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29 January 2013

Gina McCarthy, Assistant Administrator for the Office of Air and Radiation

US EPA Headquarters

Ariel Rios Building

1200 Pennsylvania Avenue

, N

. W

.

Mail Code: 6101A

Washington, DC 20460

(202) 272

- 0167

Re : Palm Waste Clas s ification

- Neste Oil Separated Food Waste Plan

Dear Ms. McCarthy:

On or about 24 July 2012, Neste Oil received a statement from the EPA that stated the

following :

The EPA will regard Palm Sludge oil recovered from palm oil mill effluent,

Palm free fatty acids, and Palm oil recovered from bleaching earth

(hereafter collectively palm waste) as "Non

- cellulosic portions of

separated food waste " s o long as such wastes meet the following

conditions :



### 1. The palm waste would be permanently discarded if not used to make

biofuel, or if not discarded, they would be used to make some nonbiofuel product who s e revenue or cost savings represents a very

small fraction of the revenue that would have been generated from

the sale of the production of the primary product palm oil.

2

. The palm waste is from palm that was originally intended to be used

in food production or derived from post consumer food

.

In the same statement, EPA further expanded its review of palm wastes to include PFAD

as follows :

In the interpretation

... of the RFS2 regulations, we concluded that palm

fatty acid distillate (PFAD) qualifies under the existing RFS2 program as a

waste product from the production of food

. Our determination is that

PFAD is a by

- product in the production of palm oil and do not represent a

primary product and are not the purpose for growing palms or extracting

and purifying palm o i l. While PFAD has some existing uses such as a

supplemental energy s our c e for boiler fuel

, we conclude that these other

uses are generally considered low value uses and removal of PFADs from

such alternative uses w i ll not substantially impact these other uses (e.g

. , decreasing the amount of PFAD used as boiler fuel will not substantially



### Neste Oil

- Ho u ston

1800 West Loop South, Suite 1700

Houston

, Texas 77027-3219 USA

Tel. (713) 407-4400 Telefax (713) 407-4480

# nESTECIL

i mpact the availability of feedstock used for boiler fuel)

. Therefore we

concluded that PFAD in the circumstances which were presented to EPA,

i s consistent with the description of a waste as included in the final RFS2

r ulemaking, assuming the material also meets the definition of renewable

biomass and any and all other applicable compliance requirements

established by rule

. EPA re s erves the right to reassess this determination

at a later date should circumstances change

.

On 17 September 2012, Ne s te Oil Singapore Pte Ltd (EPA ID No 4137) submitted a

s eparated food waste plan a s required under the applicable regulations seeking

approval to use palm sludge oil recovered from palm oil mill effluent, palm free fatty

acids (palm acid oil), palm oil recovered from bleaching earth, palm fatty acid distillate

and other palm oil derivative s (collectively "palm wastes") as non

- cellulosic portions of

s eparated food wastes and therefore classified as "biogenic waste oils/fats/greases" in

reliance on the EPA ' s determinations as communicated above

. However to date

, Neste

Oil has not received a respon s e regarding its separated food waste plan submission

despite numerous requests for s tatus updates to various personnel within the Agency.

It is our understanding that the EPA may be rethinking its previously articulated

determination on the palm wa s te s' classification as waste products as well as the similar

classification of other feedstock previously designated as waste product

. If correct

,

Neste Oil has numerous concern s regarding this review of waste product designations

. Specifically

, based on the EPA 's previous guidance, Neste Oil has invested significant

capital and time in the form of improvements to its facilities to more efficiently process

and refine EPA approved wa s te feedstock and to procure such feedstock

. A change of

determination mid

- stream will cause significant and undue hardship to producers like

Neste who acted in reliance on the agency's findings, will send negative signals to the

market about the stability and reliability of the Renewable Fuel Standard, and will

undermine the biofuel producing community ' s ability to obtain necessary quantities of

qualifying feedstock required to produce the mandated gallons of biofuels. The

unnecessary delay caused by the agency's inaction has created a large degree of

uncertainty affecting Neste Oil 's business decisions

.

Neste Oil believes EPA ' s initial a ss essment of qualifying PFAD and other palm wastes a s

a waste produce is correct

. In fact

, PFAD is a lower value product than many of the other

feedstocks approved as waste products by EPA such as animal fat

. The European Union

and some Canadian province s including Alberta and British Columbia consider PFAD to

be a waste product

. Further

, efforts by some producers capable of using only first

generation

, crop

- based feed s tock s to disqualify waste feedstocks appear to be

misguided attempts to protect market share and are an affront to a

feedstock/technology neutral platform to increase biofuel production

.

Additionally

, it is important to note that the palm wastes are a separate and distinct

feedstock from crude palm oil feed s tock and other primary purpose palm oil derivatives

.

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While the agency is considering the lifecycle analysis of crude palm oil, it should not

further delay confirmation of its approval of the palm waste streams and their separate,

waste-product lifecycle considerations

.

Neste Oil believes that these palm wastes fall squarely within the definition of waste

products as contemplated in the RFS regulations. Absent compelling lifecycle analysis to

the contrary, the EPA should discontinue review of its classification and confirm that

palm wastes including palm sludge oil, palm from bleaching earth, palm free fatty acids,

and palm fatty acid distillate, are wastes and qualify as biogenic waste oils/fats/greases

and therefore eligible for generating D4 or DS RINs under the current regulations

.

We renew our urging that the EPA act with a reasonable time for the convenience and

necessity of Neste Oil's ability to comply with the RFS and to not succumb to inertia

. Specifically, even if a preliminary determination has not been made, a response notice

to Neste Oil indicating the status of the review and an anticipated time frame for EPA to

inform Neste Oil of the agency's preliminary determination is greatly appreciated and

expected.

In order to communicate additional facts and circumstances regarding this issue and its

effect of biofuel producers like Neste Oil, we request a meeting with you and those who

will be responsible for reviewing and approving Neste's separated food waste plan

.

Respectfully,

# ~4~-4.

Neste Oil US, Inc.

Neville Fernandes, President

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