[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
 LEGISLATIVE HEARING ON DISCUSSION DRAFT CONCERNING ALTERNATIVE FUELS, 
                          INFRASTRUCTURE, AND
                                VEHICLES

=======================================================================


                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON ENERGY AND AIR QUALITY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 7, 2007

                               __________

                           Serial No. 110-53


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



                   U.S. GOVERNMENT PRINTING OFFICE
42-440 PDF                  WASHINGTON : 2008
----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free(866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, 
Washington, DC 20402-0001



                    COMMITTEE ON ENERGY AND COMMERCE

    JOHN D. DINGELL, Michigan, 
             Chairman
HENRY A. WAXMAN, California
EDWARD J. MARKEY, Massachusetts
RICK BOUCHER, Virginia
EDOLPHUS TOWNS, New York
FRANK PALLONE, Jr., New Jersey
BART GORDON, Tennessee
BOBBY L. RUSH, Illinois
ANNA G. ESHOO, California
BART STUPAK, Michigan
ELIOT L. ENGEL, New York
ALBERT R. WYNN, Maryland
GENE GREEN, Texas
DIANA DeGETTE, Colorado
    Vice Chairman
LOIS CAPPS, California
MIKE DOYLE, Pennsylvania
JANE HARMAN, California
TOM ALLEN, Maine
JAN SCHAKOWSKY, Illinois
HILDA L. SOLIS, California
CHARLES A. GONZALEZ, Texas
JAY INSLEE, Washington
TAMMY BALDWIN, Wisconsin
MIKE ROSS, Arkansas
DARLENE HOOLEY, Oregon
ANTHONY D. WEINER, New York
JIM MATHESON, Utah
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana               JOE BARTON, Texas
                                         Ranking Member
                                     RALPH M. HALL, Texas
                                     J. DENNIS HASTERT, Illinois
                                     FRED UPTON, Michigan
                                     CLIFF STEARNS, Florida
                                     NATHAN DEAL, Georgia
                                     ED WHITFIELD, Kentucky
                                     BARBARA CUBIN, Wyoming
                                     JOHN SHIMKUS, Illinois
                                     HEATHER WILSON, New Mexico
                                     JOHN B. SHADEGG, Arizona
                                     CHARLES W. ``CHIP'' PICKERING, 
                                         Mississippi
                                     VITO FOSSELLA, New York
                                     STEVE BUYER, Indiana
                                     GEORGE RADANOVICH, California
                                     JOSEPH R. PITTS, Pennsylvania
                                     MARY BONO, California
                                     GREG WALDEN, Oregon
                                     LEE TERRY, Nebraska
                                     MIKE FERGUSON, New Jersey
                                     MIKE ROGERS, Michigan
                                     SUE WILKINS MYRICK, North Carolina
                                     JOHN SULLIVAN, Oklahoma
                                     TIM MURPHY, Pennsylvania
                                     MICHAEL C. BURGESS, Texas
                                     MARSHA BLACKBURN, Tennessee
_________________________________________________________________

                           Professional Staff

 Dennis B. Fitzgibbons, Chief of 
               Staff
Gregg A. Rothschild, Chief Counsel
   Sharon E. Davis, Chief Clerk
   Bud Albright, Minority Staff 
             Director

                                  (ii)
                 Subcommittee on Energy and Air Quality

                    RICK BOUCHER, Virginia, Chairman
G.K. BUTTERFIELD, North Carolina,    J. DENNIS HASTERT, Illinois,
    Vice Chairman                         Ranking Member
CHARLIE MELANCON, Louisiana          RALPH M. HALL, Texas
JOHN BARROW, Georgia                 FRED UPTON, Michigan
HENRY A. WAXMAN, California          ED WHITFIELD, Kentucky
EDWARD J. MARKEY, Massachusetts      JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland             JOHN B. SHADEGG, Arizona
MIKE DOYLE, Pennsylvania             CHARLES W. ``CHIP'' PICKERING, 
JANE HARMAN, California                  Mississippi
TOM ALLEN, Maine                     STEVE BUYER, Indiana
CHARLES A. GONZALEZ, Texas           MARY BONO, California
JAY INSLEE, Washington               GREG WALDEN, Oregon
TAMMY BALDWIN, Wisconsin             MIKE ROGERS, Michigan
MIKE ROSS, Arkansas                  SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon               JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York          MICHAEL C. BURGESS, Texas
JIM MATHESON, Utah                   JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex 
    officio)
                                 ------                                

                           Professional Staff

                    Sue D. Sheridan, Senior Counsel
                       Lorie J. Schmidt, Counsel
                   Rachel Bleshman, Legislative Clerk
                  David J. McCarthy, Minority Counsel


                             C O N T E N T S

                              ----------                              
                                                                   Page
 Hon. Rick Boucher, a Representative in Congress from the 
  Commonwealth of Virginia, opening statement....................     1
 Hon. J. Dennis Hastert, a Representative in Congress from the 
  State of Illinois, opening statement...........................     3
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     4
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     5
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     7
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     7
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     8
Hon. Mike Rogers, a Representative in Congress from the State of 
  Michigan, opening statement....................................     9
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................    10
Hon. Mike Doyle, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................    11
Hon. Jane Harman, a Representative in Congress from the State of 
  California, opening statement..................................    12
Hon. Tom Allen, a Representative in Congress from the State of 
  Maine, opening statement.......................................    13
Hon. Tammy Baldwin, a Representative in Congress from the State 
  of Wisconsin, opening statement................................    14
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................    15
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................    17
Hon. Anthony D. Weiner, a Representative in Congress from the 
  State of New York, opening statement...........................    18
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................    18
Hon. Mike Ross, a Representative in Congress from the State of 
  Arkansas, opening statement....................................    19
Hon. Tim Matheson, a Representative in Congress from the State of 
  Utah, opening statement........................................    20
Hon. Charlie Melancon, a Representative in Congress from the 
  State of Louisiana, opening statement..........................    21

                               Witnesses

Bob Dinneen, president and chief executive officer, Renewable 
  Fuels Association..............................................    22
    Prepared statement...........................................    25
Charles Drevna, executive vice president, National Petrochemical 
  and Refiners Association.......................................    31
    Prepared statement...........................................    34
    Answers to submitted questions...............................   141
    Letter of June 14, 2007 to Mr. Boucher.......................   152
Phillip Lampert, executive director, National Ethanol Vehicle 
  Coalition......................................................    45
    Prepared statement...........................................    46
Sonja Hubbard, chief executive officer, E-Z Mart Stores, on 
  behalf of the National Association of Convenience Stores and 
  the Society of Independent Gasoline Marketers of America.......    48
    Prepared statement...........................................    50
    Answers to submitted questions...............................   145
John DeCicco, senior automotive fellow, Environmental Defense....    53
    Prepared statement...........................................    56
Alan Reuther, legislative director, International Union of United 
  Automobile, Aerospace and Agricultural Implement Workers of 
  America........................................................    76
    Prepared statement...........................................    78
Hon. Dave McCurdy, president and chief executive officer, 
  Alliance of Automobile Manufacturers...........................    84
    Prepared statement...........................................    86
    Answers to submitted questions...............................   149
Alexander A. Karsner, Assistant Secretary, Energy Efficiency and 
  Renewable Energy, U.S. Department of Energy....................   115
    Prepared statement...........................................   117
Robert J. Meyers, Acting Assistant Secretary, Office of Air and 
  Radiation, Environmental Protection Agency.....................   120
    Prepared statement...........................................   122

                           Submitted Material

``Research Finds That Earth's Climate is Approaching `Dangerous' 
  Point'' NASA article submitted by Mr. Inslee...................   153
David Von Drehle, ``An Auto Insider Takes on Climate Change'' 
  TIME.com May 31, 2007, submitted by Ms. Harman.................   155
Letter of June 6, 2007, from Attorneys General of Massachusetts, 
  California, et al., to Messrs. Dingell and Barton, submitted by 
  Mr. Waxman.....................................................   161
Letter of June 5, 2007, from Audubon, Defenders of Wildlife, 
  Friends of the Earth, et al., to Members of Congress, submitted 
  by Mr. Waxman..................................................   165
Letter of June 6, 2007, from David P. Littell, commissioner, 
  Maine Department of Environmental Protection, to Mr. Allen, 
  submitted by Mr. Allen.........................................   170
Letter of June 6, 2007, from S. William Becker, National 
  Association of Clean Air Agencies, to Messrs. Boucher and 
  Hastert, submitted by Mr. Waxman...............................   172
Letter of June 6, 2007, from Arthur N. Marin, executive director, 
  NESCAUM, to Messrs. Boucher and Hastert, submitted by Mr. 
  Waxman.........................................................   174
Letter of June 7, 2007, from the Governors of California, New 
  Mexico, Arizona, Massachusetts, Oregon, New York, Washington, 
  and Pennsylvania, to Mr. Boucher, submitted by Mr. Waxman......   176
Letter of June 7, 2007, from Mr. Waxman, et al., to Messrs. 
  Dingell and Boucher, submitted by Mr. Waxman...................   178
Discussion Draft Part II.........................................   181
``National Low Carbon Fuels Standard Scenario Analysis'' by Brian 
  Turner, National Commission on Energy Policy, International 
  Council on Clean Transportation................................   238
Statement of the Outdoor Power Equipment Institute, June 7, 2007.   246
Statement of API, June 7, 2007...................................   249
Letter of June 6, 2007 from American Council for an Energy 
  Efficiency Economy, et al., to Members of Congress, submitted 
  by Mr. Waxman..................................................   251


 LEGISLATIVE HEARING ON DISCUSSION DRAFT CONCERNING ALTERNATIVE FUELS, 
                      INFRASTRUCTURE, AND VEHICLES

                              ----------                              


                         THURSDAY, JUNE 7, 2007

                  House of Representatives,
            Subcommittee on Energy and Air Quality,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Rick 
Boucher (chairman) presiding.
    Members present: Representatives Butterfield, Melancon, 
Barrow, Waxman, Markey, Wynn, Doyle, Harman, Allen, Gonzalez, 
Inslee, Baldwin, Ross, Weiner, Matheson, Dingell, Hastert, 
Hall, Upton, Shimkus, Walden, Rogers, Sullivan, Burgess, and 
Barton.
    Also present: Representatives Green and Stupak.
    Staff present: Bruce Harris, Lorie Schmidt, Chris Treanor, 
Laura Vaught, Jonathan Brater, Jonathan Cordone, Alec Gerlach, 
Rachel Bleshman, David McCarthy, Tom Hassenboehler, and Matt 
Johnson.

  OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

    Mr. Boucher. The subcommittee will come to order. Before 
commenting on the subject matter of today's hearing, I want to 
inform members of the subcommittee that we will be meeting in 
that markup session next Wednesday, June 13 at 10 o'clock. And 
during that markup session, we will consider all of the titles 
that this subcommittee will contribute to Speaker Pelosi's 
Independence Day measure. The markup will encompass the matters 
relating to vehicles and fuel, which are the subject of today's 
legislative hearing. And also will encompass the titles 
relating to energy efficiency and the other matters that were 
the subject of the legislative hearing we conducted in May.
    I want to encourage all of the members of the subcommittee 
to submit their proposed amendments to the committee staff, if 
possible, by close of business tomorrow. That will give us time 
over the weekend and in the first couple of days of next week 
to work with the Members who are submitting the amendments and 
try to resolve any issues with their amendments prior to the 
markup taking place. So for benefit of the Members, let me 
repeat that we would like to have your draft amendments 
submitted to the subcommittee staff by the close of business 
tomorrow, if at all possible, and that will give us ample time 
to work with you prior to the markup. The full Energy and 
Commerce Committee will convene a markup session the following 
week, that will be 2 weeks hence, for the purpose of 
considering the work product of the subcommittee.
    And then following House passage of the Speaker's July 
independence energy agenda, the subcommittee's attention will 
return to our other principal topic for the year and that is 
global warming and greenhouse gas control. It is our intention 
to draft and approve in the subcommittee, and the full 
committee in September, a mandatory greenhouse gas control 
measure. Our goal is to present it to the Speaker for House 
debate as early as October of this year.
    A number of Members participated last week in an intensive 
evaluation of the European emissions trading system during the 
visit to four European Union member countries, and the 
knowledge we gained during the course of that visit places us 
in a very strong position to draft an appropriate control 
program for the United States in the fall of this year.
    This morning our legislative hearing focuses on vehicles 
and fuel. It is a comprehensive treatment. It reflects 
suggestions that have been made to the committee by 
subcommittee members following our series of hearings in the 
spring. It promotes alternative fuels, alternative fuels 
infrastructure, and motor vehicle advances. Among other major 
provisions, it mandates the manufacture of flexible-fuel 
vehicles on a stated schedule, with the requirement that by 
2020, 85 percent of the motor vehicle fleet be flexible-fuel 
capable. Correspondingly, it mandates the installation of E-85 
capable pumps at service stations when flex-fuel vehicle 
penetration reaches 15 percent in a given area. There are 
exemptions from that requirement for very small retailers and 
there are grants to make the cost of compliance easier for 
those that need the financial assistance.
    These twin mandates are designed to relieve the classic 
chicken or egg dilemma where cars are not built because of the 
absence of pumps and pumps are not installed because of the 
absence of flexible fuel-capable cars. We also respond to the 
President's call for annual consumption of 35 billion gallons 
of alternative fuel by 2017, but we require that volume of 
consumption not by 2017 but by 2025 instead. We concluded that 
the production of 35 billion gallons by 2017 was unlikely, 
given our current annual consumption of less than 6 billion 
gallons and the absence of any empirical support for the 2017 
date supplied by the administration.
    Our draft bill authorizes grants of $1 billion to 
accelerate the commercialization of cellulosic ethanol 
production; establishes a feasibility study for a pipeline that 
would be dedicated to the transportation of alternative fuels 
from point of origination to point of distribution and sale; 
creates an advanced battery loan guarantee program to speed the 
introduction of promising new high performance batteries for 
electric vehicles, including lithium ion batteries; creates a 
fund for development of a mass technology vehicle, such as 
hydrogen fuel and plug-in all-electric vehicles; creates a 
mechanism to provide public information on higher fuel 
efficiency; mandates an increase in the CAFE fuel efficiency 
requirements; creates, starting in 2013, a low-carbon fuel 
standard applicable to all motor vehicle fuels, with a formula 
assuring that, as the alternative fuel mandate increases over 
time, the requirement for the usage of low-carbon fuels will 
also grow; and creates a biodiesel fuel standard with 
identification numbers sufficient for the manufacturers of 
vehicles to build engines compatible with biodiesel fuel.
    As a step toward the greenhouse gas control measure that we 
will process through our committee later this year, we require 
the Department of Transportation to begin issuing a CAFE 
requirement, both in miles per gallon, which is the historic 
metric, and also in the equivalent grams of CO\2\ emitted per 
vehicle mile. And we require the EPA to collect data from the 
auto manufacturers regarding the lifecycle CO\2\ footprint for 
the vehicles that they are placing in commerce. We also respond 
to the regulatory confusion which exists following the Supreme 
Court decision conferring authority on the EPA to regulate for 
greenhouse gas emissions in the transportation sector, a 
subject which I am certain will stimulate a lively discussion 
this morning.
    That concludes my opening statement.
     Let me simply note that we anticipate a number of 
unanimous consent requests that will be made by various parties 
to insert material into the record during the course of today's 
hearing. We will consider all of these requests toward the 
conclusion of the hearing. In the meantime, those who desire to 
insert material are asked to provide copies of the material to 
the majority and minority staff so that we can evaluate the 
material prior to the amount of consent requests being made and 
acted upon.
    At this time, it is my privilege to recognize the 
distinguished ranking member of the Energy and Air Quality 
Subcommittee, the former Speaker of the House, the gentleman 
from Illinois, Mr. Hastert.

 OPENING STATEMENT OF HON. J. DENNIS HASTERT, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Hastert. Well, I thank you, Chairman Boucher, for 
holding this hearing to review the draft legislation you 
introduced last week. I also want to thank you for the study 
group that you put together to look at what European standards 
are doing and how well they are achieving those and some of the 
problems that they have incurred as well. Your leadership is 
duly noted. Thank you for your effort in that respect. I want 
to reiterate my commitment to continue to work with you on 
commonsense energy legislation. I would also like to thank our 
witnesses today for being here.
    Like most policy proposals, there are some things which I 
generally support, others that I may have some concerns with 
and we need to think about and talk about. I have already 
support increasing our supply of renewable and alternative 
fuels. Last Congress we had the Energy Policy Act which 
contained the Renewable Fuel Standard to get more alternative 
sources of fuel into the market. The Alternative Fuel Standard 
in this draft builds upon this and provides incentives to get a 
diverse mix of fuel into the marketplace. These alternative 
fuels will reduce our reliance on unstable sources of foreign 
oil.
    Alternative fuels, however, are not effective without the 
infrastructure in place to distribute them. Provisions in this 
draft will level the playing field to get alternative fuels 
like E-85 into the marketplace. It also provides grants for E-
85 infrastructure and the development of cellulosic ethanol 
facilities. I would even go further and provide liability 
protection to prevent the certification of E-85 pumps today. 
Countries like Brazil have been using E-85 pumps for years with 
no problems or evidence of safety concerns. The approval from 
Underwriters Laboratories has been slow-walked for too long and 
we must speed this process along.
    I have also supported efforts by this committee in the past 
to update and reform the CAFE standards. While I do support 
reforming and modernizing this program, we need to be mindful 
of setting an arbitrary floor or ceiling for fuel standards. 
The Department of Transportation is the agency with the 
expertise and is tasked with the determining maximum fuel 
savings ability. We should let them do their job.
    I am also concerned about the flex-fuel mandate in the 
draft. This is something that I think we need to talk about, 
something that I think we need to negotiate. I personally 
believe it is largely unnecessary and overly prescriptive, the 
market is working on its own. But again, it is something that I 
think is well intentioned and we need to work through it. Also, 
I want to say that I believe this draft has potential to 
produce good policy and it could go a long way towards 
improving America's energy and security.
    I look forward to hearing from our witnesses today to get 
their thoughts on some of the issues that I have raised, as 
well as any other ideas they feel might serve to strengthen the 
legislation. Again, I want to thank you for holding this 
hearing, Mr. Chairman, and I look forward to working with you 
on a bipartisan basis to further improve the bill as we work in 
markup and continuing discussion on it in the coming weeks. And 
I yield back the balance of my time.
    Mr. Boucher. Thank you very much, Mr. Hastert. And I too 
look forward to working with you in a bipartisan mode to 
produce a bill that will enjoy the broad support of Members on 
both sides of the aisle. I would announce that, pursuant to the 
rules of the committee, any of the Members who desire to waive 
their opening statements will have the time allotted for that 
opening statement added to the question time they will have for 
the first panel of witnesses today. The gentleman from Georgia, 
Mr. Barrow, is recognized.
    Mr. Barrow. Thank you, Mr. Chairman. I will waive.
    Mr. Boucher. Mr. Barrow waives his opening statement. The 
gentleman from Texas, Mr. Hall, is recognized for 3 minutes. I 
think he is no longer here. The gentleman from Michigan, Mr. 
Upton, is recognized for 3 minutes.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, Mr. Chairman, and I want to say 
that I am convinced that legislation, as we look back at the 
110th Congress in December 2008, I am convinced that 
legislation that moves through this subcommittee will indeed be 
viewed as probably the most significant legislation enacted in 
the 110th Congress. I appreciate your leadership, Mr. Chairman, 
and your commitment to work on a bipartisan basis to work on 
legislation that is going to be helpful to not only business 
and industry but obviously the consumers across our great land. 
I also appreciate the constructive work of our ranking member, 
Mr. Hastert, the former Speaker, and the relationship that he 
has with you and our staff to make sure and ensure that, in 
fact, it will be bipartisan legislation.
    There are many very positive elements of the draft that has 
been produced that we are going to be discussing today. 
Important to that is the provision that Ms. Harman and I have 
been working on as it relates to light bulb efficiencies. And 
even as we go beyond that, as we look at the first 
appropriation bills on the House floor, she and I--and your 
colleague last night, all of our colleagues looking to see that 
the Federal Government, in fact, pursue that same course and to 
be able to purchase only Energy Star light bulbs, as we look at 
the next fiscal year, for all of our agencies. And I would like 
to think that we are going to have the support of the full 
committee in terms of their votes on the House floor when this 
will be debated as early as next week.
    The bottom line is this: we need to work together for all 
of Americans. Your leadership, with the hearings that we have 
had, with the hearing today, the legislation that we are going 
to pursue, the fast track that we are on to be able to get this 
bill out the door before the end of this month and on the House 
floor after the 4th of July is very important and I look 
forward to working with you on that basis, and I yield back my 
time.
    Mr. Boucher. Thank you very much, Mr. Upton. The gentleman 
from California, Mr. Waxman, is recognized for 3 minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Mr. Chairman, I am not going to talk about the 
importance of energy independence or the crisis of global 
warming in the few minutes I have this morning. We should all 
know that already. The question facing the Congress is whether 
we are going to step up to that urgent challenge. In a recent 
Tom Friedman column about energy legislation and Congress, he 
wrote, ``you can very comfortably drive a Hummer to the gap 
between our words and deeds.'' And that was before he read this 
subcommittee's draft proposal. This discussion draft doesn't 
step up to the urgent challenge facing us. It blinks and then 
steps back.
    Last November, voters elected a new Congress and demanded 
change. They wanted an end to politics as usual and legislation 
driven by special interests. This bill unfortunately reflects 
none of that. It would not only overturn the recent landmark 
Supreme Court ruling that the EPA has the authority to regulate 
greenhouse gas emissions from cars and trucks, but would also 
block the efforts by California and 11 other States to reduce 
these pollutants. And this draft has as its centerpiece 
promoting coal. Even worse, the draft encourages high-carbon, 
coal-based liquid fuel to be used for planes and jets, with 
little protection against the inevitable increases in 
greenhouse gas emissions.
    Because this draft is so deeply flawed, I intend to offer a 
substitute bill at next week's markup. The substitute will 
include commonsense vehicle efficiency and low-carbon fuel 
standards to reduce our dependence on fossil fuels and our 
emissions of global warming pollution. It will include a 
renewable electricity standard to increase the amount of clean 
renewable electricity used in this country. It will include an 
energy efficiency performance standard to reduce our Nation's 
emissions of global warming pollution and to save consumers 
money. And instead of discouraging States from taking action, 
the substitute will make it the policy of the United States 
Government to support State programs and policies that direct 
global climate change.
    When this committee passed the 1990 Clean Air Act, we were 
able to forge consensus to craft legislation that dramatically 
reduced pollution while still allowing our economy to grow. 
Many thought that was impossible, but we did it. We did it by 
working together. We did it by not listening to those who said 
we couldn't, and we did it by rising above regionalism and 
special interests, and recognizing that urgent problems require 
innovative and strong solutions. The draft before us doesn't 
come close to that standard and I look forward to working with 
my colleagues to develop a bill that our country can be proud 
of.
    Mr. Boucher. Thank you very much, Mr. Waxman. The gentleman 
from Texas, Mr. Hall, is recognized for 3 minutes.
    Mr. Hall. Mr. Chairman, thank you. You did a very good job 
in the opening statement. I will waive my opening statement.
     I would like to take a part of my time, though, to 
recognize one of the panelists who is a highly recognized young 
lady in the southwest part of this country and she is from my 
district and that makes her special to me, but she has been 
before this committee before, as have some of her colleagues, 
Bill Douglass and the others who have graced us with their 
presence.
    Sonja Hubbard is vice chairman of government relations and 
chief executive officer of the E-Z Mart Stores that operate in 
five States and she is located in Texarkana--founded by her 
father and still runs by her mother--operating and leading the 
company. But she serves her first term, though, as National 
Association of Convenience Stores chairman of government 
relations in five States. I can tell you other things about 
her. She is a CPA. She is a part of almost everything in the 
eastern part of Texas. She serves as the director of the Texas 
Petroleum Convenience Store Association; is chairman of the 
local branch of the St. Louis Federal Reserve Bank. And what 
she and I appreciate more than ever, and I do at my age, she 
loves jazz music and her favorite movie is ``It's a Wonderful 
Life.'' And like her, I make my kids listen to that and watch 
it annually at Christmastime. Thank you for being before us and 
giving us your time. And all of you, we know it takes time to 
prepare to get here to give your testimony and you render a 
real good service to us and we appreciate all of you. I 
especially appreciate you, Sonja. Thank you, Mr. Chairman.
    Mr. Boucher. Thank you very much.
    Mr. Hall. I have campaigned enough.
    Mr. Boucher. Thank you, Mr. Hall. The gentleman from 
Massachusetts, Mr. Markey, is recognized for 3 minutes.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

    Mr. Markey. Thank you, Mr. Chairman. Mr. Chairman, this 
draft is one that I cannot support. I do not think it reflects 
the spirit of what this country wants to see happen, as we are 
challenged by 60 percent of our oil being imported as opposed 
to only 27 percent of our oil being imported 20 years ago. 
Global warming is now viewed universally as a scientific fact 
and one that requires urgent action. This bill does not respond 
to those twin challenges.
    Fourteen attorneys general have all come out in opposition 
to this bill, but they are not going to be allowed to testify 
here today. This bill is cutting the legs out from under the 
States, just as they are starting to sprint forward on carbon 
pollution regulation. And it is cutting the legs out from under 
the EPA, just as it has begun lacing up its shoes after the 
decision in Massachusetts v. EPA. This bill overrides the 
Supreme Court decision in Massachusetts v. EPA. This bill 
requires the EPA to deny California in its label request, and 
11 other States as well, including Massachusetts, to its use of 
the Clean Air Act authority to set vehicle greenhouse gas 
emission standards.
    As I have done since 2001, initially with Sherri Boehlert 
from New York and now with other Members of Congress led by 
Congressman Platts from Pennsylvania, it will be my intention 
next week to once again bring an amendment that will raise the 
fuel economy standards for our country to 35 miles per gallon, 
and we will have a vote on that issue. At 35 miles per gallon, 
we back out all of the oil which we import from the Persian 
Gulf. We must send that signal to all of those OPEC nations. We 
have the technological capacity to do that. In 10 years we can 
once again reclaim our control of our own energy agenda if we 
take those actions. And the same thing is true for global 
warming. We have to ensure that we reduce dramatically the 
greenhouse gases that are creating this potential catastrophic 
condition for the planet. Sadly, this bill does not do that.
    And so we have a historic debate about to break out and led 
by the clean coal, the coal-to-liquid issue, which is only 
going to worsen greenhouse gases, and the absence of meaningful 
fuel economy standards for our vehicles that we drive, which 
would help. This debate is historic and about to begin. Thank 
you, Mr. Chairman.
    Mr. Boucher. Thank you, Mr. Markey. The gentleman from 
Illinois, Mr. Shimkus, is recognized for 3 minutes.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman. I agree with my 
colleague from Massachusetts. This will be a historic debate 
and I would ask people to reserve their speech because next 
week we start. Illinois has 250 years worth of coal in the 
Illinois basin. It can make a major impact on decreasing our 
reliance on imported crude oil and help bring security and that 
is going to be part of this debate. And we relish the 
opportunity to bring this to our colleagues and talk about 
energy security.
    Thank you and I appreciate the chairman's efforts in trying 
to replace foreign oil imports by building up a strong domestic 
alternative fuel supply. We must put everything on the table to 
increase our energy security. All alternative fuel should be 
considered. Coal-to-liquid fuel, biodiesel, corn-based ethanol, 
and also cellulosic, all hold great promise and will compliment 
and strengthen our domestic energy portfolio. As we all know, 
the recent expansion of biofuels, primarily ethanol, is 
happening at record rates. With consumption running at nearly 
400,000 barrels per day, equivalent to an annual consumption 
rate of 6.1 billion gallons, this is well in excess of the 
current Renewable Fuel Standard established under EPAct 2005, 
which we passed through this committee. And I am happy to see 
that this effort had us on what seemed to be a progressive path 
for renewable fuel.
    With EPA's promulgation of the RFS credit trading and 
compliance system, largely viewed as a success, ethanol and 
biodiesel are positioned to only increase their impact on the 
domestic fuel supply and further reduce our use of imported 
foreign oil. However, there is work to be done and concerns 
remain. There is infrastructure limitations, conflicting 
environmental impact and methodologies and measures to develop. 
Even affects on fuel prices should be looked at as to not 
exceed a smooth transition to greater use of these fuels in our 
everyday transportation mix. All of these issues merit careful 
consideration before we act to further mandate the use of these 
fuels.
    While I appreciate the chairman's efforts to follow up with 
hearings and markups, I do have concerns that the timeline he 
has may be too fast for some of the provisions that we are 
trying to enact. And maybe we will hear today from our 
witnesses that this is the case. It may be more valuable to 
take a step back and that is what we are trying to do with the 
Alternative Fuel Standard and especially section 102, the Low-
Carbon Fuel Standard. I think there is a lot of uncertainty and 
we are giving ourselves a very limited amount of time to deal 
with these broad policy issues. If we are looking to expand the 
use of alternative fuels, we should remain--and technology 
neutral. We should also expand our traditional fossil fuel 
expiration and protection and strengthen our domestic energy 
supplies. We must not underestimate our current reliance on 
unstable foreign sources of fossil fuels and we must be smart 
and responsible with further actions.
    With that, I welcome our panelists and I yield back the 
balance of my time, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Shimkus. The 
gentleman from Michigan, the chairman of full committee, Mr. 
Dingell, is recognized for 5 minutes.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Mr. Chairman, I will not use 5. I will take 3 
and be happy. First, Mr. Chairman, thank you. This is an 
important hearing. It addresses a number of questions that need 
to be dealt with before we proceed further. I want to commend 
you for the way in which you are handling this matter and the 
extraordinary leadership that you are providing to the 
committee and the subcommittee. At the outset, I note that the 
draft legislation is well balanced, and for that I commend you. 
It provides us a starting point for our consideration of these 
critical issues. With that, Mr. Chairman, I look forward to 
hearing the views of my colleagues on the committee.
    Mr. Boucher. Thank you, Mr. Dingell. The gentleman from 
Michigan, Mr. Rogers, is recognized for 3 minutes.

