BIO Submits Letter to EPA Urging them to Reject the Petroleum Industry's RFS Waiver Petition

September 24, 2013

The Honorable Gina McCarthy
Administrator
U.S. Environmental Protection Agency
Ariel Rios Building
1200 Pennsylvania Avenue, NW
Washington, DC 20460

Dear Administrator McCarthy:

On behalf of the members of the Biotechnology Industry Organization (BIO), which include advanced and cellulosic biofuels producers, we are writing to urge the U.S. Environmental Protection Agency (EPA) to deny the joint petition  recently filed by the American Petroleum Institute (API) and American Fuel and Petrochemical Manufacturers (AFPM) (together “petitioners”) requesting the EPA grant a partial waiver of the 2014 applicable volumes of the federal Renewable Fuel Standard (RFS) pursuant to section 211(o)(7)(A) of the Clean Air Act (CAA)[1] (hereinafter “joint petition”).

BIO is the world’s largest biotechnology organization, with more than 1,100 member companies worldwide.  BIO represents leading technology companies in the production of conventional and advanced biofuels and other sustainable solutions to energy and climate change.  BIO also represents the leaders in developing new crop technologies for food, feed, fiber, and fuel.

BIO urges the EPA to deny the joint petition for several reasons.  First, the petitioners do not meet the requirements to file the joint petition.  The joint petition is also premature.  The petitioners cannot demonstrate harm when the 2014 renewable volume obligations (RVOs) have not even been formally proposed.  Moreover, most of the harm they predict would be the direct result of dilatory tactics demonstrated generally by many petroleum companies and refiners, member companies of the petitioners, and other obligated parties since the start of the RFS.  These tactics are designed to chill investment and thwart the policy goal to encourage greater use of renewable fuels in the United States.[2]

The 2014 RVOs should be set as always through the use of the best market information possible to, as accurately as possible, determine projected production and supply availability. Following this process, there are a number of compliance options for 2014.  In addition, contrary to petitioners’ arguments, there are solutions to the blend wall, including the use of higher blends of biofuels, greater distribution of biofuels, increased production of flex fuel vehicles, and greater use of drop-in fuels.

I.             API and AFPM Do Not Meet the Requirements Under the RFS to File the Joint Petition

 EPA should deny the joint petition because API and AFPM do not meet the requirements under the RFS to file such a petition. Under Section 211(o)(7)(A) of the Clean Air Act, such a petition may only be filed by “one or more States, … any person subject to the requirements of this subsection, or … the Administrator on his own motion.”[3]  Here, neither API nor AFPM are subject to the RFS requirements, so they do not meet the criteria to qualify to file a petition to EPA to waive all or part of those requirements.  The plain language of the statute makes it clear that these trade associations may not request waivers of all or part of the annual RFS requirements. Therefore, EPA should deny their joint petition.

II.           The Joint Petition is Not Ripe

In addition, EPA should deny the joint petition because it and the relief it requests are premature.  It is absurd for the petitioners to request a partial waiver of the 2014 RVOs before they even know the 2014 RFS RVOs that EPA will propose. The joint petition has been filed before EPA has even issued its proposed rule setting the 2014 RFS RVOs.  It is not appropriate for petitioners to try to unduly influence the 2014 RVOs outside of the established regulatory process. Therefore, any arguments petitioners wish to make should be filed during the public comment period after EPA issues its proposed 2014 RFS rule.

Moreover, in its 2013 RFS final rule, EPA has already indicated that it is aware of the petitioners exaggerated claims and, if needed, may make appropriate adjustments to the 2014 RFS RVOs.[4]  Here, the petitioners are requesting relief from the 2014 statutory RVOs when they know that EPA makes annual adjustments to them based on market and supply realities and when EPA has already committed to making appropriate adjustments.  The petitioners should wait to see the proposed 2014 RVOs and attempt to influence them during the public comment period. 

III.          The Joint Petition Misconstrues the RFS, its Goals and the Suite of Options for Compliance

Under Section 211(o)(7)(a) of the Clean Air Act, the Administrator may waive RFS RVO obligations in whole or in part, after public notice and opportunity to comment, if she determines that (1) implementation of the requirements would severely harm the economy or environment of a State, a region, or the United States, or (2) that there is an inadequate domestic supply.[5]   Petitioners turn the statute’s language on its head to argue that blend wall concerns will reduce the RINs available for RFS compliance, forcing refiners to restrict the domestic supply of fuel, which will then impose devastating costs on consumers and thus severely harm the U.S. economy. The reality is that because they have blocked investment in infrastructure and created marketing challenges for higher blends of biofuels, the petitioners are now requesting the Administrator waive the 2014 RVOs to 9.7 percent of the domestic fuel supply.  They created the very situation from which they are requesting relief.

