U.S. Biofuels Industry Need Them All? 

Iowa State University, Center for Agricultural and 

Rural Development, Policy Brief 10–PB–1, March 

2010. p. 4–5. 

74McPhail, L, P Westcott, and H Lutman, The 

Renewable Identification Number System and U.S. 

Biofuel Mandates, United States Department of 

Agriculture, November 2011. 75U.S. Department of Energy, Energy Information 

Administration. 2012. Annual Energy Outlook 2012 

(Early Release). Available at: http://www.eia.gov/

forecasts/aeo/er/. 

76 If current RIN prices were used to gauge social 

cost in lieu of the bottom-up engineering cost 

approach applied herein, the estimate of 

transportation fuel costs would be higher. 

Consistent with our previous work in 

this area, EPA’s quantifiable cost 

methodology is a ‘‘bottom-up’’ 

engineering cost analysis that estimates 

the cost to produce a gallon of soybeanbased biodiesel and then compares that 

cost to the production cost of an energyequivalent gallon of petroleum-based 

diesel. In certain situations, it may also 

be useful to use a ‘‘top down’’ analyses 

to estimate the potential cost of a 

program to society. In the case of the 

biomass-based diesel standard, one 

suggestion was to look at the RIN price 

as a proxy for the societal cost of the 

program. 

RIN prices reflect the incremental 

private marginal cost of blending BBD 

into the diesel fuel pool. As noted by 

Professor Bruce Babcock, of Iowa State 

University: 

‘‘The market for RINs is an effective and 

efficient way to enforce the mandates. Motor 

fuel producers who find that biofuel is too 

difficult to access or to blend buy RINs 

instead. Fuel producers who have ready 

access to biofuels and find it profitable to 

blend biofuels sell their excess RINs. By 

making RINs tradable, the mandates are met 

at the lowest possible cost.’’ 72

We have received comments 

suggesting that we use RIN prices to 

estimate the costs to society of the 

biomass-based diesel RFS2 requirement. 

RIN prices may be more representative 

of marginal costs. However, the use of 

historical RIN price trends may have 

limitations since RIN price may reflect 

other policy changes such as changes in 

U.S. tax policy, import tariff policies, 

and other effects in RIN markets.73 We 

finally note that other factors, such as 

the existence of multiple RIN vintages 

in any given year and the effects of other 

policies can create incentives for 

potential speculation in the RIN 

markets. In their 2011 report on RINs, 

USDA observed that this speculation 

results in RIN prices that are somewhat 

higher than the cost of biodiesel, though 

the exact amount of this increment is 

extremely difficult to quantify.74

c. Transportation Fuel Costs 

In the NPRM, we cited cost estimates 

that we had developed in the RFS2 final 

rule. In response to comment, we have 

revised our methodology for examining 

the effect of this mandate on the cost of 

transportation fuel. The estimates 

described in Section IV.B.1 above 

represent the quantifiable costs to 

society as a whole stemming from our 

increase in the biomass-based diesel 

volume requirement from 1.0 billion gal 

to 1.28 billion gal. These estimates do 

not include certain transfers, such as 

those between buyers and sellers of 

diesel fuel. For this reason, the increase 

in the cost of transportation fuel from a 

societal perspective is different from the 

increase from the perspective of 

individual buyers and sellers of fuel. 

However, these costs do impact the 

retail price of diesel and associated 

economic impacts for fuel consumers. 

To estimate the increase in the cost of 

transportation fuel associated with 

today’s mandate for 1.28 billion gal in 

2013, we took our projections for the 

quantifiable program costs reported in 

Section IV.B.1.b and compared that to 

projected fuel consumption. The AEO 

projects that the U.S. will consume 44.9 

billion gal of blended diesel in 2013.75

Averaged over this diesel pool, the 

quantifiable costs of the 1.28 billion gal 

mandate translate into a per gallon cost 

of between $0.006 and $0.008 in 2013.76

Several parties commented that the 

analysis of the cost impacts of 1.28 

billion gallons of biomass-based diesel 

must take into account the biodiesel tax 

subsidy, which expired at the end of 

2011. Fuel taxes and tax subsidies 

function to change the manner in which 

society pays for transportation fuel 

through redistribution of costs, but they 

do not change the total cost to society. 