  OPENING STATEMENT OF HON. MIKE ROGERS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Rogers. Thank you, Mr. Chairman, for holding today's 
hearing. Addressing the twin problems of our dependence on 
foreign oil and climate change requires sensible action on 
transportation fuel. Developing diverse fuel sources is a goal 
in this committee and it has been pursued for some time. Much 
of this bill continues our bipartisan tradition of pursuing 
market-based solutions to America's energy needs. However, 
several provisions in this bill can be cause for concern.
    The Renewable Fuel and Alternative Fuel Standards are 
particularly complex and I am concerned that they may limit 
rather than encourage the growth of alternative fuels. Several 
provisions related to alternative fuel infrastructure raise 
serious questions about the respect for private property 
rights. The report on CAFE standards contemplated in this bill 
is immense. I am very concerned that the bill, while well 
intentioned, continues the system of using arbitrary numbers 
that distort the marketplace, limiting consumer choice and 
making it exceptionally difficult for the American auto 
industry to effectively compete in the United States.
    Finally, the provisions providing assistance for battery 
research and alternative propulsion are laudable. However, I 
have serious questions regarding how this legislation will 
actually work in this area and the consequences, Mr. Chairman, 
are very, very real. Recently in Michigan, within the last 
year, we opened up a plant just outside Lansing, Michigan, the 
most high tech manufacturing automobile plant in North America 
that builds the Buick Enclave and the Saturn Outlook and it is 
a marvel of modern manufacturing technology and represents the 
best in cooperation between the UAW and management to build 
very high quality vehicles, crossover SUVs that get in the mid 
20 miles per gallon. Twenty-five hundred direct manufacturing 
jobs and another 2,500 jobs were created in the area just in 
the supply chain, direct manufacturing jobs. Five thousand jobs 
directly, not counting all of the supply that will supply the 
supply chain. It is an incredible feat. It is an incredible 
vehicle. They are building incredible vehicles, high quality 
vehicles. They are making that march toward better miles per 
gallon. We should not punish them.
    And I would just caution you, Mr. Chairman, please do not 
rush this legislation. The consequences if we get this wrong 
are very real to America's manufacturing base, consumer choice 
and just jobs in our local neighborhoods that have been, I 
think, the backbone for our middle class for the better half of 
this century. And with that, Mr. Chairman, I look forward to 
working with you on the issues in this bill. Again, I would ask 
that we continue that working relationship to get to the right 
place for a better America, and I yield back the remainder of 
my time.
    Mr. Boucher. Thank you very much, Mr. Rogers. The gentleman 
from Maryland, Mr. Wynn, is recognized for 3 minutes.
    Mr. Wynn. Thank you, Mr. Chairman. I will waive.
    Mr. Boucher. The gentleman waives his opening statement. 
The gentleman from Texas, Mr. Burgess, is recognized for 3 
minutes.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. I thank the chairman. I also want to thank you 
for your willingness to work with the Republican side of the 
dais as we craft energy independence legislation.
    I am pleased to see the language is in the discussion draft 
covering a provision I have been working that would help to 
incentivize biodiesel. The reliance on foreign energy sources 
undermines our economy and security. Homegrown fuels, such as 
biodiesel, can help move the United States towards greater 
energy independence. Despite the energy and security and clean 
air benefits, biodiesel-capable cars and trucks have been 
slowly hitting the market, mainly because of concerns by 
original equipment manufacturers for automobiles and engines. 
Although manufacturers are comfortable with the B-5 biodiesel 
blend, most of them certified their engines to run on the 
biodiesel B-20. Section 103 of the draft seeks to clarify the 
definition of biodiesel and the blends, which I think is a 
necessary step towards the widespread use of biodiesel. My 
provision, included in the draft looks at the hardware, if you 
will, and tries to incentivize the B-20-capable automobiles by 
making B-20 eligible for alternative fuel credit of the 
Corporate Average Fuel Economy Program.
    Alternative fuels receive an additional CAFE credit because 
they help reduce the use of petroleum fuel and provide clean 
air benefit. Biodiesel, in fact, does both. An October 2005 EPA 
study shows diesel vehicle fuel economy improvements of between 
a third to almost 40 percent of the lifecycle carbon savings, 
and a lifecycle carbon savings of 16 to 20 percent compared 
with gasoline vehicles. In addition, for every unit of diesel 
fuel which is replaced by biodiesel, the total lifecycle 
greenhouse gas emissions that would have been produced from 
that unit of diesel fuel would be reduced by 13 percent, 
numbers that Kermit the Frog would love.
    Mr. Chairman, I ask you and your staff to work with me and 
my staff on this provision and ensure that it is included in 
the final draft when the subcommittee comes to markup next 
week. I would be remiss if I forgot to say I have some concerns 
about the provisions in the discussion draft, particularly with 
regard to the wisdom of adopting a low-carbon fuel standard 
without first doing some analysis to determine its effect on 
the prices paid by the consumer at the pump. I am hopeful that 
the bipartisan spirit set forth by Chairman Dingell and you, 
Chairman Boucher, will prevail and that we will be able to work 
through some of these issues. I thank the chairman for today's 
hearing and I look forward to working with you to keep the B-20 
provisions in the final draft of the bill, and I will yield 
back the final 25 seconds.
    Mr. Boucher. Thank you very much, Mr. Burgess, and thank 
you for recommending the biodiesel provision to us. That was a 
substantial contribution to our work and we do look forward to 
continuing our discussions with you about that provision. The 
gentleman from Pennsylvania, Mr. Doyle, is recognized for 3 
minutes.

   OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF PENNSYLVANIA

    Mr. Doyle. Thank you, Mr. Chairman. Let me begin by showing 
my appreciation to you for putting this discussion draft 
together. While I know it is not been easy and that there are 
members on this committee with legitimate concerns with this 
draft, you should be commended for your efforts as we continue 
this process.
    As we all know, the short deadline for completion of this 
legislation was a deadline imposed by the Speaker. This was not 
your choice nor was it the choice of Chairman Dingell, and 
there are many on this committee who would like more time to 
address some of these important matters. And while I understand 
this concern, I just hope we can all move forward together to 
build the best package we can. I want to remind all of the 
members of this committee that the vast majority of us in both 
parties share the same goal. We all want to reduce carbon 
emissions by 80 percent by the year 2050. What we are 
essentially arguing about is how we are going to reach this 
goal. I would like to challenge everyone here to keep their 
eyes on the prize, so to speak, and not get bogged down in one 
path towards its achievement versus another. It doesn't matter 
to me if the line of progress is perfectly straight with 
mandated reductions annually, or if the line of progress is one 
that is gradual over the early years and explodes upwards in 
future years as technology is developed. We arrive either way 
at an 80 percent reduction in greenhouse gas emissions and that 
is no small accomplishment.
    In the end, this committee is going to pass a bill that 
will, for the first time, put our Nation on a path towards 
energy independence. We are going to do this in a bipartisan 
and bicameral way. This process will allow us to investigate 
multiple paths towards the same goal and I think it is critical 
that we explore all of these options. After all, Mr. Chairman, 
this is not the first time you have heard me say that all 
options are on the table. But what I think is critical is that 
we don't let ourselves be swayed by some of the rhetoric that 
we have heard here today. We should instead keep our focus on 
our mutually shared goal and work together in a manner and with 
a dignity befitting this great body in which we serve.
    So Mr. Chairman, I will again express my sincere desire to 
continue working closely with you, and all of the members of 
this committee, to produce an energy bill that makes our 
country more independent, expands development of new 
technologies, and protects the American economy as it 
transitions to a carbon-constrained world. It is our challenge 
to blend our political parties' goals with those of the 
American people and those who fuel our economy. They don't have 
to be mutually exclusive anymore. This is a unique time in our 
history and a time that presents us with this tremendous but 
extremely beneficial challenge. I am ready to, in good faith 
and in an open forum, do my part and I hope that is the case 
with everyone on this committee. Mr. Chairman, I yield back the 
balance of my time.
    Mr. Boucher. Thank you very much, Mr. Doyle, and thank you 
for your very substantial contributions to the work which is 
before us. The gentleman from Oklahoma, Mr. Sullivan, is 
recognized for 3 minutes.
    Mr. Sullivan. I waive, Mr. Chairman.
    Mr. Boucher. The gentleman waives his opening statement. 
Are there other Members on the Republican side who have not 
been called on? The gentle lady from California, Ms. Harman, is 
recognized for 3 minutes, with the Chair's thanks for her 
contributions to the light bulb provision and to other matters.

  OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Harman. Thank you, Mr. Chairman, very much. Mr. 
Chairman, the luckiest members of this committee hail from 
California. Among other things, our State is an active 
revolutionary low-carbon fuel standard and tailpipe emissions 
standard that throw into sharp relief the Federal Government's 
failure, at least up until this point, to act adequately on 
climate change. Having said that, however, I commend you, as 
well as Chairman Dingell, for this draft legislation.
    While I favor a number of changes to it, as I have 
mentioned to you, I urge that our consideration of climate 
change legislation in the House follow the regular order. The 
product of this committee's labor should be the basis for what 
the House will pass this summer and fall. There should not be 
end runs around this committee. But I think our bill should 
leave room for States to maneuver. States, Justice Louis 
Brandeis said, are America's laboratories of democracy.
    California has been this Nation's principal laboratory for 
climate change policy and the legislation we are considering 
today, in my view, is due in no small part to the effort to my 
home State over the past decade. As I have told you, I cannot 
vote to strip away California's authority to exceed Federal 
greenhouse gas standards and I will plan to offer an amendment, 
hopefully a bipartisan amendment, since Governor Arnold 
Schwarzenegger agrees with this position, to strike the 
preemption section.
    Again, I applaud your instinct to be open to improvements 
in the draft. I really know we can produce a smart bill that 
both reduces our reliance on oil, reduces our carbon emissions 
and with Mr. Upton, provides the perfect light bulb provision. 
Let me finally say that I would like to ask unanimous consent 
to insert in the record a three-page color spread in this 
week's Time magazine on our chairman, Mr. Dingell, entitled ``A 
Mastodon Takes On Global Warming.'' I am not sure I agree with 
the animal choice, but I do agree with the very positive tone 
of the article, and I yield back.
    Mr. Boucher. Thank you very much, Ms. Harman. I think most 
of us are familiar enough with that article to agree at this 
time to the unanimous consent request. So thank you for making 
it and let me say that the portrait of our chairman portrayed 
in that article is interesting, I think largely accurate and it 
is a salute to his many years of strong leadership in the 
Congress and the continuing role that he has played in leading 
this committee, and I want to congratulate the chairman on that 
depiction of the wonderful things that he has done for energy 
and other policies over the years. So without objection, it is 
inserted within the record.
     The gentleman from Maine, Mr. Allen, is recognized for 3 
minutes.

   OPENING STATEMENT OF HON. TOM ALLEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF MAINE

    Mr. Allen. Thank you. Mr. Chairman, I regret that I am 
disappointed by the draft legislation before us. It rolls back 
recent progress made by the courts on climate change, preempts 
the States' abilities to control greenhouse gas emissions, and 
doesn't do enough, in my opinion, to reduce carbon emissions 
and halt global climate change. The bill overturns 
Massachusetts v. EPA, a landmark Supreme Court decision that 
confirmed that the EPA has authority under the Clean Air Act to 
regulate carbon dioxide as a pollutant. The Supreme Court 
decision is spurring the administration to action, changing the 
dynamic on climate change and making it more likely we can pass 
meaningful legislation this year. Overturning Massachusetts v. 
EPA takes us takes us in the wrong direction. We should 
preserve the power of the EPA to regulate air pollutants under 
the Clean Air Act.
    Further, this bill prevents California and 12 other States, 
including Maine, from enacting strict automobile greenhouse gas 
emission standards. Today, many people have lost confidence 
that the Federal Government will effectively respond to air 
pollution and global warming. Therefore, we should not block 
States from developing their own measures, especially on the 
basis of a promise that later on we will do more on greenhouse 
gas emissions. Mr. Chairman, I would ask unanimous consent, at 
this point, to enter into the record a letter from David 
Littell, commissioner of the Maine Department of Environmental 
Protection, in opposition to the bill as drafted because of 
these two provisions.
    Mr. Boucher. Thank you, Mr. Allen. Why don't you submit 
that to us and we will consider that along with all of the 
other materials we will be receiving for insertion in the 
record and offer unanimous consent approval at a uniform point 
later in the proceeding.
    Mr. Allen. Thank you, I will do that. In my statement at 
the legislative hearing on the first part of this energy 
package, I expressed my hope that the final product of this 
subcommittee would include a strong section on plug-in hybrids 
combined with coal plants that employ the latest technology for 
carbon capture and sequestration plus state-of-the-art 
technology. This was not done. Further, I expressed my hope 
that the subcommittee would produce an energy independence 
package with a renewable energy standard in language similar to 
Mr. Markey's CAFE proposal. There is no renewable energy 
standard in the bill and the CAFE language, in my opinion, is 
weak compared to Mr. Markey's proposal.
    Finally, Mr. Chairman, I believe that cleaner air and a 
comprehensive strategy to combat global climate change go hand-
in-hand with action to achieve energy independence. I am 
disappointed that the bill before us today falls short of this 
vision, but I certainly hope that we can work together to make 
it better. And with that, Mr. Chairman, I yield back.
    Mr. Boucher. Thank you very much, Mr. Allen. The gentleman 
from Texas, Mr. Gonzalez, is recognized for 3 minutes. Mr. 
Gonzalez waives his opening statement. The gentleman from 
Washington State, Mr. Inslee. I don't believe he is here. The 
gentle lady from Wisconsin, Ms. Baldwin, is recognized for 3 
minutes.

 OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF WISCONSIN

    Ms. Baldwin. Thank you, Mr. Chairman. I want to begin by 
thanking you for your dedication and your efforts in crafting 
the discussion draft that we have before us. I recognize the 
very difficult task that you have and for that reason I wish I 
could be more excited and more supportive of its provisions. 
But unfortunately, I am concerned that the discussion draft, as 
it is currently written, fails to take significant steps toward 
reducing our Nation's energy consumption and putting us on a 
path to energy independence.
    Many times over the course of this committee's energy 
independence and climate change hearings, I have said that we 
need to push the envelope in terms of creating efficient, 
effective and environmentally friendly legislation. But rather 
than taking bold steps, this draft appears to threaten some of 
the progress that we have made thus far. For instance, the 
language in the draft bill to overturn the Supreme Court's 
important decision in Massachusetts v. EPA undermines the 
achievements we have made and rehashes old arguments over 
whether the EPA has authority under the Clean Air Act to 
regulate emissions of greenhouse gases for motor vehicles.
    Moreover, the discussion draft preempts the progress made 
thus far by 12 States to regulate and reduce greenhouse gas 
emissions from automobiles. We should be encouraging and 
commending the States for not sitting idly by over the past 
several years while the Federal Government dragged its feet on 
emission standards. Instead, the bill precludes their efforts 
while also failing to increase our energy independence and slow 
the effects of global climate change.
    Also, as I expressed at our last legislative hearing, I 
remain concerned about the coal-to-liquid projects. If we are 
truly going to make our Nation energy independent, we must do 
so in a manner that reduces our greenhouse gas emissions and we 
must aspire to a higher standard than do no harm. The treatment 
of coal-to-liquid in the draft before us has done little to 
alleviate my concerns. Rather than limiting its use, the bill 
opens up the possibility that high-level greenhouse gas 
emitting fuel source will supply our Nation's aviation industry 
without having to meet the low-carbon fuel standard. This cuts 
directly against all the steps we are taking and will take to 
decrease our energy use and lower our greenhouse gas emissions.
    Mr. Chairman, while I have concerns with this discussion 
draft, I believe that we still have an opportunity to perfect 
it and I hope that we will. There are several provisions in 
here that are sensible policy approaches. For instance, I am 
pleased to see that we will be making significant improvements 
to increasing the use of E-85 and improving the E-85 
infrastructure and flex-fuel vehicles. These are necessary 
improvements that will help spur increased development of 
renewable fuels and move us in the right direction on energy 
independence and global climate change.
    In all, this bill offers us a chance to show the world that 
our Nation is ready to take bold action and address our 
Nation's energy issues. We must not let this opportunity pass 
us by. Thank you, Mr. Chairman.
    Mr. Boucher. Thank you very much, Ms. Baldwin. The 
gentleman from Texas, Mr. Barton, the ranking member of the 
full Energy and Commerce Committee, is recognized for 5 
minutes.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, Mr. Chairman. I once again want to 
commend you for a process that you and Chairman Dingell have 
engaged in on this emerging package of energy items. It is an 
open process and it has been a fair process and I am sincere in 
saying that I am very appreciative of it. Because of that, 
myself and Mr. Hastert and the Republicans are really looking 
for ways to work with you and Mr. Dingell to craft an energy 
package that is good for the American people.
    Having said that, your timetable is, to say the least, 
ambitious. In previous Congresses, energy packages of similar 
scope took years of discussion, dozens of hearings, numerous 
markups at subcommittee and full committee, false starts and 
working with the other body before they became law. Your 
discussion draft, for example, on the fuels and vehicles part 
alone is one of the biggest changes, would be one of the 
biggest changes in the history of the Clean Air Act. It is also 
very complicated. I spent 2 hours yesterday with some very 
smart people discussing it and trying to figure out exactly 
what it means and how it would work in practice and what the 
implications of it are.
    I am certainly not the smartest guy on energy policy, but I 
know a little bit about it and I am having trouble just 
adjusting to the thesis of some of those time frames. I have 
got numerous questions that I want to ask later today in this 
hearing and I know that other Members on both sides do too.
    The discussion draft would require monumental changes in 
the automotive and refining industries. We need to know what 
the cost and the benefit of those changes might be. Although 
the provisions to expand the renewable fuel standard can set 
the market to include other types of alternative fuel such as 
natural gas and coal-to-liquid have real merit, no one yet 
knows how these fuels would actually be used when they also 
need and if and when they would have to be assimilated into 
some sort of a carbon cap under the low carbon fuel standard as 
proposed in section 102. We simply have to understand the 
practical effects of these proposals. How much are they going 
to add to the cost of transportation fuels for American 
drivers? Gasoline prices are high enough already and it would 
appear to me that on the first glance that if this proposal 
were to become law, gasoline prices would easily go up to at 
least a dollar, perhaps $1.50 a gallon. I hope I am wrong about 
that.
    Your section 301 does grant the authority to set CAFE 
standards, similar to a bill that this committee reported last 
year, but, it is unclear whether it would allow the fuel 
economy standards to be greater than 36 miles per gallon by 
2021. At the same time, it sets an aggressive carbon cap on 
refineries and fuel providers and those come on top of the many 
other environmental requirements that are already mandated 
under the Clean Air Act to control the existing criteria 
pollutants.
    I had difficulty trying to understand what kind of a CO\2\ 
baseline the bill would envision. I also had trouble 
understanding the totality of CO\2\ that the bill would attempt 
to regulate or monitor. There is just a lot of these types of 
technical questions that I am having trouble with. In several 
places the bill authorizes new Federal spending, including 
``such sums as are necessary.'' I think I speak for most 
Republicans when I say that we are opposed to ``such sums as 
are necessary.'' That is basically a blank check. I don't even 
know how the CBO would score such a phrase.
    I also don't know whether it would square with the current 
House rules against unfunded mandates. I also don't know how it 
would square against the new rule on PAYGO that the new 
majority has instigated in this Congress. There are many, many 
possible unintended consequences of these kinds of provisions. 
I think it would normally take a lot of weeks to tease these 
out and to understand them. Apparently, we are going to have to 
get it done in the next 2 or 4 weeks. That seems to me to be a 
little bit ambitious.
    Mr. Chairman, I apologize for giving you so many questions, 
but I think that shows you how seriously we are taking your 
discussion draft. We are not just saying we are against it or 
rubberstamping it. I think there is room here for a bipartisan 
compromise and Mr. Hastert and myself, we met on this 
yesterday; both decided that we want to be a part of that 
compromise, if it is possible. So take my questions or take my 
comments on the opening statement in the spirit of which they 
are given, which is intense seriousness.
    I have sat in the chair that you are sitting, I have sat in 
the chair that Mr. Dingell is sitting in. It is not an easy 
job. It is a very important job. I will promise you this, if 
you are open and fair and work with the minority, we will be 
open and fair and work with you and Mr. Dingell. We will try to 
put together a bill that everybody on both sides of the aisle 
can be proud of. With that, I yield back, Mr. Chairman.
    Mr. Boucher. Well, thank you very much, Mr. Barton, and I 
appreciate the gentleman's candor. His careful attention to the 
measure that we have forward in draft form, and I will say that 
I also appreciate his willingness to work with us in a 
bipartisan mode to arrive at a measure that we can all support 
and that is a willingness that we will express back to you. We 
will do our best to provide the answers we have for the 
questions that you have raised now and those that you raise 
later and I thank the gentleman for his interest and attention 
to this.
    The gentleman from Washington State, Mr. Inslee, is 
recognized for 3 minutes.

   OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Inslee. Thank you. First, I want to thank the Chair on 
how he has handled this incredibly challenging effort. It has 
just been remarkable to try to give everyone a say in this.
    I want to put in the record, and circulate to my 
colleagues, an article about a NASA report that came out last 
week and the reason I want to circulate it is that timing is an 
issue here and I want to make it clear that we need to work on 
global warming this July, as well as energy independence and 
this article will make it clear why. Our scientists at NASA, 
the group that put a man on the moon, in this article basically 
told us that we have got about 10 years, not 50 years, not 40 
years.
     We have got about 10 years to make significant changes in 
our CO\2\ emissions or the world is bound for a tipping point 
where we melt the tundra and the methane, which is 16 times 
more powerful than CO\2\, tips the climatic system in the world 
into places we don't want it to go. I point this out and I am 
going to circulate this article because this July, I believe we 
have to take action with significance on CO\2\ in addition to 
energy independence and I am looking forward to achieving that.
     A couple of things that I will be working on I am very 
appreciative of the Chair putting in a provision on low-carbon 
fuels. It is absolutely imperative that we work towards an 
effort for advanced forms of biofuels and electricity for our 
cars and a whole host of advanced non-CO\2\ emitting fuels. And 
this is a first step. I will be suggesting some additions that 
will make the low-carbon fuel provision much stronger so that 
it will apply particularly with a long-term fixed, enforceable 
guarantee to our kids that we are going to have low-carbon 
fuel.
    One of the things we have learned is that we have to give 
certainty to the investment community so that decisions in 
investment can be made to make investments in these low-carbon 
fuels. And this is one way we need to do it, not by giving too 
much flexibility or alternatives, but in fact, a guarantee to 
get that done.
    Second, we will have some suggestions to try to advance the 
plug-in hybrid technology, which I believe will be here, could 
be here, in fairly short order if we take the right strong 
measures to perfect the lithium battery technology that is so 
promising, to run our cars on 1 cent a mile for pure 
electricity, zero CO\2\, 150 miles a gallon of low-carbon 
advanced fuels after that. That is quite a deal and if we play 
our cards right, we can do that in that regard.
    With that, I look forward to moving, not just on energy 
independence on July 4, pretty good theme, but independence of 
the world to continue to have a climate for our grandkids. 
Thanks.
    Mr. Boucher. Thank you very much, Mr. Inslee. The gentleman 
from New York, Mr. Weiner, is recognized for 3 minutes.

 OPENING STATEMENT OF HON. ANTHONY D. WEINER, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF NEW YORK

    Mr. Weiner. Thank you, Mr. Chairman. I won't use the full 3 
minutes. First, I want to honor you and Mr. Dingell for tapping 
what is an extraordinarily difficult task. It is a difficult 
issue that is wrapped up in regional conflicts and here in 
Congress, it is wrapped up in different views of the future and 
it is wrapped up in trying to envision a technological future 
that obviously none of us can say with certitude we can 
predict.
    There are two elements to the bill that I think are two 
abiding ethos that as we should keep in mind. One has been 
mentioned earlier, this notion of first do no harm. New York is 
among the States that has taken the opening provided by 
Massachusetts v. EPA to push the envelope on trying to figure 
out ways to reduce CO\2\ emissions for residents of New York, 
to try to figure out ways to be innovative.
    In the recent campaign that we had for Governor, there was 
a great deal of conversation about what would the State 
legislature do, what will the governor do if given the 
opportunity and New York was one of the parties to the suit--so 
we should be very cautious about doing anything that slows down 
innovation at the State level. I know you are sensitive to 
that, Mr. Chairman. You have expressed that to me and I think 
that we need to keep that in mind as we go forward.
    The second is going to be a question that is going to hover 
above a lot of our deliberations about how far to push, how 
bold to be. There is going to be discussion on whether or not 
pushing the outer limits of innovation will push too far and 
create job loss and put us in a competitively disadvantaged 
place. Well, I think that when you look at the innovation going 
on in the energy sector, the innovation going on in the 
transportation sector, the quality of the automobiles being 
made, the fact that hybrid automobiles are among the fastest 
growing sector of the economy--I think that we have to be 
setting up a goal line here that is variable.
    I think we should be as bold as possible. This is an 
opportunity for us to say we are not going to be halfway where 
other jurisdictions are, we are going to push all out. And I 
think there are indications that in Europe, for example, they 
are going to be setting standards that are much higher than 
ours which are going to force our technology providers, our 
transportation sector, to compete at a higher level, anyway. I 
would like very much for us to be bouncing our grandkids on our 
knee and talking about 2007 as the year that we crafted perhaps 
the single most important legislation ever passed out of 
Congress to deal with the issues of global warning and energy 
independence.
    I am confident this committee, on both sides of the aisle, 
is up that. I am confident that you are, Mr. Chairman. So long 
as we keep in mind those sheer values of trying not to harm 
things that are out there that are working and also trying to 
be as absolutely bold as we can be. And I yield back my time.
    Mr. Boucher. Thank you very much, Mr. Weiner. The gentleman 
from North Carolina, Mr. Butterfield, is recognized for 3 
minutes.

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Butterfield. Thank you very much, Mr. Chairman. I don't 
have a lengthy opening statement except to thank you for your 
leadership and your boldness in taking on this issue. 
Certainly, it is going to be debated on both sides of the aisle 
and within our own respective caucuses, but I want to thank you 
and the chairman of the full committee for your leadership and 
I look forward to this debate. At the end of the day, I am 
confident that we can reconcile our differences and have a good 
piece of legislation to take to the floor and to the American 
people. Thank you. I yield back.
    Mr. Boucher. Thank you, Mr. Butterfield. The gentleman from 
Arkansas, Mr. Ross, is recognized for 3 minutes.

   OPENING STATEMENT OF HON. MIKE ROSS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ARKANSAS

    Mr. Ross. Thank you, Mr. Chairman, for holding today's 
hearing and all the witnesses who have come before the 
subcommittee to testify. I especially want to recognize and 
thank Ms. Sonja Hubbard, who is testifying today on behalf of 
the National Association of Convenience Stores. Like 
Congressman Hall, I claim Ms. Hubbard. If you are not familiar 
with the geography of Texarkana, it is a twin city. There is 
Texarkana, Arkansas and Texarkana, Texas and the only thing 
that separates them is State Line Avenue.
    As you drive south down State Line Avenue, the right hand 
side of the road or the west side, if you will, you can vote 
for or against Congressman Hall and buy lottery tickets, and on 
the left hand side or east side of the road, you can vote for 
or against me and buy whiskey. But you can't do either one on 
the other side of the road. So we are all pleased. Congressman 
Hall and I both are pleased to claim Ms. Hubbard and as he 
indicated, she is the CEO of E-Z Mart Stores, which supply 
gasoline to many of my constituents in Arkansas and I welcome 
her here today. I look forward to hearing her testimony.
    I also want to thank Chairman Boucher and the committee 
staff for all their work on this legislation. I am particularly 
pleased to see provisions regarding specifications for 
biodiesel and an increase in the authorized amount of 
cellulosic ethanol production grants. Mr. Chairman, you have 
heard me state before that we talk a lot about alternative and 
renewable fuels in this Congress and yet, we will spend more 
money in Iraq in the next 8 hours than we will spend in the 
next 365 days on research and development for alternative and 
renewable fuels. I hope this is one step toward changing that.
    Increasing funding for cellulosic ethanol projects would 
help to achieve the increased levels of alternative fuels 
outlined in this legislation. In addition, these alternative 
and renewable fuels provide an incredible opportunity to 
provide new markets for our farm families and trigger what I 
believe could be an economic revival in the Delta region of 
this country, much of which I represent. I am also pleased to 
see that the draft legislation encourages the development of 
the alternative fuels infrastructure in this country for the 
grant program to assist retailers with the installation and 
conversion of E-85 infrastructure.
    I know a number of people in Arkansas that are trying to do 
the right thing and they bought flex-fuel vehicles, but they 
have no place to fill them up. Expanding the number of 
alternative fuel pumps at the station is crucial to the future 
of alternative fuels in this country and key to lessening our 
dependence on foreign oil. However, like Ms. Hubbard, before 
the committee today, I want to ensure that the supply and 
cross-implications of the proposed mandate to install an 
alternative fuel infrastructure are thoroughly analyzed in 
order to ensure that the demand for alternative fuels supports 
this transition.
    Finally, I am glad to see provisions that increase the 
number of flex-fuel vehicles on the road and the supply of 
alternative fuels in this country, including biodiesel, 
ethanol, coal-to-liquid, hydrogen and natural gas. Once again, 
thank you, Chairman Boucher, for your work on this legislation. 
I look forward to today's hearing and testimony of the benefits 
of this bill as well as possible ways to improve upon this 
draft. And with that, I yield back the negative 32 seconds that 
I remain.
    Mr. Boucher. Thank you very much, Mr. Ross. The gentleman 
from Utah, Mr. Matheson, is recognized for 3 minutes.

  OPENING STATEMENT OF HON. TIM MATHESON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    Mr. Matheson. Thank you, Mr. Chairman. As all of these 
opening statements have helped illustrate, this is a 
complicated piece of legislation and as Mr. Doyle indicated 
earlier, we are working on a timeframe that is not necessarily 
the first choice of folks on this committee, but I applaud you 
for taking on this task in terms of trying to move a complex 
piece of legislation forward. When you are working with complex 
legislation, often there are nuances to the legislation that 
sometimes get glossed over when people start talking about it. 
And I think if people really dive into this discussion draft, 
they will see that some of these issues that they have been 
praising here, as a group, are not quite as simple as they are 
made out to be.
    For example, it is not clear to me that the discussion 
draft necessarily overturns the Supreme Court's decision. To 
me, the portion of the Supreme Court decision it affects is in 
relation to a subject that is already regulated by the Federal 
Government and that is motor fuel, the current motor vehicle 
fuel economy. The discussion draft preserves the ability of 
States to regulate criteria pollutants, such as from motor 
vehicles, under the Clean Air Act. The discussion draft 
preserves the ability of States to regulate the carbon content 
of fuels under the Clean Air Act. The discussion requires EPA 
to establish a first every Federal low-carbon fuel standard.
    The discussion draft, for the first time, requires 
automakers to report the lifetime carbon footprint of their 
vehicles to the EPA. And while it is not more vehicles, the 
discussion draft preserves the preserves the ability of States 
and EPA to regulate CO\2\ emissions from stationary sources. I 
think it is important that that information be put out for 
people to understand what this draft does accomplish. I think 
we have heard some statements that don't indicate those factors 
are actually part of this discussion draft and I think we all 
have acknowledged that.
    Second thing I think we ought to acknowledge is that our 
automobile industry--let me take a step back. Any industry in 
this country appreciates a predictable transparent policy 
environment in which they make decisions. And when you are a 
capital intensive industry, like the auto industry, that is all 
the more important. And so the fact that this discussion draft 
makes an attempt to try to clarify where right now we may have 
two different Federal agencies setting standards and possibly 
States setting standards, as well, I applaud you, Mr. Chairman, 
for trying to create a greater sense of clarity so people can 
work in a transparent predictable environment.
    I think that makes sense in terms of good policy. I think 
it is good for our economy, as well. Thank you for all your 
work on this discussion draft and I look forward to 
participating in the hearing. I will yield back.
    Mr. Boucher. Thank you very much, Mr. Matheson. The 
gentleman from Louisiana, Mr. Melancon, is recognized for 3 
minutes.

