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Schwab, Justin [/0=EXCHANGELABS/OU=EXCHANGE ADMINISTRATIVE GROUP (FYDIBOHF23SPDLT)/CN=RECIPIENTS/CN=EED0F609C0944CC2BBDB05DF3A10AADB-SCHWAB, JUS] 5/9/2017 7:41:31 PM John Duff [john@sorghumgrowers.com] Tim Lust [tim@sorghumgrowers.com]; Chris Cogburn [chris@sorghumgrowers.com]; Bernadette Bern Rappold, Esq. [rappoldb@gtlaw.com]; dohales@gtlaw.com Re: Sorghum Oil Update
Thank you for these materials and this discussion.
Sent from my iPhone
> On May 9, 2017, at 3:38 PM, John Duff <john@sorghumgrowers.com> wr ot e: > > Dustin, > > This email includes al1 the information relevant to the sorghum oi1 pathway process. The emai1 includes a 1arge amount of informati o n , so I have groupedsi mi 1ar pi eces of informati on and included bold headi ngs and bri ef itali ci zed summari es of each group for ease of reference. > > Applicable Executive Orders > > The provi sions of Executive Order 13771 requi ri ng two regulati ons be elimi nated for every one issued do not apply gi ven approvi ng sorghum oi1 is a permi tti ng acti on that imposes no compli ance cost. Furthermore, thi s Order as well as EO 13783 demonstrate intent by the Admi ni strati on to streamli ne the regulatory process and remove regulatory obstacles for busi nesses. > > On our May 4 phone cal 1 with EPA staff, Sharyn Lie stated Executive Order 13771 would preclude a strai ghtforward rulemaki ng (or si mi 1ar approval)gi ven it would requi re two regulati ons to be eli mi nated as well. Thi s requi rement is not appli cable in thi s case gi ven approvi ng sorghum oi1 as a bi odi esel feedstock does not increase compliance costs but rather functions as a permit for the petitioners to engage in a busi ness activity. Subjecti ng our peti ti on for approval to EO 13771 would undermi ne the intent of the EO, whi ch was to reduce unnecessary costs of regulatory compliance. > > The Order states in section 1: "It is the poli cy of the executi ve branch to be prudent and financially responsible in the expenditure of funds, from both public and private sources." This demonstrates an intent for the process of approvi ng new regulati ons to be streamli ne d. An expedi ti ous approval of sorghum oi 1 as a bi odi esel feedstock would save si gni fi cant taxpayer resources and assi st U.S. companies subject to a renewable volume obii gati on with compli a n ce. In addi ti o n , we beli eve our proposed pathway is so si mi 1ar to exi sti ng pathways that approval by letter, rather than rul emaki ng (as EPA has done in the past), is appropriate. > > Similarly, secti on 1(c) of Executive Order 13783 states: > > "Accordingly, it is the policy of the United States that executive departments and agencies (agencies) immediately revi ew exi sti ng regulati ons that potential ly burden the development or use of domesti cal 1y produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domesti c energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law." > > In secti on 2, the Order further di rects: >
> "The heads of agenci es shal1 revi ew al1 exi sti ng regulati o n s , orders, gui dance documents, poli ci e s , and any other si mi 1ar agency acti ons (col 1ecti v e l y , agency acti ons) that potenti al1y burden the development or use of domesti cal 1y produced energy resources, with parti cular attenti on to oi1, natural g a s , coal,
and nuclear energy resources." > > It conti nues by defi ni ng "burden" in secti on 2 (b): > > "For purposes of thi s order, 'burden' means to unnecessari1y obstruct, delay, curtai1, or otherwi se impose si gni fi cant costs on the si ti n g , permi tti n g , producti o n , uti1izati o n , transmi ssi o n , or deli very of energy resources." > > Taken together, these secti ons demonstrate a desi re by the Admi ni strati on to remove regulatory obstacles to greater energy producti o n . When conducti ng its revi ew under EO 13783, we suggest the EPA examine ways to reduce the burden on renewable fuels producers. As described below, our lengthy journey to obtai n a permi t for a much-needed domesti c energy source is a perfect exampl e of the ki nd of burden the Admi ni strati on seeks to eli mi nate. > > Pathway peti ti on and related documents sent to EPA staff
Sierra Club v. EPA 18cv3472 NDCA
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> We have submitted three documents to EPA staff total ing 325 pages. The original peti ti on was submi tted in July 2016, and fol1ow-up submissions answeri ng staff questions were sent in January 2017 and Apri1 2017. We also sent a fol1ow-up answer to Aaron Levy on May 4. He assured us the questi on we answered with thi s emai1 would be the 1ast in thi s process. >