Multiple compliance options exist for petitioners' members.  Simply stated, the reason for petitioners’ concern about any lack of availability of sufficient RINs is due to the continuing dilatory tactics of obligated parties not to prepare for the blend wall transition.  This situation was anticipated at the outset of RFS implementation, nearly five years ago.  It is not because of “constraints imposed by fueling infrastructure and problems of gasoline engine incompatibility.” In fact, there are a host of RFS compliance choices explained in detail below, which taken together provide obligated parties sufficient flexibility and time to plan compliance strategies for 2014 and beyond.  Since these compliance options exist, obligated parties have sufficient tools to plan ahead for the accumulation of RINs to meet their 2014 RFS RVOs. While some individual refiners may choose to restrict U.S. fuel supply as a compliance strategy, market competition and the increasing production of biofuels will work in tandem so such a restriction will not harm the U.S. economy or consumers.

Below, please find a more detailed discussion of the realities of the so-called blend wall and the suite of RFS compliance options that exist for petitioners' members.

Petitioners in the joint petition define the blend wall as “the point at which the RFS attempts to force the use of more renewable fuels than can be consumed in the United States, due to fundamental constraints imposed by fueling infrastructure and problems of gasoline engine incompatibility.”[6]  They further describe the blend wall as unavoidable under the statutory RFS volumes.[7]

This definition, and the suggested unavoidable inevitability that flows from it, is simply a complete fabrication that the obligated parties and their leading voices are using to try to break the RFS.  The limits to market access for biofuels through the anticipated “blend wall” represent a series of barriers contrived by the oil refining industry to prevent biofuels from gaining access to the marketplace.[8] The RFS is not attempting to force more renewable fuels than can be consumed in the United States, as petitioners assert[9]; it is attempting to force a reduction of reliance on foreign oil, and it is working. Further, EPA’s annual rulemakings on RVOs based on actual projected production helps control the situation so the RFS does not force consumption of more renewable fuels than can be produced.

The fact is that the blend wall is not due to infrastructure and engine constraints, but rather as we state above and throughout this letter, it is due to the ongoing dilatory and anticompetitive tactics of the oil refining industry. Obligated parties have had more than five years to begin establishing the infrastructure necessary to distribute RFS-mandated fuel volumes, but have taken few steps to do so.  Their assertions that the blend wall is prohibitive to distribution of greater volumes of biofuels only seek to undermine the development of homegrown biofuels that promote America’s energy security, the biobased economy, and rural development.

  1. Obligated Parties Have Chosen Not to Prepare for the Anticipated Blend Wall Transition

Congress first passed the RFS in 2005, and enhanced it and its target volumes of renewable fuels in 2007.  In setting the 2022 targets that represented more than 20 percent of projected fuel demand, it is clear that Congress intended the RFS to drive biofuel adoption well beyond the threshold of 10 percent of total fuel consumption.  The system of credits and other compliance options articulated in the RFS statute clearly also anticipated the role of RIN-driven market forces in achieving this broader adoption.

Following passage of the Energy Independence and Security Act of 2007 (EISA), EPA anticipated the blend wall when implementing the RFS, stating that “…[c]omplete saturation of the gasoline market with E10 is referred to as the ethanol “blend wall.”[10] The height of the blend wall in any given year is directly related to gasoline demand. This was also reflected in AEO 2009, where EIA projected that gasoline demand would peak around 2013 and then start to taper off due to vehicle fuel economy improvements. Based on the primary ethanol growth scenario, we’re forecasting under today’s RFS2 program, the nation is expected to hit the 14-15 billion gallon blend wall around 2014…although it could be sooner if gasoline demand is lower than expected. It could also be lower if projected volumes of non-ethanol renewable do not materialize and ethanol usage is higher than expected.

