SUPPORTING STATEMENT FOR THE

RENEWABLE FUELS STANDARD (RFS2) PROGRAM (Draft)

January 8, 2013

A.	JUSTIFICATION

1.	Identification of the Information Collection

a.	Title:  Renewable Fuels Standard (RFS2) Program, EPA ICR No. 2333.03,
OMB Control Number 2060-0640.

 

b. 	Short characterization:

	The Energy Policy Act (EPAct) of 2005 amended the Clean Air Act,
section 211(o), and required the existing RFS program.  The existing RFS
program is referred to in this supporting statement as "RFS1". The RFS1
program started in 2006 and was covered by EPA ICR No. 2242.02, OMB
Control Number 2060-0600. Please refer to “Regulation of Fuels and
Fuel Additives: Renewable Fuel Standard Program – Notice of Proposed
Rulemaking” and “Regulation of Fuels and Fuel Additives: Renewable
Fuel Standard Program – Final Rule” (both available in docket number
EPA-HQ-OAR-2005-0161) for a detailed discussion of the RFS1 program”. 

	The Energy Independence and Security Act (EISA) of 2007 further amends
the Clean Air Act, section 211(o), and has required EPA to propose new
regulations for renewable fuels.  The new RFS program is referred to in
this supporting statement as "RFS2."  Under RFS2, the volume requirement
and types of renewable fuels are expanded; non-road uses are included
(RFS1 only affected motor vehicle fuel); there are additional types of
waivers and special provisions for renewable fuel types; and EPA will
implement an EPA-Moderating Transaction System (EMTS) for RINs. 
Additional parties will be required to register, keep records, and
report.  Please refer to the Final Rule (available in docket number
EPA-HQ-OAR-2005-0161) for a detailed discussion of the RFS2 program.   

For compliance purposes, under both RFS1 and RFS2, volumes of renewable
fuel are identified through the use of renewable identification numbers
(RINs) that are initially generated by the producer of the renewable
fuel.  However, under RFS2, there are additional types of RINs and the
volume of RINs traded is expected to be greater.  

	This supporting statement provides tables that break down reporting
items by party (e.g. producer, importer, refiner, etc.)  Parties who are
interested in recordkeeping and reporting burden will want to review the
tables containing our estimates carefully.  The RFS2 program includes
provisions for EMTS for RINs, which was not a feature of RFS1.  It also
includes third-party disclosure provisions applicable to biofuel
feedstock producer‘s who were not covered by recordkeeping and
reporting under RFS1.  

	

	The Regulatory Impact Analysis (RIA), which was prepared for the Final
Rule, has been placed in the public docket.  This document was consulted
to provide additional detailed information about the regulated universe
(see Chapter 1 of the draft RIA).  We also considered the actual number
of reporting parties under RFS1 and similar reporting programs.

   

2.  Need For, and Use of, the Collection

Authority for the Collection

	  SEQ CHAPTER \h \r 1 Sections 114 and 208 of the Clean Air Act (CAA),
42 U.S.C. §§ 7414 and 7542, authorize EPA to require recordkeeping and
reporting regarding enforcement of the provisions of Title II of the
CAA.  

	

	b. 	Practical Utility/Uses of the Data

	The reporting requirements of this regulation will allow EPA to monitor
compliance with the RFS program.

3.  Non-duplication, Consultation, and other Collection Criteria

	a. 	Non-duplication

	  SEQ CHAPTER \h \r 1 Efforts have been made to eliminate duplication
in this information collection. 

	

b. 	Public Notice

	EPA is seeking comment on reporting requirements via the NPRM.  We have
also docketed a copy of our draft ICR supporting statement. 

	

	c. 	Consultations

	We have drawn upon our experience with RFS1 and with similar fuels
regulations to develop the estimates in this supporting statement. 
Interested parties may also be interested in reviewing "Chapter 1 –
Industry Characterization" of the draft Regulatory Impact Analysis (RIA)
available in the public docket.  