OPENING STATEMENT OF HON. CHARLIE MELANCON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Melancon. Thank you, Mr. Chairman. First, I would like 
to commend you and Chairman Dingell for the work that you have 
done, particularly for the common sense to attempt to bring 
together what is a very complex issue for this Nation. I feel 
very honored to be in the Congress at a time when we are taking 
on something that probably--I shouldn't even say probably--that 
we know should have been addressed in the past. I realize that 
we have people in the Congress that believe that tomorrow 
everything should happen and as Mr. Doyle said yesterday, 
instead of having things go like this, maybe they need to go 
like that so that we don't damage our economy, lose the jobs 
and at the same time, we do want to set an example to the 
people of the world that America is ready to face the problems 
of global warming.
    I have always said that a good deal is one where both 
parties walk away happy. A bad deal is when one party walks 
away mad and the other party walks away happy. I have seen that 
here in this Congress and I hope, with this legislation, we 
will see the makings of a good deal as we bipartisanly work 
towards achieving the issues that are involved in the energy 
policy that we are addressing right now. I would like to thank 
you, Mr. Chairman, for the inclusion of two items that I 
requested or we had talked about. One was to include natural 
gas in the definition section of alternative fuels and also, 
the second one was the investment of cellulosic ethanol 
technology.
    I thank the chairman, also, for addressing regulatory 
uncertainty arising from the recent Supreme Court ruling in 
Massachusetts v. EPA and as noticed by opening statements, this 
will be a contentious issue. However, I feel that we can't have 
multiple jurisdictions trying to address gas mileage and 
manufacturing of automobiles State by State, the blending of 
fuel in the manufacturing of cars will just add to the 
additional cost to the consuming public.
    I believe that to remove uncertainty from markets, 
particularly from capital intensive industries like automobile 
manufacturing, we must have a common regulatory authority and 
because of the recent Supreme Court interpretation, I think 
that we are moving in the right direction. I believe that the 
authority to regulate fuel economy should rest with the 
Department of Transportation and I hope that our final draft 
arrives at a solution that reinforces this point.
    I would also hope that we can reach agreement on the pace 
of increasing fuel economy standards. The discussion draft 
contains a thoughtful substantive approach that addresses the 
issue more responsibly than the proposal offered by the 
administration. I want to thank the chairman again for his 
thoughtful work on the issues and Mr. Dingell, also, and I work 
forward to working with the people on both sides of the aisle 
to try and bring to America and to the world a common sense 
legislation that will move this country forward. Thank you. I 
yield back the rest of my time.
    Mr. Boucher. Thank you very much, Mr. Melancon. All of the 
Members now having delivered their opening statements, I am 
pleased to welcome today's witnesses and I want to thank each 
of you very much for taking the time to prepare and deliver 
your comments to us this morning.
    Our first panel of witnesses contains people highly 
knowledgeable about individual sectors of our economy that will 
be affected by the legislation pending before us. And we want 
to welcome Mr. Bob Dinneen, the president and chief executive 
officer of the Renewable Fuels Association; Mr. Charlie Drevna, 
the executive vice president of the National Petrochemical and 
Refiners Association; Mr. Phillip Lampert, the executive 
director of the National Ethanol Vehicle Coalition; Ms. Sonja 
Hubbard, the chief executive officer of E-Z Mart Stores, 
testifying on behalf of the National Association of Convenience 
Stores and the Society of Independent Gasoline Marketers of 
America; Mr. John DeCicco, the senior automotive fellow for 
Environmental Defense; Mr. Alan Reuther, the legislative 
director for the International Union of United Automobile, 
Aerospace and Agricultural Implement Workers of America; and 
Mr. Dave McCurdy, president and chief executive officer of the 
Alliance of Automobile Manufacturers and a former colleague of 
this committee who we welcome back.
    Thanks to each of our witnesses for sharing your comments 
with us. Without objection, your prepared written statements 
will be made a part of our record. We would welcome your five-
minute oral summaries and Mr. Dinneen, we will be pleased to 
begin with you.

    STATEMENT OF BOB DINNEEN, PRESIDENT AND CHIEF EXECUTIVE 
      OFFICER, RENEWABLE FUELS ASSOCIATION, WASHINGTON, DC

    Mr. Dinneen. Thank you very much, Mr. Chairman. Thank you, 
Congressman Hastert, members of the committee, for holding this 
very important hearing. The work that you are doing is going to 
be critically important, as you well know, to the Nation's 
energy, economic and environmental future and I applaud the 
hard work that has gone into the discussion draft. As you all 
know, the ethanol industry is a result of the Energy Policy Act 
of 2005 that this committee got passed, has been growing at an 
unprecedented rate. There are now 120 ethanol plants in 
operation across the country capable of producing more than 6 
billion gallons of ethanol a year. Ethanol is blended in almost 
half of the Nation's fuel today.
    But because of the signal that that bill sent to the 
marketplace, there are also 77 ethanol plants that are 
currently under construction that will add another 6 billion 
gallons of ethanol across the country and will allow ethanol 
virtually to be blended in every single gallon of gasoline that 
this country sells every year. As I look across the panel 
today, there is ethanol expansion, new construction or 
development in every single one of the States that you 
represent; in Louisiana, in Georgia, in North Carolina, in 
Maryland, in California, in Washington and Congressman Barton, 
you will probably be pleased to know that there are more 
ethanol plants under construction in Texas today than in 
Congressman Shimkus' home State of Illinois because of the bill 
that you passed.
    But if ethanol is going to be more than just a gasoline 
additive, if we are going to be able to produce ethanol from 
cellulosic feedstocks and commercialize that very promising new 
technology; if we are going to motivate the marketplace to put 
more FFEs on the road, to have more E-85 being used across this 
country, that more obviously needs to be done. EPAct has shown 
what an inspired marketplace can do. This Congress proposed a 
7.5 million gallon RFS and everybody at the time thought that 
that was going to be way too much and that we would never be 
able to do it. Well, we have got 12 million gallons of ethanol 
that will be in production within the next 18 months, far in 
advance of the 2012 deadline and certainly far more than was 
required by EPAct.
    If you set the old agenda, the marketplace will absolutely 
respond and I think that is what this bill is trying to do and 
I commend the chairman and the members of the committee for 
putting together a discussion draft that is very thoughtful, is 
very comprehensive, it is very proficient and it will move the 
date about where we need to be in terms of energy policy far 
down the field.
    We do have issues. We, for example, do not believe that an 
alternative fuel program, as outlined in the discussion draft, 
as opposed to the more specific renewable fuel program, 
provides the market with adequate certainty for any of the 
available alternative fuels to attract sufficient investment to 
grow with the confidence the RFS has provided ethanol and 
biodiesel. There is no question that America's energy needs 
demands that we utilize all of our energy resources, renewable 
and alternative. But our assessment is that we ought to be 
trying to do that with independent programs to assure that 
other alternatives are able to grow at the same pace that our 
industry has.
    I understand the motivation about wanting to pick winners. 
But if you don't ensure that all of these emerging technologies 
can be winners, we all might lose. The discussion draft 
maintains and expands the compliance items included in EPA's 
rulemaking implementing the RFS. While this is an appropriate 
mechanism for rationalized AFS market, it magnifies our 
concerns about an equitable approach to fuel policy. These 
compliance values have the effect of creating a significant but 
as yet unknown number of paper credits that actually work to 
reduce the volume of petroleum potentially displaced by this 
program.
    For example, if there is a billion gallons of renewable 
diesel that is used in this program under EPA's compliance 
guides, that means that 700 million gallons of petroleum is not 
displaced by this program. If the committee determines that an 
alternative fuel program, as opposed to a renewable fuel 
program is preferred, the RFA would suggest either increasing 
the volume required or modifying the compliance values to be 
paid to gasoline as opposed to ethanol to preserve the 
petroleum to strengthen potential of this program.
    We support, generally, the low-carbon fuel standard. We 
believe that there are a number of questions with respect to 
that. We look forward to working with the committee to answer 
some of those questions so that there is more clarity with 
respect to the criteria that would go into a full fuel cycle 
analysis, but we believe the discussion draft that you have put 
forward, again, is a very thoughtful, comprehensive draft and I 
thank you, Mr. Chairman, and look forward to working with you 
on it.
    [The prepared statement of Mr. Dinneen follows:]
    [GRAPHIC] [TIFF OMITTED] 42440.001
    
    [GRAPHIC] [TIFF OMITTED] 42440.002
    
    [GRAPHIC] [TIFF OMITTED] 42440.003
    
    [GRAPHIC] [TIFF OMITTED] 42440.004
    
    [GRAPHIC] [TIFF OMITTED] 42440.005
    
    [GRAPHIC] [TIFF OMITTED] 42440.006
    
    Mr. Boucher. Thank you very much, Mr. Dinneen. For the 
benefit of Members, let me note that we have recorded votes 
pending on the floor in a series of two votes. We will continue 
receiving testimony for as long as we can. We will certainly 
get through Mr. Drevna's testimony. And at that point, I think 
it will be necessary to declare a brief recess in the committee 
while we cast these votes, so Members should be apprised that 
we will recess in order to respond to these roll calls. Mr. 
Drevna, we will be happy to hear from you.

STATEMENT OF CHARLES DREVNA, EXECUTIVE VICE PRESIDENT, NATIONAL 
     PETROCHEMICAL AND REFINERS ASSOCIATION, WASHINGTON, DC

    Mr. Drevna. Chairman Boucher, Congressman Hastert and 
members of the subcommittee, I am Charlie Drevna, executive 
vice president of NPRA, the National Petrochemical and Refiners 
Association. We thank you for the opportunity to provide our 
perspective on the proposed fuels title. We understand and 
appreciate the challenges the subcommittee faces in satisfying 
the energy needs of the American consumers and the various 
industries and entities invited to testify today. We share the 
subcommittee's objective, to provide clean, affordable fuels to 
the American consumer as well as other energy products that 
meet their needs. As you will hear today, however, we believe 
that elements of the alternative fuels discussion draft, as 
currently constructed, will not fully achieve those objectives 
and may ultimately be counterproductive.
    While there is universal agreement that alternative fuels 
will continue to be a strong and growing component of the 
Nation's transportation fuel mix, NPRA's longstanding position 
opposes the mandated use of alternative fuels and supports the 
integration of these alternative fuels into the marketplace 
based on market principles and demands. That being said, 
however, I would like to address several provisions of the 
draft and share some general thoughts on a stable fuels policy.
    To begin, the requirements of the Alternative Fuels 
Program, the AFP, and the Low-Carbon Fuel Standard, the LCFS, 
are large and ambition. NPRA appreciates that compared to 
similar legislation in the Senate and the administration's 
alternative fuel proposal. The implementation timeline for the 
AFP reflects a relatively measured and gradual progression. We 
would note, however, that by placing an overlapping carbon 
limit on alternative fuels, the aperture through which industry 
must travel may be much too narrow. The tension, we believe, 
between the increasing AFP and the decreasing LCFS could 
potentially interfere with the implementation of both programs. 
While the AFP allows for a wide variety of fuels to meet its 
mandated volume, the strict limitations of the LCFS may 
disqualify use of these same alternative fuels to meet the 
standard after a very finite number of years.
    Now, to the extent that there is some misunderstanding 
between what the draft intends and what our calculations show 
in our written statement--we believe the arithmetic to be 
correct--but if there is some misunderstanding between the 
intent and how we developed those calculations, we, naturally, 
would want to continue working with the committee and the staff 
to make sure that it is not the intent that we have somewhere 
of a 22 to 30 percent reduction in carbon, as opposed to 
California's 10 percent. Again, if there is some 
misunderstanding there, we definitely want to work with you on 
that.
    Turning to the draft fuel waiver provision, we are 
concerned that the language should result in restricting or 
undermining capital investment. A preferable approach to this 
``off-ramp labor'' would be the development of, perhaps, an on-
ramp trigger. By this, I mean under this system, the EPA 
administrator would be required to certify that certain 
positions necessary for successful implementation and 
compliance are in place at least 2 years before the AFP 
commences. Those conditions would include projection for an 
adequate supply of alternative fuels at competitive prices, 
based upon commercially proven technology. The AFP allows for 
use of an expanded fuel base, thereby providing incentives for 
a wider array of fuels and thereby promoting flexibility, 
allowing for the development of a myriad of alternatives.
    State biofuel mandates, however, could frustrate and 
undermine this purpose by limiting refiners' choices in 
specific geographic areas. Further, these mandates create 
cumbersome boutique markets requiring special fuel formulation 
in transportation logistics, thereby vulcanizing the national 
fuel market. If Congress wishes to allow for as diversifiable 
alternative fuels as possible and to promote flexibility in the 
system, State and local biofuel mandates should be preempted.
    We also have concerns related to the overall supply of 
natural gas. One unintended, but nevertheless a likely 
consequence of the AFP could be additional pressures on the 
natural gas marketplace. The production of ethanol requires 
significant volumes of natural gas throughout its production 
cycle, converting corn into potentially cellulosic material 
into useful fuel requires energy and natural gas currently 
provides much of that necessary energy. In addition to the 
magnified natural gas demand cause by increased production of 
biofuels, the natural gas demand would also, likely, rise, as 
obligated parties attempt to comply with the LCFS. In order to 
meet the significant carbon reductions outline in the 
discussion draft, the technology to require on natural gas 
would have to be added to the transportation section.
    Turning to the alternative fuels dispensing requirement in 
the draft, and while NPRA does not speak comprehensibly to fuel 
marketers, our members, nevertheless, oppose mandates that 
require installation of dispensers for products which we do not 
make or for which we cannot vouch. As companies are required to 
install these pumps and potentially distribute E-85, the 
company should be indemnified for claims related to product 
quality arising from the sale of unbranded E-85 or other 
alternative fuels.
    Finally, but not least importantly, legislation requires 
regulations within 2 years and begins that gradual climb to 35 
billion gallons. NPRA believes that energy security, public 
health and environment infrastructure, job creation and 
economic development are topic most relevant today and should 
not be relegated to a review of 13 to 18 years from now. We 
therefore suggest that the study provision be pushed forward.
    Thank you very much, Congressman. I will be happy to answer 
any questions you may have.
    [The prepared statement of Mr. Drevna follows:]
    [GRAPHIC] [TIFF OMITTED] 42440.007
    
    [GRAPHIC] [TIFF OMITTED] 42440.008
    
    [GRAPHIC] [TIFF OMITTED] 42440.009
    
    [GRAPHIC] [TIFF OMITTED] 42440.010
    
    [GRAPHIC] [TIFF OMITTED] 42440.011
    
    [GRAPHIC] [TIFF OMITTED] 42440.012
    
    [GRAPHIC] [TIFF OMITTED] 42440.013
    
    [GRAPHIC] [TIFF OMITTED] 42440.014
    
    [GRAPHIC] [TIFF OMITTED] 42440.015
    
    [GRAPHIC] [TIFF OMITTED] 42440.016
    
    [GRAPHIC] [TIFF OMITTED] 42440.017
    
    Mr. Boucher. Thank you very much, Mr. Drevna. The 
subcommittee will stand in recess, pending completion of the 
last vote.
    [Recess]
    Mr. Boucher. The subcommittee will come to order. Mr. 
Drevna had completed his testimony. Mr. Lampert, we will be 
pleased to hear from you.

  STATEMENT OF PHILLIP LAMPERT, EXECUTIVE DIRECTOR, NATIONAL 
         ETHANOL VEHICLE COALITION, JEFFERSON CITY, MO

    Mr. Lampert. Thank you very much, Mr. Chairman. My name is 
Phil Lampert. I appreciate the opportunity to be here today. 
Thank you Mr. Hastert and all of the members of the committee. 
I want to also thank your staff, Mr. Chairman. They have done 
and outstanding job and been very communicative with all of us, 
and we thank them.
    Mr. Chairman, I was here April 18 and provided testimony, 
so I will not be duplicative in that sense. I want to must make 
a couple very quick comments. In regard to the establishment of 
an alternative fuel infrastructure development grant program, 
the National Ethanol Vehicle Coalition strongly supports that. 
We believe that incentives continue to be the proper mechanism 
to promote E-85 installation. We would continue to issue our 
opposition to mandatory alternative fuel installation. And if 
you would allow me just to make a very simplest analogy, we 
like to consider ourselves the bottled water salesmen of 20 
years ago, and I go to the store and suggest that let us take 
out 5 feet of refrigerator space that is being sold for Bud 
Lite or Michelob or what have you to put in bottled water, and 
we think it should, frankly, be the decision of that 
convenience store operator whether or not to sell bottled 
water. And 20 years ago, a lot of convenience stores did not 
have bottled water. Today, that is the number-on profit center 
in that refrigerator case. We think the same will be occurring 
in the market place for E-85 infrastructure. That is as more 
people demand it, as more vehicles are out there, as there are 
incentives available to put in that E-85 infrastructure that 
the marketplace will continue to promote it, and should they 
not, then they will lose the tremendously profitable profit 
center for the future.
    In respect to proposed language that prohibits franchise 
agreement restrictions on placing the E-85, we strongly support 
the inclusion of that language. I have, as I mentioned, 
participated in several hearing and watched other that you have 
very diligently reviewed in this testimony and as you crafted 
this legislation, and some members of the petroleum industry 
have indicated that there are no restrictions on the placement 
of E-85 under canopies. Well, if that is the case, then I don't 
think there will be any objection to including this statement, 
and we would encourage you to do so.
    The dispenser requirements, I again would encourage you to 
look very closely at those, the provision of a $200 million 
grant program, also the proposal of a grant program to the 
Department of Energy to provide technical assistance and 
support is going to be very important, and we applaud the 
committee for including that. Yesterday, the Superintendent of 
the Capitol grounds received a phone call from the Speaker's 
office and was directed to place an E-85 fueling system in 
operation here in the Capitol. Many Members are driving E-85 
vehicles, and law enforcement officials and others can use E-
85. It is easy to talk about putting in an E-85 station, but 
because of the lack of experience in that, the superintendent 
of the Capitol calls my office, and because I am in DC this 
week, I will be meeting with him this afternoon. But the 
provision of technical support to continue to develop the 
program is, again, very key, and we very much applaud the 
provision of that title.
    I would like to simply close by bring to the committee's 
attention a recent statement by Rick Wagner, chief executive 
officer of the General Motors Corporation, and one of our 
members, and I will quote Mr. Wagner: ``It is increasing clear 
that of anything we can do over the next decade, ethanol has, 
by far, the greatest potential to actually reduced U.S. oil 
consumption, reduce oil imports, and reduce carbon-gas 
emissions.'' And we applaud what the committee has done 
regarding the alternative fuels and renewable fuel standards 
and stand available to provide any support. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Lampert follows:]

                    Testimony of Phillip J. Lampert

    Good morning, Chairman Boucher, Ranking Member Hastert, and 
distinguished members of the committee, my name is Phillip 
Lampert and I serve as the executive director of the National 
Ethanol Vehicle Coalition. On behalf of the NEVC, I would like 
to thank you for the opportunity to appear before you this 
morning.
    As I mentioned during my April 18, 2007 testimony to the 
committee, the NEVC is the nation's primary advocate of the use 
of 85 percent ethanol as a form of alternative transportation 
fuel. Our members include automakers; state and national corn 
grower associations; ethanol producers; equipment manufacturers 
and suppliers; ethanol marketers; the 37 States that comprise 
the Governors' Ethanol Coalition; farmer cooperatives; chemical 
and seed companies; petroleum marketers; and individuals.
    Our written and verbal comments this morning will be 
focused on the June 1, 2007 Discussion Draft that the Committee 
has provided for comment, specifically title I-Fuels, title II-
Alternative Fuels Infrastructure, title III-Vehicles.
    In regard to title I-Fuels, the NEVC strongly supports an 
increase in the Renewable Fuel Standard. The ethanol industry 
is clearly proving that it can meet the levels of the RFS 
established in the 2005 Energy Policy Act and that an 
aggressive expansion is feasible. In terms of national 
security, energy independence, and domestic economic growth, 
and increased RFS is positive for the nation.
    With respect to the volume levels, the relative amounts of 
each form of fuel, and the potential multiplier associated with 
each form of fuel, we encourage further discussions with each 
of the stakeholders. It is important to note that the NEVC is 
strongly supportive of policies that promote the future 
production of alternative fuels such as ethanol from cellulosic 
materials. That being said, the maintenance of a strong system 
of ethanol production based on corn as a feedstock remains 
critical to the strength of the entire industry.
    Title II-Section 201 deals with the establishment of an 
alternative fuel ``infrastructure development grant'' program 
and a ``retail technical and marketing assistance'' effort.
    The NEVC strongly supports the provision of Federal 
financial incentives, both through the provision of grants and 
an increase in the Federal income tax credit, to support the 
establishment of alternative fueling infrastructure. We believe 
that entrepreneurs in the fueling industry who wish to take 
advantage of such programs will do so and as restrictions are 
lifted which may be preventing branded stations from selling 
alternative fuels, the market penetration of E-85 fueling sites 
will increase to meet the related demand presented by the FFVs 
being produced.
    The proposed establishment of a ``retail technical and 
marketing assistance'' effort will be key to ensuring that new 
vendors are able to market and offer E-85 at a price on a 
gasoline equivalent basis to regular unleaded, that equipment 
standards are being maintained, that promotional materials are 
available, and that a central clearinghouse is available to 
respond to questions from consumers. The addition of such a 
sub-program to the basic DOE grant effort is critical and we 
applaud the Committee for including this new subsection.
    We also believe the Committee has been wise to outline the 
selection criteria that would be used to make such 
infrastructure grants. Basing the allocation of funds on the 
numbers of FFVs, opportunities to establish fueling corridors, 
displacement of petroleum, and commitment on the part of the 
applicant are all criteria that will assist with maximizing the 
wise use of scarce taxpayer resources.
    The NEVC also appreciates the Committee language which 
requires that all such infrastructure grant recipients prepare 
a marketing plan, provide information to consumers, and report 
on sales and pricing of alternative fuels. As we have 
mentioned, it is easy to establish an E-85 fueling station. 
However, it is much more difficult to establish a successful E-
85 fueling facility. These obligatory marketing and outreach 
provisions for all grant recipients will make this program 
exceedingly stronger.
    In regard to the proposed language that ``prohibits 
franchise agreement restrictions related to alternative fuel 
infrastructure'' , over the past several weeks, testimony has 
been provided by representatives of the petroleum industry to 
this Subcommittee stating that there are no restrictions on the 
sale of alternative fuels by so called ``branded'' operations. 
While not wishing to debate that matter, this language will 
serve to clarify the previous statements made by those 
representatives and address this issue. An owner/operator of a 
fueling station should have the right to sell any form of 
alternative transportation fuel. This new section will simply 
clarify such right.
    Regarding the section of the draft language that 
establishes ``alternative fuel dispenser requirements,'' it has 
been the position of the National Ethanol Vehicle Coalition 
that there is little benefit in the promulgation of Federal law 
which requires the installation of alternative fueling 
infrastructure. As we have often noted, the key to successfully 
selling E-85 and any other form of alternative fuel is proper 
pricing, marketing, and the provision of educational resources. 
While the Committee's goals in regard to the mandatory 
establishment of E-85 infrastructure based on market 
penetration of FFVs are admirable, we continue to believe that 
the marketplace is the mechanism most appropriate to ensure 
such E-85 fueling sites are installed.
    It is our observation that mandating E-85 fueling 
facilities may result in placement of the sites in poor 
locations, setting high prices for E-85, and lack of customer 
outreach and marketing. While unlikely, it would be possible 
that opponents of alternative fuels could use high pricing of 
fuel at sites they were forced to establish to confirm a lack 
of demand and establish an ``I told you so'' prophecy of 
failure of the site. The Committee draft includes a general 
grant program that, complementary to the existing tax credit 
program, could be used to offset the cost of new E-85 fueling 
equipment. In the future, vendors choosing not to sell E-85 
will be facing the loss of a significant new revenue stream and 
potential profit center. As in the sale of other commodities, 
vendors who do not rapidly respond to market demands, are those 
that rapidly exit the marketplace. We believe that this will 
also be true in the sale of alternative fuel. The NEVC supports 
the market in this endeavor and continues to resist embracing 
such mandatory programs. It may be necessary to re-evaluate 
this position in the future, but presently, we oppose such 
mandates.
    In regard to the production requirements of Flexible Fuel 
Vehicles as outlined in section 302 of the draft, the Chief 
Executive Officers of General Motors, DaimlerChrylser, and Ford 
have each stated their company's commitment to the production 
of 50 percent of their entire fleet as FFVs by model year 2012. 
Selected imports are also producing FFVs and it is our 
understanding that additional models may be forthcoming this 
fall.
    Unlike most motors vehicles manufactured today that are 
only warranted to operate on up to 10 percent ethanol, a 
flexible fuel vehicle can operate on any level of ethanol from 
0 percent up to 85 percent. As the Congress begins to consider 
Renewable Fuel Standards exceeding 35 billion gallons, it is 
important to note that with today's vehicles, the maximum 
amount of ethanol that can legally be consumed approaches 14 
billion gallons nationally in a 10 percent blend. While the 
potential use of E12 and E15 use in existing vehicles is being 
debated, we know that a flexible fuel vehicle can operate on 
E15, E30, or E-85 absent adjustments or modifications.
    The impetus for today's production of alternative fuel 
vehicle was provided by the 2nd Session of the 100th Congress 
via passage of the Alternative Motor Fuels Act (AMFA) of 1988, 
extended by the Automotive Fuel Economy Manufacturing Incentive 
for Alternative Fueled Vehicles Rule of 2004. These laws 
encourage the production of motor vehicles capable of operating 
on any form of alternative fuel. This incentive has been 
tremendously valuable in that prior to 1988 there were zero 
alternative fuel vehicles on the nation's highways. As a result 
of AMFA, today, there are more than 6 million E-85 vehicles and 
a number of electric, CNG, and LPG cars and trucks across the 
nation.
    The provision of new incentives to further grow the 
production of flexible fuel vehicles, especially by foreign 
manufactures, may be an appropriate mechanism to ensure the 
wide scale and massive integration of such vehicles into our 
nation's fleet of passenger autos and light duty trucks.
    In summary, to advance the use of E-85 as a form of 
alternative transportation fuel, we believe the following are 
needed:

      Federal financial incentives to assist with 
offsetting the cost of new or converted infrastructure. These 
may be provided in the form of grants as recommended by the 
discussion draft or as an increase in the existing Federal 
income tax credit.
     A much stronger emphasis being placed on the 
provision of technical support, marketing support, and 
promotional assistance to new and existing E-85 vendors.
     The massive introduction of flexible fuel vehicles 
into the nation's auto and light duty truck sectors, and;
     Finally, while outside the jurisdiction of this 
Committee, an increase in the existing incentive that is 
available for ethanol to reflect the lower BTU value of the 
product.

    Mr. Chairman and Members of the committee, we appreciate 
the work that you are doing on behalf of the American people to 
address our nation's growing dependence on imported petroleum. 
The National Ethanol Vehicle Coalition thanks you for the 
opportunity to provide these comments and we are available to 
respond to questions at your convenience.
    The National Ethanol Vehicle Coalition is a non-profit 
organization located in Jefferson City, MO.
                              ----------                              

    Mr. Boucher. Thank you very much, Mr. Lampert. Ms. Hubbard.

 STATEMENT OF SONJA HUBBARD, CHIEF EXECUTIVE OFFICER, E-Z MART 
 STORES, ON BEHALF OF THE NATIONAL ASSOCIATION OF CONVENIENCE 
  STORES AND THE SOCIETY OF INDEPENDENT GASOLINE MARKETERS OF 
                     AMERICA, TEXARKANA, TX

    Ms. Hubbard. Thank you very much. Good morning, Mr. 
Chairman and members of the subcommittee, my name is Sonja 
Hubbard. I am CEO of E-Z Mart stores, based in Texarkana Texas, 
and our company owns and operates over 300 stores in Texas and 
the surrounding States of Arkansas, Oklahoma, Louisiana and 
Missouri. Today, I appear on behalf of the National Association 
of Convenience Store and the Society of Independent Gasoline 
Markets of America. Together NACS and SIGMA members account for 
approximately 80 percent of all motor fuels sold in the United 
States, annually.
    Before I begin, let me make it perfectly clear that 
retailers are agnostic about which motor fuels we sell, with 
one caveat: we do want to sell motor fuels that are available 
and that consumers want.
    With that, let me begin with a comment regarding the 
proposed alternative fuel program. The discussion draft before 
this committee appears to be a more conservative approach than 
others because it provides additional time to implement the 
increase. NACS and SIGMA believe it can be further improved by 
conditioning any inquiries beyond existing programs upon the 
finding that there be both sufficient supplies of renewable 
fuels and sufficient distribution infrastructure to deliver the 
product to retail without placing and undue finical burden on 
consumers. Regarding the proposed E-85 mandate, let me state 
clearly and unconditionally, NACS and SIGMA strongly oppose the 
provision. It is anti-free market, and it will put retailers in 
significant financial jeopardy. NACS and SIGMA appreciate the 
committee's efforts to address some of our itemized concerns. 
These are positive provisions that do help mitigate the 
negative consequences of the mandate. However, the only 
provision that could earn our endorsement would be to eliminate 
the mandate, all together. The fundamental problem is that if a 
retailer is forced to install E-85 equipment against its will, 
nothing will ensure that consumers will actually purchase the 
fuel. In other words, the proposal proposes extensive mandates 
without any promise that that forced investment will make a 
return. This problem explains why many have been slow to make 
the investment on their own accord. It is not due to animosity 
towards an alternative fuel, and it is not due to limitations 
imposed by our suppliers. Rather, it is because consumer demand 
for the product is insufficient to justify the cost of the 
investment.
    To illustrate the basis of our concerns, let me start by 
explaining the costs associated with the E-85 system. In 
preparation for this hearing today, I inquired of my equipment 
suppliers and industry colleagues to establish what it would 
cost to convert a station to sell E-85. I found the cost range 
from a low of $11,000, part-only, no installation cost, to 
convert my most modern facility, the most up-to-date current 
one I have, and also to a high of $200,000 in California. In 
addition, many of my colleagues who have installed E-85 report 
that it has not been beneficial. The fundament fact is that 
most drivers with flexible-fuel vehicles do not want to buy E-
85 unless it is offered at substantial discounts compared to 
gasoline. That is in part due to the mileage benefit. 
Unfortunately, it is not always possible for retailers to 
obtain product at a price that enables them to sell it at this 
discount. This lack of consumer acceptance is a major problem. 
Fuel sales, which generate incredibly low margins, drive 
traffic to our store where the margins are much stronger. Many 
retailers now lament their decisions to install E-85 systems, 
because they have been unable to generate enough sales to 
support the overall business model.
    Our opposition to the proposed mandate is not necessarily a 
just-say-no position, and the need for retailers to protect the 
finical stability of their very own businesses and preserve for 
themselves the right to make any decisions that could affect 
that stability.
    This brings me to my final mission, the ability of 
franchise retailers to install the E-85 equipment. NACS and 
SIGMA are not opposed to Congress clarifying the retailer's 
right to convert its own equipment and land for the sale of E-
85. However, NACS and SIGMA strongly oppose granting someone 
who does not own the equipment and land on which it operates 
the right to expose the landowner to substantial and long-term 
liability. Congress must amend the discussion draft to ensure 
that only the owner of the land, who also owns that liability, 
should be empowered to make that decision.
    In conclusion, NACS and SIGMA urge the committee to, one, 
condition any increase in renewable and alternative-fuels 
mandates upon the finding that there is sufficient supply and 
distribution infrastructure to accommodate this increase. Two, 
do not expose those of us who lease outlets to dealers to a 
potentially huge liability resulting from a third-party 
decision to convert or install such equipment. Three, please do 
not mandate the installation of E-85 systems. And four, 
consider carefully the supply and price implications of 
policies under you jurisdiction. Our customers, your 
constituents, deserve no less.
    Thank you again for the opportunity to share our thoughts 
regarding this discussion.
    [The prepared statement of Ms. Hubbard follows:]

                       Statement of Sonja Hubbard

     Good morning. My name is Sonja Hubbard. I am the chief 
executive officer of E-Z Mart Stores, Inc., headquartered in 
Texarkana, Texas. My company owns and operates over 300 motor 
fuel outlets in five states--Texas, Oklahoma, Louisiana, 
Arkansas, and Missouri. Our company sells nearly 200 million 
gallons of gasoline and diesel fuel each year and we employ 
over 2,200 clerks, managers, and other personnel in these five 
states. We sell gasoline under our own brand and, at some 
locations, under the brand of our refiner suppliers.
     I appear today on behalf of the National Association of 
Convenience Stores (NACS) for whom I currently serve as Vice 
Chairman of the Board. NACS is a non-profit trade association 
representing the convenience and petroleum retailing industry. 
Our industry operates more than 145,000 retail locations and, 
in 2006, sold $405.8 billion worth of motor fuels.
     I also appear on behalf of the Society of Independent 
Gasoline Marketers of America (SIGMA), of which I am a member. 
SIGMA is an association of more than 250 independent motor fuel 
marketers operating in all 50 states. SIGMA members sell more 
than 30 percent of all motor fuels sold in the United States 
and supply more than 35,000 retail outlets across the Nation.
     Together, NACS and SIGMA members account for approximately 
80 percent of all motor fuels sold at retail in the United 
States every year.
     Thank you for providing me with the opportunity to share 
our industry's perspective on the Committee's discussion draft 
legislation regarding alternative and renewable fuels. Before I 
begin, let me make it perfectly clear that retailers are 
agnostic about which motor fuels we sell, with a single caveat: 
We want to sell motor fuels that are available and that our 
customers want to buy.
     Today, I will focus my comments on those provisions of 
this discussion draft that most directly affect the motor fuels 
retail industry.

