RFA Board of Directors Meeting JW Marriott Hill Country San - - PowerPoint PPT Presentation

RFA Board of Directors Meeting

JW Marriott Hill Country San Antonio, TX January 10‐11, 2017

2017 RFA Board Meetings

• April 25-26, 2017 Washington, DC
• July 18-19, 2017 Washington, DC
• October 4-5, 2017 West Des Moines, IA

Reception at the Golf Club

sponsored by

Anti-Trust Statement Anti-Trust Statement

It is the policy of the RFA and the responsibility of every RFA member company to comply in all respects with federal and State antitrust laws. No activity or discussion at any the RFA meeting

• r other function may be engaged in for the purpose of bringing

about any understanding or agreement among members to raise, lower, or stabilize prices; (b) regulate production; (c) allocate markets; (d) encourage boycotts; (e) foster unfair trade practices; (f) assist monopolization, or (g) in any way violate federal or State antitrust laws. Any questions regarding the meaning or applicability of this policy, as well as any concerns regarding activities or discussions at RFA meetings, should be promptly brought to the attention of the RFA President or General Counsel.

Treasurer Report

• Bank Balance: As of November 30, 2016, the bank balance for the Renewable Fuels

Association was $2,662,714.56. The 2nd quarter fiscal year 2017 producer member dues invoiced was $2,165,880.00 and of that $180,900.00 has been collected

• Producer Member Dues: Dues invoiced for producer members for 1st and 2nd quarter

fiscal year 2017 totaled $4,291,260.00. As of December 21st, 2016 we have collected $1,850,900.00. Amount outstanding 1st and 2nd quarter fiscal year 2017 is $2,440,360.00.

• Associate Member Dues: Dues invoiced for associate members totaled $506,000 for

fiscal year 2017. As of December 21st, 2016, we have collected $164,000. Amount

• utstanding is $342,000 for fiscal year 2017.
• Expenses: The Annual Budget for expenses for fiscal year 2017 is $6,925,150.00.

Through November 30, 2016 the expenses of $823,199.06 are 12% of the total annual budget for fiscal year 2017.

• Monthly expenditures for November 2016 were $372,831.58.

President’s Report

Counties that flipped from Obama in 2012 to Trump in 2016

These 218 counties voted for President Obama in 2012, but “flipped” and voted for President-Elect Trump in 2016. The counties were pivotal in helping Trump secure electoral votes from Iowa, Wisconsin, Michigan, Ohio, and Pennsylvania—all states that voted for Obama in 2012.

Source: FEC; AP; NPR

Counties that flipped from Obama in 2012 to Trump in 2016 w ith at least 1 million bushels of corn production

Corn farming is a major driver of employment and economic activity in many of the counties that flipped to Trump in 2016. Each of the 133 “swing counties” shown below produce at least 1 million bushels

• f corn yearly.

Together, these counties produced 1.96 billion bushels of corn in 2015, nearly 15% of the nation’s crop.

The corn produced by these “swing counties” in 2015 was valued at $7.1 billion.

Source: RFA; USDA-NASS

The ethanol produced by these “swing counties” in 2015 was valued at $4.7 billion.

Corn ethanol production is also critical to the economies of many

• f the counties that flipped to

Trump in 2016. Overall, 33 ethanol plants are located in 29 counties that swung to Trump. Each of these plants supports approximately 1,300 direct and indirect jobs. In 2015, the 33 facilities in these “swing counties” made 2.9 billion gallons of ethanol, or almost 20%

• f total U.S. ethanol production.

Counties that flipped from Obama in 2012 to Trump in 2016 w ith at least one ethanol plant

Source: RFA

Trump (175) Clinton (9)

Counties w ith at least one ethanol plant* : How did they vote?

In 2016, 8 of the top 10 ethanol- producing states voted for Trump. In 2012, only 5 of the top 10 ethanol- producing states voted for the Republican candidate.