For this reason we generally do not 

quantify the impact of taxes or tax 

subsidies on price, but instead focus on 

the costs to produce and distribute 

transportation fuel. Moreover, the 

impact of the biodiesel tax subsidy on 

the retail price of biodiesel is a complex 

relationship that can be difficult to 

assess. For instance, Figure IV.B.1.c–2 

shows the retail price of biodiesel over 

the period January 2008 through April 

2012. While the biodiesel tax credit was 

not effective during 2010 or 2012, the 

price of biodiesel was not substantially 

higher during these years than it was at 

other times. Moreover, after the tax 

credit was reinstated for 2011, including 

retroactive credits for biodiesel 

produced in 2010, the price of biodiesel 

in 2011 did not decrease substantially in 

2011 compared to 2010. These results 

illustrate the difficulty in correlating 

biodiesel price with tax policies, and 

thus represents an additional reason 

that we have not made an effort to 

project biodiesel prices in the future 

under different tax policy scenarios. 


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77USDA Livestock & Grain Market News for 

October 14, 2011. http://www.ams.usda.gov/ 

mnreports/lswagenergy.pdf. 

In their comments on the 2012 

Renewable Fuel Standards, the 

American Trucking Association (ATA) 

suggested that production of biomassbased biodiesel from yellow grease and 

other rendered fats may not be 

economically practical due to the 

diffuse nature of the feedstock supply 

chain. Specifically, ATA argued that the 

cost of collection of often small 

quantities of this feedstock dispersed 

over a wide geographic area and their 

transport to biofuel producers may be 

cost-prohibitive. 

We agree with the commenter that the 

transportation costs associated with the 

collection of yellow grease and other 

rendered fats may be greater than the 

cost of collection for biomass-based 

biodiesel feedstock such as soybean oil. 

However, the actual delivered cost of 

feedstock for use in producing biodiesel 

consists of two components: the cost of 

production and the cost of 

transportation. For soybean oil, the cost 

of production (e.g., planting, fertilizing, 

harvesting, expelling) is relatively large 

compared to the cost of transportation to 

centralized biofuel producers. However, 

the cost of production for yellow grease 

and other rendered fats is zero, as they 

are considered wastes or byproducts. 

When combining both cost components 

(i.e., production and transportation) for 

each respective feedstock from USDA’s 

National Weekly Agricultural Energy 

Round-Up,77 the total delivered costs for 

yellow grease and other rendered fats is 

consistently less that the total delivered 

costs for soybean oil. For instance, for 

the week of March 30, 2012, crude 

soybean oil was selling for about 53 ¢/ 

lb, while yellow grease was selling for 

about 41 ¢/lb. As such, we believe that 

the ATA concerns regarding the 

feedstock supply chain are not 

warranted. 

2. Monetized Quantifiable Benefits 

Many of the benefits and impacts that 

Congress asked EPA to examine when 

evaluating whether to increase the 

volume requirement for biomass-based 

biodiesel are difficult to fully quantify. 

In this section, we present a selection of 

quantifiable benefits from increased 

biodiesel production, including 

increased energy security and reduced 

greenhouse gas emissions. 

a. Energy Security 

Quantified energy security benefits 

are taken from the estimates reported in 

Section IV.A.2 of this final rule. As 

noted there, EPA considers only the 

macroeconomic disruption and 

adjustment effect in its estimates of 

energy security benefits. Based on 

application of the ORNL methodology, 

we estimate that the energy security 

benefits of the additional 280 mill gal 

increment of biodiesel are $0.15 per 

gallon in 2013. This translates to a total 

program benefit of about $41 million. 

b. Air Quality 

We discuss air quality impacts 

qualitatively in Section IV.A.4 of this 

final rule and expect an additional 280 

mill gal of biodiesel will have a 

relatively small impact on ambient air 

quality. That said, we do expect the 

production and combustion of biodiesel 

to have a slightly different emissions 

impact relative to petroleum-based 

diesel. As presented in Table IV.A.4–1, 

we estimated that the increased 

production of biodiesel related to the 

RFS2 mandate would impact both 

downstream and upstream emissions, 


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78 Due to analytical limitations, the estimated 

dollar-per-ton values do not include comparable 

impacts related to reductions in other ambient 

concentrations of criteria pollutants (such as ozone, 

NO2 or SO2) or toxic air pollutants, nor do they 

monetize all of the potential health and welfare 

effects associated with PM2.5 or the other criteria 

pollutants. 

79U.S. Environmental Protection Agency (U.S. 

EPA), 2010. Regulatory Impact Analysis, Final 

Rulemaking to Establish Light-Duty Vehicle 

Greenhouse Gas Emission Standards and Corporate 

Average Fuel Economy Standards. Office of 

Transportation and Air Quality. April. Available at 

http://www.epa.gov/otaq/climate/regulations/ 

420r10009.pdf. EPA–420–R–10–009. 80U.S. Environmental Protection Agency (U.S. 