> The first three attachments consti tute our submi ssi ons to EPA staff. The first is the ori gi nal peti ti on submi tted in July 2016. The second incl udes our answers to thei r first round of questi ons submi tted in January 2017. The thi rd includes our answers to thei r second round of questi ons submi tted in Apri 1 2017. > > We answered thei r thi rd round of questi ons on May 4 with the fol1owi ng emai1 to Aaron Levy, who assured us vi a phone thi s would be al1 staff needs to finish the pathway. On the questi ons of a) why we are unable to provide separate market data for sorghum DDGS with oi1 and sorghum DOGS without oi 1 and b) why nutritionist Ryan Mass stated cattle feeders pay less for de-oi1ed DD GS: > > "Per our di scussi o n , these two statements are not contradi ctory. First, on the questi on of marketi ng sorghum DDGS wi th and wi thout oi1, the two products are not physi cally separated and sold as such by the ethanol producer. An ethanol producer depl oyi ng oi 1 extracti on for the first ti me will not change anythi ng wi th regard to stori ng or selling the D D GS. > > Second, on the questi on about D r . Mass's statement, he is correct in that cattle feeders do pay 1ess for DDGS wi thout oi1. However, he also emphasizes the dynami c nature of feed markets. Thi s applies to al1 feed ingredi ents as these are commodi ty markets and thus change on a mi nute-by-mi nute basi s . Therefore, feed buyers do pay di fferent pri ces for DDGS dependi ng on market condi ti ons for a mul ti tude of
ingredients. > > For example, 1ocal supply and demand of soybean oi1 often has a si gni fi cantly larger impact on the pri ce and needed quanti ty of oi1 in DDGS than the oi 1 content in DDGS itself. Other key pri ces in thi s calculation are the domestic and international supply and demand factors affecting energy as well as
1ocal avai1abi1ity of other energy sources. Pri ces of other ingredi en ts, such as protei n and starch, also exert influence. Thi s holds for both corn and sorghum DDGS as the change in composi ti on from sorghum DDGS wi th oi1 to sorghum DDGS wi thout oi1 is the same as the change in composi ti on from corn DDGS wi th oi 1 to corn DDGS wi thout oi 1 . > > As D r . Mass noted, species other than beef cattle (e.g ., poultry, swi ne and dai ry cattle) in many cases perform better on de-oi1ed DDGS. A n d , in the case of beef cattle, there is sti11 a 1arge amount of oi1 1eft to meet the animals' needs. Furthermore, as stated above, feed markets are dynamic and complex, and feed buyers continuously change the pri ce they are wi11ing to pay based on a number of factors. This is the same whether the ingredient in questi on is sorghum DDGS or corn DDGS." > > Modeli ng
>
> No new modeli ng is requi red as extensive modeli ng has al ready taken pi ace for related feedstocks and processes. Addi ng oi1 extracti on means sorghum ethanol producers should achi eve a footpri nt reducti on of approxi mately 35-40%. Thi s is because a) addi ng oi1 extracti on improves the envi ronmental footpri nt and b) sorghum ethanol has a better footpri nt than corn ethanol. > > As Aaron Levy verified vi a phone, addi ng oi1 extracti on to an ethanol producti on faci1ity actually improves the envi ronmental footpri nt of the ethanol produced from the de-oi1ed grai n (keep in mi nd a smaller footpri nt means a higher "score"). This is important as EPA staff is particularly interested in ensuri ng nothi ng related to the oi1 extracti on process will adversel y impact the footpri nt of the ethanol produced from the de-oi1ed grain. > > Per section V.C. of the RFS2 fi nal rule: > > "Based on the above, corn ethanol faci 1iti es usi ng natural gas or bi omass as the process energy source will meet the appli cable 20% GHG performance threshol d if it either al so uses at 1east two of the
technologi es Table V.C-6 or one of the technologi es in Table V.C-6 but marketi ng at 1east 35% of its DGS
as w e t . Alternatively, a faci1ity usi ng none of the advanced technologi es 1isted in Table V.C-6 will
qualify as produci ng ethanol meeti ng the 20% performance threshol d if it sel1s at 1east 50% of its DGS prior to drying." > > Here is the table to whi ch the passage refers: > > [Inii ne image 1] > > Thi s reference to corn oi1 extracti on as an advanced technology indi cates it improves the footpri n t . Furthermore, per the fol 1owi ng passage from secti on 1.4.1.3 of the RFS2 regulatory impact analysi s : > > "The oi1 recovered usi ng the corn oi1 extracti on process is di stressed oi 1 and cannot be sol d as a food grade product. Markets for thi s product do exi s t , however, as an addi ti ve to cattl e feed or as a bi odi esel feedstock. In addi ti on to generati ng an addi ti onal revenue stream, extracti ng the corn oi1 has several other benefi ts for the ethanol producer. Because the oi1 is an insulator, removi ng it improves the heati ng effi ci ency of the DGS dryers and reduces the energy demand of the ethanol pi a n t . Reduci ng the oi1 content of the DGS also improves its f1owabi1ity and concentrates its protei n content."