Across the country, 184 counties are home to 205 ethanol plants.* Of the counties with ethanol plants, 175 (or 95%) voted for Trump. These 175 counties were responsible for 93% of total ethanol production in 2015.

*Excludes counties & plants with less than 8 MG annual capacity Source: RFA

The “Corn Belt”: Corn for grain production by county, 2015

Counties that voted for Trump produced 91% of the 2015 corn crop.

Trump Administration & 115th Congress Outlook

Trump’s Cabinet Picks

Source: The New York Times; Tuesday, January 3,2016 8:54 AM *Requires Senate Confirmation

Commerce Secretary Secretary of Housing and Urban Development Attorney General Transportation Secretary

• Dr. Ben

Carson*

• Sen. Jeff

Sessions* Tom Price* Elaine L. Chao* Wilbur Ross*

Betsy DeVos*

13 Health and Human Services Secretary Education Secretary Treasury Secretary

Steven Mnuchin*

Defense Secretary

James N. Mattis* John F. Kelly*

Homeland Security Secretary Agriculture Secretary Interior Secretary Labor Secretary Secretary of State Secretary of Veterans Affairs

Andrew F. Puzder* Rex W. Tillerson* ______ _______* ______ ______* Ryan Zinke*

? ?

Energy Secretary

Rick Perry*

Trump’s Non‐Cabinet Appointees

Source: The New York Times; Tuesday, January 3,2017 9:42 AM *Requires Senate Confirmation

Trade Czar Chief Strategist White House Chief of Staff National Security Adviser Press Secretary U.N. Ambassador

Nikki R. Haley* Sean Spicer Michael T. Flynn Reince Priebus Carl Icahn Peter Navarro

Kellyanne Conway

Stephen Bannon

14 Regulatory Czar Counselor C.I.A. Director

• Rep. Mike

Pompeo*

White House Counsel

Donald F. McGahn II

U.S. Trade Representative

Robert Lighthizer* Thomas P. Bossert

Homeland Security Adviser EPA Administrator

Scott Pruitt*

Small Business Administration

Linda McMahon*

15

 Repeal of Obama Administration Executive Orders specific to GHG reductions, decarbonization, and WOTUS  Repeal and Replace U.S. healthcare policy  Tax Reform  Reset U.S. Trade Policy  Update and Rebuild U.S. Infrastructure (roads, bridges, ports, airports, etc.)  Reform U.S. Immigration Policy

La Lawsuits uits re regard rding re regulations Likely to be removed/overturned

The Clean Power Plan, Clean Water Rule, ozone rule and fracking rule among others are currently under

• litigation. Trump could direct the Justice

Department to delay litigation or in other cases simply not appeal the decisions

Trump Energy & Environmental Policies

‘M ‘Midnigh idnight’ re regulations Likely to be overturned

All regulations that are not yet final are likely to receive a stop- work order. This happens every time there is a change of

• administration. Given Trump’s

goal of reducing regulations

• verall, it is unlikely that any will

survive

Cl Clean ean Po Power Pl Plan an Likely to be removed/overturned

The Clean Power Plan has been put on hold by the Supreme Court and the D.C. Circuit Court of Appeals is deciding whether to

• verturn it or not. If a decision does not

come by inauguration day Trump’s Justice Department lawyers could ask for the case to be dismissed and the EPA would undo the regulation

Trump Energy & Environmental Policies

Cl Clean ean Wa Water Rul Rule (W (Waters of

• f the

the U. U.S.) Likely to be removed/overturned

The rule makes small waterways like wetlands and ponds subject to federal rules. The rule is in the Sixth Circuit Court of Appeals and will likely go to the Supreme Court unless Trump repeals it

Pa Paris Cl Clim imate Agreem emen ent Withdrawing is possible

Trump has repeatedly vowed he will withdraw from the deal, but the process of leaving will take four years. Republicans and the Trump campaign say it will be easy because the Senate has not ratified the agreement

Trump Energy & Environmental Policies

Offs ffshore re oil

• il and

and ga gas Pr Protections Unlikely to be increased

Obama has designated many offshore locations that contain oil and gas as national monuments and there are no provisions for Presidents to revoke this status. Trump could get rid of a five- year plan for offshore leasing, but if Obama includes it in the Outer Continental Shelf Lands Act there will be little Trump can do to include arctic waters in offshore leases

Ene Energy gy ex extraction fr from

• m pu

public lic lands nds Likely to be increased

Development of renewable energy on public lands will likely continue, but Trump wants to increase oil and gas exploration on public lands as well.

