To amend the Clean Air Act to require that, after the year 2010, all gasoline sold in the United States for motor vehicles contain not less than 10 percent ethanol and that all diesel fuel sold in the United States for motor vehicles contain not less than 5 percent biodiesel, and for other purposes.

SECTION 1. FINDINGS.

    The Congress finds as follows:
            (1) The over reliance of the United States on imported 
        petroleum creates a major strategic vulnerability for the 
        Nation, with nearly half of the energy supply of the United 
        States dependent on foreign sources.
            (2) From the economically damaging Arab oil embargoes of 
        1973-74 and 1979 to the recession precipitated by rising oil 
        prices which began in 1999, to the stock market's instability 
        in early 2005 due to the cost of imported oil at near record 
        highs of $55 per barrel, the economic stability of the United 
        States has too often been shaken by economic forces outside its 
        borders.
            (3) Increasing fuel prices have been a particular hardship 
        on small, independent businesses particularly truckers and 
        farmers, who have no choice but to pay ever-increasing fuel 
        bills while absorbing these higher costs in today's economic 
        environment.
            (4) This Act would help shift America's dependence away 
        from foreign petroleum as an energy source toward alternative, 
        renewable, domestic agricultural sources. Its aim is to convert 
        the current petroleum trade deficit to a trade balance by 
        replacing foreign sources of supply with steady increases of 
        biobased fuels through domestic production.
            (5) Today, there are nearly 140,000,000 cars and 85,000,000 
        trucks on our highways. Of this amount, approximately 3,300,000 
        cars and trucks already on our highways will run on 85 percent 
        ethanol (E-85), and this number is increasing. For the 2005 
        model year, there are 20 different models of vehicles capable 
        of running on E-85. Yet given this market, the alternative fuel 
        is used less than 1 percent of the time given that of the more 
        than 187,000 retail locations selling motor fuel in the United 
        States, only 400 stations across 38 States sell E-85.
            (6) Biodiesel production is also dramatically increasing, 
        going from 5,000,000 gallons in 2001 to nearly 25,000,000 
        gallons in 2003. Daimler-Chrysler has also announced its 
        intentions to initially fuel the Diesel Jeep Liberty with a 5 
        percent biodiesel blend, the first time a vehicle has been 
        explicitly fueled with an alternative fuel as it rolls off the 
        production line.
            (7) Currently the United States annually consumes about 
        7,171,885,000 barrels of petroleum. (164,000,000,000 gallons of 
        vehicle fuels and 5,600,00,000 gallons of heating oil.) In 
        2002, 62 percent of these fuels were imported, part of a total 
        $358,200,000,000 trade deficit with the rest of the world. 
        Since 1983, the United States importation of petroleum and its 
        derivatives has more than tripled, rising from 1,215,225,000 
        barrels in 1983 to 4,476,501,000 barrels in 2003.
            (8) Further Strategic Petroleum Reserve policy should 
        encourage domestic production to the greatest extent possible. 
        Currently, the Strategic Petroleum Reserve holds 670,700,000 
        barrels (out of a potential 727,000,000 barrels), sufficient to 
        cushion the United States from wild price swings for a period 
        of 53 days. None of the fuel in this Reserve is bio-based. In 
        fact, 92.2 percent of the Strategic Petroleum Reserve has been 
        purchased from foreign sources--41.9 percent from Mexico, 24 
        percent from the United Kingdom, and over 20 percent from OPEC 
        nations.
            (9) Strategic Petroleum Reserve policy also should 
        encourage the development of alternatives to the Nation's 
        reliance on petroleum such as biomass fuels.
            (10) As a first step in diversification, the Strategic 
        Petroleum Reserve should exchange 2,100,000 barrels from our 
        current reserves for 32,000,000 gallons of ethanol and 
        biodiesel, which could comprise less than 2 percent of the 
        United States market, but yield a doubling of ethanol products.
            (11) The benefits of biofuels are as follows:
                    (A) Energy security.--
                            (i) Biofuels hold potential to address our 
                        dependence on foreign energy sources 
                        immediately. With agricultural surpluses, 
                        commodity prices have reached record lows; 
                        concurrently world petroleum prices have 
                        reached record highs and are expected to 
                        continue rising as global petroleum reserves 
                        are drawn down over the next 25 years. It also 
                        is clear that economic conditions are favorable 
                        to utilize domestic surpluses of biobased oils 
                        to enhance the Nation's energy security.
                            (ii) In the short term, biofuels can supply 
                        at least one-fifth of current United States 
                        fuel demand using existing technologies and 
                        capabilities. Additional plant research, newer 
                        processing and distribution technologies, and 
                        placing additional acres under cultivation can 
                        yield even greater results.
                            (iii) Biofuels can be used with existing 
                        petroleum infrastructure and conventional 
                        equipment.
                    (B) Economic security.--
                            (i) Continued dependence upon imported 
                        sources of oil means our Nation is 
                        strategically vulnerable to disruptions in our 
                        oil supply.
                            (ii) Renewable biofuels domestically 
                        produced directly replace imported oil.
                            (iii) Increased use of renewable biofuels 
                        would result in significant economic benefits 
                        to rural and urban areas and also reduce the 
                        trade deficit.
                            (iv) According to the Department of 
                        Agriculture, a sustained annual market of 
                        100,000,000 gallons of biodiesel alone would 
                        result in $170,000,000 in increased income to 
                        farmers.
                            (v) Farmer-owned biofuels production has 
                        already resulted in improved income for 
                        farmers, as evidenced by the experience with 
                        State-supported rural development efforts in 
                        Minnesota where prices to corn producers have 
                        been increased by $1.00 per bushel. With the 
                        Department of Agriculture having forecast 
                        prices of $2.10 per bushel of corn for the 
                        2004-2005 marketing year, the portion of the 
                        corn crop that goes for ethanol has a farm 
                        value of $2,100,000,000.
                    (C) Environmental security.--
                            (i) The use of grain-based ethanol reduces 
                        greenhouse gas emissions from 35 to 46 percent 
                        compared with conventional gasoline. Biomass 
                        ethanol provides an even greater reduction.
                            (ii) The American Lung Association of 
                        Metropolitan Chicago credits ethanol-blended 
                        reformulated gasoline with reducing smog-
                        forming emissions by 25 percent since 1990.
                            (iii) Ethanol reduces tailpipe carbon 
                        monoxide emissions by as much as 30 percent.
                            (iv) Ethanol reduces exhaust volatile 
                        organic compounds emissions by 12 percent.
                            (v) Ethanol reduces toxic emissions by 30 
                        percent.
                            (vi) Ethanol reduces particulate emissions, 
                        especially fine-particulates that pose a health 
                        threat to children, senior citizens, and those 
                        with respiratory ailments.
                            (vii) Biodiesel contains no sulfur or 
                        aromatics associated with air pollution.
                            (viii) The use of biodiesel provides a 78.5 
                        percent reduction in CO&lt;INF&gt;2&lt;/INF&gt; emissions 
                        compared to petroleum diesel and when burned in 
                        a conventional engine provides a substantial 
                        reduction of unburned hydrocarbons, carbon 
                        monoxide, and particulate matter.