EPA). 2008. Regulatory Impact Analysis, 2008 

National Ambient Air Quality Standards for 

Ground-level Ozone, Chapter 6. Office of Air 

Quality Planning and Standards, Research Triangle 

Park, NC. March. Available at http://www.epa.gov/ 

ttn/ecas/regdata/RIAs/6-ozoneriachapter6.pdf>. 

EPA–HQ–OAR–2009–0472–0238. 

81U.S. Environmental Protection Agency (U.S. 

EPA). 2010. Regulatory Impact Analysis: National 

Emission Standards for Hazardous Air Pollutants 

from the Portland Cement Manufacturing Industry. 

Office of Air Quality Planning and Standards, 

Research Triangle Park, NC. August. Available on 

the Internet at <http://www.epa.gov/ttn/ecas/

regdata/RIAs/portlandcementfinalria.pdf>. EPA– 

HQ–OAR–2009–0472–0241. 

82U.S. Environmental Protection Agency (U.S. 

EPA). 2010. Final NO2 NAAQS Regulatory Impact 

Analysis (RIA). Office of Air Quality Planning and 

Standards, Research Triangle Park, NC. April. 

Available on the Internet at http://www.epa.gov/ttn/ 

ecas/regdata/RIAs/FinalNO2RIAfulldocument.pdf. 

Accessed March 15, 2010. EPA–HQ–OAR–2009– 

0472–0237. 

with increases in some pollutants and 

decreases in others. 

Ideally, the monetized impacts of 

changes in air quality related to the final 

rule would be estimated based on 

changes in ambient pollution 

concentrations and population 

exposure, as determined by complete air 

quality and exposure modeling. 

However, conducting such detailed 

modeling was not possible within the 

timeframe for this analysis. 

Instead, our analysis of PM2.5-related 

health impacts associated with 280 

million additional gallons of biodiesel 

uses a ‘‘dollar-per-ton’’ method to 

estimate selected PM2.5-related health 

impacts. These PM2.5-related dollar-perton estimates provide the total 

monetized human health impacts (the 

sum of premature mortality and 

premature morbidity) of reducing one 

ton of directly emitted PM2.5, or one ton 

of a pollutant that contributes to 

secondarily-formed PM2.5 (such as NOx, 

and SOx) from a specified source.78 The 

dollar-per-ton technique has been used 

in previous analyses, including the 

2012–2016 Light-Duty Greenhouse Gas 

Rule,79 the Ozone National Ambient Air 

Quality Standards (NAAQS) RIA,80 the 

Portland Cement National Emissions 

Standards for Hazardous Air Pollutants 

(NESHAP) RIA,81 and the final NO2

NAAQS.82

The analysis of the final 2013 fuel 

mandate did not estimate the direct 

emissions impacts to which we could 

apply the ‘‘dollar-per-ton’’ estimates. 

Instead, we converted ‘‘dollars-per-ton’’ 

to ‘‘dollars-per-gallon’’ by transferring 

the biodiesel tons-to-emissions 

relationship observed in the RFS2 final 

rule analysis to the current analysis 

(dividing emissions in Table IV.A.4–1 

by 1.44 billion gallons of biodiesel) and 

multiplying that by each pollutantspecific dollar-per-ton estimate. 

The dollar-per-ton estimates used to 

monetize the emissions impacts from 

each gallon of biodiesel are provided in 

Table IV.B.2.b–1. 

TABLE IV.B.2.b–1—PM2.5-RELATED DOLLAR-PER-TON VALUES (2010$) a

Year 

All sources c Upstream (non-EGU) 

sources d

Mobile sources 

SO2 NOX Direct PM2.5 NOX Direct PM2.5

Dollar-per-ton Derived from American Cancer Society Analysis (Pope et al., 2002) Using a 3 Percent Discount Rate b

2015 ......................................................................................................... $30,000 $4,900 $230,000 $5,100 $280,000 

2020 ......................................................................................................... 33,000 5,400 250,000 5,600 310,000 

Dollar-per-ton Derived from American Cancer Society Analysis (Pope et al., 2002) Estimated Using a 7 Percent Discount Rate b

2015 ......................................................................................................... 27,000 4,500 210,000 4,600 250,000 

2020 ......................................................................................................... 30,000 4,900 230,000 5,100 280,000 

Dollar-per-ton Derived from Six Cities Analysis (Laden et al., 2006) Estimated Using a 3 Percent Discount Rate b

2015 ......................................................................................................... 73,000 12,000 560,000 12,000 680,000 

2020 ......................................................................................................... 80,000 13,000 620,000 14,000 750,000 

Dollar-per-ton Derived from Six Cities Analysis (Laden et al., 2006) Estimated Using a 7 Percent Discount Rate b

