Document nNQnbyZxwyxv4avzn6vOkjBp2

To: Dravis, Samantha[dravis.samantha@epa.gov]; Gunasekara, Mandy[Gunasekara.Mandy@epa.gov]; Bolen, Brittany[bolen.brittany@epa.gov] Cc: Inge, Carolyn[lnge.Carolyn@epa.gov]; Kime, Robin[Kime.Robin@epa.gov]; 'Gene Gebolys'[ggebolys@worldenergy.net] From: Larry Schafer Sent: Wed 5/24/2017 7:52:37 PM Subject: Follow up - Biodiesel Industry Meeting w OMB related to the RVO proposed rule Final - World Energy Letter to EPA on RVO Volumes May 23.pdf OMB S-23-2017.pdf Hey Samantha, Mandy and Brittany: Hope you are well. Yesterday, our team met with OMB. Kent Engelbrecht, ADM, Chairman of the National Biodiesel Board (NBB) Gene Gebolys, CEO of World Energy, Co-Chair of NBB's 2018 RVO Working Group Gary Haer, REG, Co-Chair of NBB's 2018 RVO Working Group Jonathan Phillips, COO and General Counsel, RBF Port Neches, LLC ULiLiUMLJ Combined these 4 companies own approximately 20 domestic biodiesel and renewable diesel facilities and produce over 1 billion gallons of biodiesel and renewable diesel. Larry Schafer, CEO Playmaker Strategies Anne Steckel, VP of Federal Affairs, National Biodiesel Board We provided the attached Power Point Presentation as background for the discussion. 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007890-00001 Attached too is a letter from Gene Gebolys CEO of World Energy which highlights how important the rule of law is in implementing the RFS program. In brief: We agree with Administrator Pruitt in that EPA should follow the rule of law and implement laws as Congress intended. World Energy shares this sentiment. Increasing the domestic production and use of Advanced Biofuels was clearly one of the primary goals of the Energy Independence and Security Act of2007 (P.L. 110-140). In EISA, Congress sought "[t]o move the United States toward greater energy independence and security, [and] to increase the production of clean renewable fuels." Specifically, EISA "set forth the minimum annual volumes for each year... and defined transportation fuel to include both gasoline and diesel fuel." In our letter, we encourage EPA through the annual RVO rulemaking process to follow the statute and implement volumes for Advanced Biofuels and Biomass-based Diesel in a manner that is consistent with the intent of Congress and that captures the full potential of the biodiesel and renewable diesel industries, which is capable of producing at least 5.25 billion gallons of Advanced Biofuels in 2018. This is basically a status quo ask from our industry. Due to the RIN values established by Congress by statute, this amounts to only 2.94 billion gallons of biodiesel and renewable diesel. By point of reference, nearly 2.9 billion gallons of biodiesel and renewable diesel were consumed domestically in 2016. We think it is wholly appropriate to set next year's volume level for biodiesel and renewable diesel at a level that is at a minimum consistent with last year's actual usage level. The biodiesel industry has made great strides in producing domestic energy and diversifying our nation's fuel supply. We have done what Congress has asked us to do and we are creating real manufacturing jobs, generating tax revenue and improving our energy security. We encourage you to take this new opportunity to support the RFS as Congress intended and to support higher RVOs for Advanced Biofuels. Thank you for consideration. Please look at your calendars for Monday June 19 and Tuesday June 20th. Our team will be back 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007890-00002 in DC at that time and would like the opportunity to meet with you all. Again, thank you. Larry Schafer Playmaker Strategies 202.997.8072a 750 Ninth Street NW Suite 650 Washington DC 20001 Lschafer@PlavmakerStrategies.com www.PlavmakerStrategies.com From: Dravis, Samantha [mailto:dravis.samantha@epa.gov] Sent: Friday, May 19, 2017 1:19 PM To: Larry Schafer <lschafer@playmakerstrategies.com>; Gunasekara, Mandy <Gunasekara.Mandy@epa.gov>; Bolen, Brittany <bolen.brittany@epa.gov> Cc: Inge, Carolyn <Inge.Carolyn@epa.gov>; Kime, Robin <Kime.Robin@epa.gov>; 'Anne Steckel' <asteckel@biodiesel.org> 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007890-00003 Subject: RE: Follow up -- Biodiesel Industry Meeting Request for Tuesday May 23 ... Thank you for the note, Larry. Next Tuesday is rather crowded on the calendar over here and I am not able to meet that day, I'm sorry. I am happy to read any follow up materials you would like to send over. Thanks again. Samantha From: Larry Schafer [mailto:lschafer@playmakerstrategies.com] Sent: Friday, May 19, 2017 11:55 AM To: Gunasekara, Mandy <Gunasekara.Man.dy @, ep3.gov>: Bolen, Brittany <bolen.brittany@,epa.gov>: Dravis, Samantha <dravis.samantha@,epa.gov> Cc: Inge, Carolyn <Itige.Carolyn.@epa.gov>: Kime, Robin <Kime.Robin.@epa.gov>: 'Anne Steckel' <asteckel @bi odi esel. org> Subject: Follow up -- Biodiesel Industry Meeting Request for Tuesday May 23 ... Mandy, Samantha, Brittany: We really appreciate the time you have all spent with different folks from the biodiesel industry over the past couple of weeks. On Tuesday May 23rd four leaders from the Biodiesel Industry will be in Washington DC for a meeting with the Office of Management and Budget to discuss the 2018 RVO proposal. We would like to meet with you that same day. Do you have availability any time after noon on that day? 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007890-00004 Issues: Our industry is unified on what we think are the appropriate volumes of Advanced Biofuels for 2018 and Biomass-based Diesel for 2019. This RVO process is new to all of us and we have worked hard to give you a realistic view of our industry. As we move through this process we want to be a resource for your team. We would like to continue that discussion with you and our leadership team next week. Our team: Kent Engelbrecht, ADM, Chairman of the National Biodiesel Board (NBB) Gene Gebolys, CEO of World Energy, Co-Chair of bJBR's 2018 RVO Working Group Gary Haer, REG, Co-Chair of NBB's 2018 RVO Working Group Jonathan Phillips, COO and General Counsel, RBF Port Neches, EEC Combined these 4 companies own approximately 20 domestic biodiesel and renewable diesel facilities. Larry Schafer, CEO Playmaker Strategies Anne Steckel, VP of Federal Affairs, National Biodiesel Board Thank you. Please let me know if we can coordinate a meeting for Tuesday afternoon. 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007890-00005 f*L,AYMAmmm StratomcS' llc Larry Schafer Principal Playmaker Strategies, LLC 750 Ninth St, NW, Suite 650 Washington, DC 20001 Phone: (202)997-8072 Email: Lschafer@PlavmakerStrategies.com Www: www.plavmakerstrategies.com From: Gunasekara, Mandy fmailto:Gunasekara.Mandv@epa.qovl Sent: Thursday, May 11, 2017 5:59 PM To: Larry Schafer; Bolen, Brittany Cc: Inge, Carolyn; Kime, Robin Subject: RE: Biodiesel Meeting Request for week of May 15 -- Biodiesel meeting follow up! Hi Larry, Apologize for the delayed response. Robin or Carolyn, can you help set up a call for Brittany and I this Friday (tomorrow). I'm flexible mid-afternoon. Best, 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007890-00006 Mandy From: Larry Schafer [mailto:lschafer@playmakerstrategies.coml Sent: Thursday, May 11, 2017 4:49 PM To: Gunasekara, Mandy <Gun.asekara.Maiidv@epa.gov>: Bolen, Brittany <bolen.brittany@,epa.gov> Cc: Inge, Carolyn <Inge.Carolyn@epa.gov>; Kime, Robin <Kime.Robin@epa.gov> Subject: Fwd: Biodiesel Meeting Request for week of May 15 -- Biodiesel meeting follow up! Mandy and Brittany Hope you are well Can we discuss how to make this meeting happen? It's really important to our industry that we have a chance to continue our dialogue with you about the role of biodiesel in the RFS. Perhaps a call on Friday? Thank you. Larry Schafer Playmaker Strategies 202.997.8072 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007890-00007 May 23, 2017 The Honorable Scott Pruitt Administrator U.S. Environmental