Non-responsive

CREW FOIA 2014-006851-0001213

Non-responsive

CREW FOIA 2014-006851-0001214

Non-responsive

CREW FOIA 2014-006851-0001215

Non-responsive

CREW FOIA 2014-006851-0001216

Non-responsive

CREW FOIA 2014-006851-0001217

Non-responsive

CREW FOIA 2014-006851-0001218

Non-responsive

CREW FOIA 2014-006851-0001219

Non-responsive

CREW FOIA 2014-006851-0001220

Non-responsive

CREW FOIA 2014-006851-0001221

Non-responsive

CREW FOIA 2014-006851-0001222

Non-responsive

CREW FOIA 2014-006851-0001223

Non-responsive

CREW FOIA 2014-006851-0001224

Non-responsive

CREW FOIA 2014-006851-0001225

Non-responsive

CREW FOIA 2014-006851-0001226

Non-responsive

CREW FOIA 2014-006851-0001227

Non-responsive

CREW FOIA 2014-006851-0001228

Non-responsive

CREW FOIA 2014-006851-0001229

Non-responsive

CREW FOIA 2014-006851-0001230

Correspondence Management System Control Number: AX-13-001-1431 Printing Date: October 22, 2013 11 :32:29

Citizen Information

Citizen/Originator: Greco, Ill, Robert L. Organization: American Petroleum Institute

Address: 1220 L Street, NW, Washington, DC 20005-4070

Constituent: N/A

Committee: N/A Sub-Committee: N/A

Control Information

Control Number: AX-13-001-1431 Alternate Number: N/A

Status: For Your Information Closed Date: N/A

Due Date: N/A #of Extensions: 0

Letter Date: Oct 11, 2013 Received Date: Oct 21, 2013

Addressee: AD-Administrator Addressee Org: EPA

Contact Type: EML (E-Mail) Priority Code: Normal

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

File Code: 401_127 _a General Correspondence Files Record copy

Subject: Daily Reading File - Request for Reconsideration of EPA's Final Rulemaking "Regulation of

Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Final Rule" issued on August 15,

2013 (Docket ID No. EPA-HQ-OAR-2012-0546)

Instructions: For Your Information -- No action required

Instruction Note: N/A

General Notes: N/A

CC: OEAEE - Office of External Affairs and Environmental Education

Lead Information

Lead Author: N/A

Lead Assignments:

Assigner Office

Supporting Information

Supporting Author: N/A

Supporting Assignments:

!Assigner lattice I Jacqueline Leavy I OEX

History

!Action By lattice I Jacqueline Leavy I OEX

Comments

Assignee Assigned Date Due Date Complete Date

No Record Found.

!Assignee I Assigned Date

IOAR I Oct 22, 2013

!Action !Date

I Forward control to OAR I Oct 22, 2013

Page 1of2

CREW FOIA 2014-006851-0001231

I

October 11, 2013

The Honorable Gina McCarthy Administrator United States Environmental Protection Agency 1200 Pennsylvania Avenue, NW Washington, DC 20460

Robert L. Greco, III Group Director Downstream & Industry Operations

1220 L Street. :-;w Washington. DC 20005-4070 USA Telephone Fax Email www.api org

202-682-8167 202-682-805 J

greco@api.org

Re: Request for Reconsideration of EPA 's Final Rulemaking "Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Final Rule" issued on August 15, 2013 (Docket ID No. EPA-HQ-OAR-2012-0546).

Dear Administrator McCarthy:

The American Petroleum Institute ("API") submits this petition for administrative reconsideration of the final rule entitled "Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Final Rule" published at 78 Federal Register 49794 (August 15, 2013) pursuant to section 307(d)(7)(B) of the Clean Air Act, 42 U.S.C. § 7607(d)(7)(B). It was impracticable for API to raise the objections raised in this petition during the public comment period - because they became known after the period for public comment (indeed, only when EPA published the final rule) - and these objections are of central relevance to the outcome of the rule.

API is a national trade association representing more than 500 companies involved in all aspects of the oil and natural gas industry, including those that are the obligated parties under the Renewable Fuel Standard ("RFS"). Our industry supports the use of biofuels, but the RFS is unrealistic and unworkable and should be repealed by Congress. EPA's implementation of the program contributes to the problem, and the 2013 Final Rule is no exception.