> > Thi s passage detai1s the reasons why corn oi1 extracti on improves the footpri n t , and the fol1owi ng table provi des a quanti fi cati o n . This table is included in the RFS2 noti ce of proposed rulemaki n g :
Sierra Club v. EPA 18cv3472 NDCA
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> [Inline image B] > > Noti ce adding corn oi1 fractionation (which in the notice of proposed rulemaking primarily means oi1 separated via centrifuge, or the process sorghum ethanol producers use) to a faci1ity producing DDGS improves the footpri nt by 8%. For a faci1ity produci ng W D G S , addi ng oi 1 extracti on improves the footpri nt by 3 %. The coproduct credi t is included in both cases. >
> Accordi ng to the grai n sorghum noti ce of data avai1abi1ity (EPA-HQ-OAR-2011-0542; FRL-9680-8), grai n
sorghum ethanol achi eves a 32% footpri nt reducti o n , easily meeti ng the 20% reducti on threshold necessary for qual ifi cati on as a conventi onal bi ofuel eli gi ble to generate RINs under RFS2. Accordi ngly, addi ng oi1 extracti on means sorghum ethanol producers should achi eve a footpri nt reducti on of approxi mately 35-40%. > > As noted above, EPA staff is parti cularly interested in ensuri ng nothi ng related to the oi1 extracti on process will adversely impact the footpri nt of the ethanol produced from the de-oiled grai n . Any adverse impacts would relate to the coproduct credit, whi ch improves the footpri nt by offsetti ng the amount of grai n needed to replace the grai n diverted away from the feed supply to produce ethanol. >
> It is important to note the modeli ng summari zed in table V I .C .1-2 above includes the coproduct credit. Given the si mi 1ari ties between corn and sorghum DDGS we have demonstrated in our submi ssi ons and sorghum's smal1er footpri n t , sorghum ethanol with oi1 extracti on has already been effectively modeled with the result bei ng an approxi mate 35-40% footpri nt reducti o n . Therefore, per EPA's own models, sorghum ethanol produced with de-oi1ed grai n easi ly qual ifi es as a conventi onal bi ofuel el igi bl e to generate RINs under RFS2. For thi s reason, sorghum oi1 quali fi es as a bi odi esel feedstock. > > Between the wealth of data we have provi ded and the si mi 1ari ties between sorghum oi1 and other grai n
oi 1s , the EPA has ample information that would al1ow it to quickly approve our pathway. In fact, the EPA's
pri or acti ons in approvi ng renewabl e fuel pathways suggest there is already 1egal precedent for more streamli ned acti o n . Wei 1 -researched, proven sources of energy 1ike our proposed pathway have usually quali fi ed for expedi ted approval wi thout the need for a 1engthy rulemaki n g . > > Legal precedents > > At 1east three precedents for expedi ti ous approval exi s t . The fi rst two were approvals of bi odi esel pathways (in 2013 and 2014) usi ng assumpti ons and models already approved. Nei ther approval incl uded a protracted process, and one requi red no new modeli ng at al1. The thi rd was an approval of al1 grai n kernel fi bers (in 2014) based on si mi 1ari ti es to corn kernel fiber. No modeli ng was performed for thi s approval at al 1 . > > Here is an excerpt Bernadette Rappold prepared for us detailing what EPA has done in the past: > > "Every element of our proposed pathway has been evaluated duri ng pri or pathway approvals, whi ch should provi de the EPA wi th most of the models and data needed to complete a qui ck analysi s . In parti cular, the
EPA's approval of renewable fuel pathways wi th non-food grade corn oi1 (NFGCO) and grai n sorghum feedstock
should provi de the necessary background and a bluepri nt for your analysi s of our proposed grai n sorghum oi1 pathway. > > Si nee 2013, several proposed pathways for bi odi esel produced from corn oi1 and other crop residue oils have been approved wi th mi ni mal addi ti onal analysi s because of thei r si mi 1ari ty to previously approved pathways. For exam pl e, in October 2013, the EPA approved a pathway peti ti on from Di amond Green Diesel ,
LLC, after compari ng DGD's proposal to exi sti ng modeli ng for three previ ously approved pathways that had
the same components as DGD's proposal. Although DGD's proposal included several feedstock options in
addi ti on to NFGCO (soybean oi1, canola oi1, and bi ogeni c waste oi1s/fats/greases), much of the EPA's
strai ghtforward analysi s uti1ized the assumpti ons and model s appli cable to the already approved hydrotreati ng process, NFGCO, and Cameli na satvi a oi1 feedstock, whi ch had al1 been careful 1y evaluated.
