II 109th CONGRESS 2d Session S. 3554 IN THE SENATE OF THE UNITED STATES June 21, 2006 Mr. Obama (for himself, Mr. Cochran, Mr. Lugar, and Mr. Carper) introduced the following bill; which was read twice and referred to the Committee on Environment and Public Works A BILL To establish an alternative diesel standard, and for other purposes.

1.

Short title

This Act may be cited as the Alternative Diesel Standard Act of 2006.

2.

Alternative diesel fuel content of diesel

(a)

Findings

Congress finds that— (1)section 211(o) of the Clean Air Act (42 U.S.C. 7535(o)) (as amended by section 1501 of the Energy Policy Act of 2005 (Public Law 109–58)) established a renewable fuel program under which entities in the petroleum sector are required to blend renewable fuels into motor vehicle fuel based on the gasoline motor pool; (2)the need for energy diversification is greater as of the date of enactment of this Act than it was only months before the date of enactment of the Energy Policy Act (Public Law 109–58; 119 Stat. 594); and (3)(A)the renewable fuel program under section 211(o) of the Clean Air Act requires a small percentage of the gasoline motor pool, totaling nearly 140,000,000,000 gallons, to contain a renewable fuel; and (B)the small percentage requirement described in subparagraph (A) does not include the 40,000,000,000-gallon diesel motor pool. (b)

Alternative diesel fuel program for diesel motor pool

Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended by inserting after subsection (o) the following: (p)

Alternative diesel Fuel Program for diesel motor pool

(1)

Definition of alternative diesel fuel

(A)

In general

In this subsection, the term alternative diesel fuel means biodiesel (as defined in section 312(f) of the Energy Policy Act of 1992 (42 U.S.C. 13220(f))) and any blending components derived from alternative fuel (provided that only the alternative fuel portion of any such blending component shall be considered to be part of the applicable volume under the alternative diesel fuel program established by this subsection). (B)

Inclusions

The term alternative diesel fuel includes a diesel fuel substitute produced from— (i)animal fat; (ii)plant oil; (iii)recycled yellow grease; (iv)single-cell or microbial oil; (v)thermal depolymerization; (vi)thermochemical conversion; (vii)a coal-to-liquid process (including the Fischer-Tropsch process) that provides for the sequestration of carbon emissions; or (viii)a diesel-ethanol blend of not less than 7 percent ethanol. (2)

Alternative diesel fuel program

(A)

Regulations

(i)

In general

Not later than 1 year after the date of enactment of this subsection, the Administrator shall promulgate regulations to ensure that diesel sold or introduced into commerce in the United States (except in noncontiguous States or territories), on an annual average basis, contains the applicable volume of alternative diesel fuel determined in accordance with subparagraph (B). (ii)

Provisions of regulations

Regardless of the date of promulgation, the regulations promulgated under clause (i)— (I)shall contain compliance provisions applicable to refineries, blenders, distributors, and importers, as appropriate, to ensure that the requirements of this paragraph are met; but (II)shall not— (aa)restrict geographic areas in which alternative diesel fuel may be used; or (bb)impose any per-gallon obligation for the use of alternative diesel fuel. (iii)

Requirement in case of failure to promulgate regulations

If the Administrator fails to promulgate regulations under clause (i), the percentage of alternative diesel fuel in the diesel motor pool sold or dispensed to consumers in the United States, on a volume basis, shall be 0.6 percent for calendar year 2008. (B)

Applicable volume

(i)

Calendar years 2008 through 2015

For the purpose of subparagraph (A), the applicable volume for any of calendar years 2008 through 2015 shall be determined in accordance with the following table: Applicable volume of Alternative diesel fuel in diesel motor pool (in millions of gallons):Calendar year: 2502008 5002009 7502010 1,0002011 1,2502012 1,5002013 1,7502014 2,0002015 (ii)

Calendar year 2016 and thereafter

The applicable volume for calendar year 2016 and each calendar year thereafter shall be determined by the Administrator, in coordination with the Secretary of Agriculture and the Secretary of Energy, based on a review of the implementation of the program during calendar years 2008 through 2015, including a review of— (I)the impact of the use of alternative diesel fuels on the environment, air quality, energy security, job creation, and rural economic development; and (II)the expected annual rate of future production of alternative diesel fuels to be used as a blend component or replacement to the diesel motor pool. (iii)