	

	d. 	Effects of Less Frequent Data Collection

	We have designed the reporting schedule to coincide with existing
reporting deadlines applicable to many of the same parties under such
programs as RFG and anti-dumping and diesel fuel.  Less frequent
collection of data would make it impossible to carry out the provisions
of the CAA and EISA.    

	e. 	General Guidelines

	This rule does not exceed any of the OMB guidelines.

	f. 	Confidentiality

	We inform respondents that they may assert claims of business
confidentiality (CBI) for information they submit. Under RFS2, actual
RINs should not be treated as confidential business information under
RFS2, as they are necessary identifiers to accompany renewable fuels. 
Any information claimed as confidential will be treated in accordance
with 40 CFR Part 2 and established Agency procedures.  Information that
is received without a claim of confidentiality may be made available to
the public without further notice to the submitter under 40 CFR §
2.203.

g. 	Sensitive Information

	

	This information collection does not require submission of any
sensitive information.

4.	The Respondents and the Information Requested

	a.	Respondents/with NAICS and SIC Codes

  SEQ CHAPTER \h \r 1 The respondents to this information collection
fall into the following general industry categories:  petroleum
refineries (324110/2911), ethyl alcohol manufacturers (325193/2869),
other basic organic chemical manufacturing (325110/2869), chemical and
allied products merchant wholesalers (426990/5169), petroleum bulk
stations and terminals (422710/5171), petroleum and petroleum products
merchant wholesalers (422720/5172), and other fuel dealers
(454319/5989).  

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

Producers of renewable fuels (500, of which 300 are biodiesel producers)

Importers (75, of which 20 are biodiesel importers)

Obligated Parties (150)

Parties who own RINs ( 950)

Foreign Refiners (10)

[Note:  The above estimates are derived from the number of registered
parties as of December, 2012, rounded up.  The number of biodiesel
producers is the number registered as of December, 2012, rounded up.]

For biofuel feedstock producers, we have assumed the following classes
of party, with the number of each in parenthesis:

(1,000,000)  out of 10 million plantation and private forest owners in
United States

(30,966 ) foreign biofuel feedstock producers ( Estimated 3% of Domestic
plantation and private forest owners )

[Note:  The above estimates are derived from the following sources:  A
presentation given by Brent Butler, United States Forest Service in
conjunction with the U.S. Department of Agriculture, entitled “Who
Owns America’s Forest?,” dated May, 2008 estimates a 10,000,000
population of plantation and private forest owners.  We have assumed 1
million owners or 10% to participate in RFS2.  

The Bureau of Labor Statistics, U.S. Department of Labor, Occupational
Outlook Handbook, 2012-13 Edition, Farmers, Ranchers, and other
Agricultural Managers, on the Internet at   HYPERLINK
"http://www.bls.gov/ooh/management/farmers-ranchers-and -other
agricultural-managers.htm" 
http://www.bls.gov/ooh/management/farmers-ranchers-and -other
agricultural-managers.htm  Estimated 1,106,400  persons who claim
farming as an occupation and for our purposes can be possible producers
of feedstock for producers of renewable fuel. We estimated the number of
foreign biofuel feedstock producers to be 30,192 which is 3% of the
total of domestic feedstock producers (i.e., 3% of 1,006,400.)]

	This supporting statement includes estimates reporting involving
biofuel feedstock producers and plantation/private forest owners. These
parties must provide certain information about their feedstock and
lumber byproducts resources to biofuel producers and to EPA upon
request.  The RFS2 final rule contains provisions requiring
recordkeeping/reporting and the mapping of certain plots of land (e.g.
generating a Google map or similar representation), based upon an
aggregate baseline approach. At this stage in the program, this
information is required for foreign biofuel feedstock producers,
domestic plantation/private forest owners and foreign plantation/private
forest owners.  Although we expect that this could lead to future burden
on the part of certain biofuel producers who use croplands and wood
byproducts, we do not expect that the domestic biofuels feedstock
producers or those from Canada will be required to engage in
recordkeeping and reporting activities under this provision at this
time. Therefore, we are providing estimates related to this provision
for the above named biofuels feedstock producers. We expect this to
result in added burden during the three year period covered by this ICR.
 Estimates for future recordkeeping and reporting will be provided when
the recordkeeping and reporting is expected to occur.  See Table Vl:
Biofuels Feedstock Producers.