Protection Agency 1200 Pennsylvania Avenue, NW Washington DC 20460 Re: 2013 RVO for Advanced Biofuels and the 2019 RVO for Biomass-based Diesel Dear Administrator Pruitt: As the U.S. Environmental Protection Agency (EPA) moves forward with setting the Renewable Volume Obligation (RVOs) for "Advanced Biofuels" for 2018 and "Biomass-based Diesel" for 2019 (biodiesel and renewable diesel) under the Renewable Fuel Standard (RFS), ! would encourage you to follow the law as directed by Congress for both programs. World Energy has been a leader in biofuel supply since the inception of the biodiesel industry fully two decades ago and is one of America's largest suppliers of biodiesel offering over 200 Million gallons of annual biodiesel production from four plants in the United States. As a domestic energy producer, I can attest that policy certainty and the rule of law is vita! to our success. Recently, on March 9th at the CERAWeek conference, you said, "we need to provide certainty in the marketplace so that investments can be made to encourage growth and respect the rule of law" Additionally you discussed "regulatory overreach" and stated that the lawsuits you initiated while serving as Attorney General of Oklahoma, "were initiated largely because decisions were being made at the agency that didn't respect the statutory framework put forth by Congress" World Energy shares this sentiment. Increasing the domestic production and use of Advanced Biofuels was clearly one of the primary goals of the Energy Independence and Security Act of 2007 (P.L. HO MO). In EISA, Congress sought "[t]o move the United States toward greater energy independence and security, [and] to increase the production of clean renewable fuels." Specifically, EISA "set forth the minimum annual volumes for each year... and defined transportation fuel to include both gasoline and diesel fuel." Additionally, the D.C. Circuit Court found, Congress "directed" EPA "to ensure that transportation fuel sold or introduced into commerce in the United States ..., on an annual average basis, contains at least the applicable volume of renewable fuel" under the statute. Most recently on April 24, 2017 at oral argument before the D.C. Circuit Court in a challenge to EPA's waiver authority, Judge Brett Kavanaugh stated, "The point [of the statute] was to force the market to develop." He also said, "the statute doesn't seem to give EPA the authority to fix everything that is not working right." World Energy Boston World Energy Rome World Energy Harrisburg 185 Devonshire Street, Boston, MA. 02110 555 W Hermitage Road, Rome, GA. 30161 2850 Appleton Street Suite E, Camp Hill, PA.17011 (617)889-7300 (706)291-4829 (717)512-8195 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007891-00001 ' * energy Additionally, Judge Patricia Millett stated, "the whole reason this statute exists is to force front-end creation so there will be that material for consumers to use.,.. It seems a little odd to say that EPA ... could say ...we can waive all of these obligations." "That seems to be at war with the whole notion of change and seems to be the one place the Congress didn't want EPA to look." She also said, "When you do act, there has to be a framework." Therefore, we encourage EPA through the annual RVO rulemaking process to follow the statute and implement volumes for Advanced Biofuels and Biomass-based Diesel in a manner that is consistent with the intent of Congress and that captures the full potential of the biodiesel and renewable diesel industries, which is capable of producing at least 5.25 billion gallons of Advanced Biofuels in 2018. Due to the RIN values established by Congress by statute, this amounts to only 2.94 billion gallons of biodiesel and renewable diesel. By point of reference, nearly 2.9 billion gallons of biodiesel and renewable diesel were consumed domestically in 2016. We think it is wholly appropriate to set next year's volume level for biodiesel and renewable diesel at a