Coal Coal in industry and and re regulations Regulations Likely to be removed

The moratorium on coal leasing will likely be

• removed. The final stream protection rule could

also be revised. However, coal faces a significant competitor in natural gas which Trump plans to expand.

Trump & the RFS

• Spoke positively about ethanol & RFS throughout

campaign, visited plants

• Transition Team continues to reiterate support
• But … Appointment of Anti-RFS Cabinet and WH

staff raises concern

• Trump confirmed Pruitt’s support to Branstad
• Republican Governor’s sent letter to Trump
• Hill Advocates preparing to query nominees

20

POLICY TRUMP Trans‐Pacific Partnership (TPP) Against TPP and Concerned About Currency Manipulation Trade with China Proposed a Cease and Desist for Trade with China and Mexico Free Trade Supports Congress Enforcing Sanctions on Countries Participating in Currency Manipulation

21

POLICY TRUMP Inversions Discourages Corporate Tax Inversions Proposes a 10 Percent Repatriation Tax on the Profits of Foreign Subsidiaries of U.S. Companies and Tax Future Profits as they are Earned Tax Reform Supports Tax Reform and Reducing the Marginal Tax Rates for Individuals and Businesses Proposes Repealing Alternative Minimum Taxes Individual Tax Supports Simplifying the Current Tax Structure that Ranges from 10‐39.5 Percent to 10, 20 and 25 Percent Gift and Estate Taxes Supports Repealing All Federal Gift and Estate Taxes

Tom Carper, DE, Ranking Member Ben Cardin, MD Bernie Sanders, VT Sheldon Whitehouse, RI Jeff Merkley, OR Kirsten Gillibrand, NY Cory Booker, NJ Ed Markey, MA Tammy Duckworth, IL Kamala Harris, CA John Barrasso, WY, Chairman Jim Inhofe, OK Shelley Moore Capito, WV Mike Crapo, ID John Boozman, AR Jeff Sessions, AL* Roger Wicker, MS Deb Fischer, NE Mike Rounds, SD Dan Sullivan, AK Joni Ernst, IA

REPUBLICANS DEMOCRATS

*Sen. Sessions has been nominated as Attorney General and will be replaced later if confirmed by the Senate.

Maria Cantwell, WA, Ranking Ron Wyden, OR Bernie Sanders, VT Debbie Stabenow, MI Al Franken, MN Joe Manchin, WV Martin Heinrich, NM Mazie K. Hirono, HI Angus King, ME Elizabeth Warren, MA Lisa Murkowski, AK, Chairman John Barrasso, WY Jim Risch, ID Mike Lee, UT Jeff Flake, AZ Bill Cassidy, LA Cory Gardner, CO Steve Daines, MO Rob Portman, OH John Hoeven, ND Lamar Alexander, TN Shelley Moore Capito, WV