SEC. 2. ETHANOL AND BIODIESEL FUEL REQUIREMENTS.

    Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended as 
follows:
            (1) By redesignating subsection (o) as subsection (q).
            (2) By inserting after subsection (n) the following:
    ``(o) Renewable Fuel Program--
            ``(1) Definitions.--In this section:
                    ``(A) Ethanol.--The term `ethanol' means ethanol 
                derived from any lignocellulosic or hemicellulosic 
                matter that is available on a renewable or recurring 
                basis, including dedicated energy crops and trees, wood 
                and wood residues, plants, grasses, agricultural 
                residues, and fibers. The term includes ethanol derived 
                from animal wastes, including poultry fats and poultry 
                wastes, and other waste materials, or municipal solid 
                waste.
                    ``(B) Biodiesel.--The term `biodiesel'has the same 
                meaning as when used in section 312(f) of the Energy 
                Policy Act of 1992 (42 U.S.C. 13220(f)).
            ``(2) Renewable fuel program.--Not later than 1 year after 
        the enactment of this subsection, the Administrator shall 
        promulgate regulations ensuring that, after December 31, 2010, 
        all gasoline or diesel motor vehicle fuel sold or dispensed to 
        consumers in the contiguous United States, on an annual average 
        basis, contains not less than 10 percent ethanol, in the case 
        of gasoline, and not less than 5 percent biodiesel, in the case 
        of diesel fuel.''.

Summary: Amends the Clean Air Act to require the Administrator of the Environmental Protection Agency (EPA) to promulgate regulations ensuring that after December 31, 2010, all gasoline or diesel motor vehicle fuel sold or dispensed in the contiguous United States contains not less than ten percent ethanol (in the case of gasoline) and not less than five percent biodiesel (in the case of diesel fuel).