	

	

b.	Information Requested

		

		A)	Reporting:  The individual reports required from regulated parties
are described in the preamble.  The following reports are required by
the Final Rule:  Annual Compliance Reports (obligated parties only), see
table Vlll:  Biofuels Feedstock Producers, required to provide
information on the land used to provide feedstock to fuel producers, see
table Vl: Quarterly Reports of Biofuels Party requires the submission of
quarterly reports regarding generation and assignment of RINs (producers
and importers only), See Table Vll: and Quarterly RIN Reports
summarizing transactions and activity, and “real time” RIN
transactional activity reporting within EMTS, see table Vllll. 
Reporting items include registration of parties engaged in activities
covered by the RFS2 regulation and reporting related to transactions
involving RINs and associated volumes of fuel.

The exact reports filed will depend upon the activity engaged in by the
party. A party must file reports appropriate for each activity it
engages in – for example, if a party is both an exporter of renewable
fuel and a producer of renewable fuel, then that party must file the
reports applicable to both activities.  

	In the Final Rule, we establish that “real time” reporting within
EMTS will be construed as within five (5) business days of a reportable
event (e.g. generation and assignment of RINs, transfer of RINs).  This
means that some parties may elect to “batch” real time reports,
similar to how businesses batch credit card transactions at the end of
the day.  We estimate that an average party would report daily,
resulting in 365 instances of reporting in EMTS per year.  

Quarterly reports are due as follows:

Quarterly Reporting Schedule for RFS2 Program

Quarter Covered by Quarterly Report	Due Date for Quarterly Report

January - March	May 31

April - June	August 31

July - September	November 30

October - December	February 28

        

Annual reports are due on February 28 for the preceding year.  

For some reports, e.g. involving biofuel feedstock producers the
frequency of reporting is “on occasion” (i.e., when a transaction
requiring disclosure occurs).  As discussed above, for EMTS purpose, we
have assumed one instance of reporting per day for each day of the year,
or 365 instances of reporting).  

	     

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

		B)	Recordkeeping: Respondents must retain underlying records related
to reports they file for five (5) years.  This period is consistent with
other fuels programs and with customary business practices (CBP) for the
industry.  Respondents must transfer volumes of fuel with product
transfer documentation or bills of lading, which is already done in the
course of business. 

5.  The Information Collected, Agency Activities, Collection
Methodology, and Information Management

a.	Agency Activities

All reports and registrations will be reviewed by EPA for completeness
and for potential violations.

Potential violations will be referred to enforcement personnel.

Registration numbers will be issued for new registrants. 

Contacting reporting parties if there is a problem with their
submission.

b. 	Collection and Methodology and Management

	We anticipate receiving data in a simplified and secure fashion via the
Agency's CDX.  Information claimed as CBI will be stored in
appropriately controlled areas.

c.	Small Entity Flexibility

	This collection will not adversely affect small entities.  The Final
Rule describes flexibility provisions available to small entities. 

d.	Collection Schedule

	Registrations are received on a rolling basis, as updates may be sent
in at any time and new parties may enter the regulated industry at any
time.   Reporting is as-needed, monthly, quarterly, and annual.