REPUBLICANS DEMOCRATS

 Tammy Baldwin (WI)  Sherrod Brown (OH)  Maria Cantwell (WA)  Benjamin Cardin (MD)  Tom Carper (DE)  Bob Casey (PA)  Joe Donnelly (IN)  Dianne Feinstein (CA)  Kirsten Gillibrand (NY)  Martin Heinrich (NM)  Heidi Heitkamp (ND)  Mazie Hirono (HI)  Tim Kaine (VA)  Amy Klobuchar (MN)  Claire McCaskill (MO)  Joe Manchin (WV)  Robert Menendez (NJ)  Christopher Murphy (CT)  Bill Nelson (FL)  Debbie Stabenow (MI)  Jon Tester (MT)  Elizabeth Warren (MA)  Sheldon Whitehouse (RI)  John Barrasso (WY)  Bob Corker (TN)  Ted Cruz (TX)  Deb Fischer (NE)  Jeff Flake (AZ)  Orrin Hatch (UT)  Dean Heller (NV)  Roger Wicker (MS)  Angus King, Jr. (ME)  Bernie Sanders (VT)

Messaging In the New Washington

• Carbon Benefits Won’t Resonate with Republicans,

But Use for Democrats

• Trump Favors “American” Energy
• Republicans Gravitate Toward Consumer Choice
• Anti-Oil Themes Miss the Mark
• Low Cost, Home-Grown, Clean-Burning

So, What Does It All Mean?

Reasons for Optimism

• POTUS-E Supports the RFS
• Tough on Trade Barriers –

America First

• Regulatory Reform Agenda
• 41 Vote Backstop Remains

Concerns

• Appointees Anti-RFS
• Not a fan of NAFTA, TPP, or any
• ther Trade Agreement
• Carl Icahn Regulatory Czar
• Potential 2018 Losses/Schumer

Need to Start “Thinking” About Post- 2022 Policy Framework

Renewable Fuel Standard/RVO

2017 Final RVOs

• EPA released final 2017 RVOs on 11/23/16
• Raised conventional renewable fuel RVO

from proposed volume of 14.8 to 15.0 BG

– EPA did NOT use general waiver as it did with 2014‐16 rule – EPA agreed with RFA comments about higher gasoline consumption, increased E15/E85 capacity, role of D6 renewable diesel/biodiesel

• Raised advanced biofuel RVO from

proposed volume of 4.0 BG to 4.28 BG

– Includes 2.0 BG of BBD (3.0 B RINs); 0.311 BG of cellulosic biofuel – Creates advanced biofuel “gap” of 0.969 BG

14.80 15.00 3.00 3.00 0.312 0.311 0.688 0.969 14 15 16 17 18 19 20 Proposed Final Billion RINs

2017 RFS RVOs: Proposed vs. Final

Conventional Biomass‐Based Diesel Cellulosic Biofuel Other Advanced

Outlook for RFS Legislation Outlook for RFS Legislation

(First Session 115th Congress)

• Long legislative calendar with lots of legislative days – Senate scheduled to be

in session 33 additional days than House.

• We continue to face a very aggressive opponent to repeal and/or reform the

RFS.

• There will be many legislative vehicles for RFS/ethanol amendments on the

House and Senate floors. (i.e., RVP/E15, 9.7% cap, post-2022, point of

• bligation, etc.).
• House and Senate Committees of jurisdiction (both under new leadership), as

well as government oversight committees, are expected to hold RFS-related hearings.

Outlook for RFS Legislation cont. Outlook for RFS Legislation cont.

• Congressional opponents of the RFS will continue their efforts to Repeal or

Reform the RFS.

• Flores-Welch legislation to be re-introduced in this Congress (118 co-

sponsors on previous version of bill last Congress)

• 54 Members on the House Energy & Commerce Committee
• 31 Republicans and 23 Democrats
• 25 members of the House Energy and Commerce Committee were co-

sponsors of Flores-Welch, including five Democrats

• Only 28 votes are necessary to win a vote in Committee
• Continue to fortify “Backstop” of 41 votes supporting no legislative changes to

the RFS remains critical in the Senate.