2015 ......................................................................................................... 66,000 11,000 510,000 11,000 620,000 

2020 ......................................................................................................... 72,000 12,000 560,000 12,000 680,000 

aTotal dollar-per-ton estimates include monetized PM2.5-related premature mortality and morbidity endpoints. Range of estimates are a function 

of the estimate of PM2.5-related premature mortality derived from either the ACS study (Pope et al., 2002) or the Six-Cities study (Laden et al., 

2006). bThe dollar-per-ton estimates presented in this table assume either a 3 percent or 7 percent discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. c Note that the dollar-per-ton value for SO2 is based on the value for Stationary (Non-EGU) sources; no SO2 value was estimated for mobile 

sources. d Non-EGU denotes stationary sources of emissions other than electric generating units (EGUs). 

For certain PM2.5-related pollutants 

(such as direct PM2.5 and NOx), EPA 

estimates different per-ton values for 

reducing mobile source emissions than 

for reductions in emissions of the same 

pollutant from stationary sources such 

as fuel refineries and storage facilities. 

These reflect differences in the typical 

geographic distributions of emissions of 

each pollutant by different sources, their 

contributions to ambient levels of PM2.5, 

and resulting changes in population 

exposure. We apply these separate 

values to estimates of changes in 

emissions from vehicle use and from 


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fuel production and distribution to 

determine the net change in total 

economic impacts from emissions of 

those pollutants. Monetized PM2.5- 

related health impacts associated with 

the final rule can be found in Table 

IV.B.2.b–2 and per gallon impacts can 

be found in Table IV.B.2.b–3. 

TABLE VI.B.2.b–2—TOTAL AMBIENT

PM2.5-RELATED MONETIZED HEALTH

IMPACTS (MILLIONS 2010$) a

2013 Monetized 

impacts 

(7% discount 

rate–3% 

discount rate) 

Using Dollar-per-ton Derived from American 

Cancer Society Analysis (Pope et al., 2002) 

Downstream ....................... $14 to $16. 

Upstream ........................... ¥$34 to ¥$37. 

Net Impacts ....................... ¥$19 to ¥$21. 

Using Dollar-per-ton Derived from Six Cities 

Analysis (Laden et al., 2006) 

Downstream ....................... $35 to $39. 

Upstream ........................... ¥$82 to ¥$91. 

Net Impacts ....................... ¥$47 to ¥$52. 

a Note: Negative values indicate disbenefits 

associated with decrements in ambient air 

quality. 

TABLE VI.B.2.b–3—PER GALLON AMBIENT PM2.5-RELATED MONETIZED

HEALTH IMPACTS (2010$ PER GALLON) a

2013 Monetized 

impacts 

(7% discount rate– 

3% discount rate) 

Using Dollar-per-ton Derived from American 

Cancer Society Analysis (Pope et al., 2002) 

Downstream ................. $0.05 to $0.06. 

Upstream ...................... ¥$0.12 to ¥$0.13. 

Net Impacts .................. ¥$0.07 to ¥$0.08. 

Using Dollar-per-ton Derived from Six Cities 

Analysis (Laden et al., 2006) 

Downstream ................. $0.12 to $0.14. 

Upstream ...................... ¥$0.29 to ¥$0.33. 

Net Impacts .................. ¥$0.17 to ¥$0.19. 

a Note: Negative values indicate disbenefits 

associated with decrements in ambient air 

quality. 

The method used in this analysis to 

estimate the monetized PM2.5-related 

impacts of an increase in biodiesel 

production is subject to a number of 

assumptions and uncertainties. 

• The method does not reflect local 

variability in population density, 

meteorology, exposure, baseline health 

incidence rates, or other local factors 

that might lead to an overestimate or 

underestimate of the actual benefits of 

controlling fine particulates in specific 

locations. This is particularly a problem 

for the monetization of upstream 

emissions since those have a very 

specific geographic profile different to 

that associated with mobile source 

emissions. 

• Transferring the biodiesel tons-toemissions relationship derived from the 

RFS2 mandate in 2022 to the current 

analysis assumes that the incremental 

production of biodiesel associated with 

the 2013 mandate (of 280 million 

gallons) will yield the same relative 

emissions impacts, which we cannot say 

with certainty. 

• This analysis assumes that all fine 

particles, regardless of their chemical 

composition, are equally potent in 

causing premature mortality. PM2.5

produced via transported precursors 

emitted from stationary sources may 

differ significantly from direct PM2.5

released from engines and other 

industrial sources. At the present time, 

however, no clear scientific grounds 

exist for supporting differential effects 

estimates by particle type. 