Minimum applicable volume

For the purpose of subparagraph (A), the applicable volume for calendar year 2016 and each calendar year thereafter shall be equal to the product obtained by multiplying— (I)the number of gallons of diesel that the Administrator estimates will be sold or introduced into commerce during the calendar year; and (II)the ratio that— (aa)2,000,000,000 gallons of alternative diesel fuel; bears to (bb)the number of gallons of diesel sold or introduced into commerce during calendar year 2015. (3)

Applicable percentages

(A)

Provision of estimate of volumes of diesel sales

Not later than October 31 of each of calendar years 2007 through 2015, the Administrator of the Energy Information Administration shall provide to the Administrator an estimate, with respect to the following calendar year, of the volumes of diesel projected to be sold or introduced into commerce in the United States. (B)

Determination of applicable percentages

(i)

In general

Not later than November 30 of each of calendar years 2008 through 2015, based on the estimate provided under subparagraph (A), the Administrator shall determine and publish in the Federal Register, with respect to the following calendar year, the alternative diesel fuel obligation that ensures that the requirements of paragraph (2) are met. (ii)

Required elements

The alternative diesel fuel obligation determined for a calendar year under clause (i) shall— (I)be applicable to refineries, blenders, and importers, as appropriate; (II)be expressed in terms of a volume percentage of diesel sold or introduced into commerce in the United States; and (III)subject to subparagraph (C), consist of a single applicable percentage that applies to all categories of persons described in subclause (I). (C)

Adjustments

In determining the applicable percentage for a calendar year, the Administrator shall make adjustments to prevent the imposition of redundant obligations on any person described in subparagraph (B)(ii)(I). (4)

Credit program

(A)

In general

The regulations promulgated pursuant to paragraph (2)(A) shall provide for the generation of an appropriate amount of credits by any person that refines, blends, or imports diesel that contains a quantity of alternative diesel fuel that is greater than the quantity required under paragraph (2). (B)

Use of credits

A person that generates a credit under subparagraph (A) may use the credit, or transfer all or a portion of the credit to another person, for the purpose of complying with regulations promulgated pursuant to paragraph (2). (C)

Duration of credits

A credit generated under this paragraph shall be valid during the 1-year period beginning on the date on which the credit is generated. (D)

Inability to generate or purchase sufficient credits

The regulations promulgated pursuant to paragraph (2)(A) shall include provisions allowing any person that is unable to generate or purchase sufficient credits under subparagraph (A) to meet the requirements of paragraph (2) by carrying forward a credit generated during a previous year on the condition that the person, during the calendar year following the year in which the alternative diesel fuel deficit is created— (i)achieves compliance with the alternative diesel fuel requirement under paragraph (2); and (ii)generates or purchases additional credits under subparagraph (A) to offset the deficit of the previous year. (5)

Waivers

(A)

In general

The Administrator, in consultation with the Secretary of Agriculture and the Secretary of Energy, may waive the requirements of paragraph (2) in whole or in part on receipt of a petition of 1 or more States by reducing the national quantity of alternative diesel fuel for the diesel motor pool required under paragraph (2) based on a determination by the Administrator, after public notice and opportunity for comment, that— (i)implementation of the requirement would severely harm the economy or environment of a State, a region, or the United States; or (ii)there is an inadequate domestic supply of alternative diesel fuel. (B)

Petitions for waivers

Not later than 90 days after the date on which the Administrator receives a petition under subparagraph (A), the Administrator, in consultation with the Secretary of Agriculture and the Secretary of Energy, shall approve or disapprove the petition. (C)

Termination of waivers

(i)

In general

Except as provided in clause (ii), a waiver under subparagraph (A) shall terminate on the date that is 1 year after the date on which the waiver is provided. (ii)

Exception

The Administrator, in consultation with the Secretary of Agriculture and the Secretary of Energy, may extend a waiver under subparagraph (A), as the Administrator determines to be appropriate. . (c)

Penalties and enforcement

Section 211(d) of the Clean Air Act (42 U.S.C. 7545(d)) is amended— (1)in paragraph (1), by striking or (o) each place it appears and inserting (o), or (p); and (2)in paragraph (2), by striking and (o) each place it appears and inserting (o), and (p). (d)

Technical amendments

Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended— (1)in subsection (i)(4), by striking section 324 each place it appears and inserting section 325; (2)in subsection (k)(10), by indenting subparagraphs (E) and (F) appropriately; (3)in subsection (n), by striking section 219(2) and inserting section 216(2); (4)by redesignating the second subsection (r) and subsection (s) as subsections (s) and (t), respectively; and (5)in subsection (t)(1) (as redesignated by paragraph (4)), by striking this subtitle and inserting this part.