                       Alternative Fuels Program

     Let me begin with a couple of comments regarding the 
proposed Alternative Fuels Program. Two years ago, the Energy 
Policy Act of 2005 established a renewable fuels standard 
(RFS), mandating that at least 7.5 billion gallons of renewable 
fuels be sold in the United States by the year 2012. As 
everybody should by now be well aware, the industry is 
implementing the program ahead of schedule and is on pace to 
exceed the 2008 requirement to blend 5.4 billion gallons.
     Now, however, it seems there is widespread interest on the 
part of political leaders to accelerate and expand upon this 
accomplishment. The discussion draft before us proposes to 
increase the mandate to 35 billion gallons by the year 2025, 
beginning with 14 billion gallons in the year 2013. Another 
proposal calls for the program to expand to 36 billion gallons 
by 2022, beginning with 8.5 billion gallons in 2008. Still 
another requires 35 billion gallons by 2017, starting with 10 
billion gallons in 2010.
     In light of these competing proposals, one can say that 
the discussion draft before this Committee appears to be a more 
conservative approach because it provides additional time to 
implement the increase. Regardless, each of these proposals 
contains very ambitious goals, and we must ask if they are the 
best course of action.
     The market is proceeding to offer renewable fuels ahead of 
the federally mandated schedule. There is no reason to believe 
that this will not continue in the absence of an increased 
mandate. However, as we have testified before, if Congress 
feels compelled to accelerate this transition through a revised 
Federal mandate, NACS and SIGMA call upon Congress to construct 
the revised program with the interests of consumers in mind.
     Any increase beyond the existing RFS should be predicated 
upon a finding by the Secretaries of Energy and Agriculture 
that there will be both sufficient supplies of renewable fuels 
and sufficient distribution infrastructure to deliver that 
product to retail without placing an undue financial burden on 
consumers. If these assurances cannot be made, then the 
proposed increase should be delayed until conditions are 
sufficient to support its implementation. Further, such a 
decision should be made with enough lead time to enable the 
petroleum industry to make necessary arrangements to 
accommodate the requirements.
     If such consumer protections based upon market analysis 
are not provided, we will be concerned about potential market 
disruptions and the impact these could have on our customers. 
Last year, the disruptions we experienced in this area due to 
the transition from MTBE to ethanol were primarily the result 
of inadequate distribution infrastructure and insufficient 
supply in appropriate markets. It is critical that this program 
protects against a repeat of that experience.

                    Alternative Fuels Infrastructure

     I would like to direct the rest of my testimony toward the 
provisions in the discussion draft focusing on alternative 
fuels infrastructure.
     The proposal before the Committee implements a mandate for 
retailers to install E-85 compatible equipment. Let me state 
clearly and unconditionally: NACS and SIGMA are strongly 
opposed to this provision. It is anti-free market; it will put 
retailers in significant economic jeopardy; it is an extreme 
overreaching by the Federal Government into private enterprise; 
and, it is unsupported by existing or anticipated market 
conditions.
     Further there seems to be little support for the mandate 
within any segment of motor fuels industry. For example, the 
National Ethanol Vehicle Coalition, the primary advocate for 
the use of E-85 fuel, testified on April 18 that it ``opposes 
the mandatory establishment of E-85 fueling locations.'' The 
Coalition's Executive Director, Phil Lampert, said, ``Mandated 
establishment of E-85 fueling locations is counter productive 
and will lead to poor pricing, disinterested marketing, 
lackadaisical vendor performance, undesirable locations and 
general dissatisfaction by the consumer.''
     Given the apparent lack of support, we are at a loss as to 
why the Committee would propose implementing this retailer 
mandate.

               Considerations for Mandate Implementation

     To be fair, the discussion draft before us perhaps 
represents the best effort to date by Congress to reflect 
market factors when imposing an E-85 retailer mandate. NACS and 
SIGMA appreciate the Committee's efforts to address some of our 
itemized concerns centered around such a program. Specifically, 
we appreciate that the draft directs the Secretary of Energy to 
determine an appropriate schedule and plan for implementation, 
contingent upon the promulgation of a rule. Further, we 
appreciate that Congress directs the Secretary to consider: (1) 
the availability of E-85 within a region and number of 
competing E-85 wholesale suppliers; (2) the level of financial 
assistance available to retailers within a region; (3) the 
potential inability of retailers to install E-85 due to 
property restrictions; (4) the economic burden the mandate will 
impose on a business; and, (5) the time it will take a retailer 
to comply with the mandate.
     These are positive provisions that do help mitigate the 
negative consequences of the mandate. However, they do not 
explain how the Secretary will select, from a list eligible 
retailers in a market, which will be required to make the 
mandatory investment and which will not. The legislation does 
not give the Secretary any direction as to how to determine the 
winners and losers in this system.
     I cannot think of any provision or combination of 
provisions that would be sufficient to secure the support of 
the retail community other than elimination of this mandate.
     The fundamental problem is that if a retailer is forced to 
install E-85 against its will, the bill before the Committee 
fails to ensure that consumers will actually purchase E-85. In 
other words, the proposal imposes an expensive mandate on us 
without any promise that our forced investment will provide any 
return.
     This is the critical question for retailers and explains 
why many have been slow to make the conversion investment on 
their own accord. It is not due to animosity towards an 
alternative fuel and it is not due to limitations imposed by 
our suppliers. Rather, it is because consumer demand for the 
product is insufficient to justify the cost of the investment. 
Trust me, my fellow NACS and SIGMA members and I will make E-85 
pumps available when the market calls for it. But to illustrate 
the basis of our concerns, let me start by explaining the costs 
associated with E-85 systems.

              Cost to Convert E-Z Mart Store to Sell E-85

     The primary impediment to retailers converting a dispenser 
to E-85 is equipment compatibility. Because E-85 is more 
corrosive than regular gasoline or E-10, it requires equipment 
that is certified compatible with the fuel.
     In preparation for this hearing, I inquired of my 
equipment supplier to determine what would be required to 
convert one of my newer stations to sell E-85. These stations 
have the newest equipment and, therefore, hold the best chance 
for existing equipment compatibility. I learned that my new 
steel tanks and my fiberglass tanks were certified compatible 
with E-85. Our automatic tank gauges were listed compatible as 
were our fiberglass piping systems. However, we would have to 
replace several of the ancillary fittings, including the 
submersible turbine pump, the overfill drop tube and others 
like flexible hoses, spill buckets, ball valves, etc. In 
addition, our hanging hardware, which includes conventional 
nozzles, swivels, breakaways and curb hoses would have to be 
replaced with nickel plated units at an increased cost. For all 
of these conversions, including tank cleaning, we estimated the 
cost to be between $6,000 and $7,000.
     However, this does not include the dispenser itself. The 
two dispenser manufacturers each charge an additional fee for a 
new E-85 compatible dispenser--$8,000 for Dresser-Wayne and 
$7,300 for Gilbarco. Thus, a typical E-85 dispenser can cost 
upwards of $17,000 per unit. And this cost is for equipment 
that has not yet been certified compatible with E-85 by 
Underwriters Laboratories.
     While it is conceivable to convert an existing dispenser, 
this would require at a minimum replacing the meters, internal 
piping, filter inlets, compression fitting, control valves and 
seals, and any non-ethanol compatible sealants. Consequently, 
converting an existing dispenser would cost in excess of 
$5,000.
     In short, to convert one of my newer stores to sell E-85, 
I would face an expense of at least $11,000, not including 
labor expenses. For older locations, the cost would be 
considerably higher than this. According to colleagues in the 
industry who have installed E-85 systems, such an investment 
would be considered a bargain. One reported spending upwards of 
$55,000 on a new system, while another in California reports 
the cost of installing a basic diesel system at more than 
$200,000--not including the up-charge associated with 
compatible equipment.

                   Consumers Are Not Buying the Fuel

     As we have testified repeatedly, fuel retailers are not 
picky. We will sell whatever products our customers want to 
buy. As an industry, we have been watching the development of 
E-85 and flexible fuel vehicles quite closely, and many of my 
colleagues have taken the initiative to convert a dispenser to 
sell E-85. The results have not been overwhelmingly positive.
     The fundamental fact is that most drivers of FFVs (Flex 
Fuel Vehicles) do not want to buy E-85 unless it is offered at 
a substantial discount compared to gasoline. Because these 
drivers can purchase either E-85 or gasoline, they make 
economic decisions when at the pump.
     Clearly, consumers have made the economic calculation 
regarding the decreased fuel economy associated with E-85 
(approximately 25 percent fewer miles per gallon than gasoline) 
and they are demanding a benefit in price. Absent that benefit, 
they will follow their economic interests and purchase 
gasoline.
     NACS and SIGMA have spoken with retailers throughout the 
Nation who sell E-85, and we have learned that sales of E-85 
fall off dramatically when the price is not significantly lower 
(at least 20 cents per gallon) than gasoline. Some retailers 
report that the price differential to maintain volumes is 
actually closer to 40 cents per gallon.
     Unfortunately, it is not always possible for retailers to 
obtain supplies of E-85 at a price that enables them to sell it 
at such a discount. The provision in the proposal requiring 
consideration of the number of E-85 wholesale suppliers is 
important, because without adequate competition in the E-85 
supply market, retailers will have little to no chance to 
obtain competitively priced product. However, there are no 
guarantees that even a competitive market will produce E-85 
supplies that can be priced well below gasoline.
     The lack of consumer acceptance of E-85 is a major 
problem. Fuel sales, which generate incredibly low margins, 
drive traffic to the store, where margins are much stronger. We 
have spoken with several retailers who lament their decision to 
install E-85 equipment because they have been unable to 
generate sufficient sales from these fueling positions to 
support their overall business model.
     Our opposition to the proposed mandate is not necessarily 
a ``just say no'' position. Rather, it is reflective of actual 
market conditions and the need for retailers, who, on average, 
generated less than $34,000 in pre-tax profit per outlet in 
2006, to protect the financial stability of their business and 
to preserve for themselves the right to make any decisions 
which might affect that very stability.
     The government has no responsibility to generate sales 
sufficient to pay my employees. By the same token, it should 
not make decisions affecting my ability to sell a marketable 
commodity.

                          Franchise Agreements

     Let me address one final provision of the discussion 
draft. There is some confusion about whether retailers are not 
voluntarily installing E-85 because they are prohibited from 
doing so by their franchise agreements. Neither NACS nor SIGMA 
have heard from any of our members complaining that their 
suppliers were preventing them from installing E-85 dispensers. 
Rather, we believe this is a red herring being used to cover 
the fact that consumer demand for the product is not strong to 
make such investment a viable option for most retailers.
     Regardless, neither NACS nor SIGMA are opposed to Congress 
enacting legislation that will clarify a retailer's right to 
convert their own equipment for the sale of E-85. The proposal 
in this discussion draft, however, does require some 
modification to ensure that only the entity which owns the 
fueling equipment, and assumes the liability for that equipment 
and the land on which it sits, shall be empowered to make the 
decision to convert and install an E-85 compatible system.
     There are instances where the operator of a retail outlet 
does not own the land or equipment which it operates. Rather, 
that individual may lease the land and equipment from his 
franchisor, which could be a refiner but is more likely an 
independent wholesale distributor. In these circumstances, the 
individual operator who does not own the equipment should not 
be permitted to make conversion decisions about that equipment. 
Converting existing equipment, much less installing a new 
storage and piping system, has significant potential liability 
implications for the owner of the real estate. I submit that 
none of you would permit another the unilateral right to create 
this kind of long-term liability for you. It is simply not 
fair. It is simply not right. We encourage this Committee to 
amend the proposed language to reflect this reality.
     NACS and SIGMA are not antagonistic to the expanded market 
availability of alternative and renewable fuels, provided our 
customers want to buy them. Expanding the mandate for these 
fuels as provided in this proposal can be dramatically improved 
by requiring the executive branch to find that sufficient 
supplies and distribution infrastructure exist to support the 
specific increase. Absent such a finding, a pending increase 
should be suspended. This will protect consumers from market 
disruptions associated with insufficient supplies.
     The effort to eliminate any potential for a supplier to 
prevent an independent retailer from installing E-85 
infrastructure must not endanger the legitimate interests of 
the owner of the land or the equipment, even if that be the 
supplier, to make decisions concerning the conversion or 
installation of such equipment.
     While we appreciate the efforts made by the Committee to 
address itemized retailer concerns regarding an E-85 retail 
mandate, NACS and SIGMA consider such proposals completely 
unnecessary. NACS and SIGMA will oppose legislation like the 
discussion draft unless and until it offers the petroleum 
marketplace a chance to work in the best interest of consumers.
     Finally, NACS and SIGMA members are extremely sensitive to 
our customers' concerns about motor fuel prices. Our businesses 
compete with each other on the basis of pennies per gallon as 
we seek to attract the increasingly price conscious consumer. 
Consequently, we become very concerned regarding any proposals 
that could potentially affect supplies or distributing 
efficiencies or otherwise put upward pressure on prices. 
Therefore, we urge this Committee to consider carefully the 
supply and price implications of policies under your 
jurisdiction. Our customers, your constituents, deserve no 
less.
     Thank you again for the opportunity to share our thoughts 
regarding the discussion draft pending before the Committee.
                              ----------                              

    Mr. Boucher. Thank you very much, Ms. Hubbard. Mr. DeCicco.

     STATEMENT OF JOHN DECICCO, SENIOR AUTOMOTIVE FELLOW, 
             ENVIRONMENTAL DEFENSE, WASHINGTON, DC

    Mr. DeCicco. Thank you, both to the chairman and ranking 
member for the opportunity to testify today. On behalf of 
Environmental Defense and our 500,000 members, I want to 
express appreciation for the thoughtful process through which 
this subcommittee has approached the issues of energy and 
climate.
    We appreciate your statements, Mr. Chairman, but the 
legislation before you is about energy security and not a 
solution to the climate challenge. It is critically important 
for the public to understand that this bill cannot substitute 
for a cap on greenhouse gas emissions. I think we agree that 
the efforts to enhance energy security should not interfere 
with that goal or come at the expense of climate protection. 
Unfortunately, this discussion draft contains provisions 
specific to climate change and in very troubling ways puts 
climate at risk. That is why Environmental Defense must 
unfortunately, but vigorously, oppose this draft in its current 
form. Most damaging are the draft's provisions that nullify 
California, and now 11 other States' actions to address 
greenhouse gas emissions for cars. Also troubling is its 
evisceration of EPA's authority to do the same. It is simply 
unacceptable to undermine State leadership to combat global 
warming.
    That being said, we appreciate your efforts to look for new 
ways to address transportation sector greenhouse gas emissions. 
A low carbon fuel standard and a requirement that automakers 
report their product's lifetime emissions are useful building 
blocks for a policy that could ultimately drive deep emissions 
cuts. But the draft falls short in limiting emissions to the 
levels that leading U.S. businesses have called for and that 
scientists say are necessary to avoid catastrophic climate 
change. The U.S. Climate Action Partnership recommends a 
specific path of emissions reductions for the United States. 
Environmental Defense supports the stricter end of the U.S. CAP 
range.
    The graph I displayed compares what the discussion draft 
might achieve, which is the blue curve, against climate-
protective auto emission levels proportional to the economy-
wide cap recommended by U.S. CAP. Those are the green lines. It 
is clear that this draft does not go nearly far enough, and 
that brings me to another concern. Such weak targets risk 
creating expectations among other industries that they too can 
get by with little need to limit emissions. Alternatively, 
other industries might come to fear that they would be unfairly 
saddled with a disproportionate burden. Either way, the 
politics of building consensus for a truly comprehensive 
climate policy will be that much more challenging.
    Mr. Chairman, as you and Mr. Dingell have said, all 
industries and sectors will need to chip in their fair share. 
We can't let some parties leave the table early and stick 
everyone else with the bill.
    To sum up, Environmental Defense believes the current draft 
would make it much more difficult to mitigate the dangers of 
climate change. We oppose it based on four concerns. It 
destroys California's ability to lead other States in the 
Nation in climate protection through its path-breaking 
greenhouse gas standards for cars. It restricts the 
Environmental Protection Agency's authority to regulate 
automotive greenhouse gases as air pollutants under the Clean 
Air Act as recently clarified by the U.S. Supreme Court in 
Massachusetts v. EPA. It sets stringency levels for fuels and 
vehicle regulation that fall far short of what is needed to 
ensure an appropriate sector contribution to climate 
protection. And fourth, it may undermine the development of 
climate legislation that is truly comprehensive and effective.
    We are happy to do whatever we can, Mr. Chairman, to help 
you improve this bill as it moves forward. In the meantime, 
Environmental Defense will continue to emphasize that the most 
effective solution to both energy security and climate change 
is a comprehensive carbon cap, one that cuts emissions as much 
as the scientific community tells us they must be cut, allows 
permit trading to keep costs low and to spur innovation. We 
look forward to working with you as you bring such a bill to 
the floor in October as you have indicated that you intend to 
do.
    Thank you for the chance to share our views.
    [The prepared statement of Mr. DeCicco follows:]
    [GRAPHIC] [TIFF OMITTED] 42440.018
    
    [GRAPHIC] [TIFF OMITTED] 42440.019
    
    [GRAPHIC] [TIFF OMITTED] 42440.020
    
    [GRAPHIC] [TIFF OMITTED] 42440.021
    
    [GRAPHIC] [TIFF OMITTED] 42440.022
    
    [GRAPHIC] [TIFF OMITTED] 42440.023
    
    [GRAPHIC] [TIFF OMITTED] 42440.024
    
    [GRAPHIC] [TIFF OMITTED] 42440.025
    
    [GRAPHIC] [TIFF OMITTED] 42440.026
    
    [GRAPHIC] [TIFF OMITTED] 42440.027
    
    [GRAPHIC] [TIFF OMITTED] 42440.028
    
    [GRAPHIC] [TIFF OMITTED] 42440.029
    
    [GRAPHIC] [TIFF OMITTED] 42440.030
    
    [GRAPHIC] [TIFF OMITTED] 42440.031
    
    [GRAPHIC] [TIFF OMITTED] 42440.032
    
    [GRAPHIC] [TIFF OMITTED] 42440.033
    
    [GRAPHIC] [TIFF OMITTED] 42440.034
    
    [GRAPHIC] [TIFF OMITTED] 42440.035
    
    [GRAPHIC] [TIFF OMITTED] 42440.036
    
    [GRAPHIC] [TIFF OMITTED] 42440.037
    
    Mr. Boucher. Thank you, Mr. DeCicco.
    Mr. Reuther.

STATEMENT OF ALAN REUTHER, LEGISLATIVE DIRECTOR, INTERNATIONAL 
    UNION OF UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL 
          IMPLEMENT WORKERS OF AMERICA, WASHINGTON, DC

    Mr. Reuther. Thank you, Mr. Chairman. My name is Alan 
Reuther. I am the legislative director for the UAW. We 
appreciate the opportunity to testify before this subcommittee 
on the discussion draft.
    The UAW strongly supports this draft legislation. We 
believe it would achieve significant reductions in oil 
consumption and greenhouse gas emissions. At the same time, 
this legislative would help to protect and expand jobs for 
American workers. We believe the draft legislation contains a 
number of very positive provisions relating to vehicle fuel 
economy and carbon efficiency. First, it would amend the CAFE 
program to mandate that all vehicle manufacturers must meet a 
36 MPG standard for passenger cars by 2022 and a 30 MPG 
standard for light trucks by 2025. This would represent a 31 
percent improvement in fuel economy for passenger cars and a 35 
percent improvement for light trucks. The UAW supports this 
mandate because we believe it is technologically and 
economically feasible for the auto manufacturers.
    Second, the UAW supports the provision that would authorize 
DOT to adopt an attribute-based CAFE system for passenger cars. 
This would enable DOT to reform the CAFE structure for 
passenger cars so it does not discriminate against particular 
manufacturers based on their product mix.
    Third, the UAW is particularly pleased the draft 
legislation maintains the existing domestic-foreign fleet 
distinction for passenger cars and also requires companies to 
meet an anti-backsliding requirement. This critically important 
provision will provide a strong incentive for companies to 
continue small car production in the United States, thereby 
protecting the jobs of 67,000 American workers who assemble or 
make parts for these vehicles.
    Fourth, the UAW applauds the provision that would require 
DOT to publish the new CAFE standards both in a miles-per-
gallon format and a grams-of-CO\2\-per mile format as well as 
the provision requiring auto manufacturers to report the 
projected lifetime carbon emissions of their vehicles. We hope 
these two provisions will facilitate the integration of the 
CAFE program with an economy-wide cap and trade program that 
may ultimately be developed to reduce greenhouse gas emissions.
    Fifth, the UAW supports the provision in the draft 
legislation reinforcing the longstanding policy that DOT has 
the exclusive authority to regulate the fuel economy and carbon 
efficiency of motor vehicles through the CAFE program. In order 
for vehicle manufacturers to be able to retool factories and 
redesign vehicles to meet the challenging new fuel economy 
requirements, it is essential that they have the security of 
knowing that they will only have to comply with a single 
national standard and not be pulled in a variety of directions 
by a multitude of State standards. We recognize that some 
groups may advocate for much more stringent fuel economy 
standards or for provisions giving States the ability to 
establish such standards. However, the UAW is deeply concerned 
that extreme fuel economy standards such as the CAFE proposal 
in H.R. 1506 or the vehicle CO\2\ standard approved by 
California are not economically feasible and could seriously 
threaten the jobs and benefits of active and retired workers in 
the auto industry.
    The UAW believes the goals of reducing oil consumption and 
greenhouse gas emissions can best be achieved by addressing the 
fuels that go into vehicles as well as the efficiency of the 
vehicles themselves. Thus, we support the provision in the 
draft legislation that would require vehicle manufacturers to 
make certain percentages of their fleets flex fuel capable by 
specified dates. The technology needed to do this is readily 
available and relatively inexpensive. All companies easily 
should be able to meet this mandate. The UAW also supports the 
provisions establishing an alternative-fuel standard and a low-
carbon-fuel standard. These provisions will assure that we 
continue to expand the amount of alternative fuels that are 
produced in our Nation while at the same time requiring 
movement towards fuels that produce lower carbon emissions. The 
UAW applauds the provision requiring DOE to mandate the 
installation of alternative-fuel dispensers when the market 
penetration of flex fuel vehicles reaches a certain level. 
Expanding the distribution network for alternative fuels is 
critically important if we are to make substantial progress in 
increasing the actual use of alternative fuels by consumers.
    To meet the challenge of higher fuel economy standards, 
vehicle manufacturers will have to rapidly accelerate the 
introduction of advanced technology vehicles including hybrids 
and clean diesels. We therefore strongly support the provision 
in the discussion draft that would create a grant program to 
encourage domestic production of these advanced technology 
vehicles and their key components. This will help to ensure 
that these vehicles of the future and their key components are 
built in this country, thereby creating jobs for tens of 
thousands of American workers. As this draft legislation moves 
forward, we would like to work with the subcommittee and House 
leaders to refine and expand these provisions so there is a 
reliable and substantial source of funds provided to support 
this critically important program.
    In conclusion, we appreciate the opportunity to testify on 
the discussion draft and look forward to working with the 
subcommittee as we move forward in considering it.
    [The prepared statement of Mr. Reuther follows:]
    [GRAPHIC] [TIFF OMITTED] 42440.038
    
    [GRAPHIC] [TIFF OMITTED] 42440.039
    
    [GRAPHIC] [TIFF OMITTED] 42440.040
    
    [GRAPHIC] [TIFF OMITTED] 42440.041
    
    [GRAPHIC] [TIFF OMITTED] 42440.042
    
    [GRAPHIC] [TIFF OMITTED] 42440.043
    
    Mr. Boucher. Thank you very much, Mr. Reuther.
    Mr. McCurdy.

 STATEMENT OF HON. DAVE MCCURDY, PRESIDENT AND CHIEF EXECUTIVE 
 OFFICER, ALLIANCE OF AUTOMOBILE MANUFACTURERS, WASHINGTON, DC

    Mr. McCurdy. Thank you, Mr. Chairman. I want to commend the 
chairman and Speaker Hastert for the spirit in which you are 
working together to develop this landmark legislation. Having 
been on that side of the table, I can assure you I understand 
it is no small task.
    The Alliance joins all Americans and the Congress in 
considering the matters of increasing vehicle fuel economy and 
reducing carbon dioxide emissions as among the most important 
issues our country faces. A certain chairman that was alluded 
to earlier in the hearing has recently said: ``Either work with 
me and I will do everything I can to get you a bill that you 
probably won't like but with which you can live, and if you 
don't, you will have a bill that you won't like and you can't 
live with.'' Well, Chairman Boucher, we are here to work with 
you, and Chairman Dingell is right: this discussion draft is a 
bill that the industry as a whole really doesn't like but 
recognizes it is probably going to be forced to live with it, 
and as Mr. Melancon so aptly said, a good deal is when both 
parties either walk away happy or probably not so happy, and a 
bad deal is when one seems overjoyed. I can assure that we will 
be nursing a very bruised arm when we walk through this 
process.
    In simple terms, this proposal presents the largest 
technology challenge automakers have ever encountered. Although 
we remain committed to CAFE reform and support the increases in 
CAFE, we do so with a great deal of pain and angst. You must 
also understand that these changes would require unprecedented 
levels of financial resources and engineering commitment, and 
in the end we do not know the answer to the most fundamental 
question in all of this: Will consumers respond? Our experience 
has taught us that we cannot turn a blind eye to the factors 
that must be considered if we are to produce automobiles that 
consume less fuel but still appeal to the American consumers, 
who demand a wide variety of features.
    The Alliance supports preserving the car and light truck 
distinction, and I think everyone on the panel currently 
understands that distinction well. While Americans value fuel 
economy, their buying habits have shown that they also want 
room for passengers and cargo. They want performance. They want 
towing ability and much more. In fact, in 2006, for the fifth 
straight year, light trucks including pickups, minivans, vans 
and SUVs outsold passenger cars. More than 53 percent of last 
year's new vehicle purchases were light trucks. Mr. Hall, in 
Texas that is 60 percent of the new registrations. Mr. 
Melancon, in Louisiana it is 63 percent of new registrations. 
In Utah, Mr. Matheson, who was here earlier, it was 59 percent. 
Even in Massachusetts and California, it is 50/50, light trucks 
versus passenger cars. The properties in light trucks that 
business owners, trades people, farmers, families, sports 
enthusiasts and others value are the very properties that 
differentiate them from cars. These qualities make it 
impossible to put all vehicles in a single category.
    Alliance members also recognize the importance of 
establishing a comprehensive and nationwide energy policy. It 
needs to be done on the Federal level. A patchwork of 
conflicting State fuel economy and carbon dioxide mandates 
would surely create marketplace chaos for our consumers and 
manufacturers who would have to sort problems, products and 
parts based on complex systems of inconsistent standards and 
regulations. A single comprehensive Federal policy must preempt 
State laws because this is a national issue.
    We support the National Highway Traffic Safety 
Administration being granted authority to reform passenger car 
standards using an attribute-based approach. This approach is 
essential to preserving the diverse range of vehicles currently 
on the market.
    The Alliance also supports legislation funding the 
advancement of promising technologies. More research and 
development is needed for plug-in hybrids, fuel cells and 
hydrogen internal combustion engines to truly provide us with 
their full potential. We also value efforts to improve the 
support technologies we have already brought to the market such 
as alternative-fuel automobiles. Legislation should increase 
alternative-fuel availability to keep pace with the 
alternative-fuel autos we are working hard to build and sell. 
Likewise, we support increasing consumer education and making 
the public fully aware of the ever-increasing amount of 
alternative-fuel options. We have increased the number of 
alternative-fuel automobile models 500 percent in just the past 
7 years. Just this week we were pleased to announce that 2007's 
first quarter alternative-fuel automobile sales were our best 
ever, a 27 percent increase over the same period last year.
    Automakers understand that what our Nation truly requires 
to address our energy needs is wider focus. Carbon reduction 
depends on three intertwined factors: consumers, fuels and 
vehicle technology. Focusing only on one component while 
ignoring the others will not move our Nation closer to its 
energy goals. Now, having said that, the Alliance is concerned 
with the flexible-fuel mandates under consideration in section 
302 of the bill. The ones under discussion today include an 
unachievable target and a time frame that is just too 
aggressive. Furthermore, the legislation allows no alternatives 
should the E-85 fuel fail to make it to the market on time or 
not be found in as many locations as needed. The Alliance must 
also express concern over the doubling of the CAFE penalty. 
This proposal discriminates against smaller manufacturers and 
those with limited product lines. Ultimately, this provision 
will cause consumers to pay more for certain vehicles while 
similar and possibly less efficient vehicles will have not had 
the same cost hike simply because the manufacturers of these 
vehicles produce a wider product range.
    Finally, Mr. Chairman, a complex change of massive 
technical changes that must be repeatedly tested and fine-tuned 
is required to adjust a car's fuel economy by just one tenth of 
a mile.
    Mr. Boucher. Mr. McCurdy, we are running a little bit over 
on time, so if you could conclude, that would be great.
    Mr. McCurdy. I will conclude with this, Mr. Chairman. The 
targets we are talking about today would require that we do 
that 900 fold. The proposed standards of 36 miles per gallon 
for passenger cars and 30 for trucks represent a 30 or 31 
percent increase and 35 percent increase in fuel efficiency. 
That is an unprecedented reformulation that will again create 
the largest challenge this industry has ever seen. Mr. 
Chairman, it is a big challenge. We do have angst and concern 
whether the American consumers will choose to buy these 
products so we will continue to work with the subcommittee and 
the full committee to try to move the bill forward.
    [The prepared statement of Mr. McCurdy follows:]

                     Statement of Hon. Dave McCurdy

     Mr. Chairman, good morning. My name is Dave McCurdy and I 
am the president and CEO of the Alliance of Automobile 
Manufacturers. The Alliance is the auto industry's leading 
trade association representing nine manufacturers including 
BMW, DaimlerChrysler, Ford Motor Company, General Motors, 
Mazda, Mitsubishi, Porsche, Toyota and Volkswagen.
     On behalf of our members, I'd like to thank you for giving 
me an opportunity to be here today to comment on the draft 
legislation before the Committee. Alliance members share the 
interests and concerns of our customers, the Congress and the 
American public about increasing vehicle fuel economy and 
reducing carbon dioxide emissions.
     At a March 14, House Energy Subcommittee hearing, CEOs 
from DaimlerChrysler, Ford Motor Company, General Motors and 
Toyota all committed to working with Congress to find ways to 
address these issues. That is our focus today. Let me summarize 
my main points:

     First, the Alliance of Automobile Manufacturers 
supports several of the provisions in the proposed legislation, 
and we want to work with policymakers to create a bill that is 
effective, achievable and inclusive.
     That said, we urge the Congress to recognize that 
automakers are investing significantly in advanced technology 
vehicles powered by electricity, biofuels, clean diesel, 
hydrogen and compressed natural gas.
     While many fuel-efficient and advanced 
technologies are on sale today, more technology is being 
developed for future introduction.
     Promising technologies, such as plug-in hybrids 
and hydrogen-powered autos, need significant research and 
development before they will be commercially available on an 
even larger scale.
     Through the Corporate Average Fuel Economy (CAFE) 
program, the light duty vehicle segment has been carbon-
constrained for more than 30 years. We recognize that fuel 
economy requirements will continue to increase for our 
products, but these regulations need to recognize the 
competitive conditions of the automotive market, the vehicle 
needs of American consumers, and the resource and economic 
challenges involved in achieving future fuel economy levels.