6.	Estimating the Burden and Cost of Collection

a.	Estimating the Respondent Universe 

	We drew upon experience implementing similar regulations among the same
entities to develop estimates of the burden associated with this
collection.  

b.	Estimating the Respondent Burden and Cost

	Three labor categories are involved:  managerial (includes legal and
professional review), technical, and clerical. The estimates used the
Bureau of Labor Statistics figures from "National Industry-Specific
Occupational Employment & Wage Estimate “Petroleum and Coal Products
Manufacturing” (May 2011), with a 3% annual inflation factor applied
to bring the values to the present.  Using this method, the following
wages and benefits apply by category:

Wages and Benefits

Managerial    		$67.44   per hour

Technical		$65.56   per hour

Clerical		$22.17   per hour

Doubling for company overhead beyond wages and benefits, and for
convenience, rounding up to the dollar, gives the following rates for
this ICR:

Total Employer Cost

Managerial		$135.00 per hour

Technical		$131.00 per hour

Clerical		$   44.00 per hour

It is assumed that for each hour of activity the mix will be about 0.1
hour managerial, 0.7 hour technical, and 0.2 hour clerical.  This gives
an average labor cost of $103 per hour, which will be used in this ICR.
For purchased services related to attest engagements and some items of
registration, we have doubled this hourly cost to $206 in order to more
accurately reflect the cost of a certified public accountant (CPA) or
licensed professional engineer's (PE) services.

c.  	Estimating the Agency Burden and Cost  

	EPA must generate company and facility registration number(s) for new
registrants and notify them of these numbers, which must appear on
reports. Report formats and instructions/guidance must be prepared by
Agency personnel.  Reports will be processed by contractors and must be
reviewed by Agency personnel.  Reporting parties must be contacted if
there is a problem with their submission. We have developed forms for
RFS2 reporting to include four types, rather than one type, of RIN
unlike the RFS1 templates. We have provided RFS2 reporting templates as
an attachment to this document.

 

This supporting statement considers all Agency costs associated with
accepting new registrants and new reports associated with RFS2, as
expressed in EPA ICR Number 2333.02. Using the RFS1, and the RFG and
anti-dumping ICR, and other recent fuels-related ICRs as a guide in
developing these initial estimates for RFS, we anticipate that RFS2 may
require the equivalent labor of one full time GS-13 technical employees
for a total of $115,000, and labor costs of $54,875 in the clerical
category and $19,438 in the management category.  Since we are using the
CDX, some costs incurred by the Agency will be tied to the number of
registrants who send us reports.  Specifically, there is an annual
"subscription cost" associated with the use of CDX that is passed on to
the EPA program office and we estimate that registrants due to RFS2 will
cost our office approximately $200,000 per year in 2013, 2014 and 2015. 
We anticipate $266,666 in annual contract costs related to registration
and reporting activities.  We anticipate IT development and testing
costs at $ 600,000 divided by three years to yield an annual cost of
$200,000.  Adding the following values results in an annual estimated
Agency burden as follows:

One GS-13 technical employee (full time) = 		$   115,000

One GS-7 clerical worker (full-time) 	 = 	      	       54,875

One GS-15 manager (1/8 time) 	 = 		       19,438

Annual CDX subscription fee = 			     200,000

Annual contract costs = 				     266,666

Testing and development= 				     200,000

TOTAL = 						   $855,979

  As with all items in this supporting statement, we strongly encourage
comment on the estimated Agency burden and on the Agency activities
associated with this proposed information collection.    

	  

d.	Estimating the Respondent Universe

	We were able to estimate the number of regulated entities drawing upon
experience regulating the same or similar entities.  	We were able to
estimate the number of regulated entities drawing upon experience
regulating the same or similar entities.  

e.	Bottom Line Burden Hours and Costs

	From the tables, we estimate the following totals:

TOTAL NO. OF RESPONDENTS:    	2,092,731	 

TOTAL NO. OF RESPONSES:		2,702,531

TOTAL BURDEN HOURS:    	    	6,379,263		 

TOTAL COST TO RESPONDENTS:  	$ 60,459,623

f.	Reason for Change in Burden

	At the onset of the RFS2 program, EMTS for RINs were not a feature of
RFS1.  For the new EMTS system, all parties who owned RINs were required
to re-submit their application, disclose feedstock sources, prepare
quarterly reports on RIN activity and submit annual compliance reports
(obligated party only).  Re-submittal provisions are no longer required
which will cause a decrease in total responses for this ICR.   EMTS
users will not be burdened to submit more reports in this information
collection, unlike the previous.  The total responses for industry
dropped from 4,525,625 to 2,092,731 a difference of 2,432894, now that
the final rule is no longer requiring re-submissions or quarterly
reports for certain party members.  To date, biofuels producers and
importers are required to submit quarterly reports along with their
third party disclosure on feedstock producers to EPA.  All users of the
EMTS system are required to submit quarterly RIN reports. 

 

	The number of respondents or users of the EMTS system has more than
doubled from 1,059,326 to 2,092,731 an increase of 1,639,992, caused by
the additional response burden for mapping foreign and domestic
plantation/forest land owners and foreign biofuels feedstock producers
which was not reflected in the previous ICR reporting period.   With an
increase of respondents, total burden hours have increased by more than
4 million costing the industry $60,459,623 a decreased of $47,882,366.
The reduction in the total cost for this renewal is due to the fact that
the EMTS system’s automation structure helps users to prepare reports
instantly, lessening the amount of time and cost needed to respond, even
with more than a million added users.  This notable factor increased the
industry burden hours but, will lower the total cost of this information
collection request if renewed. 

 

g.	Burden Statement 

	The annual public reporting and recordkeeping burden for this
collection of information is estimated to be 2.4 hours per response. 
Burden means the total time, effort, or financial resources expended by
persons to generate, maintain, retain, or disclose or provide
information to or for a Federal agency.  This includes the time needed
to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to comply
with any previously applicable instructions and requirements; train
personnel to be able to respond to a collection of information; search
data sources; complete and review the collection of information; and
transmit or otherwise disclose the information.  An agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a currently valid OMB
control number.  The OMB control numbers for EPA's regulations are
listed in 40 CFR part 9 and 48 CFR chapter 15.     

	To comment on the Agency's need for this information, the accuracy of
the provided burden estimates, and any suggested methods for minimizing
respondent burden, including the use of automated collection techniques,
EPA has established a public docket for this ICR under Docket ID number
EPA-HQ-OAR-2005-0161, which is available for online viewing at 
HYPERLINK "http://www.regulations.gov" www.regulations.gov , or in
person viewing at the Air Docket in the EPA Docket Center in Washington,
DC (EPA/DC).  The docket is located in the EPA West Building, 1301
Constitution Avenue, NW, Room 3334, and is open from 8:30 a.m. to 4:30
p.m., Eastern Standard Time, Monday through Friday, excluding legal
holidays.  The telephone number for the Reading Room is (202) 566-1744,
and the telephone number for the Air Docket is (202) 566-1742. 

	

	You may use www.regulations.gov to submit or view public comments,
access the index listing of the contents of the public docket, and to
access those documents in the public docket that are available
electronically.  When in the system, select “search,” then key in
the Docket ID Number EPA-HQ-OAR-2005-0161.  Also, you can send comments
to the Office of Information and Regulatory Affairs, Office of
Management and Budget, 725 17th Street, NW, Washington, D.C. 20503,
Attention: Desk Officer for EPA.  Please include the EPA Docket ID
Number EPA-HQ-OAR-2005-0161 and OMB Control Number 2060-NEW in any
correspondence.

.       

 These estimates are derived from "OPM Salary Table 2012-DCB," effective
January 2012.  This table may be found at
http://www.opm.gov/oca/06tables/indexGS.asp.  The extreme of step 10 was
assumed for all categories.  We have assumed a full-time GS-7 clerical
worker, one full-time GS-13 technical worker, and a GS-15 manager
working one-eighth of his/her time managing this project (0.125).  All
values were multiplied by 1.6 (which is a common factor utilized in ICRs
to account for overhead costs). We rounded the resulting dollar value to
the nearest thousand.  This cost is per year.

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