CREW FOIA 2014-006851-0001156

8/9/2019 CREW FOIA 2014-006851-0001156

1/23

Correspondence Management System

Control Number: AX-14-000-1206

Printing Date: November 13 2013 08:25:16

Citizen Information

Citizen/Originator: Drevna Charles T

Organization:

Address:

American Fuel Petrochemical Manfacturers

1667 K Street, N.W., Washington,

D

20006

Constituent: N/A

Committee: N/A

Sub-Committee:

N/A

Control Information

Control Number:

AX-14-000-1206

Alternate Number:

N/A

Status: For Your Information Closed Date: N/A

Due Date: Nov 26, 2013

of

Extensions: 0

Letter Date: Nov 4, 2013 Received Date: Nov 12, 2013

Addressee: AD-Administrator Addressee Org: EPA

Contact Type: LTR (Letter) Priority Code: Normal

Signature: SNR-Signature Not Required Signature Date: N/A

File Code: 401_127_a General Correspondence Files Record copy

Subject:

Instructions:

Daily Reading File- Letter to President in support

of

2014 Renewable Fuel Standard

For Your Information -- No action required

Instruction Note: N/A

General Notes:

N/A

CC: N/A

Lead Information

Lead Author: N/A

Lead Assignments:

Assigner

Office Assignee Assigned Date Due Date

Complete Date

Ken Labbe OEX OAR Nov 12, 2013 Nov 26, 2013

N/A

Instruction:

AA-OAR-Prepare draft response for signature by the Assistant Administrator for OAR

Sabrina Hamilton OAR OAR-OTAQ Nov 13, 2013 Nov 22, 2013 NIA

Instruction:

OTAQ - Prepare response for the signature

of

Christopher Grundler, Director

of

the Office

of

Transportation and Air Quality (OTAQ).

Supporting Information

Supporting Author: N/A

Supporting Assignments:

I ssigner

l ttice

History

I ssignee

No Record Found.

I ssigned Date

8/9/2019 CREW FOIA 2014-006851-0001156

2/23

November 8, 2013

The Honorable Barack Obama

President

United States ofAmerica

The White House

Washington, DC 20500

Olarles T Drevna

A-esident

Re: 2 14 Renewable Fuel Standard blending requirements

Dear Mr. President,

Anerican

Fuel PetrochaTical

l\llarufaclurer

1Ei67Kstreet NN

SL.ite

700

\N:Ehirgtm, oc

am

aQ.457.0400office

aQ.552.8457direct

aQ.457.0400

fax

Qjre v11:@3fpnorg

The American Fuel

&

Petrochemical Manufacturers ( AFPM) writes in support

of

the

Environmental Protection Agency's (EPA) indication that it plans to partially waive the 2014

Renewable Fuel Standard (RFS) in order to address concerns with the market's ability to

accommodate higher levels

of

ethanol.

1

Such action would find solid grounding in both the

realities

of

the fuel market and in the law.

Despite the biofuel industry's sustained campaign to frame this debate

as

a battle for

market share,'' the reality remains that the RFS boils down to a simple math problem: the 2014

RFS -

if

fully implemented - would require more biofuel than consumers demand, and than

current vehicles and infrastructure are designed and warrantied to handle. Refiners are thus

faced with a series

of

difficult choices - either force more biofuel into the market knowing that it

damages consumers' engines and compromises infrastructure (bringing with it significant

liability concerns), or reduce domestic supply of gasoline and diesel to limit the obligation to buy

compliance credits (Renewable Identification Numbers, or RINs ) needed to sell gasoline and

diesel in the United States. Neither

of

these options

is

good for the American consumer.

Recognizing this problem, on August 13, 2013, AFPM and the American Petroleum

Institute ( API) filed a petition on behalf

of

its members seeking a partial waiver

of

the 2014 RFS.

In its petition, AFPM detailed the technical and marketplace challenges associated with

increasing the volume ofbiofuel in the fuel supply, and requested a waiver that would set the

ethanol content in gasoline at an average of 9.7 percent, for a total 2014 RFS

of

12.9 billion

gallons

of

ethanol and 1.9 billion ethanol-equivalent gallons

of

biomass-based diesel. In

particular, a 9.7 percent cap would retain a market for neat gasoline (i.e., gasoline containing

no ethanol) required for some applications (such

as

boating), promote liquidity in the RIN

1

See 78

ederal Register

49794, 49798 (August 15, 2013) ( EPA anticipates

th t

adjustments

to

the 2014 volume

requirements are likely to be necessary based o

the

projected circumstances for 2014, taking into account ...

the

ElO blendwall, and cur rent infrastructure, and market-based limitati ons to the consumption

of

ethanol in gasoline

- ethanol blends above ElO )

CREW FOIA 2014-006851-000115

8/9/2019 CREW FOIA 2014-006851-0001156

3/23

market, and account for historical differences between the Energy Information Administration's

(EIA) projections

o

gasoline demand and actual demand.