         Increasing Fuel Efficiency, Decreasing Carbon Dioxide

     Auto engineers are working hard to include a diverse range 
of highly fuel-efficient technologies in new vehicles, because 
in the short term, this is the only feasible way to reduce the 
amount of carbon-based fuel used by automobiles. At the same 
time, it is equally important to start now to reduce the carbon 
intensity of our fuel infrastructure.
    I must stress one key point here:
     Alliance members support the goal of improving fuel 
economy to the maximum feasible level. Improving fuel economy 
is a consumer issue, an economic issue, a climate change issue, 
an energy security issue, and a high priority.
     Automakers pursue the goal of increasing fuel economy as 
they develop vehicles that meet the various needs of American 
families in every segment. But while consumers value fuel 
economy, they also want many other attributes in today's 
vehicles, such as safety, passenger and cargo room, 
performance, and towing and hauling capacity. In 2006, for the 
fifth year in a row, light trucks, including pickups, minivans, 
vans and SUVs, outsold passenger cars. More than 53 percent of 
all new vehicles purchased last year were light trucks. Our 
challenge is to develop automobiles that combine all the 
vehicle attributes demanded by Americans' with improved fuel 
efficiency--and at an affordable price.
     Automakers are competing to bring these vehicles to market 
as soon as the technology is feasible, affordable and meets 
consumer expectations. We have made the investments, and we are 
beginning to see results.
     Alliance members are working now to offer more alternative 
fuel and advanced technology autos, including vehicles that run 
on hybrid-electric technology, clean diesel, and alternative 
fuels like E-85 ethanol and hydrogen, because these autos will 
help our country address the growing concerns about U.S. 
gasoline consumption and oil imports, as well as carbon dioxide 
emissions.
     Just this week, the Alliance reported that sales of 
alternative fuel autos continue to grow. According to R.L. Polk 
& Company, the first quarter of 2007 showed record sales for 
alternative fuel autos. In the first three months of this year, 
more than 430,000 alternative fuel autos were sold nationwide, 
an increase of more than 27 percent over the same period last 
year.
     Last October, government, auto industry and fuel suppliers 
partnered to introduce the ultra-low-sulfur diesel needed for 
clean diesel engines. Since the year 2000, sales of light-duty 
diesel vehicles have almost doubled.
     Today, more than 11 million alternative fuel autos that 
run on hybrid technology or fuels like clean diesel, ethanol, 
hydrogen and others are already on the road. Automakers are 
offering 60 models of alternative fuel autos on sale today, up 
from 12 in 2000, and many more models are planned for future 
production. Guiding Principles
     Automakers understand the desire of Congress to reduce 
carbon dioxide, and we support that goal. Reducing carbon is 
dependent on three intertwined factors: consumers, fuels, and 
vehicle technology. Attempts to address concerns about energy 
security and carbon dioxide emissions cannot succeed by 
focusing only on one component.
     There are many provisions in the proposed legislation that 
treat fuels and autos as a system. In 1999, EPA finalized its 
landmark regulations called Tier 2, which for the first time 
regulated autos and fuels as a system. Future legislation needs 
to consider fuels and autos together.
     Today, I will limit my testimony to provisions that affect 
autos, but I would like to recite several principles that have 
guided automakers in responding to this legislative proposal.
     A consumer-sensitive approach is needed. Many segments of 
our economy depend on cars and light trucks. Farmers, 
tradesmen, small businesses and others need vehicles, 
especially larger cars and light trucks, for their livelihoods. 
Any program that reduces the availability of these work 
vehicles or significantly raises their costs represents a 
burden on the U.S. economy, and especially a burden on 
independent and small businesses.
     A market-driven, market-responsive approach is needed. Any 
effective program needs to consider the realities of the 
marketplace. For example, incentives in place for the renewable 
fuels program enable competitive pricing of ethanol, which is 
resulting in increased consumer demand for this alternative 
fuel.
     Incentives are needed to encourage real reductions in 
carbon dioxide. Incentives can encourage consumers to purchase 
advanced technology autos on sale today and encourage energy 
providers to increase availability of alternative fuels and to 
reduce the overall carbon intensity of the fuels that power 
them.
     Consideration of effects on competitiveness is needed. Any 
effective program to reduce carbon dioxide needs to allow for 
companies to grow and thrive, without imposing provisions that 
would result in job loss. Sufficient lead time is critical in 
this industry, since auto manufacturing requires five years to 
develop and introduce a new model, and seven years to make 
significant changes to powertrains.
     Finally, any effective approach needs to be comprehensive 
and nationwide. The United States needs a consistent national 
policy that avoids the marketplace chaos that would surely 
arise from a patchwork of conflicting state fuel economy/carbon 
dioxide mandates. Therefore, it is crucial that there be 
Federal pre-emption of State laws.

                 Provisions in the Proposed Legislation

     With these principles as a guide, let me address several 
of the specific provisions in the proposed legislation.
     The Alliance Supports Granting NHTSA Authority to Reform 
Passenger Car CAFE Standards.
     The Alliance supports providing authority to NHTSA to 
reform the way it sets fuel economy requirements for passenger 
cars. A rulemaking process that maximizes consumer choice and 
avoids safety trade-offs, without injuring competition or--any 
individual automaker is clearly desirable. Attribute-based 
approaches, when properly designed, can help achieve these 
objectives. But ultimately, success in meeting these objectives 
depends on the--provisions of the program, such as the specific 
attributes or set of attributes that are chosen, the level at 
which standards are set, and the adequate provision of lead-
time. Whatever attributes are considered for cars must preserve 
the diverse types of passenger cars.
     The Alliance supports authorizing NHTSA to reform the CAFE 
standard for cars into an attribute-based system, but NHTSA 
should not prejudge the issue by assuming that the footprint-
based system used in the light truck reform rulemaking makes 
the most sense for cars. When reforming light truck CAFE 
standards, NHTSA used an attribute-based approach that 
acknowledged consumers require different sized vehicles for 
their business and family needs. NHTSA's attribute-based 
approach addressed some of the previous concerns about safety 
and about inequitable effects on different manufacturers 
arising from the previous ``one size fits all'' standards.

   The Alliance Supports Preserving the Distinction between Cars and 
                             Light Trucks.

     The proposed legislation preserves consumer choice by 
maintaining the 30-year-old statutory distinction between cars 
and light trucks. Americans value fuel economy, but they also 
want passenger and cargo room, performance, towing ability and 
more. The fuel economy of light trucks can and should increase, 
but we need to acknowledge that light trucks and cars need 
separate fuel economy standards. Existing Federal law 
rightfully separates cars and light trucks in the CAFE program 
by setting different fuel economy standards for each.

    The Alliance Supports Setting CAFE at the Maximum Feasible Level.

     The Energy Policy and Conservation Act directed NHTSA to 
set national fuel economy standards at the ``maximum feasible'' 
level taking into account key elements such as the need of the 
U.S. to reduce energy use, as well as technological 
feasibility, affordability, safety, emissions controls, 
consumer choice, disparate impacts on manufacturers and effects 
on American jobs. This approach balances petroleum conservation 
needs with technological feasibility, safety, affordability, 
jobs and consumer choice.
     By directing NHTSA to continue to set annual standards at 
the maximum feasible level, this legislation acknowledges that 
progress may be faster some years than others. While the draft 
bill includes targets that must be ultimately achieved, this 
approach acknowledges that progress and breakthroughs are not 
always governed by the calendar. Fuel economy varies depending 
on the introduction of models and technologies, along with 
consumer purchases. For example, a new model may sell well in 
its first few years, but then decline in popularity.
     The dual approach of ultimate targets and standard-setting 
year-by-year allows NHTSA to make adjustments based on 
available technologies and manufacturers' product plans to 
fine-tune progress toward the legislation's ultimate fuel 
economy targets. The ultimate fuel economy targets, however, 
remain extremely ambitious and challenging to our member 
companies.

       The Alliance Supports Funding the Development of Promising 
                             Technologies.

     While fuel-efficient technologies are on sale today, more 
technology is being developed for future introduction. 
Thousands of automotive engineers are working on innovative 
technologies every day, but many emerging technologies, such as 
plug-in hybrids, fuel cells and hydrogen internal combustion 
engines, still need significant research and development before 
they will be commercially ready. Moreover, the hydrogen fueling 
infrastructure needs to be developed.
     Setting aside funds collected from the automakers under 
the CAFE program to speed up commercialization and production 
of advanced technology vehicles and vehicle components in the 
U.S. makes sense. Added to the billions of dollars automakers 
are already investing in research and development each year, 
this money can assist in getting more fuel efficient vehicles 
to market less expensively and faster. Similarly, the advanced 
battery loan guarantee program in Section 305 will help make 
leap-ahead technology a reality.

 The Alliance Supports Improving the Availability of Alternative Fuels 
     to Keep Pace with the Availability of Alternative Fuel Autos.

     Autos and the alternative fuels to power them must be 
developed in harmony. Automakers are putting millions of 
alternative fuel autos on U.S. roads, but many consumers are 
still searching for the alternative fuels to power them. Today, 
there are 6 million E85 ethanol-capable vehicles on our roads. 
In the first quarter of 2007, sales of E85 autos were up 40 
percent over the same period last year. But only about 1,200 of 
the 170,000 gas stations in the U.S. offer E85 and even fewer 
offer alternative fuels like hydrogen and biodiesel. As a 
general matter, the Alliance does not support mandates, but we 
do support incentives that can help speed up the introduction 
of biofuels and other fuels to the marketplace.

         The Alliance Supports Increasing Consumer Information.

     This proposed legislation would seek to raise consumer 
awareness in three important areas.
     First, a public campaign would be undertaken to inform 
consumers of the availability of both Flexible Fuel Vehicles 
and where alternative fuels can be purchased. Automakers have 
been advertising their vehicles, and we support groups like the 
National Ethanol Vehicle Coalition and the Clean Diesel Fuel 
Alliance that provides a consumer Web site on fuels 
availability at www.E85.com and www.clean-diesel.org.
     Second, a Fuel Conservation Education Program would be 
created to ensure consumers are given more information on how 
to conserve fuel through proper use and maintenance of their 
vehicles. The Alliance has already initiated this effort, 
working with EPA, through the Web site, 
www.MileageWillVary.com. On this site, consumers can test their 
knowledge of fuel savings practices. We have been advertising 
the Web site on consumer sites like www.Edmunds.com, and 
certainly we support further education.
     Third, this legislation proposes to educate consumers on 
replacement tire fuel efficiency. The Alliance currently 
educates the public about the influence that tires have on 
vehicle fuel economy through its Web site, 
www.CheckMyTires.com. According to the National Academy of 
Sciences, a 10 percent reduction in average rolling resistance, 
if achieved for the population of passenger vehicles using 
replacement tires, promises a 1 to 2 percent increase in the 
fuel economy of these vehicles. About 80 percent of passenger 
cars and light trucks are equipped with replacement tires. 
Assuming that the number of miles traveled does not change, a 1 
to 2 percent increase in the fuel economy of these vehicles 
would save about 1 billion to 2 billion gallons of fuel per 
year. This fuel savings is equivalent to the fuel saved by 
taking 2 million to 4 million cars and light trucks off the 
road \1\
---------------------------------------------------------------------------
    1 Tires and Passenger Vehicle Fuel Economy: Informing Consumers, 
Improving Performance, Transportation Research Board Special Report 
286, National Academy of Sciences, Washington, DC, 2006.
---------------------------------------------------------------------------
     We support the tire manufacturers' providing additional 
information about the contribution of tires to vehicle fuel 
consumption, either at the point of sale or through other means 
like advertising.

          The Alliance Supports the Focus on Carbon Emissions.

     For more than 30 years, corporate average fuel economy has 
been focused on reducing oil consumption, but CAFE alone cannot 
address the broader problem of climate change. To affect 
climate change, the Congress must address carbon dioxide 
emissions through a comprehensive program that touches fuel 
producers, vehicle manufacturers and consumers.
     This proposed legislation expands the policy focus to 
carbon dioxide (CO\2\) emissions in several ways. For example, 
the Department of Transportation would be required to issue 
fuel economy standards in both ``grams per mile of CO\2\'' and 
miles per gallon. In addition, EPA would be directed to develop 
a Low Carbon Fuels Standard.
     These are good initial efforts that focus on carbon 
dioxide and climate change while maintaining the options to 
develop a broader climate change policy.

                   Provisions for Further Discussion

     The CAFE Targets Are Very Aggressive and Will Be Difficult 
for Manufacturers to Achieve.
     Under the proposed legislation, car CAFE standards would 
increase by more than 30 percent while light truck standards 
would increase by 35 percent. The legislation's proposed 
standards of 36 mpg for passenger cars by 2022 and 30 mpg for 
light trucks by 2025 represent significant increases over the 
current standards. Indeed, the proposed increases in fuel 
economy requirements would present major technology challenges 
for automakers, requiring tremendous investments over a 
sustained period of time. An automaker can spend well over $1 
billion to develop a brand new engine or transmission or a new 
vehicle that is not based on an existing platform. If passed 
into law, this legislation would result in the largest increase 
in CAFE standards to cars and light trucks. Automakers 
traditionally have supported standard-setting by NHTSA, the 
expert agency with long experience with CAFE. The NHTSA notice 
and comment rulemaking process is based on thorough development 
of a factual record regarding technical feasibility, 
affordability, effects on safety or jobs, and environmental 
benefits, that is built with input from all interested parties. 
While the 2002 NAS Committee on CAFE \2\
---------------------------------------------------------------------------
    2 Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) 
Standards, Transportation Research Board, National Academy of Sciences, 
Washington, DC, 2002. believes that the identification of trade-offs 
should reside with elected officials, the consideration of these trade-
offs in the selection of fuel economy targets and levels is appropriate 
for the expert Federal Government agency to set.
---------------------------------------------------------------------------
     Automakers are deeply committed to working with Congress 
and NHTSA to develop standards that achieve the fuel savings 
and CO2 reductions desired, while at the same time maintaining 
jobs, a sound economy and a vibrant automotive industry.
     In May, Standard and Poor's issued a report stating that 
stringent fuel economy and vehicle emissions legislation would 
``pose a real risk to global automakers'' financial 
performance, particularly as some are already under pressure 
from razor-thin margins.''
     As a result, overly aggressive fuel economy standards 
could undermine the economic health and stability of 
automakers, and they could raise costs to consumers and result 
in restrictions on certain models.
     The Flexible Fuel Mandates Offer No Flexibility if 
Circumstances Change.
     As a general matter, the Alliance does not support 
technology mandates, and we are extremely concerned about the 
technology mandate for flex fuel vehicles proposed in the 
discussion draft. This mandate proposes targets that may be 
unachievable, as well as a time frame that is very aggressive, 
and it allows no alternatives should E85 fail to make it to the 
market in the anticipated volumes and needed locations. Company 
product plans for 2012 are firming-up now and legislating a 45 
percent mandate by that date would impose an enormous resource 
burden on some companies. This mandate would compete with 
engineering resources needed to improve vehicle fuel economy. 
Moreover, 2012 provides insufficient lead time for small-to 
intermediate-size automakers that are not already producing 
those types of vehicles.
     Doubling the CAFE Penalty Unfairly Hurts Small-Line 
Manufacturers.
     The Alliance does not support the doubling of the CAFE 
penalty. This proposal discriminates against smaller 
manufacturers and those with limited product lines. Ultimately, 
it will cause consumers to pay more for certain vehicles, while 
similar, possibly less efficient, vehicles from manufacturers 
with a wider product range will not carry the additional costs.
     Extending Flex Fuel Credits Will Incentivize Production 
and Reduce the Cost of Compliance.
     The Alliance does support two provisions that are not 
currently in the proposed legislation. First, the Alliance 
supports extending CAFE credits for flexible fuel vehicles. An 
incentive-based approach such as this will continue the growth 
in numbers of Flexible Fuel Vehicles without harming 
manufacturers. Second, the Alliance supports extending the 
carry-forward, carry-back credits to five years from three 
years for additional flexibility in adjusting to constantly 
varying market conditions.
     There are also many provisions in the proposed legislation 
that require further review and analysis, and we want to 
continue constructive discussions with policymakers to move 
this bill forward.
     Again, thank you for the opportunity to comment on this 
legislation. We look forward to working with you and all 
members of the House of Representatives as this legislation 
moves forward. We want to ensure that the important priorities 
of climate change and energy security are addressed in a 
meaningful way without disproportionately harming consumers or 
an industry that provides jobs to millions of Americans.
     I welcome any questions you may have regarding the 
Alliance's positions on improving fuel economy and reducing 
carbon dioxide.
[GRAPHIC] [TIFF OMITTED] 42440.165