Three specific issues in the rulemaking to establish the 2013 standards merit reconsideration: (1) EPA failed to use the October 2012 EIA information regarding gasoline and diesel production estimates for 2013 and instead improperly relied on EIA information from 2013, after the compliance period began; (2) EPA's methodology to establish the cellulosic standard in 2013 continues to be flawed, and information clearly available to the Agency before the rule was finalized exposes this flawed methodology; and (3) EPA granted a small refiner exemption that improperly and retroactively raised the obligation for other obligated parties.

Use of New EIA Data EPA failed to use the October 2012 EIA information regarding gasoline and diesel production estimates for 2013, even though the Agency proposed using this data set. Instead, EPA's final rule used EIA information

CREW FOIA 2014-006851-0001232

from 2013 - after the compliance period began. EPA did not propose this new methodology to set the standards, and API could not have raised its objections with this approach in the comment period.

Clean Air Act Section 211(o)(3) states: (3) Applicable percentages (A} Provision of estimate of volumes of gasoline sales Not later than October 31 of each of calendar years 2005 through 2021, the Administrator of the Energy Information Administration shall provide to the Administrator of the Environmental Protection Agency an estimate, with respect to the following calendar year, of the volumes of transportation fuel, biomass-based diesel, and cellulosic biofuel projected to be sold or introduced into commerce in the United States. (B} Determination of applicable percentages

{i}!n general Not later than November 30 of each of calendar years 2005 through 2021, based on the estimate provided under subparagraph {A), the Administrator of the Environmental Protection Agency shall determine and publish in the Federal Register, with respect to the following calendar year, the renewable fuel obligation that ensures that the requirements of paragraph (2) are met.

EPA's Proposed Rule states1:

"The Act requires EPA to base the standards on an EIA estimate of the amount of gasoline and diesel that will be sold or introduced into commerce for that year. The four separate renewable fuel standards for 2013 are based on the gasoline, ethanol, diesel, and biodiesel consumption volumes projected by EIA. [Footnote: Letter, Adam Sieminski, Administrator, U.S. Energy Information Administration, to Lisa P. Jackson, Administrator, U.S. EPA, October 18, 2012.}

The Clean Air Act directs EPA to set the subsequent year's standards based on the EIA estimate due October 31. EPA has no discretionary authority to use other subsequent estimates, and EPA gave no indication in the Proposed Rule that the Agency would consider using other estimates. It was not appropriate for EPA to solicit EIA for a revised fuel demand estimate, and it was improper for EPA to set the volume obligations based on the new information.

EPA acknowledges the tardiness of the rule, and explains that its delay is the rationale for using more up to date information. Conventional wisdom might suggest that the most up-to-date transportation fuel demand information will render the most accurate results, but, in reality, this assumption founders.

Obligated parties must acquire the proper number of RINs to demonstrate compliance. Regulatory certainty before January 1 of the compliance year is needed for efficient planning and logistics purposes. The 2013 RFS proposed rule which was published late on February 7, 2013 included an RFS total renewable standard of 9.63%; the final rule published on August 15, 2013 revised that standard to 9.74%. This change can have material impact on obligated parties' compliance plans.

1 "Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Proposed Rule." Federal Register Vol. 78,

No. 26 (February 7, 2013): 9302

2

CREW FOIA 2014-006851-0001233

Due to the forward-looking projections required by statute, the RFS will always have inherent variability with respect to the transportation demand projections (see chart below). Congress recognized the need for regulatory certainty by requiring final rules by November 30, regardless of future changes in transportation demand. EPA acted outside its scope of authority in establishing RFS requirements that were based on information made available so late into the compliance period. EPA placed the May gth EIA information in the docket on August 15th, raising additional concerns that the Agency is acting in a manner that total disregards obligated parties' need for regulatory certainty and only complicates compliance.

