# nitid tatc tnat

WASHINGTON, DC 20510

Februar y 4, 2013

President Barack Obama ftc \\'hite House 1600 Pennsylvania Avenue NW \Vashington, DC 20500

Dear rvlr. President:

On Januar y 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 y sis 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,