[GRAPHIC] [TIFF OMITTED] 42440.166

    Mr. Boucher. Thank you very much, Mr. McCurdy, and the 
Chair thanks all of the witnesses for your extremely helpful 
testimony here today.
    Mr. Lampert, let me begin my questioning with you. And 
first, I want to compliment something that you have done. I was 
just handed a compelling graph. This is about my congressional 
district. I represent a very rural area, 27 counties and 
cities, literally hundreds of very small municipalities, and 
you have prepared for my district, and I understand for the 
districts of every member of this subcommittee on both sides of 
the aisle, a similar graph. And what this graph shows in the 
case of my congressional district is that we have, in our area, 
10,583 flexible fueled vehicles, by your estimate, and in my 
district, across these 27 counties and cities, and hundreds of 
small municipalities, we have zero service stations with a 
flexible fuel pump.
    Mr. Lampert. That is correct.
    Mr. Boucher. So, not a single E-85 pump in 27 counties or 
cities, that potentially could be servicing, even today, more 
than 10,000 flexible fuel vehicles. Do I read that correctly?
    Mr. Lampert. That is exactly right, Mr. Chairman. What we 
tried to do here is designate by ZIP Code the concentration of 
flexible fuel vehicles, as is registered and reported to the 
automakers, and that is a matter of public record.
    Mr. Boucher. Well, it is certainly a compelling chart. It 
is startling in what it demonstrates. It says to me that we 
have got to do something to stimulate the introduction of 
flexible fuel pumps at service stations, and I want to thank 
you for preparing this.
    Let me ask if you would make available to the committee the 
chart you have prepared for all of the members of the 
subcommittee. I would personally like to make sure that each of 
them gets the chart that is designed for their particular 
district.
    Mr. Lampert. That has been made available to staff already, 
Mr. Chairman.
    Mr. Boucher. Thank you. Thank you very much, Mr. Lampert.
    Mr. Lampert. You are very welcome.
    Mr. Boucher. For Mr. Reuther and Mr. McCurdy, I want to say 
first, thank you for your support of the discussion draft, 
which you have announced in your testimony here today.
    It is designed, as I think I indicated in my statement, and 
Chairman Dingell has indicated in his other statements, to be a 
down payment on the later action that this committee will take 
in October, and at that time, in the September-October 
timeframe, we intend to construct a mandatory greenhouse gas 
control program. And what we are doing in this draft is a 
bridge to that, the first step in that direction.
    I appreciate the support you have expressed for the 
discussion draft. My question to both of you is should our 
discussion draft, in major part, be adopted into law? Will you 
continue to work with us in fashioning a mandatory greenhouse 
gas control measure that we can present to the House in 
October? Mr. McCurdy.
    Mr. McCurdy. Mr. Chairman, on March 14 in this very room, 
four CEOs from the Alliance of Automobile Manufacturers said 
yes, they would continue to work with the subcommittee. We 
understand this is a bridge. It is a difficult bridge, but it 
is a bridge, and we will continue to try to work to reach that 
ultimate goal.
    Mr. Boucher. Thank you very much, Mr. McCurdy. Mr. Reuther.
    Mr. Reuther. At that same hearing, the president of the UAW 
indicated that we strongly support an economy-wide cap and 
trade program, and we look forward very much to working with 
you to help develop that.
    Mr. Boucher. Thank you very much, Mr. Reuther.
    Mr. Drevna, in your testimony, you indicated that there 
might have been some miscalculation in the numbers that you 
used in the testimony you provided regarding the percentage 
reductions that would be required under our Low Carbon Fuel 
Standard. You have acknowledged that perhaps that was in error. 
I also think that your numbers are.
    I am going to ask Mr. DeCicco, who I think has some 
information with regard to what the actual effect of that Low 
Carbon Fuel Standard to be is, and would you, Mr. DeCicco, care 
to respond? What Mr. Drevna said in his written testimony is 
that if our Low Carbon Fuel Standard were adopted, that it 
would require a 26 percent reduction in the carbon content of 
automotive fuels the first year, and that would lead eventually 
to a 38 percent reduction by 2020, and that if those numbers 
are accurate, that we would actually have a far more stringent 
Low Carbon Fuel Standard than what California has proposed, 
which is a 10 percent reduction in the carbon content by 2020.
    So, Mr. DeCicco, how do you interpret our Low Carbon Fuel 
Standard, in terms of the percentage reductions that in fact it 
would require?
    Mr. DeCicco. Mr. Chairman, we do interpret it differently 
than Mr. Drevna's calculations. In our written submission, we 
have a table, table 3 on page 12, in which we provide 
preliminary estimates of the overall covered motor fuel pool 
carbon intensity reduction implied by the discussion draft. Our 
estimate, and we emphasize that these are preliminary, we have 
not done a full calculation in the short term, but we estimate 
that by 2020, the implied reduction is 3.3 percent, and again, 
as you pointed out, that is actually much less, a third of what 
has been proposed in California's Low Carbon Fuel Standard.
    Mr. Boucher. Thank you very much, Mr. DeCicco. Mr. Drevna, 
would you concede that perhaps his calculations are accurate?
    Mr. Drevna. Mr. Chairman, based upon how we read the draft, 
and I think there is a lot of confusion about as to exactly 
what is and what isn't covered under the calculations, and to 
be quite candid, in very recent conversations we had with 
staff, they tried to explain to us what the intent was, our 
numbers are based upon what we thought the draft had said and 
does say, so I think that is the confusion with the draft that 
we want to work with staff and you on, to make sure we are at 
least speaking from the same hymnal here.
    Mr. Boucher. Well, thank you, Mr. Drevna, and we will all 
endeavor to come to a common understanding about precisely what 
the effect is. I personally think Mr. DeCicco has it right.
    My time has expired. The gentleman from Illinois, Mr. 
Hastert, for 5 minutes.
    Mr. Hastert. I thank the chairman. Just to follow up on the 
comment. I have some questions, too, about what goes into these 
things. I come from a stretch of about 120 miles that is all 
cornfields and beanfields, it starts on the very western edge 
of the Chicago suburbs, and goes all the way to the Mississippi 
River. Those fields are going to be producing soybeans and 
corn, regardless of those, if it is going to be soy diesel or 
if it is going to be ethanol.
    And so, if you are going to start to add in what the cost 
of corn is, and the fuels that go to produce corn, and the dry 
corn, and those things, and add them into the cost of fuel, I 
don't know if you are also going to add that into the cost of 
bacon when it gets to the market. Because there are two ways 
that that corn can go. It can go to be making fuels that reduce 
our emissions, or we could be making bacon. So, there are two 
cost dispersions out there, and I am not sure how we add all 
these things in.
    That being said, Mr. Lampert, I appreciate that map, 
because it does show my district, that has got the I-80 
corridor there, with most of those stations, because there is a 
lot of traffic down there, and actually, I did a little 
calculation. I have about 7,200 square miles, and if you take 
out the I-80 stations that are right on the edge of my 
district, I have only got seven stations in there, and I bought 
an E-85 truck last year. That was a good thing to do; a kind of 
symbolism of what we are trying to do. The trouble is, I have 
to drive 25 miles to fill it up. If I have to drive 25 miles to 
find a gas station to fill it up, and then 25 miles back home, 
you kind of shoot all the economy and savings that are already 
there.
    So, contrary to what Ms. Hubbard said, we need to be able 
to make sure that those pumps are available to people, because 
I am sure we have, in my district, almost 24,000 flex fuel 
vehicles with approximately seven stations, if you take out the 
I-80 stations. It just doesn't calculate.
    But one of the things that we have to think about is what 
really causes the problems that prohibit E-85 availability, and 
one of the things that really, when you talk about all the new 
fuels that may come along stream, whether it be cellulosic, or 
ethanol, or soy diesel, and when you talk about the coal to 
liquid, what are the mix of low emission fuels with the 
traditional old petroleum fuels that we have to find? What is 
the ideal out there where you get the maximum fuel efficiency 
and the least emissions. I am not sure that we have found that 
number yet. I am not sure if the true number is E-85 or E-45 or 
E-50 or E-28. I don't know that yet. We are going to have to 
do, probably ought to do a couple studies, and I think maybe 
the private sector might be able, best thing to do that may be 
the Government. But I think that is something you need to think 
about.
    But in your mind, you have been very helpful in trying to 
bring along and find ways to implement E-85 distributors. What 
has been one of the biggest prohibitions that you have found?
    Mr. Lampert. Well, the continued prohibition that we see of 
placing E-85 under a canopy, testimony has been made here that 
if the owner of a station or a vendor did not own the facility, 
there may be some liability issues. I clearly understand that. 
I think to your question, if I would own a station, and I was a 
branded operator, in many cases, we could not put E-85 under 
the canopy. I have a recent statement from ConocoPhillips where 
they are now allowing that in four States in the country. So, 
apparently, 46 States in the Nation, ConocoPhillips does not 
allow alternative fuel under the canopy.
    That has certainly been an issue. We have, today, Mr. 
Speaker, about one gas station for every 1,500 motor vehicles 
in the United States. We have one E-85 station for every 5,000 
flexible fuel vehicles. So, clearly, we have a long way to go. 
But this is a very infant industry. E-85 has only been around 
for 12, 15 years, where obviously, the gasoline business is 110 
years old. So, we have made progress, but certainly have a long 
way to go.
    Mr. Hastert. I have just a short period of time left, but 
one of the things we are trying to do is make sure that the 
liability for an E-85 station isn't any different from the 
liability of somebody that is doing 100 percent petroleum. I 
think that is fair, and that may expedite the placement of 
pumps. We have found that the whole issue of certification has 
become a slow walk through this process, and we are seeing, I 
don't know how, why that has happened with Underwriters 
Laboratories, but we need to expedite that process as well.
    And one thing, if the chairman will allow me to say, that I 
don't necessarily think the mandating of pumps and stations is 
the right thing to do, until I heard Mrs. Hubbard's testimony, 
and the stalling tactics of vertically owned retail 
distributors, I think has certainly been on the record, and 
maybe we have to mandate that part. I heard her testimony, and 
I think maybe she has tilted me over the other way, a tipping 
point, I guess is the term that we have today.
    So, I appreciate your testimony, and I think we have a lot 
of things that we really need to mull over before we get this 
whole thing to move. Thank you.
    Mr. Boucher. Thank you very much, Mr. Hastert. The 
gentleman from Georgia, Mr. Barrow, is recognized for 8 
minutes.
    Mr. Barrow. Thank you, Mr. Chairman.
    At the outset, this is how I see the problem. As I see the 
problem, we have got a three legged stool. One leg is the 
infrastructure that is going to be tasked with providing us 
with a clean alternative fuel in the future. The second leg is 
an industry that is going to be tasked to provide the 
infrastructure to deliver that fuel to the customers. And the 
other leg of the tool is an industry that is going to be tasked 
with providing the fleet that can run on it.
    And the problem is both between legs and within legs, 
because nobody wants to go first, and nobody can afford to go 
first, because anybody is going first, they are going to get 
whipped. If this whole industry on one leg is going to be 
moving forward to be reaching the goals we want in the future, 
it is going to be an economic train wreck for the rest of us, 
and we are trying to avoid, trying to get all this moving at 
the same time. And that is the problem, as I see it.
    Mr. Dinneen, I want to begin with you. Asking, this 
business about the supply of the clean fuel, just how in regard 
to that, that one of the legs of the stool, OK. Right now, our 
policy is to require that a certain percentage of the fuel in 
this country, a certain percentage of the fuel, have a certain 
percent of ethanol in it, but not requiring all the fuel in the 
country to have that percentage means that some areas of the 
country end up sucking up all the E-10 that we have got in 
order to meet environmental standards or constraints imposed as 
a result of nonattainment in certain areas.
    What I want to ask you is, and apparently, the working 
draft is going to continue, that is going to build on that 
model. We are not going to require all the fuel to have a 
certain percentage. We are just going to require a certain 
percentage of the fuel to have a certain percentage. And the 
question I want to ask is, can your industry, does it have the 
capacity to provide a certain minimum percentage of alternative 
fuels in every gallon of gas sold in the entire country? Can we 
produce enough ethanol to have E-10 everywhere in the country, 
and still provide enough for those folks who have got to have 
it in order to meet their local constraints?
    Mr. Dinneen. Congressman, absolutely we can. Quite frankly, 
we are probably going to get there even without legislation. We 
have got 12 million gallons of ethanol production, either in 
service today or under construction. We have 140 billion gallon 
gasoline market. So, we are already getting to the point where 
we are going to reach the saturation point, in terms of the 
existing blend market, which is why this legislation is really 
important, because it envisions other markets of E-85, flexible 
fuel vehicles, and it addresses the other two legs of that 
stool.
    But in terms of the production, our own single leg, I would 
also suggest to you that while we see the opportunity to get 
the 10 percent blends, and I think we are going to get there, 
the flexible fuel market may not be developing quite as fast as 
our industry is building, and you may have a situation very 
soon, Congressman, where we have more than enough ethanol to 
satisfy the 10 percent market across the country.
    Mr. Barrow. Will that market address the other legs of the 
stool, because if there was an infrastructure to deliver it, 
and there was a fleet to run on it, I think you all's problem 
would be solved.
    Let me turn to Ms. Hubbard with that thought in mind. Ms. 
Hubbard, you and your colleagues, and your associates probably, 
the folks I represent depend on you all for a whole lot more 
than they get from this Congress, it seems to me from time to 
time, so I want to turn to you with a great deal of concern and 
interest, because you all are going to be tasked with trying to 
deliver this, and I share your concerns about not being forced 
to do something you can't do, and meet a demand that ain't 
there.
    The question I want to ask you is what can we do to help 
you all do that? If we get these other two legs of the stool 
moving, so you get the supply of the fuel coming, we get the 
fleet ramping up more or less, what can we do to help 
facilitate it? First of all, to make sure that your entire leg 
of the stool ain't out of line with everybody else, but also to 
make sure that folks within that leg, folks who are competing 
with the, for the business that is done by you and your 
colleagues and your competitors, that nobody is put at a 
disproportionate disadvantage in trying to get on board.
    What can we do to help you all?
    Ms. Hubbard. Obviously, if the demand exists, our industry 
has historically been early adopters of new products, and we 
also are pretty significant risk-takers. So, as the demand was 
there, we have talked about some of these vehicles within the 
marketplace, 10,000 or 7,500 vehicles in a widespread area 
could not be serviced by one or two locations, and if we don't 
have the volume, the rate of return would take decades.
    Mr. Barrow. How do you evaluate the working draft's 
approach to this problem, by trying to make sure that mandates 
don't kick in until you have got a 15 percent penetration in 
the market? I am not sure if I can get the 15 percent, but how 
do you all assess that?
    Ms. Hubbard. Well, the problem even with the 15 percent, if 
that was determined to be a justifiable amount, how do you 
determine, then, who becomes that either sacrificial lamb or 
the risk-taker? How do these retailers pick out in their force 
to, as kind of the Field of Dreams, build it and they will 
come, but it is almost a nightmare, because we don't know that 
they will come, and we don't know how do you choose which is 
the retailer that unfortunately has to take that risk?
    Mr. Barrow. Let me turn to the other leg. So, Mr. McCurdy, 
in terms of the ability to deliver the fleet of vehicles that 
can run on this, provided we get this supply, and we get the 
infrastructure to deliver it, I got to tell you, in my part of 
the country, the folks depend upon their vehicles to work. I 
just completed an 11 city town hall tour of the rural areas of 
my district, and the truck, the pickup truck is the all-purpose 
vehicle, and a pickup's got to have pickup. We just can't 
afford to have little itty-bitty pickup trucks that may look 
big on the outside, but they can't carry any load, or they 
can't pull off from a dead stop. We have got to have pickups 
that can really pick up and go.
    What is the future? What can you tell us is coming, in 
terms of strike a balance, because we don't want to sacrifice, 
we want to get fuel economy, and we want to get low emissions, 
but we have got to have working trucks that can do real work. 
They have got to be, and we have to have lots of them. So, what 
is the future on that? What can you all tell us?
    Mr. McCurdy. Congressman, it is a great question, and you 
are exactly right, as far as the consumer demand and need for 
the types of vehicles that provide work throughout most of the 
country. And there is a chicken and egg problem here, but from 
a technology standpoint, we already manufacture over 60 
different models that are alternative fuel available, or 
capable.
    Mr. Barrow. I think we got the fuel. I think you have got 
the fuel part, it is the economy standards that I am concerned 
about.
    Mr. McCurdy. We have talked some about E-85, we have talked 
about other types, but there is also diesel, biodiesel, and 
other things that are there, as well. We see in Europe and 
other places that diesel provides a lot of torque.
    Mr. Barrow. Indeed.
    Mr. McCurdy. And diesels, I think, are quite capable for 
large vehicles, including trucks. And flex fuel vehicles can, 
again, have internal combustion engines that use other forms of 
fuel. So, as I said, there are 10.5 million of those vehicles 
out there. The challenge is there isn't the infrastructure, 
there is not the fuel available, and that is exactly what the 
committee is attempting to address.
    So, we can produce it, and it really does address one of 
the major concerns of this committee, and I think the Congress, 
and that is energy dependence, dependence on foreign oil, and 
there can be major reduction there. On the flip side of that 
the movement towards a lower carbon intense society. And you 
don't have to have a complete tradeoff of lower carbon for, as 
you said, itty-bitty trucks or small vehicles.
    Mr. Barrow. Well, big trucks with itty-bitty engines.
    Mr. McCurdy. That is right. Well, you can have workhorse 
vehicles with high technology, provided the infrastructure is 
there and the fuel is there.
    Mr. Barrow. Well, you are right. That describes a chicken 
and egg problem of the hearing, I said this is not just a 
chicken and egg problem, it is a chicken, chickenfeed, chicken 
coop, and rooster problem, not to mention the chickenhawks that 
are out there.
    Thank you, Mr. Chairman. Yield back.
    Mr. Boucher. Thank you very much, Mr. Barrow. The gentleman 
from Illinois, Mr. Shimkus, is recognized for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. And I appreciate the 
map. Of course, my district is doing well, I think. In my 
district line, there are about 22 E-85 stations. I think in the 
ZIP Code area, you have got 36. I have 30 counties. They say 
here, in the ZIP Code calculations, 22,000, so comparable, we 
have done well.
    And, but I know 4 years ago, we had zero. So, this 
promotion of flexible fuel retail locations has come about 
based upon our work here, and I can guarantee my colleagues 
that their districts will--I do not have a single ethanol 
refinery in my district. So, it is not because I have one in my 
district. It is because the public demanded it, and I like Mr. 
Barrow's comments, too. I have 30 counties in southern 
Illinois. We want working trucks. Now, I have a little itty-
bitty truck. I am a politician, I really don't work, but a lot 
of my folks do. I had the bean producers in. We have got the 
pork producers. We have got farmers. We have got to have trucks 
that work, and they got to be big trucks, and that is part of 
this debate.
    Mr. DeCicco, has the Earth climate ever, in the history--I 
am a creationist--in the world's history, has it ever been in 
balance?
    Mr. DeCicco. Balance is a question of time, and it has 
changed slowly through time. What we are seeing now are changes 
of an unprecedented nature, in terms of their danger and 
rapidity.
    Mr. Shimkus. Thank you. I would submit to you that the 
Earth has never been in balance, and to assume that human 
beings can balance the climate is very arrogant on our part. 
And it is interesting how this has now taken a worldwide 
application based upon one election in which I would guess not 
a single congressional election was won on climate change, and 
now we are going to affect manufacturing and the world 
environment, the whole economy of our country, and maybe the 
world, based upon this debate, and it is very frustrating for 
those of us who do believe, of the arrogance of the human being 
thinking that we will control the world's climate.
    Mr. Dinneen, where is the ethanol industry on a Low Carbon 
Fuel Standard?
    Mr. Dinneen. We generally support the effort to try to use 
carbon emissions, and we are supportive of the effort in the 
discussion draft, that moves us forward.
    Mr. Shimkus. I am going to get to my question, because my 
time is running pretty quick, would this Low Carbon Fuel 
Standard limit the use of certain renewable fuels?
    Mr. Dinneen. They may limit it. I think there are a lot of 
questions about how it would be imposed, because how you do the 
lifecycle analysis.
    Mr. Shimkus. And that is the point I want to highlight to 
the chairman is the lifecycle debate on this, is where we need 
to, I need to move quicker. What about compliance values in 
this bill?
    Mr. Dinneen. As I said in my testimony, I think it does 
undermine the potential petroleum displacement in the act, in 
the program.
    Mr. Shimkus. Would it be helpful, on the Alternative Fuel 
Standard, if we apportion percentages and goals to be achieved 
by the different fuel mixes? Would that be helpful? Because the 
issue is, we have got the corn ethanol debate, and then we have 
the cellulosic debate. We are putting great hope in cellulosic. 
We had great testimony here in this committee, but that is 
still further down the line for permitting and application than 
the coal-to-liquid debate, since we know we can do it, all we 
have to do is start building them. Does a percentage debate 
help or hurt in this discussion?
    Mr. Dinneen. I haven't really given a great deal of thought 
to it. I would want to analyze it a little bit better. I do 
think that there are ways to make the program more effective, 
though.
    Mr. Shimkus. And if I could, Mr. McCurdy, let us talk about 
this other blend. The reality is, in my district, when we have 
E-85 pumps, there are folks, they self-mix, when gas prices are 
high. So they are doing that experimentation, of course, the 
retailers have a little concern on the debate, but I do want to 
highlight, all these 22 stations, maybe 20 of them now are all 
independent retailers, and I have great, Ms. Hubbard, I have 
great relations with the folks in my district. They are the 
ones who took the risk, and they are getting the benefit now.
    But Mr. McCurdy, can you talk about this whole E-15, E-20 
debate, and where we should head?
    Mr. McCurdy. Well, that is a good question, and one that we 
have had internally as well. E-10, obviously, is the current 
plan. E-85 is a standard, that I think the industry supports. 
There is a debate about what happens when you start blending in 
between. The key here is to have harmonization of those 
standards, and I think that the committee is going the right 
direction to look at those, too, and at least develop that 
standard.
    Mr. Shimkus. Thank you, Mr. Chairman, and I think I have 
found one issue that I think the autoworkers might rally in 
support behind Congressman Shimkus on this bill, and I look 
forward to working with you all.
    Mr. Boucher. Thank you very much, Mr. Shimkus. The 
gentleman from Massachusetts, Mr. Markey, is recognized for 5 
minutes.
    Mr. Markey. Thank you, Mr. Chairman, very much.
    We have a huge national security issue that is looming in 
our country, and that is this dramatic increase in our 
dependence upon imported oil, from 27 percent in 1986 to 60 
percent of our oil imported last year, and it is all. And much 
of it is related to the fact that, the doubling of our fuel 
economy standards from 1975 to 1986 reduced dramatically our 
dependence upon foreign oil, and once that standard was allowed 
to erode, we now see this dramatic increase.
    The consequences, of course, are that we wind up as 
Americans more dependent upon Middle Eastern oil, and we also 
wind up funding countries and, unfortunately, radical elements 
in those countries, that have come back to haunt our country, 
in the form of al-Qaeda. And it is critical for us to reduce 
dramatically our dependence upon oil from these countries.
    Now, in Europe, I just returned from a visit to Europe with 
the Speaker, we found that Europe is going to increase, by 
2012, their CAFE standards to 43.4 miles per gallon. That is by 
2012. And in its reflection of this critical issue, not only of 
climate change, but of national security interests. They 
already meet a 35 mile per gallon standard, but they are saying 
over the next 5 years, they want to dramatically increase it.
    That is my feeling as well. This is a national security 
crisis for our country, and we cannot allow this to continue, 
not with 170,000 young men and women over there, and 1.6 
million young men and women who have already gone over there to 
the Middle East for Iraq. The higher that goes is the more 
likely other young men and women will have to go over there.
    So, Mr. McCurdy, it is very difficult for me to understand 
why General Motors, Ford, for example, can meet a standard of 
43.4 miles per gallon by 2012. They are already meeting the 35 
mile per gallon standard. Ford and General Motors are the top 
of the list of European auto sellers right now. They outsell 
Toyota and Honda in Europe. My question is, the laws of physics 
are the same in the EU and here in the United States. I am 
asking that 10 years from now, in my amendment that I will be 
making next week, that the United States meet a standard which 
the EU meets today.
    Can you tell me why that is unreasonable, given one, what 
is going on in Europe, and how the American automotive industry 
is going to meet that challenge in 2012, and this incredible 
threat to our national security, which is represented by the 
importation of oil, and how much of that oil money is used to 
then come back to haunt our country?
    Mr. McCurdy. I thank my friend of 27 years for asking the 
question, and since I was in your office recently, and you 
showed me that chart, I thought I would bring you a chart as 
well.
     And with regard to the question of autos in Europe, I 
think it is actually pretty clear, Mr. Chairman, and when you 
look at the difference, the first one as being fuel, in the 
United States, we are 99.8 percent gasoline fueled or driven 
automobiles. In Europe, it is 51 percent diesel and 49 percent 
gasoline. That is a huge difference.
    Second, look at the issue of transmissions. Mr. Barrow 
mentioned he likes trucks, and Mr. Shimkus said they need 
trucks that work. In the United States, 92 percent of our 
vehicles are automatic. In Europe, they are 80 percent stick 
shift, all right? Let us look at the real question here. In the 
United States, 23 percent are 8 cylinders, 47 percent are 6 
cylinders, while only 28 percent are 4 cylinders. In Europe, 84 
percent of the vehicles are 4 cylinder engines, and only 1 
percent is an 8 cylinder. So, there is a difference. You are 
right, this is a big change, but when you are looking at the 
size of the cars, the weight of the cars, the classification, 
the requirements of the automobiles, they are not as heavily 
penetrated with pickups.
    Mr. Markey. My time is going to run out. All I am saying to 
you is you are telling us that it can be done, and that it is 
being done already, and let me add this, a Ford Escape hybrid 
SUV today gets 36 miles per gallon, and a Ford Escape does not 
with equal safety, so Ford is already doing it in the United 
States today. It is being done in Europe, it is being done in 
the United States for SUVs or these light trucks by Ford.
    We are saying 10 years from now.
    Mr. McCurdy. You are mixing apples and oranges.
    Mr. Markey. Not at all.
    Mr. McCurdy. Yes, it can be done, Mr. Markey, if you want 
smaller vehicles, if you want 4 cylinder engines, if you want 
stick shifts.
    Mr. Markey. No, I am talking about a Ford Escape SUV hybrid 
getting--I am talking a large----
    Mr. McCurdy. The Ford Escape is a great hybrid. They are 
hybrid technologies, it is an important technology. It is being 
introduced. I have a hybrid. There are hybrids, and we want to 
see that expand, but that is not the only answer to this 
question.
    Mr. Markey. But you don't have to do it the same way, my 
only point is that Ford is already doing it with their Ford 
Escape hybrid. It can be done. It must be done. The national 
security of our country remains in jeopardy.
    Mr. McCurdy [continuing]. hybrids, but I think it is last, 
because of the penetration in Europe is diesel. And why have 
they had more diesel penetration? Because there is almost a $4 
gasoline tax, and there is a dollar cheaper tax for diesel.
    Mr. Markey. They are mandating this 43.4. This is not a 
gasoline tax increase. It is an absolute mandate.
    Mr. McCurdy. They don't have a CAFE requirement. They have 
not had a CAFE requirement.
    Mr. Markey. They are going to--they are mandating----
    Mr. McCurdy. We are going to see----
    Mr. Boucher. Mr. Markey, some of us are actually interested 
in hearing the answers to these questions. They are such good 
questions, but the gentleman's time is expired, in any event.
    The gentleman from Oregon, Mr. Walden, is recognized for 5 
minutes.
    Mr. Walden. Thank you very much, Mr. Chairman.
    I would like to follow up on this line of questioning. Mr. 
McCurdy, do the European countries have the same clean air 
standards as the United States?
    Mr. McCurdy. No. Actually, on particulates and oxides of 
nitrogen, NOx, we have a three times more stringent standard on 
diesel than there currently is in Europe, and that is the 
challenge for the introduction of diesel and biodiesel, clean 
diesel in the United States. Now, that is the bad news. The 
good news is that we are making improvements there. There is 
new technology available. There is branded technology, such as 
BlueTech and others, that will now be capable of meeting the 
stringent U.S. requirements on diesel for the NOx.
    Mr. Walden. And my understanding is, and I was over in 
Europe last week with Mr. Boucher and Mr. Hastert, and others, 
that in Europe, there are 370,000 premature deaths in Europe 
due to poor air quality, a lot of which is coming out of the 
tailpipes of diesel burning, dirty burning cars. In the United 
States, it is about 20,000 premature deaths due to air quality 
problems.
    So, there is a tradeoff here that has occurred in Europe 
where people just die earlier, but they get better gas mileage. 
Isn't that almost what is being said? Now, what we are doing, 
and what you are doing, and what we are going to push you to 
do, as your industry, is give us other fuel alternatives under 
our clean air standards, so that we can have both, clean 
emissions or reduced emissions, or as minimal emissions as 
possible, cleanest air as possible, and get us better gas 
mileage, or diesel mileage.
    And my understanding is there are automakers who are going 
to come out with diesels in the next year that will do both. Do 
you know what kind of mileage they are going to achieve?
    Mr. McCurdy. Generally, the diesels get 20 to 25, maybe 30 
percent more efficiency than the gasoline equivalent.
    Mr. Walden. So, what will that get them to? Because we are 
going to argue here about this notion of trying to increase the 
fuel economy standards.
    Mr. McCurdy. Right. Well, Congressman, that is one of the 
challenges that this committee and the Congress and the public 
faces. What is the improvement in gas mileage? It depends on 
the vehicle, it depends on how the vehicle is used. But there 
are percentage improvements. But many of the diesels, again, 
can be applied to trucks, to pickups, and you will see 
significant increases in fuel efficiency.
    Mr. Walden. All right.
    Mr. McCurdy. And as you said, cleaner.
    Mr. Walden. I am going to have to cut you off, just because 
I only have about 2 minutes here.
    Mr. Karsner, is he still--no. Sorry?
    Mr. Boucher. Next panel.
    Mr. Walden. Next panel, I should leave these on when I 
read. All right. Well, then, I want to go to who can talk to me 
about ethanol and the renewable fuels? Now, I come from the 
West, and when I was out touring around my district, we 
actually have a couple ethanol plants that are under 
construction or in the design phase, and yet, the concern I 
consistently hear is that we are driving up the cost of corn, 
which we don't raise a lot of out on the west coast. In fact, 
these ethanol plants are going to have to truck it in, 
hopefully, from Mr. Hastert's district. That is the only place 
I would really like to see it come from. That is important to 
his economy and mine.
    But I get cattle ranchers and dairy lots that are saying 
this is driving us to the drink here with higher finishing 
costs. Now, I don't think on the west coast, and this is where 
I hope somebody can answer this, and I don't know who is best 
to do that, but what are we going to see in terms of E-85 
outlets on the west coasts? I understand it in the Midwest, but 
what are the odds we are going to actually get E-85 on the west 
coast, and benefit from all the ethanol portfolio requirements 
we are contemplating here?
    Mr. Dinneen. Well, let me first try to address some of the 
issues with respect to the rising price of corn, because it is 
indeed true that the increased demand for ethanol in this 
country has indeed created new markets for farmers, and they 
are seeing a better price for their product today.
    Mr. Walden. Right.
    Mr. Dinneen. And the days of cheap corn are probably, 
indeed, over, but I believe that the marketplace will 
absolutely respond, and I believe that we are going to see a 
great deal more corn being grown across the country. Indeed, 
the crop intention report that was just released a couple of 
months ago suggested that the marketplace is working, because 
farmers are going to plant as much as 90 million acres, 15 
percent more acres than they did just a year ago, so farmers 
are absolutely responding.
    What this bill is about is trying to, however, motivate the 
marketplace, so that we are able to move beyond grain, because 
there are going to be limitations to what you are going to be 
able to produce from grain, and as with the grant program for 
cellulose, and most importantly, by creating a marketplace for 
greater volumes of ethanol in the form of E-85 for flexible 
fuel vehicles. You are going to be incentivizing more cellulose 
ethanol to get out there.
    What it is going to take to get more flexible fuel vehicles 
and more E-85 is sort of the three legs of the stool that 
Congressman Barrow talked about. It is going to take more 
ethanol, it is going to take more vehicles, and it is going to 
take greater infrastructure. Those three legs of the stool are 
addressed in this bill in one fashion or another.
    Mr. Walden. All right. And I know my time has expired. 
Thank you all for your testimony and your answers.
    Mr. Boucher. Thank you very much, Mr. Walden. The gentleman 
from Pennsylvania, Mr. Doyle, is recognized for 5 minutes.
    Mr. Doyle. Thank you, Mr. Chairman.
    I got this graph. I am just curious. Is three stations for 
11,000 flex fuel vehicles enough, too little?
    Mr. Lampert. Well, as I had mentioned earlier, on a 
national average, there is approximately one gasoline outlet 
per 1,500 vehicles. So, to answer your question, there is 
approximately one E-85 outlet in your district for every 3,500 
or 4,000 vehicles. So, obviously, that is not meeting the 
national average of gasoline outlets.
    Mr. Doyle. And Ms. Hubbard, you said your industry is quick 
responders and risk-takers, so why aren't there more----
    Ms. Hubbard. Well, the problem, of course, is the 
concentration of those vehicles, and if there are enough of 
those vehicles within a serviceable market area, as you know, 
probably within your own community, you don't drive the whole 
city to shop at a convenience store. It is close to where 
either you live or you work. And so, the demand, if there were 
20 gallons per vehicle every single week, that still doesn't 
put the volume of fuel that goes through there. It doesn't make 
it adequate to justify the investment.
    Mr. Doyle. Thank you.
    Mr. DeCicco, you said that one of the things that concerned 
you about the bill is that the levels that are set for the 
vehicles fall far short of what is needed, and when you look at 
the draft, section 301 that starts on page 41, as I understand 
it, the draft directs NHTSA Administrator to set CAFE standards 
at the maximum feasible level every year, beginning in model 
year 2012, with the express requirement that under no 
circumstances are CAFE standards to be lower than 36 miles per 
gallon for cars in model year 2022, and 30 miles per gallon for 
trucks in model year 2025.
    So, I would like to ask you some questions. Is there any 
language in the draft, as you read it, that would prohibit 
NHTSA, provided the agency deems it feasible, from setting the 
CAFE standards for model year 2025 at 40 miles per gallon?
    Mr. DeCicco. No.
    Mr. Doyle. 50 miles per gallon?
    Mr. DeCicco. No.
    Mr. Doyle. 150 miles per gallon?
    Mr. DeCicco. No.
    Mr. Doyle. So, the draft would, in effect, give future 
administrations the ability to meet or exceed the CAFE targets 
set out by this proposal or any others, regardless of the 
specific number in the draft, and I think that is an important 
point to keep in mind. These are floors, not ceilings.
    Mr. Reuther or Mr. McCurdy, perhaps you both might respond, 
too. Given what you are seeing in the technology in hybrid 
vehicles and other types of vehicles that are being developed, 
is it reasonable to expect that by the year 2025, that there is 
a high probability that we could probably exceed what this 
floor is?
    Mr. McCurdy. Alan is punting here.
    Well, first of all, the targets that are in the bill are 
extremely aggressive. And the average efficiency in cars are 
far more efficient today than they were in the '70's. There has 
been roughly 1 percent a year. To get that level of advancement 
takes incredible investment of time, money, and engineering, 
and some potential breakthroughs.
    I am not discounting the potential for breakthroughs. If we 
have breakthroughs in plug-in hybrids, if we have breakthroughs 
in hydrogen, and some of the other capabilities, fuel cells, 
then in fact you might be able to see miles per gallon 
achievement in excess of those targets that you see. But the 
other critical factor here is availability of fuels, and the 
third and most important is whether or not the consumer 
supports it.
    I don't know if you saw the announcement this week, that 
Honda announced it was canceling, terminating its hybrid 
Accord. That is a decision they make based on the model. That 
doesn't mean it is a technology failure. That was, perhaps, a 
model failure that didn't catch on with the public. That is 
always the risk that manufacturers face, is that we can build 
it, but if they don't buy it, then we haven't accomplished 
their goals, and we----
    Mr. Doyle. Isn't that basically the argument you were 
making with Mr. Markey about European culture and American 
culture, that basically, that it isn't a technology issue. You 
are obviously making cars in Europe that meet these fuel 
economy standards. It is just that Americans, from the chart 
that I saw, they don't drive stick shift, diesel, four cylinder 
cars, or they do, but in much smaller percentages than the 
Europeans do. So, it is not that you don't know how to make the 
car, it is that, will Americans start to drive those kinds of 
cars that get that kind of mileage, and that is a culture 
change that has to take place in the country, too.
    I have a Ford Escape hybrid. I want to tell you, it is a 
great vehicle. I just by choice buy American cars only, and I 
have been railing at Detroit for years about you know, why 
doesn't an American car manufacturer make a hybrid. I have 
never had a lick of trouble with that car. It says it gets 36 
miles to a gallon. I am getting more like about 29, but I am 
very happy that when I fill the tank up, it is still under $30, 
even with the price of gasoline now.
    And I don't know what it would take to wake up Detroit that 
Americans want these kinds of cars, and they should be gearing 
up for it. This CAFE standard battle really shouldn't be a 
battle much longer, once Detroit starts to get it, and once 
technology helps us to get there.
    Mr. McCurdy. Well, Congressman, if I could respond just 
quickly.
    Mr. Boucher. Well, Mr. McCurdy, I am afraid the time for 
that questioning has expired.
    Mr. Doyle. Thank you, Mr. Chairman. I am sorry for taking 
so much time.
    Mr. Boucher. Thank you very much, Mr. Doyle. The gentleman 
from California, Mr. Waxman, is recognized for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    I would like to start by seeking unanimous consent to put 
in the record a letter from a dozen members of this committee 
to you and Chairman Dingell, expressing our concerns about and 
opposition to this discussion draft. We are also going to 
release this letter to the public.
    Mr. Boucher. Without objection.
    Mr. Waxman. And second, I would like to request unanimous 
consent to put six additional letters in the record. These 
letters express the concerns and opposition of eight Governors, 
15 members of the National Association of Attorneys General, 
the National Association of Clean Air Agencies, the Clean Air 
Association of the Northeast States, and leading environmental 
and consumer groups.
    Mr. Boucher. Mr. Waxman, we have agreed that unanimous 
consent requests for submitting materials for the record will 
be granted as a group at the end of the hearing, and we would 
ask that the material be submitted to the staff on both sides, 
so we can evaluate it in advance of that.
    Mr. Waxman. That is fine, if you will put them all 
together.
    Mr. Boucher. Thank you.
    Mr. Waxman. We will certainly make them available.
    Mr. DeCicco, the subcommittee has developed the legislation 
we are discussing today to address two of the Nation's most 
important issues, the Nation's threatened energy security and 
global climate change. If we are careful, we can address both 
issues simultaneously, and leave a planet for our children and 
grandchildren, that is clean, sustainable, and more secure.
    I am concerned, however, that the draft before us will lead 
the Nation in a dangerous and wrong direction. Earlier this 
year, the Supreme Court issued a landmark ruling on global 
warming. This case came to the Supreme Court when EPA rejected 
a petition from the States and others for EPA to regulate 
greenhouse gas emissions from automobiles. Is that right?
    Mr. DeCicco. That is right.
    Mr. Waxman. And the States had petitioned EPA, because 
global warming is a critically important issue, and they read 
the Clean Air Act to provide EPA with the necessary authority 
to regulate automobile emissions.
    EPA argued they didn't have that authority, and denied the 
State petition. The Court found that EPA was wrong. Congress 
had given EPA authority to regulate motor vehicles under the 
Clean Air Act, and EPA must do so unless greenhouse gases don't 
contribute to climate change. Is that an accurate description 
of the case?
    Mr. DeCicco. That is my best understanding of it.
    Mr. Waxman. The legislation we are examining today 
addresses this precise issue. It amends the Clean Air Act to 
rescind EPA's authority to regulate greenhouse gas emissions 
from motor vehicles. Am I correct in that reading?
    Mr. DeCicco. Yes.
    Mr. Waxman. It seems like we are heading in exactly the 
wrong direction. Is there anything you would add to that? It 
just seems to me that we are removing EPA's ability to regulate 
in this area, and we are also denying the States the ability to 
regulate in this area.
    Mr. DeCicco. That is right, Mr. Waxman, and those are very 
serious concerns, as we pointed out in our testimony. Just when 
the Nation needs to act quickly on climate change, just as 
California and now 11 other States, with others pending, have 
stepped up to the plate with some breakthrough proposals to 
lead in that direction, and just as the Supreme Court has found 
that greenhouse gases can be considered pollutants under the 
Clean Air Act, to take that leadership away, to take that 
authority away from EPA is a huge step backward, in our view.
    Mr. Waxman. It seems to me we have a global problem, and we 
ought to have a global solution to it. If we can't do that, we 
ought to at least have a national one. If we can't get a good 
national one, we ought to at least let the States do what they 
want, even the cities, because oftentimes, whoever takes action 
will become the leader, and I have always regretted the fact 
that we are becoming less of a leader in some of the technology 
that would be developed if we actually got started to do the 
regulations as necessary.
    EPA has regulated pollution from motor vehicles for almost 
40 years. Vehicles today are dramatically cleaner than they 
were in 1970, thanks to EPA and State efforts, and we all 
breathe cleaner air as a result. EPA has the authority and the 
responsibility to produce the same strong results for global 
warming pollution. In my view, the last thing that the Congress 
should be doing is to stop EPA from beginning to address this 
problem.
    I thank you for your testimony, and yield back the time, 
Mr. Chairman.
    Mr. Doyle [presiding]. Thank you, Mr. Waxman. The Chair now 
recognizes the gentleman from Utah, Mr. Matheson, for 5 
minutes.
    Mr. Matheson. Thank you, Mr. Chairman. As I mentioned in my 
opening statement, I would like to just flesh out this issue a 
little bit.
    When it comes to the automobile industry, and the nature of 
how you develop new product lines, and the timeframes and the 
capital required to do that, I would like to get a sense if my 
concern is valid or not, about uncertainty created by the 
potential of two different Federal agencies offering different 
standards, plus potentially various States also offering 
different standards, and how does, how will our auto industry 
respond to that level of uncertainty?
    Mr. McCurdy, maybe you could start.
    Mr. McCurdy. Thank you, Congressman. It is a shame Mr. 
Waxman has to leave, because I wanted to respond to his point, 
but I think we can build on it with your question.
    The industry would like to----
    Mr. Matheson. I don't want to be in the position of 
opposing Mr.----
    Mr. McCurdy. No, no, that is all right. I think it is 
important. One thing that manufacturing needs is some 
transparency and certainty and predictability.
    Mr. Matheson. Right.
    Mr. McCurdy. And the challenge is that NHTSA today has 30 
years of experience in addressing the technology for primary 
information, having the models to actually develop fuel 
efficiency requirements for the auto industry. That is an 
experience base that States do not have. That is an experience 
base in technology that EPA currently does not have.
    And as I understand Massachusetts v. EPA, the Court did not 
say EPA, you must go regulate that. They have to do a 
determination of whether or not it is a pollutant, but they 
also can work, it encouraged, the Supreme Court actually 
encouraged the agencies to work together, the Department of 
Transportation, and the EPA, and probably, in the future, the 
Department of Energy.
    So California can still provide leadership. It is just that 
they can't, they should not, in our opinion, be able to develop 
regulation that is contrary to what NHTSA and the expertise 
existing within that agency, and create different standards. 
This industry cannot survive with 50 different standards, or a 
dozen different standards, or five different standards.
    Congressman, you are exactly right. It is a global problem. 
It is a national problem. There is a potential for a national 
solution. You are now in the majority. Let us have a national 
resolution. Let us not have local. One of the keys, again, even 
with California or other States, they can continue to provide 
significant leadership on this front. Look at the incentives 
for HOV lanes. Look at dealing with congestion. There are a 
number of things they can do to incentivize, alert, educate 
consumers about the alternatives out there, and the technology 
available.
    But please don't strap an industry that is already highly 
competitive with additional regulation, and if you look at the 
testimony of some of the cases, the experts even at CARB, which 
is the Air Resources Board in California, did not take into 
consideration the very important questions of technology, cost, 
economic feasibility, impact on jobs and the economy, and those 
are all critical for having reasonable, balanced, livable 
regulation.
    Mr. Matheson. It seems to me that there are two issues we 
ought to be talking about here. One is what is the appropriate 
set of standards we want to meet, in terms of fuel economy. And 
the second issue is should we have one set of standards, or 
should we have a basket of standards of 2, 3, 10, whatever. And 
as I said, I have expressed concern about that second issue, 
about what it should----
    Mr. Waxman. Will the gentleman yield?
    Mr. Matheson. May I get one more question here?
    Mr. Waxman. Sure.
    Mr. Matheson. In terms of what this committee has indicated 
it is going to be looking at in the fall, and ideally, maybe, 
we would have not bifurcated this process, because these are 
related issues, and we are kind of dealing with them on 
different schedules. In the fall, the chairman of our 
subcommittee, the chairman of the full committee has indicated 
that we are going to pursue a mandatory economy-wide greenhouse 
gas control regimen. Is this the circumstance under which, when 
we do that in the fall, where we are going to create, if you 
will, the standards that are really going to drive where this 
industry goes, how do those play with each other? I guess that 
is what I am trying to ascertain, is how do you see those two 
dynamics working with each other?
    Mr. McCurdy. Well, CAFE is a 1970's regulation, and it is a 
challenge. Our industry has stepped up to the plate, and said 
it will work with this committee to explore climate change 
legislation, and do so in a constructive way. A number of our 
companies have joined groups, such as USCAP and others, that 
are considering this. It is a challenge, but if, we agreed that 
using industry terms, there is a key sequencing problem with 
the schedule. I realize this committee didn't dictate the 
schedule, and so, you have to move the legislation. I think the 
preferable approach would be to take more time within this 
Congress, and we want it to be done in this Congress, and 
develop more comprehensive legislation, and a solution that 
addresses the national issue.
    Our industry is prepared to be part of the solution. We are 
part of the challenge. We have a responsibility. But it needs 
to be a shared responsibility, and it should include all 
sectors of the economy, not just the one that has been--the 
only carbon constrained sector of the economy for the last 30 
years has been the automotive industry. Let us expand it.
    Mr. Doyle. The gentleman's time has expired.
    Mr. Matheson. Thank you.
    Mr. Doyle. The Chair now recognizes the gentleman from 
Texas, Mr. Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman, for the opportunity to 
participate in the subcommittee's legislative hearing, and on 
the discussion draft on alternative fuels infrastructure. While 
I am not a member of the Energy and Air Quality Subcommittee, 
this draft is of great importance in the district I represent 
in Texas, and where refineries, chemical plants, and pipelines 
play an important role in our economy. And I have just a few 
questions within the 5-minute timeframe.
    Mr. Drevna, you state that it would be difficult to be 
obligated party to comply with simultaneous with an increasing 
Alternative Fuel Program, AFP, and a decrease in low carbon 
standard, the LCF, because the compliance strategies would have 
to change frequently. The LCF would change every year, 
potentially.
    Can you further elaborate on your statement that, how could 
this hinder actually being able to sell alternative fuels?
    Mr. Drevna. Well, Congressman, it is a problem that, again, 
there is tension, as we see it, in the draft, between the 
Alternative Fuel Standard and the Low Carbon Fuel Standard. 
There may be, at times, it may be year 1, 2, how man you want 
to assign, that a particular fuel may meet the standard, but 
once, as Mr. Dinneen has spoken earlier, once the lifecycle 
question gets thrown into these fuels, and the amount of carbon 
intensity that it is allowed, it may eliminate those particular 
fuels from being used.
    So we are stuck with the dilemma of what kind of 
investments do we make, what kind of fuels do we make, on a 
going forward basis? We can't, we don't want to be switching 
fuels every other year.
    Mr. Green. Well, and I know there is concern now, because 
of the price run-up in fuels, because of the number of fuels we 
have in different markets that if you don't have a refinery in 
Texas, for example, our product typically doesn't go to 
California, because the pipeline system, but also, but if they 
have to produce a fuel for California, then it continues to 
limit it. The supply issue would be even more of a problem on a 
basis it seems like.
    If the EPA on a yearly basis were to issue an LCFS that 
reduces the average carbon intensity allowed for fuels, how 
does that affect the economics of the fuels used in the FEP, 
and how would it affect the FEP mandates?
    Mr. Drevna. Well, Congressman, one of the concerns we have 
with the draft as of right now, is we are getting mixed 
signals. We are getting the signal that we want, we want 
capacity expansion to go forward, on a refinery by refinery 
basis, but yet, we are trying to add more and more renewables.
    Now, and we understand renewables are going to play a very 
vital role on a going forward basis, in the Nation's 
transportation fuel mix. Again, one of the concerns, we have, 
is that, and in our written testimony, we did say we are 
putting the cart before the horse on this one, we are assuming 
the advent of technology, and we are hopeful that the 
appropriate technology, especially for cellulosic, will be 
forthcoming.
    Our concern is, and the way the bill is written now, the 
waiver process, it is not the same as a waiver, as if we had a 
pipeline outage or a refinery outage, where a certain area 
can't get the fuel. We are talking a waiver where we would have 
already put the capital in to make a certain kind of fuel, with 
the renewable, that may or may not exist at the time we have to 
deliver that product.
    What we are suggesting is that the staff, the draft 
legislation, allow the EPA Administrator to actually say within 
a given timeframe, say, 2 years, there will be the quantity of 
fuels needed on a commercial basis.
    Mr. Green. OK. So, you don't think the EPA Administrator 
has the ability, under this draft, to adjust either AFP or the 
LCFS mandates if necessary?
    Mr. Drevna. We don't see it under this draft. We see that 
those numbers have to be implemented, and the waiver would take 
place after the fact, whether or not they are available.
    Mr. Green. Would you feel more comfortable, for a certainty 
of investment, if the LCFS reductions, instead of using it on a 
yearly basis, would be over a group of years, so that there 
would be time to recoup investments, or even tool up to do?
    Mr. Drevna. Well, Congressman, what we are suggesting is 
that before these, what I think, whatever you would consider 
these huge volumes of renewables be implemented, that the 
Administrator make a determination that they actually are 
commercially available. That is what we are asking for.
    Mr. Green. Thank you, Mr. Chairman. As a guest, I won't 
wear out my welcome.
    Mr. Doyle. Thank you, Mr. Green.
    We have two votes coming up on the House floor, but we 
still have about 13 minutes, so I am going to recognize the 
chairman of the full committee, Mr. Dingell, for his questions.
    Mr. Dingell. Mr. Chairman, you are most gracious. Thank 
you.
    These questions are for Mr. DeCicco. Would the staff please 
see to it that the flow sheet on fuel economy regulations is 
put up on the screen, so that we can all have an understanding 
of what it does. It is a delightful piece of work.
    Mr. DeCicco, I hope that you and the rest of the panel will 
take a look at this. Now, let us take a look, and I ask 
unanimous consent, Mr. Chairman, that this be put in the record 
of the committee.
    Mr. Doyle. Without objection.
    Mr. Dingell. Now, Mr. DeCicco, these questions will require 
only a yes or no answer. When we started out on this business, 
we had the Federal Government regulating fuel efficiency 
through CAFE at Department of Transportation, and we had the 
air pollution questions regulated by the Federal EPA.
    Then, because of the California experience, they asked for 
and got authority to have their own regulation of air 
pollution, and that went on for a long time, until the recent 
decision by the Supreme Court. Now, we have the potential, is 
my statement that correct?
    Mr. DeCicco. Yes.
    Mr. Dingell. All right. Now, I want you to look at this 
flow sheet. It tells you what a wonderful experience that we 
are going to have, in terms of getting regulation under the 
situation as we are looking at it, with the most recent Supreme 
Court decision. And in that, you now have the Federal EPA 
regulating air pollution. You have California and 10 other 
States regulating air pollution. You have the Department of 
Transportation regulating fuel efficiency. You will then have 
the States regulating fuel efficiency by regulating carbon 
dioxide emissions. Is that a fair statement?
    Mr. DeCicco. I would like to check with counsel.
    Mr. Dingell. No, no, yes or no. Is that a fair statement? 
We are going to have all these wonderful folks regulating all 
these things, and I am trying to figure out how we are going to 
sort out this confusion, and whether you folks at EDF favor 
that or not?
    Now, please answer the question, because the clock is 
running, and we have a vote coming up. Is the answer to that 
question yes or no?
    Mr. DeCicco. Yes, we favor this approach.
    Mr. Dingell. OK. So, you favor it. Do you agree with me 
that factually, the statement that I have made, with regard to 
all these goodhearted folks regulating different things, is a 
factual statement?
    Mr. DeCicco. No.
    Mr. Dingell. You don't. What is wrong with my statement? 
Tell me in just a brief bit.
    Mr. DeCicco. Under the Clean Air Act----
    Mr. Dingell. No. Please tell me who regulates what, under 
this, and what is wrong with the statement that I have made. 
Let me give it to you again. DOT regulates fuel efficiency 
under CAFE, and EPA regulates air pollutants. California and 10 
States regulate air pollutants under their law. Now, under the 
new change that the Supreme Court has brought forward, the EPA 
will continue to do what it is doing, the States will continue 
doing what they are doing, and DOT will continue doing what it 
is doing. But the States and EPA will now get in and regulate 
fuel efficiency, too, by regulating CO\2\, which is essentially 
a substitute regulatory program for CAFE. Isn't that a true 
statement? Yes or no.
    Mr. DeCicco. No.
    Mr. Dingell. Why is that statement not true?
    Mr. DeCicco. Greenhouse gases are a much broader category--
--
    Mr. Dingell. Is my statement about who is going to regulate 
true or false? I hope you were listening. If you were not, 
please tell us so.
    Mr. DeCicco. In terms of the regulatory pathways, yes.
    Mr. Dingell. Regulatory structure, I am not going by who is 
going to, what is right or wrong. Is my statement factual?
    Mr. DeCicco. Yes.
    Mr. Dingell. I don't know how many regulators are getting 
in there to regulate, but you have got a lot of people 
regulating.
    Now, please tell me how this regulatory system is going to 
give expedited, sensible, balanced regulation that will 
consider the whole problem of fuel efficiency, pollutants, 
global warming, in an intelligent way? How do we set up a 
structure which does that? I will ask you to submit that for 
the record.
    Mr. DeCicco. We will do that.
    Mr. Dingell. I had hoped for better answers from you, Mr. 
DeCicco. Maybe if you get a chance to submit in writing 
something, we will have something we can deal with.
    Mr. DeCicco. We will do that.
    Mr. Dingell. Mr. McCurdy, what are your comments on this 
matter?
    Mr. McCurdy. Well, Mr. Chairman, there is no one in this 
room, or probably in this building, that knows more about the 
Clean Air Act and EPCA than you do, and you were there in 1963.
    Mr. Dingell. Though is my statement with regard to all 
these regulatory----
    Mr. McCurdy. The structure is correct.
    Mr. Dingell. Now the law, as it is interpreted by the 
Supreme Court, going to be diligently administered?
    Mr. McCurdy. Absolutely. There is going to be multiple----
    Mr. Dingell. Dealing with all of this wonderful confusion 
this is going to create, because you are going to have EPA 
coming forward with one set of regulations, you are going to 
have DOT coming forward with one set of regulations. You are 
going to have the States coming forward with one set of 
regulations. Each State is going to regulate both fuel 
efficiency, and they are going to also regulate pollutants.
    Now, with how many different regulators are we going to be 
confronted with, and what is industry, and what are the 
environmentalists going to do to get some kind of a rational 
decision, where everybody isn't standing there quarreling with 
everybody else about what is going to happen?
    What we are going to have is going to be a magnificent 
situation where nothing is going to happen, we are going to 
have vast gridlock, and an enormous mess on our hands. Isn't 
that right?
    Mr. McCurdy. Yes, sir. This could be marketplace chaos, and 
certainly, a lack of predictability for the industry, which 
takes 3 years to develop a model, and 7 to 8 years to develop a 
power train. How in the world can they develop these 
technologies with all these multiplicity of regulatory agencies 
involved?
    Mr. Dingell. I would like to welcome my old friend, Mr. 
Reuther. Mr. Reuther, you are a dear friend, tell us what this 
says to you, please.
    Mr. Reuther. What it says to us is that the industry will 
have a much more difficult time economically trying to meet the 
challenges of the new fuel economy standards.
    Mr. Dingell. It will also afflict, will it not, the 
environmentalists, who are going to have the same problems that 
the industry has?
    Mr. Reuther. That is true, and our concern, though, is that 
if the industry has these difficulties economically, that is 
going to translate into more job loss, more benefit loss, for 
the workers and retirees in the industry.
    Mr. Dingell. This regimen is going to create a tremendous 
number of jobs. It is going to be in the legal profession, 
because we are going to have a magnificent proliferation of 
litigation.
    Mr. Chairman, you have been very patient. Thank you.
    Mr. Doyle. Thank you, Mr. Dingell.
    We want to thank the first panel for your participation 
today, and we are going to take a recess while we do these two 
votes. We will come back and start the second panel.
    Thank you very much.
    [Recess.]
    Mr. Matheson [presiding]. For our second panel for the day, 
we have Mr. Alexander Karsner, who is the Assistant Secretary 
for Energy Efficiency and Renewable Energy with the U.S. 
Department of Energy, and we have Mr. Robert Meyers. He is the 
Acting Assistant Administrator with the Office of Air and 
Radiation, with the Environmental Protection Agency.
    And gentlemen, we welcome you both. If you could summarize 
your testimony in about 5 minutes, we would appreciate that, 
and Mr. Karsner, we will start with you.