Point of Obligation

• POO continues to percolate on Capitol Hill and throughout

the Administration (and incoming Trump Team)

• EPA denied Merchant Refiner Petition to Move POO, but at

the same time opened a Docket for Public Comment (Comment Period recently extended to February 22)

• Both sides adamant in their positions, and “facts” vary widely
• Appointment of Carl Icahn as Trump’s Regulatory Czar

changes the political dynamic significantly

2014-16 RVO Litigation

• On 12/15/ 16, EPA filed its brief in response to all of the claims asserted by the

petitioners in the litigation, including ACEI, API, AFPM, NBB, and Monroe

• Energy. All of the petitions, including ACEI’s, were filed last September
• EPA addresses several issues in its response brief, but there are three key

arguments that are most relevant to RFA: – EPA’s interpretation of “supply” is reasonable and should be upheld; – EPA properly considered carryover RINs in exercising its general waiver authority; and – EPA’s approach in setting the 2014 and 2015 total renewable fuel volumes was reasonable and consistent with its general waiver authority.

• We obviously disagree with these arguments, so we are going to prepare and

file a brief in reply to EPA.

2014-16 RVO Litigation

• Briefs of Intervenors, including ACEI -- January 12, 2017

– ACEI plans to file a brief to address some of the arguments in AFPM’s petition, which suggest that there are “flaws” in the RIN market and the structure of the RFS program – ACEI does not intend to take a position on the Point of Obligation issue, however.

• Reply Briefs of Petitioners (ACEI, API, NBB, etc.) -- January 30, 2017
• Final Briefs for Court’s review (with complete appendix of documents) --

February 14, 2017

• Oral argument – to be set by the Court, likely in Spring of 2017

E15 & Flex Fuel Efforts

E15 OEM Approvals

• RFA analysis found more than 80% of

new MY2017 vehicles will be explicitly approved by OEM to use E15

– Includes Hyundai/Kia for first time – Up from ~72% in MY2016 – Nissan is last remaining large “holdout”

• Approximately 25% of all vehicles on

the road approved by OEM for E15

• More than 90% legally approved by

EPA for E15

What About FFVs?

• CAFE/GHG credits for FFVs began phase‐down in MY2015
• Credits become even less meaningful in MY16‐MY19

146 157 138 88 57 52 20 40 60 80 100 120 140 160 180 2012 2013 2014 2015 2016 2017 Model Year

Unique FFV Model Offerings

E25 Dispenser Activation

• Ag group approached the two main dispenser

manufacturers about eliminating UL87a protocol, which would eliminate E10-only dispensers and make E25 standard (E85 would remain an option).

• To date, only Wayne Fueling Systems has accepted the

proposal.

• Wayne began offering E25 dispenser as standard in June

2016 on Ovation series, Helix series will switch in Q1 2017.

• Work continues with Gilbarco.

RFA Proposal to NCGA

• To date, no major attention has been garnered by announcement. Can’t find on

marketing materials of Wayne. Outreach is virtually nonexistent.

• In response, RFA proposed launching a three-year initiative that will engage current

RFA staff, and hire additional contractors as needed from the petroleum equipment and service industry.

• RFA will work with Wayne, and their vendors, to create marketing materials to help

retailers understand their options when considering upgrades, renovations and purchasing of new dispensers.

• RFA will work directly with Wayne to learn when these assets are ordered, where

these assets are to be installed, and then work directly with the fuel retailers, along with their suppliers, to proactively influence them to offer blends between E10 and E25, or upgrade the order to include E85 dispensers.

RFA Proposal to NCGA

• RFA offered two tiers of this proposal for consideration. One at

$250,000 and one at $500,000 per year.

• Presented proposal to Ethanol Committee in December, expect a

decision this month.

• Regardless, RFA will continue effort to maximize impact of this

investment.

• This effort will lead to more E15, and likely another midlevel blend like

E20 or E25, if retailer is interested and station setup/design/fuel supply agreement allows.

New Hose Technology

• Wayne Fueling Systems worked with hose manufacturers to create a

solution to blending issues in Europe.

• It was then realized that the same hose could be valuable to ethanol

blending in the U.S.

• The hose is currently in pre-production by three different manufacturers,

and Wayne owns the patents.