• This analysis assumes that the 

health impact function for fine particles 

is linear within the range of ambient 

concentrations under consideration. 

Thus, the estimates include health 

benefits from reducing fine particles in 

areas with varied initial concentrations 

of PM2.5, including both regions that are 

in attainment with fine particle standard 

and those that do not meet the standard, 

down to the lowest modeled 

concentrations. This is an appropriate 

assumption because the scientific 

literature provides no evidence of a 

threshold below which health effects 

associated with exposure to fine 

particles—including premature death— 

would not occur. 

• There are several health benefits 

categories that we are unable to quantify 

due to limitations associated with using 

dollars-per-ton estimates, several of 

which could be substantial. Because 

NOX and VOC emissions are also 

precursors to ozone, changes in NOX

and VOC would also impact ozone 

formation and the health effects 

associated with ozone exposure. 

Dollars-per-ton estimates for ozone do 

not exist due to issues associated with 

the complexity of the atmospheric air 

chemistry and nonlinearities associated 

with ozone formation. The PM-related 

benefits-per-ton estimates also do not 

include any human welfare or 

ecological benefits. 

3. Quantifiable Benefits and Costs 

Compared 

As we have observed above, the cost 

and benefit categories discussed in this 

section are not comprehensive. EPA has 

included estimates for those impacts 

that we are able to quantify at the 

present time, but this is not meant to 

suggest that EPA considers these to be 

the total costs and benefits of the 2013 

biomass-based diesel mandate. 

However, for illustrative purposes, we 

are providing a range of quantifiable 

combined cost and benefit estimates for 

the impact of a 1.28 billion gallon 

mandate in 2013, based on those 

impacts that we were able to monetize. 

EPA’s estimates of quantifiable costs 

and benefits vary significantly in 2013 

due to uncertainty about the price of 

diesel as well as uncertainty about the 

value of air quality impacts. Table 

IV.B.3–1 presents the range of estimates 

for the combined quantifiable costs and 

benefits of an additional 280 million 

gallons of biodiesel produced in 2013, 

which varies from ¥$425 million to 

¥$263 million. 

TABLE IV.B.3–1—ESTIMATES OF COMBINED COSTS AND BENEFITS OF THE

1.28 BILLION GALLON BIODIESEL

MANDATE IN 2013 

[In 2010 dollars] 

AEO 2012 early 

release 

(million) 

STEO March 2012 

(million) 

¥$425 to ¥$391 ...... ¥$297 to ¥$263 

In this final rulemaking, we have only 

provided quantified cost and benefit 

estimates for the year 2013. However, as 

observed above, these estimates should 

not be considered in isolation. Rather, 

they should be treated as a snapshot 

within the larger trends of quantified 

costs and benefits laid out in the RFS2 

final rule. The statute is forward-looking 

in that it created a program whose 

energy and environmental benefits are 

intended to grow over time. To evaluate 

the program on the basis of only one 

early year’s impacts, as part of near-term 

implementation, would be to paint an 

unbalanced and incomplete picture. For 

example, as we examine the costs of the 

program through time, we see that these 

costs fall steadily. This is due to 

changes in the cost of key fuel inputs. 

For instance, the cost of petroleum, the 

basic raw material of diesel fuel, is 

expected to rise through time. 

Meanwhile, the principal cost of 

soybean-based biodiesel, the soybean oil 

feedstock, tends to fall though time due 

to rising crop yields. As a result, the 


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relative cost difference between diesel 

and biodiesel fuel would be expected to 

narrow through time as the program 

reaches maturity. Thus, while 

quantified costs from the wider use of 

biomass-based biodiesel can be greater 

than quantified benefits in the near 

term, through time we expect that 

benefits will tend to increase and 

outweigh costs. The estimates of 

quantified costs and benefits presented 

in this rulemaking should be considered 

within this context. 

Further, as noted at the beginning of 

this section, this analysis is not 

intended to serve as a comprehensive 

quantification of the costs and benefits 

of this mandate. Rather, it illustrates 

those costs and benefits that are 

quantifiable in response to comments 

received on the proposed rule. To 

develop a comprehensive estimate of 

costs and benefits, one would need to 

qualitatively balance these estimates 

against the impacts discussed earlier in 

this section. 

V. Final 2013 Volume for BiomassBased Diesel 

Through the RFS program, Congress 

established a schedule of renewable fuel 

volumes that gradually increases over 

time. While the schedule in the statute 

for biomass-based diesel ends in 2012, 

the schedule of increasing volumes for 

advanced biofuels continues through 

2022. For the years between 2012 and 

2022, the statute indicates that biomassbased diesel volumes can increase above 

the 2012 applicable volume of 1.0 

billion gal, but they cannot ever be 

lower than 1.0 billion gal. Subject to a 

consideration of a number of factors as 

described in Section II, we believe that 

it is appropriate to consider biomassbased diesel as playing an increasing 

role in supplying advanced biofuels to 

the market between 2012 and 2022. 