Estimates on fuel projections were revised after the U.S. and world economy fell into a prolonged recession, reducing energy consumption. In addition, sustained high oil prices have kept gasoline prices well above average, reducing demand. At the same time, automakers began implementing higher CAFE standards, further reducing U.S. domestic demand for fuel. As worldwide economic growth resumed, overseas demand for finished fuel products grew, while U.S. demand continued to decline, prompting petroleum refiners to focus on export markets.

While this confluence of developments has hastened the transition across the E10 ethanol blend threshold, the eventual transition was clearly anticipated in the law, and should have factored into fuel distribution plans of any obligated party intending to comply with the law. Indeed, some obligated parties have adequately anticipated the blend wall by incorporating greater distribution of E85 into their business models, or by investing in development of advanced drop-in biofuels. Unfortunately, some obligated parties have elected to resist incorporation of biofuels and instead challenge the law itself, including through the current waiver petitions.

  1. Suite of RFS Compliance Options Exist

Despite certain specious arguments raised in the joint petition, there are a number of compliance options for 2014 and solutions to the blend wall, including the use of higher blends of biofuels, greater distribution of biofuels, increased production of flex fuel vehicles, and greater use of drop-in fuels. As discussed in more detail below, market economics of RINs under the RFS program are already driving investment in each of these options. Because of these factors, we can anticipate a rapid increase in availability of both higher ethanol blends and drop-in alternatives – but only to the extent obligated parties allow market access to these fuels.

Due to flexibility already provided by the RFS, any challenges encountered under the blend wall transition can be mitigated through the compliance mechanisms established in the law. Further, the RFS does not specifically require use of ethanol. Thus, if challenges do arise under the blend wall transition, other biofuels not subject to the ethanol blend wall, such as biobutanol, biodiesel, or renewable hydrocarbons, will rapidly increase in market value. These market forces should hasten the commercial deployment of these alternatives, significantly mitigating blend wall pressure.

i.             The Inherent Flexibility of the RFS Ensures Sufficient RFS Compliance Options

The RFS itself contributes to a solution to the blend wall for RFS compliance purposes.  Under the law, EPA is directed to adjust and set the following year’s RVOs by November 30th based on realistic market predictions of production and available supply.[11]  To date, EPA has significantly reduced the cellulosic RVOs each year to comport with that market information.  It has chosen to maintain the overall RVOs and undifferentiated advanced RVOs.  Though, the Agency does have the discretion under the law to adjust any or all of the volume categories downward based on market supply information and expectations.

In fact, in EPA’s recently issued final rule setting the 2013 RFS RVOs, the Agency recognized potential challenges to RFS compliance imposed by the blend wall transition.  Accordingly, EPA suggested that it may consider adjusting all RVOs downward to help ensure the ability of obligated parties to comply with their RFS RVOs.[12]  As we indicated above, given this significant language that affirms EPA's discretion and flexibility, the joint petition is not ripe.  How can petitioners demonstrate harm to obligated parties or to the economy of the United States based on RVOs that have not even been formally proposed, and which, in any event, are expected to be reduced?

The RFS also directs and provides EPA the authority to approve new fuel pathways for RFS compliance under the RFS.  BIO urges the Agency to use this authority and work to quickly approve new fuel pathways so the advanced and cellulosic requirements can be met now, next year and the years ahead.

ii.            Higher Blends of Ethanol Are a Solution to the Blend Wall

Greater use of ethanol blends is a solution to the blend wall that involves no new technological development or regulatory approval.  One piece of the blend wall solution could be to facilitate greater consumer use of E85 fuel (a blend of 85 percent ethanol and 15 percent gasoline) through investment in downstream petroleum infrastructure (blender pumps, etc.) and Flex Fuel Vehicles (FFVs) that can run on that type of fuel. E85 is approved for use in flex fuel vehicles and could go a long way toward meeting the renewable fuel requirements under the RFS, with the right investments.  Just recently, Iowa State University’s Center for Agriculture and Rural Development released a new study called “Price it and They Will Buy: How E85 Can Break the Blend Wall.”[13]  The study’s authors conclude that attractively priced E85 can quickly lead to increased consumption of that fuel by as much as three billion gallons over the next two years.  Further, they explain that high RIN prices actually serve to incentivize obligated parties to quickly increase E85 consumption because greater consumption of that fuel reduces RINs prices and thus their RFS compliance costs.