• Final approvals are happening now, then will need EPA blessing.
• RFA and Wayne took the new hose to EPA in November to jumpstart

the process.

• Planning for a trial in Europe and Kansas in the coming months.

New Hose Technology

Because blending is done at the nozzle versus the dispenser, hose residual is eliminated and allows:

• E15 and E0/E10 in the same hose without a 4-gallon minimum, or

dedicated fueling position.

• E15 and E85 in the same hose.
• E10 and E85 in the same hose.
• Retailers that ordered wrong equipment to begin selling E15.
• Older dispensers to be retrofitted.

* SHOULD eliminate concerns for motorcycles, small engines, boats and non-E15 approved vehicles.

UL Efforts

• Efforts are underway to alter the maximum ethanol content allowed under UL-
• 87a. Currently the listing allows a max of 25% ethanol.
• Both Wayne and Gilbarco have submitted hydraulic trees to UL for soak tests
• n both E30 and E40.
• This 16-week test is more than 50% complete.
• Once test is completed, all parts will be undergo a standard safety test to verify

the parts still meet all required standards.

• If either the E30 and/or E40 equipment passes, UL can issue a guidance letter
• n existing and new equipment.
• If both fail, more testing will be needed. It is likely a new listing will be needed,

which is costly, and time consuming. Reminds OEMs of pain from E85 ordeal years ago, and they lack interest to repeat.

Fuel Survey

• Despite months of effort, alternate vendor did not receive approval in

time to make switch for 2017.

• RFA continues to work with EPA on potential survey changes that

would limit scope of survey and cost.

• EPA did mention one of RFA’s ideas in REGS rule proposal.
• EPA also recently advised of pending significant change. They are

planning to combine all existing, and planned surveys (RFG, E15, REGS). This would then by funded by all fuel producers, not just

• ethanol. Even if RFA’s alternative sampling ideas are not implemented,

significant savings will be seen by ethanol.

• We will continue push for other vendor options.

Technical, Safety & Environment

EPA’s “Renewables Enhancement and Growth Support” (REGS) Proposal

• “Ethanol Flex Fuel” Provisions
• Biointermediates
• RFS amendments

– Corn oil extraction definition – Grandfathering provisions – Third‐party engineering review changes – CCS implementation – New cellulosic biofuel pathways – RINs for renewable electricity from biogas – Many others

REGS Background and Context

• EPA concerned about the emergence of natural gasoline as a

potential motor fuel component (i.e., beyond denaturant)

– Worried about sulfur, benzene, contaminants – EPA: current regs do not allow use of natural gasoline for flex fuel blending

• Current statute says E16‐E50 is “gasoline” and must comply with

gasoline regulations, even though fuels are approved for FFVs only

– Fuel registration (health effects testing, etc.) – Batch testing and certification – EPA says entities selling E16‐E50 to FFVs today are technically out of compliance with existing fuel regulations (despite 2006 EPA letter to SDPMA)

EPA’s Proposal: Treat E16‐E50 as Flex Fuel

• Define E16‐E50 as “ethanol flex fuel” (EFF). E51‐E83 also defined as EFF.

– “We are exempting E16‐50 blends that are used in FFVs from the designation for gasoline and we are not designating EFF blends (E16‐E83) as motor vehicle fuels under the F&FA program in this proposal.”

• Objectives:

– “…resolv[e] the ambiguity of E16‐50 blends…” – Ensure EFF provides equivalent level of emissions control when used in FFVs compared to the use of gasoline in conventional gasoline vehicles

• Same benzene, sulfur, RVP, CHONS requirements
• Provide “EFF refiners” relief from most “gasoline refiner” regulatory burdens
• Defer gasoline RVP requirements for E16‐E50

RFA Comments on EFF

• EPA held public hearing Dec. 7 in Chicago
• Written comments due Feb. 16
• Support defining E16‐E50 as EFF, not gasoline

– Support deferral of RVP testing for “blender pump refiners”

• Oppose EFF survey

– Or at least encourage least burdensome option (PTD review)

• Request simplified/streamlined reporting and recordkeeping for EFF

manufacturers

• Support deferral of RFS RVOs for natural gasoline portion of EFF

RFA Comments cont.