The U.S. consumed approximately 12.9 billion gallons o ethanol in 2012 and is on pace

to consume approximately

13

billion gallons in 2013. In fact, obligated parties are only able to

comply with the 2013 mandate because o banked RINs from previous years. In other words,

AFPM's waiver petition simply recognizes that the RIN bank will be depleted and requests a

continuation o the same consumption levels in 2014 that occurred in 2012 and 2013. A large

portion o AFPM' s request is a waiver o the 666 million gallons o imported Brazilian

sugarcane ethanol expected to be used for the advanced biofuel mandate in 2013. Given these

facts, the biofuel industry's claims that not raising the mandate next year will somehow lead to

widespread layoffs and plant closures ring particularly hollow.

Unfortunately, in its rush to scapegoat the refining industry, biofuel producers continue to

ignore the reality o the blendwall and its potential impacts on consumers. The blendwall is a

function o consumer demand, engine compatibility, infrastructure constraints, and the biofuel

industry's failure - despite nearly a decade ofbiofuel mandates - to deliver promised drop-in

biofuel that are compatible with existing engines and infrastructure. Given the heated rhetoric

surrounding this issue, AFPM would also like to take the opportunity to correct some recent

mischaracterizations about the blendwall and EPA' s legal authority to grant a waiver.

1

Infrastructure

nd

retail ownership The biofuel industry claims that refiners failed to

invest in infrastructure continue

to

ignore the realities

o

how the fuel distribution

system actually functions. While refiners and importers o gasoline are the obligated

parties under the RFS, they are often not the entities actually blending the fuel or selling

it to end-use consumers. In many cases, third-party blenders or others actually blend the

renewable fuel into the petroleum blendstock, thereby capturing the RIN that the third

party sells back to an obligated party.

Moreover,

95

percent o retail gas stations are owned by independent businesses, many o

which are single-store operators. In addition, more than half o the gas stations are

actually unbranded and unaffiliated with refining companies. Even those stations that are

franchised, however, are largely responsible for their own equipment and investment

decisions. These stations are free to sell higher ethanol blends (such as E85 or EIS) so

long as they continue to sell the branded product (a key feature

o

a franchise), but they

generally have chosen not to carry these higher ethanol blends because

o

a lack o

consumer demand and fear o potential liability. In general, franchisees get the benefit o

a steady fuel supply at a contracted price, marketing assistance, and the ability to use a

refiner's trusted brand to help sell fuel. Typically, in return, franchisees must sell at least

CREW FOIA 2014 006851 000115

8/9/2019 CREW FOIA 2014-006851-0001156

4/23

two grades

of

the refiner s product. Put another way, franchisees are getting the benefit

of

a contractual bargain between two private parties - the definition of a free market. Those

franchisees may invest in additional tanks and dispensers to carry additional fuel types, or

may terminate their franchise agreements and sell unbranded fuel.

One of the largest issues for fuel suppliers are potential liabilities stemming from vehicle

and small engine incompatibility with higher ethanol blends like EIS, discussed more

below. Given the massive potential liability or injury associated with EIS for consumers,

the retail community, engine manufacturers, and refiners, it

is

no surprise that EIS s

market penetration is limited to a few dozen stations in the Midwest. Most important,

however, is the consumer liability resulting from potential engine damage that would

occur

as

result of EIS, which cannot be used in nearly

9S

percent

of

cars or any lawn

equipment, motorcycles, boats, or countless other engines.

In addition to the infrastructure and liability issues, challenges remain including with

certification of underground storage tanks for higher blends, conflicting states laws, and

the fact that EPA has not granted a I-pound Reid Vapor Pressure (RVP) waiver for

summer EIS like it has for summer EIO.

2

Vehicle Compatibility

Although some auto companies have recently announced that

20I2-20I4

models will be compatible with EIS, there are still hundreds of millions of

cars on the road that are not compatible with that fuel. In general, it takes about a decade

for the auto fleet to tum over, meaning we will not see these changes for some time, and

implementation of the 20I4 volumes will not be significantly affected by new car sales.