More than 90 percent of new cars sold today in Brazil are flex fuel vehicles, and about half of the country’s entire fleet has changed over to flex fuel vehicles in less than a decade.[14] U.S. automakers previously made commitments to increase production and sales of flex-fuel vehicles.[15]

Another higher blend that has been approved for use in motor vehicles 2001 and newer and can help overcome the blend wall is gasoline that contains up to 15 percent ethanol blend (E15).  Petitioners contend that E15 is not a viable solution to the blend wall partly because it is incompatible with the existing vehicle fleet and because of misfueling concerns.  However, as a recent Congressional Research Service report explains, “[i]n response to industry concerns regarding the…blend wall, the EPA, after substantial vehicle testing, issued a partial waiver for gasoline that contains up to a 15% ethanol blend (E15) for use in model year 2001 or newer light-duty motor vehicles (i.e., passenger cars, light-duty trucks, and sport utility vehicles), but announced that no waiver would be granted for E15 use in model year 2000 and older light-duty motor vehicles, as well as in any motorcycles, heavy duty vehicles, or non-road engines…According to the Renewable Fuel Association (RFA), the approval of E15 use in model year 2001 and newer passenger vehicles expand[ed] eligibility to 62% of vehicles on U.S. roads at the end of 2010.”[16]

On the petroleum downstream infrastructure side, there are a number of investments that need to be made. In the joint petition, API and AFPM suggest that obligated parties have little impact over new infrastructure investments and decisions that would further enable distribution of higher ethanol blends because the majority of retail gasoline stations are “not owned or operated by the RFS obligated parties.”[17]  This is not true. For instance, a major impediment to consumer choice is obligated parties blocking station owners from putting in blender pumps that would allow consumers to choose higher blends of biofuels in gasoline.[18] Blender pumps would allow consumers to modify upward the blend of biofuels they desire to purchase. In addition, obligated parties could facilitate marketing arrangements to help incentivize consumers to use higher blends. Other forms of investment to move towards higher blends could involve even greater investment in production and proposed ethanol pipelines to move large quantities of biofuels to high-population areas.

 FFVs have the capacity to run on biofuel blends ranging from 0 percent to 85 percent. Thus, depending on the blend, consumers who drive one of the more than 14 million FFVs on the road today will have the opportunity to fuel their cars at retail stations that carry the higher blends. As E85 becomes a competitive fuel, and if the obligated parties such as petitioners' members allow market access to these higher level fuels, demand for FFVs will presumably grow as it did in Brazil during the 2003 to 2006 time period.

iii.           Cellulosic and Advanced Biofuels Help Achieve RFS Compliance

Another way to address the blend wall is to increase investment in and development of “drop-in biofuels,” which have the same properties and composition as petroleum-based fuels and may be used in the existing infrastructure. Because of these factors, existing downstream petroleum infrastructure and engines can run on these fuels even at blends beyond 10 percent. These biofuels, including biobutanol, may be produced from any starch or sugar-based biomass (that achieve a greater than 50 percent lifecycle reduction of greenhouse gas emissions) and blended using existing infrastructure at blends much higher than 10 percent. Due to biobutanol’s higher energy content this is equivalent to 21 percent ethanol. Biobutanol has been endorsed by the National Marine Manufacturers Association.

The primary challenge for drop-in biofuels is scale, but this could be addressed with greater investment in this technology (which is supported by the stability of the RFS policy). Certainly as one option to address the blend wall, drop-ins have some very attractive features: they require no change in existing infrastructure and are feedstock flexible and may be produced from both starch, cellulosic or sugar-based biomass sources. In addition, existing ethanol facilities may be cost-effectively retrofit to produce biobutanol and other drop-in biofuels.

The expansion of aviation biofuels as drop-ins would be another potential solution to the blend-wall. Currently, sustainable aviation biofuels, derived from biomass-based plant material and waste fats, are approved for use in many jet engines up to a 50 percent blend, including in all Navy and Air Force engines. This fuel is a drop-in substitute for fossil-based petroleum currently used in aviation. Some commercial airlines have flown test flights on blends of sustainable aviation fuel, and aviation is well-suited for rapid deployment of drop-in biofuels. These drop-in fuels for the commercial aviation industry has system-wide advantages including the ability to use current infrastructure: drop-in biofuels use the same pipelines and tanks as petroleum. Commercial aviation fuels also have highly concentrated nodes of supply and demand, where the largest 40 U.S. airports account for more than 90 percent of jet fuel used by commercial aviation. Thus, if sustainable aviation biofuel producers can deliver to the 40 large airports, in a cost effective manner, they will have access to a large portion of the commercial jet-fuel market.