STATEMENT OF ALEXANDER A. KARSNER, ASSISTANT SECRETARY, ENERGY 
  EFFICIENCY AND RENEWABLE ENERGY, U.S. DEPARTMENT OF ENERGY, 
                         WASHINGTON, DC

    Mr. Karsner. Thank you, sir. I would like to thank you, Mr. 
Chairman, and members of the committee for the opportunity to 
present the Department's views on the discussion draft 
concerning alternative fuels infrastructure and vehicles.
    While the administration has not had sufficient time to 
evaluate or coordinate our agency views on the discussion 
draft, I am happy to provide some preliminary comments.
    This subcommittee conducted an oversight hearing on 
alternative fuels on May 8, in which I testified on the 
President's 20 in 10 plan. The President has called for a very 
robust Alternative Fuel Standard, requiring the equivalent of 
35 billion gallons of renewable and alternative fuel in 2017. 
Many of the provisions of the discussion draft appear 
consistent with the administration's policies, and may also 
benefit from further review and discussion.
    First, the discussion draft expands on the Renewable Fuels 
Standard established by the Energy Policy Act of 2005 to 
include alternative fuels, which is consistent with the 
President's proposal. Encouraging the broadest range of fuel 
technologies is critical to the type of transformational change 
necessary to improve our Nation's energy security. We urge the 
committee to adopt a more ambitious timeframe of substantially 
decreasing projected gasoline consumption within the next 
decade. The administration believes that we must have a 
manageable timeframe for fuels and infrastructure deployment, 
and that a 10-year goal is an ambitious and appropriate metric. 
I would also urge the committee to consider an economic safety 
valve, like the one included in the President's AFS proposal, 
to provide obligated parties additional means to comply with 
the Alternative Fuel Standard requirements.
    Title 2 of the discussion draft, suggests a number of 
possible steps towards building the infrastructure necessary to 
support the domestic alternative fuels industry. Section 201 
proposes a $200 million infrastructure development program. It 
is not clear that Government grants and regulation alone can 
sufficiently ensure the supply chain viability of the 
production and delivery of alternative fuels. Creating a clear 
major incentive to supply fuels, like the AFS, will be amongst 
the most important tools to stimulate the necessary investment 
in infrastructure.
    The Federal Government's greatest contribution to energy 
security is the enactment of durable policy that signals to 
private investors in a predictable way our long-term commitment 
to alternative and renewable sources of energy. If we are 
serious about changing our Nation's energy portfolio, we must 
unleash and enable the vast potential of our capital markets. 
Government funding and regulation alone will be insufficient to 
bring about the magnitude of change at the rate required to 
address our critical security, economic, and environmental 
concerns.
    The challenge for large-scale, upfront investments in clean 
energy is that the potential for outstanding returns must be 
realized over extended period of time, or what is called the 
lifecycle of the technologies used. This is true in the case of 
alternative fuel biorefineries, solar rooftops, large wind 
farms, nuclear power plants, energy efficient products, like 
compact fluorescent lights, or transmission linking our clean 
energy sources to our urban loads.
    Though clean energy sources are domestically available and 
generate little to no greenhouse gases, uncertainty over the 
necessary technologies' lifecycle risks and capital costs 
severely retards the amount and type of private capital being 
deployed. Effective capital formation requires the Federal 
Government to provide the necessary policy predictability and 
economic climate that enables massive investments at an 
accelerated rate.
    Additionally, on the issue of infrastructure development, 
the Department believes that an E-85 delivery system is an 
important goal of an alternative fuels infrastructure, that 
intermediate blends may also be a necessary and important goal. 
Intermediate blends may provide for more rapid absorption of 
renewable fuels into the consumer markets, and extend our 
capacity to utilize alternative and renewable fuels.
    As the Department begins to assess the impact of higher 
blends of ethanol, and study their viability and potential, we 
recommend that the committee consider a balanced approach for 
all potential higher blends of biofuels deployment, especially 
in any provisions related to retail, technical, and marketing 
assistance.
    Because flexible fuel vehicles can easily consume ethanol 
blends up to E-85, it is important and essential to maximize 
the availability of options, to scale clean biofuels deployment 
as expeditiously as possible. This flexibility also ensures 
that Government does not force the economy to over-commit to a 
specific fuel class, given the many other potential alternative 
fuels and technological pathways that may become available. In 
addition, both the President and Secretary Bodman have 
emphasized their concern over any potential artificial 
impediments to biofuels infrastructure.
    Finally, on the vehicles provisions, while the Department 
believes that it is important to encourage domestic 
manufacturing of advanced energy technologies, section 305, 
which establishes a new Loan Guarantee Program for advanced 
battery manufacturing facilities, may in fact duplicate 
existing authority under EPCA title 17.
    Mr. Chairman, the President has called for legislation that 
he can sign on this issue with urgency, and there is clear 
consensus that legislative action is needed to substantially 
reduce our dependence on oil and deploy clean energy 
technologies into the marketplace at an unprecedented scale and 
rate.
    The administration looks forward to working constructively 
with the Congress and this committee to achieve the 20 in 10 
goal, and deliver legislation that the President can sign this 
summer.
    This concludes my prepared remarks, and I would be pleased 
to answer any questions the committee may have.
    [The prepared statement of Mr. Karsner follows:]

                     Statement of Alexander Karsner

    Mr. Chairman, members of the committee, thank you for the 
opportunity to present the Department's views on the Discussion 
Draft Concerning Alternative Fuels, Infrastructure, and 
Vehicles, and to discuss programs under way in the Office of 
Energy Efficiency and Renewable Energy (EERE) at the Department 
of Energy (DOE) to accelerate the development and deployment of 
renewable fuels and other alternative fuels that will reduce 
our Nation's dependence on oil and enhance our energy security. 
While the administration has not had sufficient time to 
coordinate interagency views on the Discussion Draft, I am 
happy to provide some preliminary comments.
    This Subcommittee conducted an oversight hearing on 
alternative fuels on May 8, 2007, at which I testified on the 
President's ``Twenty in Ten'' plan. The President has called 
for a robust Alternative Fuel Standard (AFS), requiring the 
equivalent of 35 billion gallons of renewable and alternative 
fuel in 2017. Many of the provisions in the Discussion Draft 
appear consistent with the Administration's policies, and may 
also benefit from further review and discussion.
    First, the Discussion Draft expands on the Renewable Fuels 
Standard established by the Energy Policy Act of 2005 to 
include alternative fuels, which is consistent with the 
President's proposal. Encouraging the broadest range of fuels 
technologies is critical to the type of transformational change 
necessary to improve our nation's energy security. However, I 
would urge the Committee to adopt a timeframe of substantially 
decreasing projected gasoline use within the next decade. The 
Administration believes that we must have a manageable 
timeframe for fuels and infrastructure deployment, and that a 
10-year goal is an ambitious and appropriate metric.
    I would also urge the Committee to adopt an economic safety 
valve like the one included in the President's AFS proposal to 
provide obligated parties additional means to comply with the 
alternative fuel standard requirements. The economic safety 
valve would allow obligated parties to purchase credits (priced 
at $1 gasoline-equivalent) from the Federal Government. This is 
intended to guard against ``price spikes'' where an 
insufficient supply of alternative fuel or alternative fuel 
credits drives up the prices.
    Turning to title II, the Discussion Draft suggests a number 
of possible steps toward building the infrastructure necessary 
to support a domestic alternative fuels industry. Sec. 201 
proposes a $200 million infrastructure development program. It 
is not clear that government grants will ensure the supply 
chain viability of the production and delivery of alternative 
fuels. Creating a clear, major incentive, like the AFS will be 
the most important tool to stimulate investment in 
infrastructure.
    If we are serious about changing our Nation's energy 
portfolio, we must unleash the vast potential of capital 
markets. The Federal Government's greatest contribution to 
energy security is the enactment of durable policy that signals 
to private investors our long-term commitment to alternative 
sources of energy. Government funding alone will not be enough 
to bring about the magnitude of change at the rate required to 
address our critical security, economic, and environmental 
concerns.
    The challenge for large scale, up front investments in 
clean energy is that the potential for outstanding returns must 
be realized over an extended period of time, or the 
``lifecycle'' of the technology's use. This is true whether 
dealing with a solar rooftop, cellulosic biorefineries, large 
wind farms, nuclear power plants, energy efficient products 
like the compact fluorescent lamp, or transmission linking our 
clean energy sources with urban loads. Though clean energy 
sources are domestically available and generate little to no 
greenhouse gases, uncertainty over the necessary technologies' 
``lifecycle'' risks and costs severely retards the amount and 
types of private capital being deployed. Rapid 
commercialization of clean energy technologies requires 
sophisticated capital risk management to facilitate complex 
financial transactions. That risk assessment is what the 
private sector does best. Effective capital formation requires 
the Federal Government to provide the necessary policy 
predictability and economic climate that enables massive 
investments at an accelerated pace.
    Additionally, as I have previously testified to this 
Committee, the Department believes that an E85 delivery system 
is an important goal of an alternative fuels infrastructure, 
but that intermediate blends may be a necessary short-term 
goal. Intermediate blends may provide for more rapid absorption 
of renewable fuels into consumer markets in the near-term. As 
the Department begins to assess the impact of higher blends of 
ethanol, and study their viability and potential, we recommend 
that the Committee consider a balanced approach for 
intermediate blends and E85 deployment, especially in 
provisions related to retail technical and marketing 
assistance. Because flexible fuel vehicles can easily consume 
any biofuel blend up to E85, it is important to maximize the 
availability of options to scale clean biofuel deployment as 
expeditiously as possible. This flexibility also ensures 
government does not force the economy to over-commit to a 
specific fuel class (e.g., E85) given the many other potential 
alternative fuels that become available (e.g., bio-butanol or 
other fuels that work in existing infrastructure). In addition 
both the President and Secretary Bodman have emphasized their 
concern over any potential artificial impediments to biofuels 
infrastructure; however, our shared interest must be balanced 
with a respect for freely negotiated private party 
arrangements.
    Finally, on the vehicles provisions, while the Department 
believes that it is important to encourage domestic 
manufacturing of advanced energy technologies, Sec. 305, 
establishing a new loan guarantee program for advanced battery 
manufacturing facilities, but duplicates existing authority 
under EPACT Title XVII.
    There is clear consensus that legislative action is needed 
to substantially reduce our dependence on oil and deploy new 
energy technologies into the marketplace at an unprecedented 
scale and rate. The administration looks forward to working 
constructively with the Congress to achieve the ``Twenty in 
Ten'' goal, and deliver legislation for the President's 
signature this summer.
    Supporting the ``Twenty in Ten'' and longer term clean 
energy goals is the Department's portfolio of research, 
development, and commercialization activities. The Department 
is particularly focused on solving technical problems to 
overcome barriers to biofuels growth, including infrastructure, 
through forging strategic cost-shared partnerships with private 
industry, collaborating with other agencies, and working with 
the different regions of our country to bring the promise of 
biofuels to fruition. We believe that a multi-pronged effort 
will expand the role of alternative fuels in our Nation's 
energy supply and economic future.

                   Bioenergy Research and Development

    EERE's Biomass Program and Vehicle Technologies Program, as 
well as other Department programs such as those within the 
Office of Science, are working closely together to overcome 
barriers to advancing technology pathways to help support 
achievement of the ``Twenty in Ten'' goal. The Office of 
Science is conducting basic research for breakthroughs in 
understanding the systems biology of biofuel-producing 
organisms and bioenergy crops that could lead to cost 
reductions for cellulosic ethanol and other biofuels. To 
accelerate the transformational scientific breakthroughs 
necessary for cost-effective production of biofuels and 
bioenergy, including cellulosic ethanol, the Office of Science 
is investing $375 million over five years to support the 
establishment and operation of three Bioenergy Research 
Centers. These centers, selected by competitive, merit-based 
scientific review, will conduct comprehensive, 
multidisciplinary research programs on microbes and plants to 
develop innovative biotechnology solutions to energy 
production.
    EERE and various U.S. Department of Agriculture (USDA) 
agencies conduct the applied research for advancing biomass 
feedstocks and conversion technologies for biorefineries. 
Currently, ethanol is the renewable fuel with greatest market 
penetration and potential for both near and long-term 
displacement of gasoline. EERE's Biomass Program is focused on 
making cellulosic ethanol cost-competitive by 2012, a target 
put forth in the President's 2006 Advanced Energy Initiative 
(AEI).
    Recently, Secretary Bodman announced the availability of up 
to $200 million for cellulosic biorefineries at 10 percent of 
commercial scale, subject to appropriations. This effort will 
help enable industry to resolve remaining technical and process 
integration uncertainties and allow for more predictable, less 
costly scale up of ``next generation'' biorefinery process 
technologies. The 10 percent- scale demonstrations have the 
potential to help reduce the overall cost and risk to industry 
and contribute to the quicker commercialization of larger-scale 
facilities. Additionally, DOE will invest up to $385 million 
for as many as six commercial-scale biorefinery projects over 
the next four years, subject to appropriations. The EERE 
Biomass Program will continue in FY 2007 to support its cost-
shared efforts with industry to develop and demonstrate 
technologies to enable cellulosic biorefineries for the 
production of transportation fuels and co-products.

            Ethanol and Biofuels Infrastructure Development

    The Department is working with other public and private 
sector partners to encourage development and deployment of a 
biofuels distribution infrastructure in the United States to 
provide for displacement of gasoline and increased consumer 
choice. To support this effort and help promote growth of the 
biofuels industry, the Department has developed a biofuels 
infrastructure team. This team works to promote convergence 
between Vehicle Technologies and the Biomass Programs to 
promote a biofuels industry and commercially competitive 
alternative fuels and vehicles. Currently, there are more than 
six million flexible-fuel vehicles (FFVs) on the road in this 
country, a significant number, but still a relatively small 
percentage of the approximately 225 million light duty vehicles 
in the U.S. One goal is to expand the use of biofuels. Another 
goal is to encourage all automobile manufacturers serving the 
U.S. market to meet and exceed state voluntary targets for 
increasing sales of FFVs? and significantly increase production 
of FFVs.
    In support of these goals the Department is pursuing a 
number of infrastructure activities, including analyses of 
pipelines, water issues, and advanced vehicle technologies. The 
biofuels infrastructure team is also assessing the impacts of 
higher-level intermediate blends of ethanol (e.g., E-15 and E-
20), renewable fuels pipeline feasibility and materials 
research, and optimization of E85 alternative fuel vehicles. 
This work is being coordinated with the Department of 
Transportation, which has responsibility for setting integrity 
management standards for pipeline transportation and ensuring 
that these products can be safely handled, and with the 
Environmental Protection Agency, which has responsibility for 
testing the emissions impacts of fuels and vehicles, and 
registering and certifying fuels and fuel additives before they 
can be used in the transportation system. Such research, 
analysis, standards and safety regulation is an appropriate 
role of government in supporting infrastructure deployment.
    The Vehicle Technologies Program has embarked on several 
new efforts to address vehicle efficiency, beyond ongoing 
combustion and fuels research. These new efforts include 
evaluation of the Biowagon produced by SAAB, a manufacturing 
subsidiary of GM, which is sold exclusively in Europe and has 
been reported to use ethanol-based fuels much more efficiently 
than current U.S. FFVs. Another new effort is focused 
specifically on optimizing engine efficiency with biofuels. 
These projects are aimed at mitigating the lower energy content 
of biofuels. The program is also evaluating other biofuels such 
as biodiesel that may contribute to future gasoline 
displacement. And, Vehicle Technologies has initiated an effort 
to engage international collaborations to address fuel 
standards, data sharing, and other common interests.

                    Interagency Energy Partnerships

    In addition to infrastructure and fuels research within the 
Department, there are important collaborations with other 
Federal agencies and entities, including the Interagency 
Biomass Research and Development Board, which I co-chair with 
USDA. The Board is the governing body that coordinates biomass 
R&D activities across the Federal Government. In November 2006, 
DOE hosted the National Biofuels Action Plan workshop in 
Washington DC, where representatives from multiple Federal 
agencies came together to identify agency roles and activities, 
assess gaps and synergies, and begin developing agency budgets 
in the area of biofuels. The Federal participants also made 
recommendations for improved coordination and collaboration 
across Federal agencies. Input from the workshop is currently 
being collected into the National Biofuels Action Plan workshop 
report. Ultimately, the goal is to improve the Board's ability 
to provide coordinated Federal support for biofuels production 
and use.
    DOE is also working with the Regional Biomass Energy 
Feedstock Partnerships with USDA and the Sun Grant Initiative 
universities, which are funded through the Department of 
Transportation. These partnerships will help to identify the 
regional biomass supply, growth, and biorefinery development 
opportunities. We believe that using regionally available 
feedstocks, produced and processed locally, promotes a 
``distributed'' transportation fuels approach that may reduce 
shipping and transportation issues. These regional partnerships 
are designed to collect and store data on a publicly available 
Web site.

                          Financial Incentives

    To provide increased incentives for financing a multitude 
of innovative energy technologies, including biofuels, EPACT 
2005 included a provision in Title XVII for a DOE Loan 
Guarantee Program. With its central focus on innovative 
technologies to avoid, reduce, or sequester air pollutants or 
anthropogenic greenhouse gas emissions, the Loan Guarantee 
Program provides broad authority for DOE to guarantee loans 
that support early commercial use of advanced technologies, 
including potentially cellulosic biorefineries that employ new 
or significantly improved energy technologies.
    I am pleased to report that the funding contained in the FY 
2007 Continuing Resolution is allowing the Department to move 
forward in implementing the Loan Guarantee Program. We have 
published for public comment a Notice of Proposed Rulemaking to 
implement the program; the public comment period closes July 2. 
Secretary Bodman has said that our goal is to have a high-
quality program, and the Department is working to do just that. 
As you know, the Department undertook a process in FY 2006 to 
solicit pre-applications for the first round of loan guarantees 
and those pre-applications are currently undergoing technical 
and financial reviews.
    The President's ``Twenty in Ten'' goal holds the promise of 
accelerating penetration of cellulosic ethanol and other 
alternative fuels into the marketplace and bringing the 
benefits of a clean renewable and alternative energy source 
more quickly to our Nation. To meet these challenges, cutting 
edge research, development, deployment, and commercialization 
must be supported by transformational policy changes--the types 
of proposals that the President articulated in the State of the 
Union. The Administration looks forward to working with 
Congress to shape policies and legislation that will make this 
happen. This concludes my prepared statement, and I would be 
happy to answer any questions the committee members may have.
                              ----------                              

    Mr. Matheson. OK. Thank you, Mr. Karsner. And now, Mr. 
Meyers, we will hear from you.

