nitid tatc tnat 

WASHINGTON, DC 20510


February 4, 2013 

President Barack Obama 

ftc \\'hite House 

1600 Pennsylvania Avenue NW 

\Vashington, DC 20500 

Dear rvlr. President: 

On January 29, 2013. (lie Office of Management and Budget (0MB) received from the 

Environmental Protection Agency (EPA) the proposed Tier 3 gasoline rulemaking. To keep 

America's retining industry strong and protect conSumers, we urge your Administration not to 

move furward with proposing new Tier 3 gasoline regulations. ihis major rulemaking could COSt 

u.S. refiners billions of dollars, raise gasoline manuliicturintt costs. make it harder for U.S. 

reliners to compete in the global nmrketplace, and discourage refinery expansion here at home. 

The result could create a need to import more gasoline, increasing our trade deficit and reducing 

our energy security. Moreover, there is a lack of clear evidence to show the Tier 3 sul fur 

reduction envisioned b y EPA would benefit health. 

Existing rules have already dramatically reduced sulin' in gasoline. l'he earlier Tier 2 

rulemaking reduced sulfur by 90 percent, from an average of 300 ppm to 30 ppm. Benefits of 

this reduction continue to he realized, and are part of (lie reason why Americas gasoline and 

other fuels remain some ot the cleanest in the world. Although proponents of a further reduction 

cite a Navigant Economics study, which they say shows that health benefits of a forther 

reduction are well established, the Navigant study failed to include any of its own anal ysis of the 

health benefits. Health impacts are far From being "well established," In fact, EPA did not 

establish the health benefits at all. 

EPA asserts that '11cr 3 standards are needed to achieve the 2008 ozone National Ambient Air 

Quality Standards (NAAQS): however, all counties newly designated out of attainment under 

that standard are expected to achieve attainment by 2015, prior to 'lier 3 even going into effect. 

Additionally. ii imposed, Tier 3 would increase refinery greenhouse gas emissions at a time 

when EPA signaled that the Agency wants to reduce these emissions. Specifically. a study by 

energy consulting firm Baker and 0' Brien found that additional hydrotreating, necessary to 

comply with more stringent Tier 3 requirements, would increase emISSIOnS ot greeithouse gases 

from the refineries themselves. This would place an extra burden on an industry already under 

pressure because of dccl ining demand and additional new or l'orthcoming requirements.
The Navigant Economics study underestimates the costs or the regulation and its impacts on 

competitiveness by referencing an overly simplistic model that evaluates what would happen at a 

handful of hypothetical refineries unrepresentative of the industry. Baker and O'Brien provided a 

far more robust analysis that examines the impacts of a Tier 3 sulfur rule at each and every 

existing U.S. refinery. This analysis concluded the planned regulation could impose capital costs 

on the industry approaching SlO billion, corresponding to a recurring annual cost of $24 billion. 

That translates to an increase in gasoline manufacturing costs U to nine cents per gallon. 

With the nation's continued slow growth, we need a competitive U.S. refining industry 

producing the vast majority of our nation's petroleum fuels here at home and employing 

hundreds of thousands of Americans. Today, the refining industry supports roughly 540,000 jobs 

and represents nearly 2 percent of GDP. The refining industry is already heavily regulated, and 

any additional regulations must be smart, practical, and necessary. Tier 3 regulations are 

discretionary. EPA should not proceed with new regulations without first providing a scientific 

demonstration of health benefits along with a thorough analysis oNhe economic and supply 

impacts. Since EPA has failed to do this, your Administration should ot move forward with 

proposing Tier 3 gasoline regulations.

Sincerely,