As described in Section IV.A.9, 

increases in the required volume of 

biomass-based diesel above 1.0 billion 

gal will help to support rural economic 

growth and job creation, will increase 

energy security, and reduce emissions of 

GHGs. Our estimates of the quantifiable 

benefits of an increase of 280 mill gal do 

not exceed the costs in 2013. However, 

as laid out above, we expect benefits to 

generally exceed costs over time based 

on the analysis performed for the RFS2 

final rule. Thus by establishing an 

applicable volume for biomass-based 

diesel in 2013 that exceeds the 

minimum of 1.0 billion gal, we are 

helping to establish the industry as a 

substantial contributor to the required 

volumes of advanced biofuel anticipated 

after full implementation of the RFS 

program. 

Therefore, based on our review of the 

factors required in the statute, we are 

finalizing an applicable volume of 1.28 

billion gal biomass-based diesel for 

2013, consistent with our proposal. We 

received comments both in support of 

and opposed to an increase above the 

statutory minimum of 1.0 billion 

gallons. We have determined that 1.28 

billion gallons is achievable in 2013 and 

is a reasonable exercise of our authority 

under CAA 211(o)(2)(B)(ii) to bring 

about the long-term benefits of the RFS 

program. 

We did not propose biomass-based 

diesel standards for 2014 and beyond in 

the NPRM since we believe we will be 

in a better position in the future to 

evaluate all of the factors related to 

establishing an applicable volume for 

2014 and later years. In response to the 

NPRM, two parties commented that EPA 

should set the required volumes of 

biomass-based diesel through at least 

the year 2017. We agree that specifying 

the required volumes of biomass-based 

diesel for more than one compliance 

year would provide greater certainty for 

both biofuel producers and obligated 

parties, stability for future investments 

and contracts, and could potentially 

reduce the need to waive a portion of 

the advanced biofuel requirement in 

future years. However, one of the factors 

that we are required to consider when 

determining the appropriate biomassbased diesel volume for years after 2012 

is a review of the implementation of the 

program during prior years. By 

determining the applicable volume 

requirement for biomass-based diesel 

only one year in advance, we are able 

to use the most up-to-date information 

on the implementation of the program 

in making our determination. This is 

particularly important in the early years 

of the program. 

VI. Public Participation 

Many interested parties participated 

in the rulemaking process that 

culminates with this final rule. This 

process provided opportunity for 

submitting written public comments 

following the proposal that we 

published on July 1, 2011 (76 FR 

38844), and we considered these 

comments in developing the final rule. 

Public comments and EPA responses are 

discussed throughout this preamble, 

and all comments received are available 

in EPA docket number EPA–HQ–OAR– 

2010–0133. 

VII. Statutory and Executive Order 

Reviews 

A. Executive Order 12866: Regulatory 

Planning and Review and Executive 

Order 13563: Improving Regulation and 

Regulatory Review 

Under Executive Order 12866 (58 FR 

51735, October 4, 1993), this action is 

an ‘‘economically significant regulatory 

action’’ because it has an annual effect 

on the economy of $100 million or 

more. Accordingly, EPA submitted this 

action to the Office of Management and 

Budget (OMB) for review under 

Executive Orders 12866 and 13563 (76 

FR 3821, January 21, 2011) and any 

changes made in response to OMB 

recommendations have been 

documented in the docket for this 

action. 

The economic impacts of the RFS2 

program on regulated parties, including 

the impacts of the required volumes of 

renewable fuel, were already addressed 

in the RFS2 final rule promulgated on 

March 26, 2010 (75 FR 14670). This 

action finalizes the applicable volume of 

biomass-based diesel for 2013. We have 

been able to quantify some of the 

economic impacts of this rule in 2013. 

We estimate that soybean prices could 

increase up to 3 cents per pound in 

2013 if the 2013 biodiesel standard is 

met solely as a result of increased 

demand for soy bean oil. Potential use 

of other less expansive feedstocks 

would reduce this impact on soy beans. 

Again assuming the 280 million gallon 

increase in required biomass-based 

diesel is met through increased demand 

for soy oil, we estimate the cost of 

producing this biomass-based diesel 

would range from $253 to $381 million 

in 2013. Adding these estimates of 2013 

costs to the fuel pool would result in a 

diesel fuel cost increase of less than 1 

cent per gallon. These estimates 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. 