2% Actual vs. STEO projection % change 0%

-2%

-4%

-6% 1

-8%

2008 2009

Gasoline

EPA's Cellulosic Biofuel Methodology

2010 2011 2012

Gasoline + Distillate

Based on October STEO and EIA data on actual fuel consumption

API provided comment to the Proposed Rule to establish the 2013 cellulosic standard stating that the proposed cellulosic standard was aspirational, arbitrary, and out of touch with reality. EPA has apparently not changed its "self-fulfilling prophesy" approach as EPA has failed to adopt a neutral methodology in the proposed or final rules. The final 2013 requirements are volumetrically lower than what was proposed, yet the Proposed Rule and Final Rule are equally unrealistic considering that the final was published so late in the year. New information now available clearly demonstrates that EPA's methodology and process used to develop the final 2013 standards were flawed and merit reconsideration. The information recently made available is regarding the capability of the KiOR facility in Columbus, Mississippi to meet its share of EPA's projected cellulosic production.

EPA finalized a cellulosic biofuel requirement that presumes a capability by KiOR to produce 3 to 4 million physical gallons (5 to 6 million ethanol equivalent gallons) of cellulosic biofuel. EPA supports this estimate with the fact that KiOR's Columbus, Mississippi facility began production in March 2013; and on May gth the

3

CREW FOIA 2014-006851-0001234

company projected total 2013 production in the range of 3 to 5 million physical gallons. The May 9th

conference call statement from KiOR President and CEO Fred Cannon below provides additional context:

"we expect that total fuel production during the second quarter will range between 300,000 & 500,000 gallons, keeping us on track to fall within our projected production range of 3 million to 5 million gallons for 2013.

EPA EMTS data show about 5,000 physical gallons were produced in March; and continuous production was apparently not achieved as evidenced by the lack of cellulosic RIN regeneration in April or May. EMTS shows an additional 68,000 physical gallons were produced in June, far short of KiOR's projected 300,000 to 500,000 gallons second quarter production. KiOR's inability to ramp up to meet its production goal for the 2"d quarter of 2013, combined with the miniscule 1st quarter 2013 volume raises serious doubt that the

company will meet its earlier projection of production for the entire 2013 calendar year.

In EPA's discussion of the viability of INEO's production facility, the Final Rule notes that initial production was announced on July 31, indicating EPA did continue to track individual cellulosic producer progress immediately prior to finalizing the rule. Yet, EPA's own EMTS data available in late July showed KiOR production estimates from May were no longer realistic. EPA apparently continued to rely on public

statements from KiOR made in May that were clearly outdated.

Immediately after EPA made a pre-publication version of the final 2013 standards available, KiOR held a conference call on August 3th to discuss second quarter results. The company announced expectations to produce 1 to 2 million gallons of cellulosic biofuel in 2013, and to achieve normal, steady-state optimal operations at the Columbus facility in the first half of 2014. The news indicates that EPA either did not continue to track KiOR's progress, or that EPA did continue to monitor progress but intended to set aspirational standards. It is additionally concerning that EPA appears to be inconsistent in evaluating individual cellulosic facilities, selectively using information that increases the standard.

API has some concerns with EPA's use of cellulosic producer information obtained in the compliance period. However, very little cellulosic biofuel has been produced and unlike our concerns with the use of more recent EIA information raised earlier, obligated parties likely would not have behaved differently in the first 8.5 months of the year to comply with the cellulosic standard. API does not take position in this petition on the appropriateness of using cellulosic producer information obtained in the compliance period; the most recent information merely demonstrates how EPA continues to implement the standard with a

flawed methodology, which is the basis for requiring reconsideration. EPA needs to use a more accurate methodology such as basing the volume on actual cellulosic production, rather than using selectively chosen, optimistic projections from companies when history shows are consistently wrong.

4

CREW FOIA 2014-006851-0001235

EPA should immediately reconsider the cellulosic biofuel standard and use a methodology that takes neutral aim at accuracy, as directed by the U.S. Court of Appeals for the D.C Circuit. API continues to recommend using three months of actual cellulosic production.

KiOR's ability to produce even the revised 1 to 2 million gallon estimate for 2013 is far from certain. On August 201

h, a class action complaint was filed with the U.S. District Court; Southern District of Texas seeking to recover damages from KiOR's alleged violations of the Securities Exchange Act. The complaint claims that KiOR: "continued to falsely reassure investors that the company remained on track to achieve commercially meaningful biofuel production levels at the Columbus facility." While the lawsuit was only recently filed and will likely not be settled or decided for some time, EPA should be following these developments when considering how it will establish a methodology that aims at accuracy when developing projections for 2014 and beyond. API raised concerns for several years that potential cellulosic producers' volume estimates and timeframes have historically been overly-optimistic, and KiOR is no exception.