Similarly, in March 2014, the EPA determi ned that Duoni x Beatri ce's proposal to produce bi odi esel from
NFGCO, beef tal1ow, and/or yellow grease through transesteri fi cati on di d not even requi re a new fuel pathway peti ti on because of its si mi 1ari ty to exi sti ng approved pathways. > > lust 1i ke the DGD and Duoni x Beatri ce pathways, almost al1 aspects of our proposed pathway have been analyzed duri ng the approval process for NFGCO pathways. Gi ven the current industry practi ces of blendi ng
corn-based and sorghum-based di stillers' grai n s , we would expect any analysi s concerni ng the impact of
sorghum grai n oi1 feedstock to be vi rtual1y identi cal to the analysi s al ready conducted for corn oi 1 .
Further, in the EPA's luly 2014 RFS Pathways II rule identifying corn kernel fi ber as a crop residue
feedstock, it acknowledged the si mi 1ari ty between corn kernel fi ber and other grai n kernel fi b e r s : 'The impacts of fi ber on the di gesti on of rumi nants, swi n e , and poultry are extremely si mi 1a r , regardless of what grai n that fi ber came from, because al 1 grai n fi ber is vi rtual 1y 100 percent cel 1ul osi c . Therefore, we are confi dent that diverti ng that fi ber to a fuel producti on stream would have si mi 1arly insi gni fi cant market and other GHG impacts to those of corn kernel fi be r...' Envi ronmental Protecti on Agency; Regulati on of Fuels and Fuel Addi ti v e s : RFS Pathways I I , and Techni cal Amendments to the RFS Standards and E15 Mi sfueli ng Mi tigation Requi rements, 79 Fed. Re g. 42,150 (luly 18, 2014)." > > We beli eve the 1ast reference, in parti cular, is key. I have attached thi s rule. As noted in the reference the key passage can be found on page 150, whi ch is page 24 of the attachment. You will noti ce al1 grai n fi bers were approved wi th 1ittle to no analysi s based on si mi 1ari ty to corn fi ber. >
Sierra Club v. EPA 18cv3472 NDCA
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> Based on these precedents, we believe that the EPA could approve our sorghum oil pathway by 1etter, just as it did with the DGD and Duoni x Beatri ce pathways descri bed above. If it sti 11 bel ieves rul emaki ng
is necessary, the 2014 RFS rule approvi ng several grai n kernel fi bers provides an ideal bluepri nt for an effi ci ent rule that approves sorghum oi1 based on its si mi 1ari ties to corn oi1, soybean oi1 as well as other approved crop resi due oils and includes the approval in a related rulemaki ng (i.e ., renewable volume obii gati ons). The EPA alreadyhas the informati on it needs for an effi ci ent approval , and we ask
that it acts on our petition in the same manner that it did in its past approvals. >
Pi ease do not hesi tate to 1et me know if you have questi o n s .
Thanks,
John
[sig]
John Duff
,S.fmte.aijt..B.us.ijness Di rector
Ex. 6
offi ce cell
> sorghumgrowers.comchttp://sorghumgrowers.com>
> Sorghum: The Smart Choi c e .
> [twitterjchttps//twitter.com/#!/SorghumGrowers> [facebook]
<https://www.facebook.com/nationalsorghumproducers> [youtube] <http://www.youtube.com/sorghumgrowers>
>
> <image (6).png>
> <i ma ge.png>
> <Grai n Sorghum Oi1 Pathway Peti ti on (2).pdf>
> <NSP Responses to EPA Questi ons on Sorghum Oi1 Peti ti on (1).pdf>
> <NSP Responses to EPA Questi ons Apri1 24 (4).pdf>
> <373478145_v 1_RFS approvals Fed Reg July 2014 (1).PDF>
Sierra Club v. EPA 18cv3472 NDCA
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