Quantified estimates of benefits and 

disbenefits include energy security 

benefits of $0.15 per gallon in 2013 and 

air quality disbenefits of $0.07 per 

gallon in 2013. Other benefits include 

GHG emission 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 

modest due to both the small impact on 


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crops planted and due to the relatively 

small impact of soy bean production. 

B. Paperwork Reduction Act 

This action does not impose any new 

information collection burden since it 

only specifies the required volume of 

biomass-based diesel under the RFS 

program for 2013. However, the Office 

of Management and Budget (OMB) has 

previously approved the information 

collection requirements contained in the 

existing regulations at 40 CFR part 80, 

subpart M under the provisions of the 

Paperwork Reduction Act, 44 U.S.C. 

3501 et seq. This would include the 

following approved information 

collections (with OMB control numbers 

and expiration dates listed in 

parenthesis): ‘‘Renewable Fuels 

Standard Program: Petition and 

Registration’’ (OMB Control Number 

2060–0637, expires March 31, 2013); 

‘‘Renewable Fuels Standard (RFS2)’’ 

(OMB Control Number 2060–0640, 

expires July 31, 2013); ‘‘Regulations of 

Fuels and Fuel Additives: 2011 

Renewable Fuels Standard—Petition for 

International Aggregate Compliance 

Approach’’ OMB Control Number 2060– 

0655, expires February 28, 2014). The 

OMB control numbers for EPA’s 

regulations in 40 CFR are listed in 40 

CFR part 9. Detailed and searchable 

information about these and other 

approved collections may be viewed on 

the Office of Management and Budget 

(OMB) Paperwork Reduction Act Web 

site, which is accessible at http:// 

www.reginfo.gov/public/do/PRAMain. 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires an agency to prepare 

a regulatory flexibility analysis of any 

rule subject to notice and comment 

rulemaking requirements under the 

Administrative Procedure Act or any 

other statute unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. Small entities 

include small businesses, small 

organizations, and small governmental 

jurisdictions. 

For purposes of assessing the impacts 

of today’s rule on small entities, small 

entity is defined as: (1) A small business 

as defined by the Small Business 

Administration’s (SBA) regulations at 13 

CFR 121.201; (2) a small governmental 

jurisdiction that is a government of a 

city, county, town, school district or 

special district with a population of less 

than 50,000; and (3) a small 

organization that is any not-for-profit 

enterprise which is independently 

owned and operated and is not 

dominant in its field. 

After considering the economic 

impacts of today’s final rule on small 

entities, I certify that this action will not 

have a significant economic impact on 

a substantial number of small entities. 

The impacts of the RFS2 program on 

small entities that are directly regulated 

under the RFS2 program were already 

addressed in the RFS2 final rule 

promulgated on March 26, 2010 (75 FR 

14670). This rule simply establishes the 

applicable volume for biomass-based 

diesel for 2013 at a level that is 

consistent with the analyses in the RFS2 

final rule. Therefore, this action will not 

impose any additional requirements on 

small entities beyond those which have 

already been evaluated. 

We received a comment suggesting 

that impacts on truckers of the 

applicable volume of biomass-based 

diesel for 2013 established in this rule 

should be evaluated as part of our 

standard small business impact 

analysis. In response, we note that such 

analyses are only required under the 

Regulatory Flexibility Act for parties 

directly regulated by a rule and that, in 

general, truckers are not directly 

regulated by today’s action nor under 

the regulatory requirements established 

in the RFS2 final rule. 

D. Unfunded Mandates Reform Act 

This rule does not contain a Federal 

mandate that may result in expenditures 

of $100 million or more for State, local, 

and tribal governments, in the aggregate, 

or the private sector in any one year. 

This rule simply establishes the 

applicable volume for biomass-based 

diesel for 2013 at a level that is 

consistent with the analyses in the RFS2 

final rule. Thus, this action is not 

subject to the requirements of sections 

202 or 205 of UMRA. 

This action is also not subject to the 

requirements of section 203 of UMRA 

because it contains no regulatory 

requirements that might significantly or 

uniquely affect small governments. 

E. Executive Order 13132: Federalism 

This action does not have federalism 

implications. It will not have substantial 

direct effects on the States, on the 

relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. This action only 

applies to gasoline, diesel, and 

renewable fuel producers, importers, 

distributors and marketers and makes 

relatively minor corrections and 

modifications to the RFS2 regulations. A 

summary of the concerns raised, and 

EPA’s response to those concerns, is 

provided in this preamble. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

This action does not have tribal 

implications, as specified in Executive 

Order 13175 (65 FR 67249, November 9, 

2000). This rule will be implemented at 

the Federal level and impose 

compliance costs only on transportation 

fuel refiners, blenders, marketers, 

distributors, importers, exporters, and 

renewable fuel producers and importers. 