level that is at a minimum consistent with last year's actual usage level. The biodiesel industry has made great strides in producing domestic energy and diversifying our nation's fuel supply. We have done what Congress has asked us to do and we are creating real manufacturing jobs, generating tax revenue and improving our energy security. We encourage you to take this new opportunity to support the RFS as Congress intended and to support higher RVOs for Advanced Biofuels. Thank you for consideration. Sincerely, Gene Gebolys President and CEO World Energy Boston World Energy Rome World Energy Harrisburg 185 Devonshire Street, Boston, MA. 02110 555 W Hermitage Road, Rome, GA. 30161 2850 Appleton Street Suite E, Camp Hill, PA.17011 17cv1906 Sierra Club v. EPA - 6/22 Production (617)889-7300 (706)291-4829 (717)512-8195 ED 001523 00007891-00002 2018 RFS AND 2019 BIOMASS-BASED DIESEL BIODIESEL, RENEWABLE DIESEL AND ADVANCED BIOFUELS Meeting with Office of Management and Budget May 23,2017 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00001 U.S. biodiesel and renewable diesel producers, feedstock providers, distributors and marketers members represent the entire value chain Kent Engelbrecht, ADM Chairman of NBB's Governing Board Gary Haer,REG Co-Chair of NBB's RVO WorkingGroup Gene Gebolys, World Energy Co-Chair of NBB's RVO WorkingGroup Jonathan Phillips, RBF Owner of the largest U.S. biodiesel plant, located near Houston, TX These four companies alone represent over I billion gallons of production capacity. 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00002 Congress "prioritized" growth "as occurring principally in advanced biofuels" (81 Fed. Reg. at 89,761) "Implied" conventional at 15 billion ethanol-equivalent gallons ' "Those targets need to be respected." - Scott Pruitt, Confirmation Hearing, Jan. 18, 201 7, quoted in Marc Heller, Pruitt: RFS targets `need to be respected,' E&E News, Jan. 19, 2017. 2016 RFS ' EPA estimated 2.5 billion gallons total biodiesel and renewable diesel as "maximum" - 80 Fed. Reg. at 77,444 ' Biomass-Based Diesel production alone exceeded 2.6 billion (over 4 billion RINs generated)* ' RIN Valuesconsistent 2017 RFS ' EPA set at 4.28 billion ethanol-equivalent gallons (over 4.29 billion advanced RINs generated)* ' First quarter RIN generation exceeds that of 2016 Biomass-Based Diesel is providing the environmental, economic and energy security benefits sought. *Based on EPA EMTS ............... 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00003 2018 RFS AND 2019 BIOMASS-BASED DIESEL -THERE IS MORE THAN * 2018 Advanced Biofuels -At least 5.25 billion ethanol-equivalent gallons can be easily achieved Biomass-Based Diesel needed would still be below domestic capacity Imports continue to increase and more available, registered capacity There is feedstock available No limitations on distributing and using B20 throughout diesel and distillate fuel market * 2019 Biomass-Based Diesel -At least 2.75 billion gallons Strong growth signals provide assurances for continued investment Certainty through timely action is key. The Biomass-based Diesel industry can and has responded. 4 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00004 U.S. Biomass-Based Diesel Market (millions of gallons) Source: EPA EMTS (data as of April 10, 2017) 3000 2500 2616 2000 1500 1000 500 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 BBD RFS Gallons EPA BBD Volume 2015 2016 2017 2018 2019 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00005 A 2.75 BILLION GALLON D4 MANDATE FOR UNDERMINE COMPETITION IN ADVANCED * 2.75 billion gallon BBD mandate supports competition by: * Retaining existing unused US capacity (<65% capacity utilization - based on EIA, not counting many closed/idled plants) * Expanding and diversifying US biodiesel capacity * Promoting additional distribution investments * Allowing for lower transportation costs with increased scale * BBD doesn't compete with other advanced fuels, e.g., cellulosic * No "crowding out" effect from increased D4 mandate * Supports certainty and increased investment in advanced biofuels * Only other commercial-scale advanced biofuel: sugarcane ethanol imports into gasoline market * Uses beyond motor vehicles 6 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00006 EPA estimates U.S. biodiesel registered capacity at approximately 3.5 billion gallons (81 Fed. Reg. at 89,782) EPA estimates U.S. renewable diesel registered capacity at approximately .7 billion gallons (81 Fed. Reg. at 89,872) 3.5 plus .7 = 4.2 billion gallons (>6 billion RINs) Then there's foreign registered production capacity and domestic D5 ' Over 4 Billion Gallons in D4 Registered Capacity (Imports discussed later) (as of May 2016) ' Over 4 Billion Ethanol-Equivalent Gallons in D5 Foreign Registered Capacity (Genscape) ' Over 1 Billion Ethanol-Equivalent Gallons in D5 Domestic Capacity (Genscape) ' Almost 800 Million Gallons in D3/D7 Foreign/Domestic Capacity (Genscape) Around 18 Billion Potential Available RINs. 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00007 Imported fuel Domestically produced fuel Foreign Capacity - Active' Domestic Registered Capacity 3500 3000 Totals = 1,162 MG 2500 2000 1500 3.000 ttBHHB 500 m o Data collected from U.S. EPA EMTS *From Key Countries 2012 Biodiesel and Renewable Diesel (millions of gallons) 1,985 MG 1,976 MG 2,093 MG 2013 2014 Year 2015 More than 6.8 2.6 BG* billion gallons in registered capacity 4.2 BG 2,890 MG 20ie 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00008 Animal Fats 14% 17cv1906 Sierra Club v. EPA 6/22 Production ED 001523 00007892-00009 Cents per Pound Cents per POund Feedstock Prices with BBD RVOat 2.75 billion in 2019 and Advaned Biofuels RVOat 5.25 billion in 2018 45.00 45 40.00 40 35.00 35 30.00 30 25.00 25 20.00 20 15.00 15 10.00 10 5.00 0.00 2018 lChoice White Grease Soybean Oil Yellow Grease *nni2012-16 ave SBO 2019 2012-16 ave YG 5 0 2012-16 ave CWG 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00010 MORE THAN SUFFICIENT FEEDSTOCH 2017 TRENDS INDICATE INCREASED I an Stocks-to-Use 600 574 Ending Stocks Stocks-to-Use Ratio 20 8M 500 v 400 , \ ttjr VAN TRUMP '* Report 44 IS tM i 300 ^P5 214 T91 197/^ 10 aoo Sj 38 151. 4 141 191 197/ / 92 - 5 TOO 0 0 / f ./ Source: Data uip*wd4ast*ewd(iwitithh iAnpnrill 1111,2*W0M1T7r W WAAQSDDEF *dlatta Large projected US supplies of vegetable oils * Record US soybean acreage in 2017 (Mar Prospective Plantings Report) * Stocks to Use ratio projected to be 2x recent years Record US meat production (2017 AgOutlook Forum) Large South American crop harvested (WASDE) 11 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00011 MORE THAN SUFFICIENT FEEDSTOC cvdamciam ci a i iruTrniKir r* a Pork Packing Capacity Expansion Plans Fall 201.6 Daily Hd Fall 2017 Wm Fall 2018 Pleasant Hope, MO 2 500 625,000 2,500 625,000 2,500 625,000 Windom, MN 4,000 1,000,000 4,000 1,000,000 Sioux Gity.lA 12,000 3,000,000 12,000* 3,000,000 Coldwator, Ml 10,000 2,500,000 10,000 2,500,000 Wright County, IA 10,000 2,500,000 Total 2,500 625,000 28,500 7,125,000 38,500 9,625,000 Head per week 12,019 137,019 185,096 Pet of `15 avg - 2.195 mil. 0.5% 6.2% 8.4% Pet of '15 max = 2.507 mil. 0.5% 5.5% 7.4% 'This plant could process 20,000 head per clay if double-shifted by the end. of 2018 Last Update* 11/2/16 12 ^checkoff 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00012 MORE THAN SUFFICIENT FEEDSTOO EXPANSION OF OILSEED PROCESSIN Recent Headlines * Ag Processing Inc. to Construct Soybean Processing Plant in South Dakota--Dec 12,2016 * Zeeland Farm Services building second soybean facility in Ithaca --October 5, 2016 * Minnesota Soybean Processors to pursue ND soybean processing plant --Feb 8, 2017 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00013 2018 Advanced Biofuel = at least 5.25 billion gallons 2019 Biomass-based Diesel Volume - at least 2.75 billion gallons 17cv1906 Sierra Club v. EPA - 6/22 Production ED 001523 00007892-00014