Most recently, EPA made EMTS data available for August 2013 which show that no D3 or D7 RINs were generated in this month, indicating that companies have not achieved steady state production of cellulosic biofuels. This information also lends further credibility to the API suggested methodology of using three consecutive months of producer data in setting the standard.

Small Refiner Exemption The Clean Air Act allows for small refiner exemptions and/ or extensions based on an EIA study, or on a case by case basis as determined by EPA. EPA's timeliness in rulemaking development is critical to the implementation of the small refiner provisions. In the Final Rule, EPA references the following statements made in the Final Rule establishing the 2011 standards:

"EPA believes the Act is best interpreted to require issuance of a single annual standard in November that is applicable in the following calendar year, thereby providing advance notice and certainty to obligated parties regarding their regulatory requirements. Periodic revisions to the standards to reflect waivers issued to small refineries or refiners would be inconsistent with the statutory text, and would introduce an undesirable level of uncertainty for obligated parties"

API agrees with the statement above, and reiterates the need for regulatory certainty. Although EPA indicated in the proposal that the Agency believed it could continue to consider exemptions on a case-by­case basis, obligated parties were expecting prompt finalization of the rule, which would have limited the period of uncertainty. EPA should not have reallocated the exempted party's obligation across the rest of the industry, especially when it was too far into the compliance period to be changing the required compliance for the first 8.5 months of the year.

Retroactive Rulemakings The 2013 RFS Final Rule indicated that EPA would extend the deadline for companies to demonstrate compliance with the 2013 RVO standards. API welcomes the change, but not for the reason EPA identified.

5

CREW FOIA 2014-006851-0001236

Not only does the text of the 2013 RFS Final Rule as published in the August 15, 2013 Federal Register indicate that EPA expects to be late in issuing the final 2014 standard, it, in effect, shows that the Agency expects to be as much as six months late! It increasingly appears that EPA will not meet the November 30, 2013 deadline for finalizing the 2014 RFS standards. The Agency should strive to issue the rules on time. Effectively stating in August 2013 that an annual rulemaking (which should by now be a routine process) could take another 10 months to promulgate is a tacit admission that the agency isn't concerned about

issuing timely RFS rules.

EPA's habitual delays in promulgating the annual RFS standards are unacceptable and fundamentally unfair. Obligated parties need this information ahead of the compliance year - as the Clean Air Act clearly requires EPA to do - in order to make operational, logistics, and investment decisions. If EPA is unwilling or unable to meet the statutorily required dates, API may seek judicial assistance in enforcing the deadlines. Furthermore, the uncertainties created by the ethanol blendwall in 2013 and beyond are enormous, and EPA is only adding to the uncertainty with retroactive rules.

Conclusion The issues outlined above collectively show that EPA is not effectively implementing the RFS, and the Agency's 2013 Final Rule continues the pattern of overly aggressive implementation of an unrealistic mandate. The ethanol blendwall remains our industry's biggest concern with the RFS, and EPA continues to exacerbate the problem. EPA not only fails to use its discretionary authority to mitigate the problem but, as described in this petition, EPA exceeds its authority in ways that only advance the timing and severity of the ethanol blendwall. EPA should expeditiously grant this petition.

We appreciate your attention to these issues, and look forward to your response. If you have any questions regarding this petition, please don't hesitate to contact us.

Sincerely,

Robert L. Greco, Ill Group Director, Downstream & Industry Operations

cc: Chris Grundler

6

CREW FOIA 2014-006851-0001237

Correspondence Management System Control Number: AX-13-001-1436 Printing Date: October 22, 2013 02:45:01

Citizen Information

Citizen/Originator: Blackburn, Jennifer Organization: National Sorghum Producers

Address: 4201 North Interstate 27, Lubbock, TX 79403

Constituent: N/A

Committee: N/A Sub-Committee: N/A

Control Information

Control Number: Status: Due Date: Letter Date: Addressee: Contact Type: Signature:

AX-13-001-1436

Pending

Nov 5, 2013

Oct18,2013 AD-Administrator

Alternate Number: Closed Date: #of Extensions: Received Date: Addressee Org:

N/A

N/A

0 Oct 21, 2013 EPA

EML (E-Mail) Priority Code: Normal DX-Direct Reply Signature Date: N/A

File Code: 404-141-02-01_141 _b Controlled and Major Corr. Record copy of the offices of Division

Directors and other personnel. Subject:

Instructions:

Renwable Fuel Standards as a means to reduce dependence upon foreign oil, to reduce

greenhouse gasses, and to create domestic jobs through the development of a domestic

industry .. Volume requirements for 2014 should reflect that intent through supporting

continued investment in domestic production, especially of advanced biofuels.

DX-Respond directly to this citizen's questions, statements, or concerns

Instruction Note: N/A General Notes: N/A

CC: OEAEE - Office of External Affairs and Environmental Education

Lead Information

Lead Author: N/A

Lead Assignments:

Assigner Office Assignee Assigned Date Due Date Complete Date

Brenda Salvador OEX OAR Oct 22, 2013 Nov 5, 2013 N/A

Instruction: AD-Prepare draft response for the Administrator's signature

Supporting Information

Supporting Author: N/A

Supporting Assignments:

I Assigner I Office

History

!Action By !office

!Assignee I Assigned Date

No Record Found.

!Action !Date

Page 1of2

CREW FOIA 2014-006851-0001238

October 18, 2013

Administrator Gina McCarthy

Environmental Protection Agency

1200 Pennsylvania Avenue, N.W.

Washington, DC 20460

Dear Administrator McCarthy:

As the Environmental Protection Agency moves to set 2014 Renewable Volume Obligations, National

Sorghum Producers would like to express strong support for continued growth in the renewable fuels

sector for both traditional and advanced biofuels.

Sorghum feedstocks join a small but increasingly diverse set of biofuels and emerging production

technologies, which will increase the volume of available advanced biofuels beyond the two current

major sources of advanced biofuels: biomass-based diesel and Brazilian sugar cane-based ethanol.

Grain sorghum-based ethanol production using biogas and combined heat and power (CHP) was

approved as a pathway in early 2013 and is expected to produce approximately 50 million gallons in

2014. Additionally, NSP currently has a pending pathway application before the EPA for sorghum oil and

has a plant waiting on approval to start producing biodiesel using this oil, and NSP expects 2.5 million

gallons, equivalent to 3.75 million RINs, of sorghum oil-based biodiesel to be produced in 2014.

NSP also currently has pending pathway applications for biomass and sweet sorghum with hopes to

begin production in early 2015. Both feedstocks represent new and growing production capacity that

could be impacted by the precedent set with EPA's 2014 volume requirements for advanced biofuels.

NSP urges the EPA to approve a volume level for advanced biofuels in 2014 that reflects current

advanced biofuels production. NSP also requests consideration is given to the sorghum capacity

currently projected to be produced in 2014 and 2015, plus any predictable increases in other advanced

biofuels during that timeframe. Current production of domestic advanced biofuels suggest an

appropriate volume should be well above the 2.75 billion gallon 2013 volume requirement which will be

met this year, largely by domestic producers, and closer to the 2014 level of 3.75 billion gallons in

statute.

4201 North Interstate 27 •Lubbock, Texas 79403 •phone: (806) 749-3478 •fax: (806) 749-9002

www.sorghumgrowers.com

CREW FOIA 2014-006851-0001239

Further, NSP urges the EPA to carefully calibrate its attempts to deal with current blend wall concerns to

also support the near-term and long-term investments in sorghum based ethanol production and other

advanced biofuels underway today. Setting an RVO for advanced biofuels that doesn't provide for

current production and continuing growth will put a damper on current and future investment in

advanced biofuels.

Congress established the RFS as a means to reduce dependence upon foreign oil, to reduce greenhouse

gasses, and to create domestic jobs through the development of a domestic industry. Volume

requirements for 2014 should reflect that intent through supporting continued investment in domestic

production, especially of advanced biofuels.

Sincerely,

Chairman, National Sorghum Producers

JS:jb

cc: USDA Secretary of Agriculture Tom Vilsack

CREW FOIA 2014-006851-0001240