from my copy:

John,

It was great to meet you in the halls of the Capitol on Thursday. Thanks for inquiring about the status of the RFS. With the deadline near on the new proposal (June 1, maybe May 29), I thought I would shoot you a note about where we seem to stand. I am treating this note and any follow-up as non-existent.

Based on intelligence coming out of the Thursday Senate/McCarthy meeting, we do not seem to be in a good place. For whatever reason, we are not making an impression on McCarthy, Deese (who we cannot even get to), Utech, etc. that introducing “distribution to the consumer” as a 3rd waiver condition (to justify slowing ethanol down for the “blend wall”) will paralyze the RFS.

It’s pretty simple. The oil industry controls fuel distribution. So if distribution issues stop the RFS, then the RFS is stopped because the oil industry has more than enough market power to make distribution an issue. This is exactly why Sen. Inhofe tried to get this identical language into the legislation in 2005. And it’s why we fought hard to block it (successfully).

As an important note, the RFS and good RIN prices punch through this oil industry intransigence as long as obligated parties are not given the upper hand via distribution waivers. That’s why it’s really not about the annual numbers; but rather, how you get there.

Unfortunately, McCarthy and others seem to think the question of distribution (or methodology) can be papered over with solid blending targets for advanced biofuels (I represent only advanced biofuels). But that’s like offering us a good horse in exchange for our ranch – once oil companies know they can stop the RFS by lying down, off-take agreements with our industry will not be signed and projects will not get financed.

What I really don’t understand is why this continues to be the path of choice for the Administration (especially with API now putting their name on it – the letter I handed you); or, why the inclination seems to be to side with API instead of us in the proposal phase.

On the substance, there are other rationales to slow the RFS down if the WH remains concerned (we offered a perfect one) that do not gut the program. On the investment side, a good proposal (no distribution methodology) is a great market signal that gets financing going again because much of the marketplace will assume that the distribution methodology has been rendered flawed. But a bad proposal has my guys doubling down overseas (what they have been doing ever since the original proposal in Nov 2013). About 35 low carbon biofuel companies put this in writing several times.

On the political side, a good proposal has us backing a D Administration – shooting outward against the oil industry (hardly bad for the D base). A good proposal also short-circuits an R political plan – as they seem to be waiting for a bad outcome to leverage. A bad proposal, on the other hand, forces our industry to tack around against a Democratic Administration (which is bad for other Ds unless addressed), which also plays right into the Republican's hands. To be clear, this is not meant as a threat, I am just being honest about what I am seeing if the President comes back at us with this thing. I am also shocked that the 111d folks are not more concerned about the investment signal of rewarding fossil fuel companies for lying down on the CAA.

There are obviously tactics that can be deployed at the last minute (both with the campaign and the current Administration) that would not be news to you. My preference would be to continue our hallway conversation in person (could be in another hallway) or discuss on the phone early next week to color this in a little. I am an open book on this thing; I want to avoid what seems like an impending big mistake and keep my guys in the country (this is a personal email address ... “my guys” are at www.advancedethanol.net). I am always available at 857 719 9766. Thx, -Brooke

4.9 GB

I can make a torrent / magnet link for it at some point.