To date, cellulosic and advanced biofuel companies have invested more than $5 billion dollars in commercializing new technology and feedstock combinations. Commercializing new fuel production technologies has required scaling up through pilot and demonstration projects, taking several years and requiring millions of dollars in capital. Leading companies are at present building, starting up and operating first-of-a-kind commercial facilities.[19] EPA, in consultation with EIA and industry companies, has produced the most accurate projections of coming year production possible. BIO and its member companies support the ongoing process EPA has employed in making these assessments.[20] Some companies are moving forward with plans for construction of additional facilities, based on the operation of these first-of-a-kind facilities. The industry as a whole has moved more quickly to this commercial status than would have been possible without the policy support of the RFS.

Many of the first cellulosic projects – including INEOS Bio, Abengoa and Fiberight – will be producing ethanol. Since cellulosic biofuels achieve the greatest reductions in GHG emissions – compared to the 2005 baseline for gasoline – room must be made in the marketplace for the use of these fuels or the goals of the RFS will be subverted. EPA’s annual RVOs establish the size of the marketplace and should be based on the most accurate projection of actual production possible.

The companies that are commercializing this technology understand that the RFS ensures that the market will be open for advanced and cellulosic biofuels, if they can accumulate sufficient capital and produce the fuels.[21] EPA’s consistent administration of the RFS rules has encouraged companies and their investors. These investors remain committed to commercialization efforts. But any reduction in the RVOs will discourage additional investment and commercialization effort. For this reason, the joint petition appears calculated to discourage additional capital accumulation and investment in the advanced and cellulosic biofuel industry.

iv.           Biodiesel Can Help Meet the Advanced Biofuels Targets for RFS Compliance

In their joint petition, petitioners ignore the market opportunity for biodiesel as an advanced biofuel. They claim that because EIA projects continuing decline in gasoline consumption, the RVO should be set at no more than 9.7% of gasoline, plus about 1.6 billion gallons of advanced. This ignores the fact that EIA projects a 0.5% increase in diesel/distillate consumption – to about 53.5 billion gallons -- which is also obligated volume.

The RVOs are nested and do not specify the use of ethanol. The biomass-based diesel RVO is nested within the advanced biofuel category, which is in turn nested within the overall renewable fuel category. Ethanol produced from corn and generating D6 RINs has been the most cost-effective way to meet annual RVOs to date. Ethanol production has scaled up quickly based on fully commercialized technology and robust agricultural value chains. If obligated parties have constructed a blend wall that raises the costs of additional use of ethanol, they can still comply with the RVOs by using greater amounts of biomass-based diesel, which is also a cost-competitive and fully commercialized technology.

v.            RINs Contribute to RFS Compliance

RINs are part of a solution to the blend wall. Because refiners can transfer or trade RINs, they have many options in setting a strategy to comply with the RFS.  Some refiners have chosen not to blend renewable fuels, leaving themselves no option but to purchase RINs from others. For example, Delta Airlines – the parent of Monroe Energy – reported in its most recent quarterly earnings statement to investors, “Because the refinery operated by Monroe does not blend renewable fuels, it must purchase its entire RINs requirement in the secondary market or obtain a waiver from the EPA and is, therefore exposed to the market price of RINs.”[22] The company also indicates that it is pursuing legislative and regulatory changes to the RFS as its compliance strategy. Since RINs can only be accumulated when biofuels actually enter the U.S. fuel supply, an increase in RIN prices serves as an incentive for obligated parties to make the investments in infrastructure to increase their blends of biofuels.

EPA should not waive part of the 2014 RFS obligations due to complaints of current high RIN prices.  The market for RINs is small and made up largely of oil companies and retailers trading with each other. As a recent New York Times article discusses in detail, speculation among these traders given uncertainty around the 2013 RVO is one of the main reasons for the higher than usual RIN prices this year.[23] While the article suggests that Wall Street brokerages and others have engaged in speculative behavior in the RIN market, the authors correctly note that these brokerages and banks are required to participate in the RFS because they are the parent companies of obligated parties. 