Tribal governments would be affected 

only to the extent they purchase and use 

regulated fuels. Thus, Executive Order 

13175 does not apply to this action. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

Risks and Safety Risks 

EPA interprets EO 13045 (62 FR 

19885, April 23, 1997) as applying only 

to those regulatory actions that concern 

health or safety risks, such that the 

analysis required under section 5–501 of 

the EO has the potential to influence the 

regulation. This action is not subject to 

EO 13045 because it does not establish 

an environmental standard intended to 

mitigate health or safety risks and 

because it implements specific 

standards established by Congress in 

statutes. 

H. Executive Order 13211: Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This rule is not a ‘‘significant energy 

action’’ as defined in Executive Order 

13211, ‘‘Actions Concerning Regulations 

That Significantly Affect Energy Supply, 

Distribution, or Use’’ (66 FR 28355 (May 

22, 2001)) because it is not likely to 

have a significant adverse effect on the 

supply, distribution, or use of energy. 

This action simply finalizes the annual 

standards for cellulosic biofuels for 

2012 and biomass-based diesel for 2013, 

provisions for new RIN-generating 

pathways, and clarifying changes and 

minor technical amendments to the 

regulations. 

I. National Technology Transfer 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (‘‘NTTAA’’), Public Law 

104–113, 12(d) (15 U.S.C. 272 note) 

directs EPA to use voluntary consensus 

standards in its regulatory activities 

unless to do so would be inconsistent 

with applicable law or otherwise 

impractical. Voluntary consensus 

standards are technical standards (e.g., 


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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Rules and Regulations 59485 

materials specifications, test methods, 

sampling procedures, and business 

practices) that are developed or adopted 

by voluntary consensus standards 

bodies. NTTAA directs EPA to provide 

Congress, through OMB, explanations 

when the Agency decides not to use 

available and applicable voluntary 

consensus standards. 

This action does not involve technical 

standards. Therefore, EPA did not 

consider the use of any voluntary 

consensus standards. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order (EO) 12898 (59 FR 

7629 (Feb. 16, 1994)) establishes federal 

executive policy on environmental 

justice. Its main provision directs 

federal agencies, to the greatest extent 

practicable and permitted by law, to 

make environmental justice part of their 

mission by identifying and addressing, 

as appropriate, disproportionately high 

and adverse human health or 

environmental effects of their programs, 

policies, and activities on minority 

populations and low-income 

populations in the United States. 

EPA has determined that this final 

rule will not have disproportionately 

high and adverse human health or 

environmental effects on minority or 

low-income populations because it does 

not affect the level of protection 

provided to human health or the 

environment. This action does not relax 

the ambient emission control measures 

on sources impacted by the RFS2 

regulations. While we have estimated 

that some emissions may increase as the 

result of the incremental volume of 280 

mill gal required through this final rule, 

ambient emission control measures 

remain unaffected. 

K. Congressional Review Act 

The Congressional Review Act, 5 

U.S.C. 801 et seq., as added by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, generally provides 

that before a rule may take effect, the 

agency promulgating the rule must 

submit a rule report, which includes a 

copy of the rule, to each House of the 

Congress and to the Comptroller General 

of the United States. EPA will submit a 

report containing this rule and other 

required information to the U.S. Senate, 

the U.S. House of Representatives, and 

the Comptroller General of the United 

States prior to publication of the rule in 

the Federal Register. A major rule 

cannot take effect until 60 days after it 

is published in the Federal Register. 

This action is a ‘‘major rule’’ as defined 

by 5 U.S.C. 804(2). This rule will be 

effective 60 days from the date of 

publication. 

VIII. Statutory Authority 

Statutory authority for the rule 

finalized today can be found in section 

211 of the Clean Air Act, 42 U.S.C. 

7545. Additional support for the 

procedural and compliance related 

aspects of today’s rule, including the 

recordkeeping requirements, come from 

sections 114, 208, and 301(a) of the 

Clean Air Act, 42 U.S.C. 7414, 7542, and 

7601(a). 

List of Subjects in 40 CFR Part 80 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Confidential 

Business Information, Diesel fuel, Fuel 

additives, Gasoline, Imports, Labeling, 

Motor vehicle pollution, Penalties, 

Petroleum, Reporting and recordkeeping 

requirements. 

Dated: September 14, 2012. 

Lisa P. Jackson, 

Administrator. 

[FR Doc. 2012–23344 Filed 9–26–12; 8:45 am] 

BILLING CODE 6560–50–P 


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