• Request less restrictive limits on natural gasoline sulfur content

– If natural gasoline is restricted to 32% maximum of EFF, and sulfur content of finished EFF is the concern, then why not allow at least 31 ppm? (31 ppm x 32% = 9.9 ppm in finished fuel) – Availability/cost

• Request immediate resolution of RVP barrier for E15

– Reduce RVP caps for CBOB by 1 psi (per Auto Alliance/RFA letters) – Request enforcement discretion on E15 to FFVs in summertime (?)

• Stranded investments, including public funds (USDA BIP)
• EPA says FFVs designed to tolerate 10 psi fuel
• Many other comments on other provisions

CAFE/GHG Midterm Evaluation

• EPA/NHTSA required to conduct “midterm evaluation” of 2017‐2025

CAFE/GHG standards (review applies to 2022‐25)

– Are standards still feasible given changes in technology and the marketplace? – Three options:

• Leave 2022‐2025 standards as is; weaken standards; or strengthen standards
• First step in MTE process was Technical Assessment Report (TAR)

– EPA determined technology is available to enable compliance with existing 2022‐25 standards – TAR ignored influence of fuels on fuel economy and emissions – RFA and others encouraged EPA to consider role of fuel properties (e.g. octane)

CAFE/GHG cont.

• Second step in MTE process is the “Proposed Determination” (PD)

– PD intended to take into account stakeholder feedback in response to TAR – PD was not expected until early spring 2017 – EPA rushed to publish the PD in November 2016 – Comments accepted through Dec. 30, 2016 – RFA joined Auto Alliance and others in seeking withdrawal of PD or extension of comment period

• Third step in MTE process is “Final Determination”

– Initially expected no later than April 1, 2018 – Likely will see FD much sooner

Coproduct’s Update

Export Exchange 2016

Held Oct. 24‐27, 2016 Detroit

• Bi‐annual conference hosted by the U.S. Grains

Council and Renewable Fuels Association

• More than 200 international buyers and end‐

users from more than 35 countries attended the conference

• International teams also enjoy related tours of

U.S. farms, ethanol plans and export infrastructure

Export Exchange 2016

• In total, attendees reported sales of

approximately 2.6 million metric tons of grains and co‐products worth $460 million traded at the conference

• DDGS had 875,000 metric tons exchanged,

roughly 8% of last year’s total U.S. DDGS exports

FSMA — Education and Training Update

• Hazard Analysis and Preventive Controls for Animal Food

courses during last summer were well received

• Completing this course 2½ day course is one way to meet

the requirements of the Preventative Controls Qualified Individual (PCQI)

• The PCQI is able to write/oversee the facility Food Safety

Plan and this course is helpful

• Due to demand and members who still have training

needs we plan to put on a few more courses for the January ‐‐ March 2017 timeline

• We also have considerations for ongoing training as a

service to our members

Market Development

Crappie Masters

• RFA entered into an agreement with Crappie

Masters, Inc. to be co-title sponsor of Crappie Masters Tournament Trail.

• Ethanol sponsorship is side-by-side with Bass Pro

Shops.

• NCGA and state corn growers will split the cost of the

sponsorship with RFA.

Crappie Masters

• Work to date includes ad, TV commercial,

uniforms, social media, websites and wrapped vehicles.

• Tournament Trail starts third week of

January in Florida.

• RFA will be on-hand to talk with participants

and further promote.

• Will be submitting LTEs and producing

videos around each tournament.

• Much more to come!

Utilizing Dispensers to Promote

• Dispenser technology beyond fuel continues to evolve.
• Nearly all new dispensers come with some sort of marketing
• pportunity with video systems.
• RFA is developing 15-second videos that will play on Wayne

dispensers bought via USDA BIP Program.