According to the Oil Price Information Service, July 17, 2013 article, “Major Gasoline Retailers Raking In Profits from Lucrative RINs Sales,”[24] while the focus has been on obligated parties such as Valero paying for the RINs, it ignores that the sellers of higher priced RINs are generating profits and that they are able to lower the cost of fuel to consumers. These profits are not going to biofuel producers, but to independent gasoline retailers, who are increasingly offering more biofuels to consumers as a result. The article goes on to point out that even while refiners are complaining about the rising RIN costs, they are enjoying robust crack spreads – the measurement between wholesale petroleum product prices and crude oil prices – benefitting from comparatively stronger margins than others.

More importantly, this dynamic illustrates why RIN costs cannot be passed to consumers. Competing refiners and obligated parties have established different strategies for compliance and are realizing different profit margins as a result. While some have increased costs from compliance with the RFS due to their chosen strategy, others may have held costs down and increased profits. Further, some of those who have seen increased costs may change their compliance strategies in a relatively short time and choose to absorb the current costs. CVR Refining, in its quarterly earnings statement to investors, asserts, “Many petroleum refiners blend renewable fuel into their transportation fuels and do not have to pass on the costs of compliance through the purchase of RINs to their customers. Therefore, it may be significantly harder for us to pass on the costs of compliance with RFS to our customers.”[25] With this competitive pressure, obligated parties are currently blocked from passing the cost of RINs to consumers, since others are in a position to hold down costs and undercut the competition. Otherwise, industry-wide increases in consumer prices for fuel based on increased RIN costs, if undertaken in a joint agreement, would represent illegal price setting by refiners.

Obligated parties, including Valero, look for the lowest cost option to comply with the RFS.  Until recently, when RIN prices were close to zero, obligated parties had little incentive to invest or use greater amounts of biofuels.  High RIN prices help to create this incentive, and incentivizing investment in and use of renewable fuels was the goal of the RFS.  Greater production and use of biofuels will help lower the cost of RINs and the price of gas at the pump, which further helps protect the U.S. economy.

IV.          Conclusion

EPA should deny the joint petition because petitioners do not meet the requirements to file it, and because it is premature.  The appropriate time for petitioners to attempt to influence the 2014 RFS RVOs will be during the public comment period after the proposed rule is issued in the coming weeks.

Even if petitioners are found to meet the requirements to file the joint petition, or if it is determined that their petition is not premature, EPA should deny the requests because the projected harm to the U.S. economy would stem not from the 2014 RFS RVOs, but rather from the ongoing dilatory tactics of the very parties seeking the waivers.  The blend wall was anticipated five years ago at the outset of RFS implementation and obligated parties have largely chosen not to prepare for the blend wall.  They have not encouraged or facilitated infrastructure investment or new fuel marketing.  Instead, most of them are spending their time and advocacy trying to chill investment in greater biofuels production.  This includes their filing the joint petition, which is  opposed by BIO as reflected in these comments. The petitioners and their members should not be rewarded for these efforts.  Rather, the RVOs should be set, as always, through the use of the best market information possible.  They should be set as accurately as possible to determine projected production and supply availability.

BIO encourages EPA to investigate barriers preventing biofuels from gaining greater access to the marketplace by obligated parties.  Rather than seeing the blend wall as a barrier to greater biofuel production, the Agency should consider encouraging a market-based approach to further the development of infrastructure and to push for the development of new feed stocks and “drop-in” fuels to meet RFS obligations. As explained in these comments, high RIN prices can help incentivize this development.

There a number of compliance options for 2014 and solutions to the blend wall, including the use of higher blends of biofuels, greater distribution of biofuels, increased production of flex fuel vehicles, and greater use of drop-in alternative fuels. Market economics under the RFS program are already driving investment in each of these options, and EPA can anticipate a rapid increase in availability of both higher ethanol blends and drop-in alternatives as a result – but only to the extent that the obligated parties provide market access to these fuels.

Unfortunately, many of these solutions are currently unattainable due to barriers to the marketplace erected by obligated parties, some of which are described in these comments. EPA should investigate these artificial barriers and, if necessary, take action to remove them so the market for transportation fuel alternatives established by the RFS is allowed to operate efficiently. Any remaining challenges to overcoming the blend wall can be addressed through the broad regulatory flexibility granted to EPA under the statute.