Moreover, hundreds of millions of off-road/non-road vehicles and engines are unable and

unapproved to use more than I 0 percent ethanol regardless of

EIS

s availability.

2

3

E85 Sales The biofuel industry claims that E8S sales can bridge the gap between

EI

0

saturation and the RFS requirements, but unfortunately this claim ignores refueling

infrastructure compatibility issues and consumer acceptance

of

E8S. Importantly, only

I

S

percent of stations carry E8S and even where it

is

widely available, consumer

acceptance remains low. In fact, data from Iowa and Minnesota (two states with the most

developed E8S infrastructure) show that there has been virtually no growth in E8S sales.

Minnesota s

E8S

sales peaked in 2007 and Iowa s in

20I l

2

Rep F James Sensenbrenner

U S

House

of

Representatives to EPA

Administrator Lisa

Jackson 5 July 2011

CREW FOIA 2014-006851-000115

8/9/2019 CREW FOIA 2014-006851-0001156

5/23

Correspondence Management System

Control Number: AX-14-000-1267

Printing Date: November 13 2013 02:31 :39

Citizen Information

Citizen/Originator: Enderson Taryl P

Organization: Minnesota Soybean Processors

Address:

121

Zeh Avenue, Brewster,

MN

56119

Constituent: N/A

Committee: N/A

Control Information

Control Number:

Status:

Due Date:

Letter Date:

Addressee:

Contact Type:

AX-14-000-1267

Pending

Nov 27, 2013

Nov 6

2013

AD-Administrator

LTR (Letter)

Sub-Committee:

Alternate Number:

Closed Date:

of

Extensions:

Received Date:

Addressee Org:

Priority Code:

Signature: AA-OAR-Assistant Administrator Signature Date:

OAR

N/A

N/A

N/A

Nov 12, 2013

EPA

Normal

N/A

File Code: 404-141-02-01_ 141_a(2) Copy

of

Controlled and Major Correspondence Record

of

the EPA

Administrator and other senior officials - Electronic.

Subject: Daily Reading File- Urging to release a 2014 biodiesel requirement consistent with today s

production level

of

1.7 billion gallons

Instructions:

Instruction Note:


N/A

General Notes: N/A

CC: OEAEE - Office

of

External Affairs and Environmental Education

OP - Office

of

Policy

RS - Region 5 -- Immediate Office

Lead Information

Lead Author: N/A

Lead Assignments:

Assigner Office

Assignee Assigned Date

Due Date Complete Date

Ken Labbe

OEX

OAR Nov 13, 2013 Nov 27, 2013 NIA

Instruction:


Supporting Information

Supporting Author: N/A

Supporting Assignments:

I ssigner

l ttice

History

I

ssignee

I ssigned Date

No Record Found.

8/9/2019 CREW FOIA 2014-006851-0001156

6/23

CREW FOIA 2014 006851 000116

8/9/2019 CREW FOIA 2014-006851-0001156

7/23

CREW FOIA 2014 006851 000116

8/9/2019 CREW FOIA 2014-006851-0001156

8/23

8/9/2019 CREW FOIA 2014-006851-0001156

9/23

CREW FOIA 2014 006851 000116

8/9/2019 CREW FOIA 2014-006851-0001156

10/23

CREW FOIA 2014 006851 000116

8/9/2019 CREW FOIA 2014-006851-0001156

11/23

8/9/2019 CREW FOIA 2014-006851-0001156

12/23

CREW FOIA 2014 006851 000116

8/9/2019 CREW FOIA 2014-006851-0001156

13/23

CREW FOIA 2014 006851 000116

8/9/2019 CREW FOIA 2014-006851-0001156

14/23

8/9/2019 CREW FOIA 2014-006851-0001156

15/23

CREW FOIA 2014 006851 000117

8/9/2019 CREW FOIA 2014-006851-0001156

16/23

CREW FOIA 2014 006851 000117

8/9/2019 CREW FOIA 2014-006851-0001156

17/23

CREW FOIA 2014 006851 000117

8/9/2019 CREW FOIA 2014-006851-0001156

18/23

CREW FOIA 2014 006851 000117

8/9/2019 CREW FOIA 2014-006851-0001156

19/23

8/9/2019 CREW FOIA 2014-006851-0001156

20/23

CREW FOIA 2014 006851 000117

8/9/2019 CREW FOIA 2014-006851-0001156

21/23

8/9/2019 CREW FOIA 2014-006851-0001156

22/23

CREW FOIA 2014 006851 000117

8/9/2019 CREW FOIA 2014-006851-0001156

23/23

CREW FOIA 2014-006851-0001156

Documents