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Statement of Need: This action is directed by the 2007 Energy Independence and Security Act. It requires EPA to implement the amendments to Clean Air Act Section 211(o) - The Renewable Fuels Standard Program.

Summary of the Legal Basis: Clean Air Act Section 211(o).

Alternatives: A notice of proposed rulemaking was published in the Federal Register on May 26, 2009. The proposal includes a number of proposed approaches as well as alternative approaches to implement the new standards. The public comment period will close on September 25, 2009.

Anticipated Costs and Benefits: The economic analyses that support the proposed rule do not reflect all of the potentially quantifiable economic impacts. There are several key impacts that remain incomplete as a result of time and resource constraints necessary to complete the proposed rule, including the economic impact analysis and the air quality and health impacts analysis (see Section II.B.3). As a result, this proposal does not combine economic impacts in an attempt to compare costs and benefits, in order to avoid presenting an incomplete and potentially misleading characterization. For the final rule, when the planned analyses are complete and current analyses updated, we will provide a consistent cost-benefit comparison. However, the following is offered in reflection of some of the benefits and costs associated with certain aspects of the proposed rule. Initial estimates indicate that the expanded use of renewable fuels will result in a reduction of 6.8 billion tons of CO2 equivalent GHG emissions in 2022. This is equivalent to removing about 24 million vehicles off the road. Also, 36 billion gallons of renewable fuel will displace about 15 billion gallons of petroleum-based gasoline and diesel fuel, which represents about 11% of annual gasoline and diesel consumption in 2022. Total energy security benefits associated with a reduction of U.S. imported oil is $12.38/barrel. Based upon the $12.38/barrel figure, total energy security benefits associated with this proposal were calculated at $3.7 billion. Increases in gasoline and diesel fuel costs are equivalent to $4 billion to $18 billion in 2022. Estimates on U.S. food costs would increase by $10 per person per year by 2022 while net U.S. farm income would increase by $7.1 billion dollars (10.6%).

Risks: Analysis of criteria and toxic emission impacts is performed relative to several different reference cases. Overall we project the proposed program will result in significant increases in ethanol and acetaldehyde emissions. We project more modest but still significant increases in acrolein, NOx, formaldehyde and PM. However, we project today’s action will result in decreased ammonia emissions (due to reductions in livestock agricultural activity), decreased CO emissions (driven primarily by the impacts of ethanol on exhaust emissions from vehicles and nonroad equipment), and decreased benzene emissions (due to displacement of gasoline with ethanol in the fuel pool). Discussion and a breakdown of these results by the fuel production / distribution and vehicle and equipment emissions are presented in the NPRM. The aggregate nationwide emission inventory impacts presented here will likely lead to health impacts throughout the U.S. due to changes in future-year ambient air quality. However, emissions changes alone are not a good indication of local or regional air quality and health impacts, as there may be highly localized impacts such as increased emissions from ethanol plants and evaporative emissions from cars, and decreased emissions from gasoline refineries. For the final rule, a national-scale air quality modeling analysis will be performed to analyze the impacts of the proposed standards. Further, as the production of biofuels increases to meet the requirements of this proposed rule, there may be adverse impacts on both water quality and quantity. Increased production of biofuels may lead to increased application of fertilizer and pesticides and increased soil erosion, which could impact water quality.