Thank you for considering these comments.

Sincerely,

Brent Erickson

Executive Vice President

Biotechnology Industry Organization (BIO)



[1] Letter from the American Fuel & Petrochemical Manufacturers and American Petroleum Institute to U.S. Environmental Protection Agency Administrator Gina McCarthy, August 13, 2013, at 1 [Hereinafter “The Joint Petition”].

[2] Trade group requests U.S. probe of oil industry’s efforts to impede renewable fuels, http://eenews.net/eenewspm/2013/03/19/archive/9?terms=RFA%2C+ConocoPhillips

[3] Clean Air Act, 42 U.S.C. § 7545(o)(7)(A), [hereinafter “CAA”].

[4] Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Final Rule, Environmental Protection Agency, 78 Fed. Reg.158, 49794, 49798, Aug. 15, 2013, available at: http://www.gpo.gov/fdsys/pkg/FR-2013-08-15/pdf/2013-19557.pdf. [Hereinafter, “the 2013 RFS Final Rule”].

[5] CAA, 42 U.S.C. §7545(o)(7)(A).

[6] See The Joint Petition at 1-2

[7] Id at 2.

[8] Fill Up With Ethanol?  One Obstacle is Big Oil, http://online.wsj.com/article/SB117547886199856472.html

[9] See The Joint Petition at 1.

[10] Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program; Final Rule, Environmental Protection Agency, 78 Fed. Reg. 58, 14669, 14759, Mar. 26, 2010, available at: http://www.gpo.gov/fdsys/pkg/FR-2010-03-26/pdf/2010-3851.pdf.

[11] CAA, 42 U.S.C. § 7545(o)(3)(B). 

[12] See The 2013 RFS Final Rule, at 49823.

[13] Bruce Babcock and Sebastien Pouliot, “Price it and They Will Buy: How E85 Can Break the Blend Wall,” CARD Policy Brief 13-PB 11, Iowa State University, August 2013, available at: http://www.card.iastate.edu/publications/dbs/pdffiles/13pb11.pdf

[14] UNICA, “Brazilian Transportation Fleet,” Sugarcane.org, http://sugarcane.org/the-brazilian-experience/brazilian-transportation-f...

[15] Beth Evans, “Automakers do not see big US demand for flex-fuel vehicles,” Platts, 7 Feb. 2013. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6131220

[16] Schnepf, R. and Yacobucci B. “Renewable Fuel Standard (RFS): Overview and Issues.” Congressional Research Service, R40155, March 14, 2013. Available at http://www.fas.org/sgp/crs/misc/R40155.pdf. (emphasis added).

[17] See The Joint Petition, at 2, 19.

[18] ‘Big oil’ may block branded retail blender pumps: Green Plains http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8102457

[19] Biotechnology Industry Organization (BIO). “The Renewable Fuel Standard: Timeline of a Successful Policy.” Washington, DC. June 29, 2012. http://www.bio.org/articles/renewable-fuel-standard-timeline-successful-....

[20] See BIO Comments on EPA Proposed Rule on “Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards,” April 5, 2013, available at http://www.bio.org/advocacy/letters/bio-comments-us-epas-proposed-rule-2....

[21] See “The Value Proposition for Cellulosic and Advanced Biofuels under the Federal Renewable Fuel Standard,” The Biotechnology Industry Organization, April, 2011, available at: http://www.bio.org/sites/default/files/201104_rfs_whitepaper_3.pdf

[22] Delta Air Lines, Inc. “Quarterly Report, Pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934, for the quarterly period ended June 30, 2013, Commission File Number 001-5424. http://www.sec.gov/Archives/edgar/data/27904/000002790413000005/dal63020.....

[23] Gretchen Morgenson and Robert Gebeloff, “Wall Street Exploits Ethanol Credits and Prices Spike,” The New York Times, September 14, 2013, available at:  http://www.nytimes.com/2013/09/15/business/wall-st-exploits-ethanol-cred...

[24] Edgar Ang, “Major Gasoline Retailers Ranking In Profits from Lucrative RINs Sales.” Oil Price Information Services, July 17, 2013.

[25] CVR Refining, LP. “Quarterly Report Pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934, For the quarterly period ended June 30, 2013.” Commission file number: 001-35781. http://www.sec.gov/Archives/edgar/data/1558785/000104746913008021/a22161....