• RFA is also exploring options to play same videos on all

dispensers that offer E15 and other higher level blends of ethanol, regardless of manufacturer.

• Will be available for your local use.

USDA BIP Program - Extensions

• There were 19 extensions requested, all were approved.
• States received extension letters mid-December.
• Extensions granted through December 31, 2017.
• RFA working with all states wanting assistance on utilizing

funds.

• Extra year will prove extremely valuable.

National UST Review

RFA is preparing a national database for USTs. Purpose is to have a single national source of information to determine:

• Number of stations per state
• All needed contacts and agencies per state
• Specific equipment per facility and state.
• Critical site information necessary for locations interested in upgrades
• Ownership vs. Operator information (where available)

* This will help us identify potential opportunities vs cold calling without any information.

National UST Review

Example from Arizona:

Tax & Trade Issues

Tax Reform

• Tax reform is expected to begin in the first 6

months of the session

• Likely to be legislated using Budget

Reconciliation procedures

• Looking for ways to flatten and simplify the

code, and provide basis for lowering rates

Tax Reform

• Possible measures for reform/inclusion:

– Pass‐through Protection; MLPs; Carbon Capture Reform; Infrastructure Credit Reform; Production Tax Credit and Bonus Depreciation for 2nd Gen Biofuel – Others?

Oil Spill Liability Tax

The IRS is currently asserting that downstream purchasers of natural gasoline, i.e., for denaturing ethanol, are liable for oil spill tax under the provisions of 4611(b). The position is based on:

• Enron holding that fractionators are not refineries
• Withdrawal of NOPR treating fractionators as refineries

RFA retained Ernst & Young to fashion and pursue a legislative and regulatory strategy to address issue

• Focus will first be on possible regulatory fix

Oil Spill Liability Tax

Efforts continue to seek favorable resolution on application and enforcement of the Oil Spill Liability Tax:

• Priority Guidance Plan Request sent in October
• Meeting w/ Internal Revenue Service in November
• Efforts complicated by Trump transition and accompanying

freeze on regulatory activity

• RFA member call held on December 20, 2016 to offer some

guidance on what steps members need to take to preserve their rights and protect their interests

Trade Promotion Efforts

• India Trade Mission

– Joined USGC and Growth Energy for 3rd visit to India – Focus of effort was on bilateral workshop to help India gain better understanding of air quality, environmental, economic and performance impact

• f ethanol blended fuel

Trade Promotion Efforts

• India Trade Mission

– Met w/ government and industry to discuss our experience w/ policy and its impact on industry and infrastructure development – Worked to help develop an India authored fact book on ethanol with partners in target market

Trade Promotion Efforts

• International Buyer Program

– Work continues toward 2nd IBP at the NEC, with China; Mexico; India; South Korea; Brazil – Activities

• Trade Counseling
• B2B Opportunities
• Networking Dinner
• Latin American Roundtable w/ Colombia, Peru,

Brazil

China Ethanol Tariff

China’s Ministry of Finance recently announced it will impose duties of 30% on imported denatured ethanol and 40% on imported undenatured ethanol from all MFN countries

• Effective January 1, 2017
• Increase is consistent with China’s WTO obligations

– new rate is equal to the bound rate agreed upon when China acceded to the WTO in 2002 – Previous 5% rate was set temporarily in 2010

• Move does not impact countries with China FTA
• Administrative action; no investigation
• Likely taken in an effort to reduce corn stockpiles in China

National Ethanol Conference

National Ethanol Conference

• Feb. 20-22, 2017 in San Diego
• Jan. 27 is the deadline to reserve a

hotel room and save $100 on registration

• Nationalethanolconference.com

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2017 RFA Board Meetings

• April 25-26, 2017 Washington, DC
• July 18-19, 2017 Washington, DC
• October 4-5, 2017 West Des Moines, IA

Reception at the Golf Club

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