  STATEMENT OF ROBERT J. MEYERS, ACTING ASSISTANT SECRETARY, 
 OFFICE OF AIR AND RADIATION, ENVIRONMENTAL PROTECTION AGENCY, 
                         WASHINGTON, DC

    Mr. Meyers. Mr. Chairman and members of the subcommittee, I 
appreciate the opportunity to appear before you today, and to 
provide testimony regarding your June 1 discussion draft.
    As you know, the June 1 discussion draft contains many 
provisions affecting motor vehicle and fuel programs, 
alternative fuel infrastructure, and Corporate Average Fuel 
Economy standards for passenger vehicles and light trucks.
    The discussion draft also extends and expands certain 
programs established by the Energy Policy Act of 2005, and 
imposes new requirements respecting biodiesel standards, 
flexible fuel vehicle production, and tire efficiency. EPA has 
experience and expertise in many of the areas addressed by the 
legislation.
    As noted in my prepared testimony, there has not been 
sufficient time for interagency review of the legislation, and 
therefore, the administration does not have a statement of 
position. However, a few initial observations can be made.
    First, the Alternative Fuel Program established in the 
draft is similar to the administration's Alternative Fuel 
Standard legislation in several important respects. The 
discussion draft would expand the existing RFS definition to 
include many alternative fuels contained in the AFS, and in the 
Energy Policy Act definition of alternative fuels.
    The discussion draft also incorporates many of the 
implementation measures specified in the AFS, including use of 
identification numbers and compliance values to demonstrate 
compliance. Some of these measures were pioneered in EPA's 
recent rulemaking implementing the Renewable Fuels Standard. 
The draft also provides for a similar enforcement of fuel 
requirements, and for a transition between the current RFS 
credit system, and credits used in the new program.
    The discussion draft, however, also differs in important 
respects from the AFS legislation. The legislation would not 
require 35 billion gallons of renewable and alternative fuel 
use until 8 years after the schedule provided in the AFS. As 
you know, setting an aggressive schedule for alternative fuel 
use was an important part of the AFS and the President's 20 in 
10 initiative.
    The discussion draft also incorporates a Low Carbon Fuel 
Standard as part of the Alternative Fuel Program, starting in 
2013. The standard is additive to other requirements, and 
assumes or sets a standard for average carbon intensity, based 
on assumptions about volumes associated with three different 
levels of carbon intensity. The draft also does not incorporate 
the temporary annual waiver structures contained in the 
President's proposal, or incorporate an economic safety valve, 
to guard against price fights for alternative fuels and 
alternative fuel components.
    The discussion draft additionally adds a new title to the 
Clean Air Act for the first time in 17 years. The title 
contains the aforementioned Low Carbon Fuel Standard plus 
greenhouse gas reporting requirements for motor vehicles. It 
also amends sections 202 and 211 of the current Clean Air Act 
to effect EPA regulatory authority concerning fuel and new 
motor vehicle standards. It additionally adds new criteria to 
section 209 in the Clean Air Act concerning waivers of 
preemption for State standards on new motor vehicles and new 
motor vehicle engines.
    The President provided a bold plan for decreasing our 
Nation's dependence on oil in his State of the Union speech, 
and in his subsequent calls for action on his 20 in 10 
legislation. EPA stands ready to draw upon its considerable 
analytical and technical expertise, and work with this 
subcommittee and the full committee as you move forward to 
consider the discussion draft or other related legislation.
    Again, I appreciate the opportunity to testify, and stand 
ready to answer your questions.
    [The prepared statement of Mr. Meyers follows:]
    [GRAPHIC] [TIFF OMITTED] 42440.044
    
    [GRAPHIC] [TIFF OMITTED] 42440.045
    
    [GRAPHIC] [TIFF OMITTED] 42440.046
    
    [GRAPHIC] [TIFF OMITTED] 42440.047
    
    [GRAPHIC] [TIFF OMITTED] 42440.048
    
    [GRAPHIC] [TIFF OMITTED] 42440.049
    
    Mr. Matheson. Well, thank you, Mr. Meyers. We will start 
with our questions. I guess the Chair will recognize himself 
for 5 minutes.
    Both of you mention the 20 in 10 proposal that the 
President made, I believe in the State of the Union address 
when we first heard about it. The discussion draft that we are 
talking about today pursues a comparable amount of gallon 
savings, I believe, over a longer period of time.
    Is there, can you help me out, what was the data, or is 
there an analysis that shows how to achieve the 20 in 10, and 
that that is the right timeframe for doing that, or can you 
share with us how that number was arrived at, and that 
timeframe?
    Mr. Karsner. Well, sir, it is not a central plan, in the 
sense that the Government is going to plan out how 20 in 10 
will happen. What we do is actually assess the state of the 
technology--and our most recent data validating that 
technology--and in terms of when we believe it will be 
available to enter into the marketplace. Then, the question is, 
if the technology is available, and capital is not a 
constraint, what will be the policies necessary to enable the 
outcome?
    And so, 20 in 10 does not say well, here is 16 percent 
electricity, and 23 percent biofuels, and everything else. We 
basically look at all the tools that we have in the tool chest 
to displace gasoline consumption, including efficiency, and 
then make a calculated guess. If the President were to get a 
mandate for alternative fuels, what would be the most 
aggressive and ambitious timeframe that could be pursued? That 
was the task.
    Mr. Matheson. Recognizing you haven't had a lot of time to 
review the discussion draft, does the administration have a 
position on the fact that this discussion draft has a longer 
period of time to achieve the 20 percent savings, if you will?
    Mr. Karsner. I think in general, as I say, we commend the 
spirit and intent, that we are happy to see in both chambers, 
that legislation is moving. But the administration's position 
generally is that a sense of urgency requires more and faster.
    Mr. Matheson. To the extent that there was an analysis of 
the existing technology in your projection of where the 
technology is going to be, I think it would be helpful to have 
that provided to the committee, because that was an open item, 
if you will, as I understand it, at discussions among members 
of the committee about the data that was the basis for the 20 
in 10 proposal.
    And I think this committee discussion draft made a 
decision, based on its estimate of where technology was going 
to go. That is why it is the longer period. So, it would be 
good to have that discussion, and figure out the data to help 
us find what is a good, aggressive, but also achievable goal.
    Next question. In terms of the provisions in the discussion 
draft about trying to roll out an ethanol or E-85 
infrastructure, we have had a lot of discussion we did with the 
first panel about it. It is the chicken and egg challenge that 
we have to face. Are you comfortable with the approach the 
discussion draft has taken? Do you have suggestions for 
amendments for that, or additions that we ought to be looking 
at? What are your thoughts on that issue?
    Mr. Karsner. We really don't have any sort of formal policy 
position, because of the short timeframe to look over the 
precise texts in the discussion draft, but knowing what that 
issue is, dealing with the regularity, thematically, our 
thoughts are chronically the same, that we need as much as 
possible as early as possible. I know, and of course, we would 
be happy to offer technical assistance--but the truth is, when 
you talk about incrementalism, and year by year buildups, when 
you tend to think of these things, as well, we are taking the 
whole fleet, so that if we get 70 percent in year X of flex 
fuel vehicles, we have taken care of 70 percent of the fleet. 
But in the meantime, doing it incrementally, we are still 
putting out many more cars that are non-flex fuel. In effect, 
we are foreclosing on the options for vehicles when in fact, 
the flex-fuel that option is available at a very incremental 
and marginal cost.
    Mr. Matheson. Do you think, in terms of, since you are 
involved in the renewable energy side of things, in terms of 
the development of cellulosic ethanol, and creating an 
infrastructure where we actually produce that, are there policy 
issues we have not addressed in this legislation? Is there a 
research and development component we ought to be looking at? 
What public policy decisions should we be making to help 
encourage that industry to become actually viable in this 
country?
    Mr. Karsner. I think you all, I think the Congress 
discussed right now, in real time, the most important issues. 
How does that market have some degree of predictability and 
foresight, as to allow people to invest in it? As I said, the 
technology, there is no need for a super technology 
breakthrough. It is process integration. It is standing up a 
commercial facility that is replicable. The Department has now 
funded at least six that are meant to be commercial scale and 
operable by 2012, and so, to replicate that, to proliferate 
that, to have confidence in the capital markets to continue 
into biofuels and other technologies, Congress needs to act on 
this durable timeframe.
    Mr. Matheson. OK. I appreciate your response. My time has 
expired. We will recognize Mr. Walden now for 5 minutes.
    Mr. Walden. Thank you, Mr. Chairman.
    Mr. Karsner, I would like to know, one of the issues that 
we are dealing with is this dispute over whether we are doing 
anything on global greenhouse emissions in the United States 
versus other countries, and whether we are lagging or not.
    Can you talk to me a little bit, having just gotten back 
from Europe, it seems like when it comes to air quality, 
certainly, we are ahead of the Europeans by a long measure, and 
when it comes to us lagging versus them, what are the sorts of 
things we have done, what do we need to do to deal with this?
    Mr. Karsner. Well, with all due respect, sir, I don't 
accept the predicate of the question, which is that we are 
lagging at all when it comes to greenhouse gas emissions. I 
know rhetorically that seems to be the discussion at hand, but 
if you measure this country's progress, not by the rhetoric, 
but by the reality of the record, we are doing those things 
that are necessary to reduce greenhouse gas emissions in 
practice faster. That is to say, we are deploying low emission 
and zero emission generating sources faster and more abundantly 
than anyone else in the world last year. So, it is very 
difficult to say what do we need to do to get on par.
    Mr. Walden. The President announced last week a plan to 
bring together the biggest emitters in the world, including 
China and India, and some of the other countries that are not 
part of the G8. Can you tell us how that proposal may work to 
actually get everybody in the same room, that are not now under 
Kyoto, in the Kyoto Accords?
    Mr. Karsner. Right. Well, I think that is quite important, 
because some of those people that haven't been in the same room 
that you have just named, China and India, for example, are 
amongst the fastest growing economies on Earth. It is predicted 
that next year, China will have more greenhouse gases than this 
country, be the largest greenhouse gas emitter on Earth, and 
so, it is very difficult to have a substantive discussion 
without all the parties, the serious emitters, if you are 
serious about the end goal. We have been doing that through the 
Presidential Initiative, the Asia Pacific Partnership, which 
accounts for about 53 percent of the greenhouse gas emissions, 
including India and China. We are now wanting to expand that, 
to include our European allies and friends in the other 
industrialized nations of the world, to have a much more 
practical bottom up approach about deploying the technologies 
that will make a difference.
    Mr. Walden. And isn't that really the issue, is getting the 
technologies that work, and then making them available to the 
developing world?
    Mr. Karsner. To my knowledge, sir, there are only three 
means to deal with greenhouse gas emissions. There is an 
increase in efficiency, there is an increase in alternative 
carbon displacing sources of supply, and there is curtailment 
of economic growth. This country prefers doing the former and 
not the latter, and so, we are seeing continued robust growth 
at the same time that we are, in fact, deploying technologies 
very fast.
    Mr. Walden. Now, are either of you familiar with the 
various attempts to get at carbon sequestration in coal plants, 
for example? We went out to visit one, in theory, to watch, in 
Germany, the sequestration of the carbon dioxide of the coal 
plant. We never quite got, we got to the plant, we never quite 
saw the technology at work. They are still under construction.
    Can you speak to me about where technology stands when it 
comes to reducing carbon emissions from coal plants?
    Mr. Karsner. Regrettably, the fossil fuel is actually 
outside of my domain, but what I can say from the experience I 
have had with carbon-based fuels and in the Department, is that 
the entire program, the Federal program that the Department of 
Energy dedicated to coal, is dedicated to clean coal technology 
and deployment, including carbon capture and storage. And so, 
this Nation invests substantially in that, and I think is 
working collaboratively with the Europeans to that end.
    Mr. Walden. And Mr. Meyers.
    Mr. Meyers. Yes and EPA has also been working in this area. 
One they are working with regard to is the underground 
injection standards that, and guidance at this point in time. 
And then, also, we have been working with advanced coal 
technology. We would be happy to provide the information.
    Mr. Walden. I would really like to get that, because as we 
try to put standards in place, we need to know the technology 
is there. It was there when we put the cap and trade provisions 
in place to get sulfur dioxide emissions out of coal plants. It 
was a known technology, the scrubbers you could put on, and I 
am not sure we have the same technology available to us, so 
that would be helpful.
    Additionally, there are issues that were raised to us about 
legal implications. Apparently, in Europe, carbon is treated as 
a waste, and it is illegal to dispose of a waste underground. 
And I am wondering about those sort of legal issues that may 
accompany any activity here, to put what would be a waste 
underground.
    Mr. Meyers. There could be legal issues. Again, we will 
provide more for the record. There could be issues under 
statutory law, both, and common to----
    Mr. Walden. I would appreciate some followup on that. That 
would be helpful. And also, what happens if it comes back up 
after you inject it and all of that.
    Finally, there are those who have said that this 
legislation would overturn the recent Supreme Court decision, 
Massachusetts v. EPA. Do either of you, in your reading of this 
bill, believe that to be the case?
    Mr. Meyers. The bill does have provisions with respect to 
amending parts of the Clean Air Act. The effect of these 
provisions is really to say that the authority in the new title 
7 regarding motor vehicles and fuels, regarding greenhouse gas 
emissions from motor vehicles and fuels, is limited to the 
authority in the new title 7. So, it is sort of, it is not a 
legal term, but it is a sort of a dependency clause, is that 
within the Clean Air Act, we will put a new title, and here is 
where we will locate EPA's authority for greenhouse gas and 
motor vehicles.
    The Supreme Court decision had a number of holdings. One of 
them, which was that EPA had the authority under the Clean Air 
Act to regulate greenhouse gas emissions from new motor 
vehicles. So, certainly, the legislation could be read to 
effect that opinion. I would be happy to provide more for the 
record, in terms of whether, from our general counsel's 
perspective, et cetera, we thought it would overturn the 
decision.
    Mr. Walden. All right. I appreciate that. Thank you, Mr. 
Chairman.
    Mr. Matheson. Thank you. The Chair would now like to 
recognize the ranking member of the full committee, Mr. Barton, 
if he has questions.
    Mr. Barton. I thought it was the Democrats turn.
    Mr. Matheson. Well, we are going to let you go now.
    Mr. Barton. OK. Walk in the room, get recognized. OK. Good 
deal.
    Well, let me preface what I am about to say. The question 
is that I am really trying to find a way to be supportive of 
the process and of the draft, but I have some really tough 
concerns about it.
    My first question, I guess, would be to the gentleman from 
the EPA, Mr. Meyers. The current ethanol mandate that we have 
in law, that we put in the Energy Policy Act 2 years ago, is, I 
want to say about 7?
    Mr. Karsner. 7.5 in 2012.
    Mr. Barton. And we are already past that, right?
    Mr. Karsner. We are not past it actual use. We project that 
we will pass it well before 2012.
    Mr. Barton. OK.
    Mr. Meyers. The actual use, I think, in the last year was 
somewhere around 5, but we would project, and EIA does project 
that we will far exceed 7.5 by the----
    Mr. Barton. Now, the discussion draft sets, increases that 
mandate for corn, I think for corn-based ethanol, to 12 billion 
gallons. Is that correct?
    Mr. Meyers. Well, the discussion draft is a little complex 
in the way it addresses these issues. It creates a new mandate, 
like the AFS, and it is ramped up to 35 billion gallons by the 
year 2022 or 2025. But then, it also has a Low Carbon Fuel 
Standard. If you read the provision in the Low Carbon Fuel 
Standard added to the requirement, and it effectively says the 
levels would be 12 billion gallons from carbon fuels of 80 
percent or less. What that means, sort of, in translation is 
our current estimate of GHG offset for a fuel like ethanol is a 
little bit over 20 percent, so fuels would seem, it would seem 
to be 12 percent, or 12 billion gallons for corn-based ethanol 
and there are other fuels that are in that range.
    Mr. Barton. Well, let me ask a little bit different 
question a little bit different way. Would it be possible to 
fence off the current ethanol mandate for corn-based ethanol, 
then create a new mandate for cellulosic ethanol, and then a 
different mandate for other alternative fuels that are not 
corn-based or cellulosic ethanol? Is that technically possible?
    Mr. Meyers. It is technically possible. I would just say 
that the current mandate is for renewable fuel, and not 
specifically for corn-based ethanol, so there are a number of 
fuels which qualify for the current Renewable Fuels Standard.
    Mr. Barton. Well, I am told that we are about to max out 
the amount of ethanol we can get from corn grown in the United 
States. So I don't see a lot of sense, and this is as much for 
Mr. Dingell and Mr. Boucher as it is for the witnesses, I don't 
see a lot of sense in increasing a mandate on something that 
the market is going to take care of and max out.
    Now, I will buy the approach that for the cellulosic 
ethanol, we may need to create a mandate to jumpstart that. In 
the discussion draft, it says they get, cellulosic ethanol 
gets, each gallon is worth, I think, 2.5 gallons, so I 
understand that. So, what I am trying to begin to think about 
is let us fence off the current mandate, let us create, 
perhaps, some new mandates, and then grow those.
    If we were to do that, and I haven't talked to either 
Boucher or Dingell, is that something the administration might 
want to look at, too?
    Mr. Meyers. We would be happy to work with the ranking 
minority member, and we would be happy to work with the 
committee on any ideas that the committee would want to put 
forward. We haven't taken a position on the discussion draft, 
and we have our bill, which we are, of course, in favor of. We 
could get back to you on the specifics, though.
    Mr. Barton. OK. Let me ask Mr. Karsner, are you aware of 
how much gasoline is currently consumed in the United States 
today on an annual basis?
    Mr. Karsner. I believe it is approximately 140 billion 
gallons.
    Mr. Barton. Our number is 160, but if you say 140, we 
will----
    Mr. Karsner. We will check with EIA.
    Mr. Barton. That is only 20 billion off. That is pretty 
good.
    Mr. Karsner. Well, thank you. It is a billion here and 
there.

    [Mr. Karsner responded for the record:]

    EIA's monthly supply surveys indicate that the total U.S. 
gasoline consumption in 2006 was approximately 141.5 billion 
gallons.

    Mr. Barton. Do you know how much ethanol it will take to 
make E-10 penetrate the gasoline market as it exists today?
    Mr. Karsner. We thank that is going to be in the 
neighborhood, because you probably won't have a 10 percent 
displacement all across the country, Texas in the summers, and 
Florida, et cetera, probably going to be closer to the 
neighborhood of 12 to 13 billion gallons.
    Mr. Barton. So, if you use 140, 10 percent of 140 is 14, if 
it is 160, 10 percent of 160 is 16.
    Mr. Karsner. Certainly.
    Mr. Barton. Do you agree or disagree that the ability to 
create ethanol from corn is about 12 billion gallons?
    Mr. Karsner. That comports with current estimates from 
Department of Agriculture.
    Mr. Barton. From corn. Now, what if we repeal the current 
ethanol tariffs? How much ethanol could we import, if we didn't 
have the tariffs and the quotas?
    Mr. Karsner. We are not seeing anything that suggests that 
there is a surplus of ethanol on global markets that would make 
a substantial difference right now. There is a potential for 
that growth, particularly in Brazil and in the Western 
hemisphere, but----
    Mr. Barton. So, we can't really import much. We can't grow 
much. So, this new mandate in the discussion draft is really a 
cellulosic ethanol mandate, logically.
    Mr. Meyers. Well, Mr. Chairman, I would say there are 
provisions in the bill, with regard to the Low Carbon Fuel 
Standard, that require that 50 percent of the remaining volume 
of AFS have a carbon intensity equal to 25 percent of the 
carbon intensity of gasoline. Right now, according to our 
figures, I think the only fuel that would qualify would be 
cellulosic, under that figure of 25 percent.
    Mr. Barton. And again, I haven't had a detailed 
conversation with Mr. Boucher or Mr. Dingell, but this, and my 
time expired a minute and 28 seconds ago, but it really looks 
like the discussion draft is more about creating a new mandate 
for cellulosic ethanol.
    Mr. Meyers. It would depend on how you read the language of 
the bill. We are in the process of doing that. The bill says 
that one should assume the Alternative Fuel Standard is met as 
follows, and then, indicates that the 25 percent carbon 
intensity figure, which as I indicated, at this point in time, 
cellulosic.
    Mr. Barton. Now, I got those answers when you used to sit 
behind me. I yield back, Mr. Chairman, and I hope I am given 
another 5 minutes after everybody else is given their first 5 
minutes. Thank you, sir.
    Mr. Matheson. OK. Thank you. The Chair recognizes Mr. 
Stupak from Michigan for 5 minutes.
    Mr. Stupak. Well, thank you, Mr. Chairman.
    Mr. Meyers, if I may, I have a number of questions I would 
like to ask you about the court case Massachusetts v. EPA. 
Congress clearly intended the Department of Transportation to 
regulate motor vehicle fuel economy when it established the 
CAFE, Corporate Average Fuel Economy Program in 1975, which has 
really served as the only effective constraint on greenhouse 
gas emissions throughout the economy for over 30 years. In 
establishing these standards, DOT must consider economic 
practicability, technological feasibility, and the effect of 
other motor vehicle standards on fuel economy. Congress also 
set out many specific provisions related to these standards in 
statute, and exactly how rulemaking should be conducted.
    When the Supreme Court interpreted the Clean Air Act to 
authorize the EPA, and by proxy, California, if you will, to 
regulate the vehicle fuel economy through tailpipe emissions of 
CO\2\, it did not set out any specific criteria for setting 
these new standards, did it?
    Mr. Meyers. Congressman, we are still assessing the Supreme 
Court case and its implications for the Clean Air Act. However, 
you would be correct that, or it is my review of the case, that 
there would be nothing that said exactly how----
    Mr. Stupak. Right. The Court didn't lay out any 
specifications there, or criteria, I should say. Other than one 
sentence, then, and I am quote now from the ruling: ``The two 
obligations may overlap, but there is no reason to think that 
two agencies cannot both administer their obligations, and yet 
avoid inconsistency.'' But yet, the Supreme Court did not 
explain how EPA should reconcile its new authority and 
resulting regulations with that of DOT's specific statutory 
mandate, did it?
    Mr. Meyers. I am unaware of anything in the Court opinion 
which would do that.
    Mr. Stupak. So, the answer to that would be no, then, 
right? Because the Court did not explain how EPA should 
reconcile its authority.
    Mr. Meyers. I have read the case, and I caution that it is 
the legal opinions that are difficult to render, but I am not 
aware of anything in the case that would tell, instruct that.
    Mr. Stupak. Well, I agree when the Supreme Court made its 
decision, it is directing EPA and DOT to do certain things. In 
the court case, and not necessarily attorneys would be 
administering this, so that is why I was trying to look for 
some specific criteria.
    Mr. Meyers. Sure.
    Mr. Stupak. The Supreme Court did not instruct the EPA to 
reconcile its new authority under the Clean Air Act with that 
of the Department of Transportation, as set out by Congress, 
did it?
    Mr. Meyers. No.
    Mr. Stupak. OK. Let me ask you this question. If EPA and 
California both issued different standards, without regard for 
the requirement Congress placed on DOT, it is possible that 
there could be three separate conflicting standards which 
vehicle manufacturers would have to comply with, then, right, 
DOE, EPA, and California?
    Mr. Meyers. If the California standards met the waiver 
criteria under 209 in the Act, and EPA essentially granted a 
waiver, the California standard, EPA could. We have made no 
decisions on how we are responding to establish a standard.
    Mr. Stupak. Right.
    Mr. Meyers. And then, my presumption is you are referring 
to a third standard being CAFE standards.
    Mr. Stupak. Correct.
    Mr. Meyers. Yes, that is----
    Mr. Stupak. You have three different standards.
    Mr. Meyers. Yes.
    Mr. Stupak. The conflicts that I am referring to are not 
really just about numbers and stringency. There could well be 
different standards applying to different types of vehicles, 
for each of these category regimes, with no requirement how 
they are going to be harmonized. Isn't that correct?
    Mr. Meyers. It is at least theoretically possible, yes.
    Mr. Stupak. OK. So, for example, DOT is required to 
establish standards for passenger cars separately from light 
trucks, and manufacturers are required to comply with DOT 
passenger car standards for both their foreign and domestic 
fleet. Neither of these requirements would be placed on the EPA 
or California under the Supreme Court's interpretation of the 
Clean Air Act, would it?
    Mr. Meyers. Those requirements are not contained in the 
Clean Air Act. They are only contained in the CAFE statute.
    Mr. Stupak. So, it would not apply, then, to California or 
EPA, underneath the Supreme Court's interpretation?
    Mr. Meyers. The EPA would not be restricted by those 
provisions.
    Mr. Stupak. OK. In fact, the Clean Air Act, as interpreted 
by the Supreme Court, does not require the EPA or California to 
set standards as a fleet-wide average, and certainly, no 
requirement that they utilize the complex averaging system 
undertaken by the DOT. Isn't that correct?
    Mr. Meyers. There is nothing in section 202 of the Clean 
Air Act which requires a fleet-wide standard.
    Mr. Stupak. Well, then, it is possible that even under the 
best of circumstances, that vehicle manufacturers would have 
difficulty complying with these conflicting standards, and in 
the worst case scenario, it could be impossible for a vehicle 
manufacturer to comply with these conflicting regulations, if 
you get three different standards put forth by three different 
entities. Correct?
    Mr. Meyers. I wouldn't be able to predict how these 
authorities will be exercised or not exercised by DOT or EPA 
with any degree of certainty at this point in time, so I can't 
predict the outcome. I think my responses have accurately, or 
to the best of my ability, provided accuracy in terms of the 
authority, that your question goes to, what would the net 
result of exerting that authority be, and I am not in a 
position to be able to predict that.
    Mr. Stupak. If we have three different regimes, three 
different standards, depending on some cars, if it was 
domestic, foreign, light truck, small truck, passenger, 
correct?
    Mr. Meyers. These are, yes, possible, yes.
    Mr. Stupak. And the requirement that would be made, or 
placed on the manufacturers of vehicles in this country, 
correct?
    Mr. Meyers. Well, the EPA's authority goes to new motor 
vehicles in this country, and those vehicles and engines 
imported for use in this country. I am not sure about CAFE 
authority for DOT. You would have to let them respond.
    Mr. Stupak. Thank you.
    Mr. Meyers. Thanks.
    Mr. Stupak. Thanks for your time.
    Mr. Matheson. The Chair recognizes Mr. Hall from Texas for 
5 minutes.
    Mr. Hall. I thank the Chair. I really didn't intend to ask 
any questions. I wanted to be sure the API energy statement 
made it in. And in sense of my being here, will be allowed to 
put in the usual questions later?
    Mr. Matheson. Absolutely. Written questions, absolutely.
    Mr. Hall. Questions later.
    Mr. Matheson. Right.
    Mr. Hall. Then I will ask just one question, for fear that 
Sonja Hubbard did get into it, and I will ask, I guess, Mr. 
Karsner.
    Section 203 would require retailers to install very 
expensive E-85 facilities to serve customers that they say may 
or may not exist. Does DOE agree that the 15 percent threshold 
is appropriate?
    Mr. Karsner. Well, sir, I would begin by saying the 
customer exists in every citizen. The question is whether the 
value proposition for the customer to buy it is the right value 
proposition, and so then, the question becomes if you have the 
right value proposition, how much is enough? And what we would 
like to do is have as much as possible as early as possible, 
priced correctly for the market. So, we are more ambitious in 
the amount than 15 percent.
    Mr. Hall. What is appropriate?
    Mr. Karsner. You are asking----
    Mr. Hall. Just give me your best educated guess or your----
    Mr. Karsner. Well, we think there is a minimum threshold to 
begin with, that about a third of the stations need to have 
infrastructure for E-85 to become viable, so that is already 
50,000 to 70,000 stations, and that is a third. There are 
reports and laboratory analysis that would say it would have to 
be much higher in order to reduce the amount of drive time and 
search time by your average user, to know that they could 
reliably go to the gas station and use it. So, it shouldn't 
have to be a chore to go find a station, and we think that at a 
minimum, that is about a third of the stations out there.
    Mr. Hall. Should the Federal Government be making these 
decisions?
    Mr. Karsner. Well, the President's policy is certainly that 
we should be putting in place a mandate that guarantees a 
sufficient amount of supply for the market to allocate that 
through retail outlets appropriately. I think the challenge for 
Congress right now is to try to understand what the state of 
the markets, can we extrapolate whether the market will, in 
fact, take those actions. We have incremental Government 
programs that do this today, both through tax credits, tax 
policies, and through our Clean Cities Programs for deploying 
infrastructure, but clearly, those are insufficient to get to 
the numbers you are inquiring about.
    Mr. Hall. Well, I really thank you, and I may have some 
followup questions on that, but if I do, I will submit them.
    Mr. Karsner. Yes, sir.
    Mr. Hall. And I thank both of you. Good to see Mr. Meyers 
again.
    Mr. Karsner. Thank you, sir.
    Mr. Matheson. Thank you, Mr. Hall. The Chair recognizes the 
chairman of the full committee, Mr. Dingell, for 5 minutes.
    Chairman Dingell. Mr. Chairman, I thank you for that 
courtesy.
    I would like to welcome our panel here. Mr. Karsner, 
welcome.
    Mr. Karsner. Thank you, sir.
    Chairman Dingell. Mr. Meyers, welcome back. We have seen 
you on the other side of that table on many occasions, and 
delighted to see you back. I hope you are doing well in your 
new appointment.
    Mr. Meyers. Thank you, Mr. Chairman.
    Chairman Dingell. Gentlemen, I am going to ask that the 
staff show on the screen again that wonderful flow sheet which 
we had. And I am going to ask the staff to make a copy 
available for each of you. I would appreciate your comments, 
gentlemen, as to whether you find that to be a factual 
representation of the situation as it is with regard to 
enforcement by the different agencies, Federal and State, that 
will have to take place for fuel efficiency, carbon dioxide 
releases, and also, releases of the different statutory 
pollutants covered under the Federal Clean Air Act.
    And I don't want you to feel that we are taking advantage 
of you. If you want to comment later, I will be happy to have 
additional comments from you. But just quick and dirty, looking 
at that, do you find that to be a factual statement of how it 
will work under current law, or rather under the law as set 
forth by the Supreme Court in the recent case?
    Mr. Meyers. Similar to the questions asked by Congressman 
Stupak, I think it is clear, and we will provide further detail 
for the record, that EPAct is one stream of authority, the 
Clean Air Act is a second stream of authority, and the third 
column, my assumption here is that we are talking about 
California's unique status in the Clean Air Act, and 
California's ability under the Clean Air Act to set separate 
standards, subject to EPA review.
    Chairman Dingell. So now, let us try and look and see what 
happens. We have 11 States which have decided that they want to 
have a separate standard fixed by the State of California. 
Under old law, that could only relate to the requirements of 
meeting the Clean Air Act, is that correct?
    Mr. Meyers. By old law, if you mean pre Massachusetts v. 
EPA, correct.
    Chairman Dingell. OK.
    Mr. Meyers. It is still the case that that----
    Chairman Dingell. Under the law as it was, EPA fixed 
standards under Clean Air, the Department of Transportation 
fixed the standards on fuel efficiency. Is that right?
    Mr. Meyers. Yes.
    Chairman Dingell. Now, under the new law, we find, or 
rather, under the Supreme Court case, we find now that the 
States will fix standards along with the State of California, 
under the California exemption, for both clean air requirements 
and carbon dioxide emissions. Is that correct?
    Mr. Meyers. Well, the Supreme Court case went to greenhouse 
gas emissions generally, not specifically carbon dioxide. We 
are looking at how that impacts our authority. California has 
already established the greenhouse gas emission requirements 
under its State law, and we are currently looking at that.
    Chairman Dingell. Right. I don't want to overcomplicate 
this.
    Mr. Meyers. Sure.
    Chairman Dingell. I am just trying to understand, and you 
will help me mightily if we stay to it, so I can get this 
picture understood. So, now, let us say under the old law, when 
a company wanted to market an automobile, they had to go in and 
get either approval from the State under the clean air 
requirements, or under EPA, if the EPA had not given the State 
authority to act on its own, and also, then, they had to go to 
DOT to get the OK with regard to meeting the CAFE standards. Is 
that right? Yes or no.
    Mr. Meyers. Yes.
    Chairman Dingell. OK. Now, let us go to the next step, if 
you please. Under new law, if the State chooses to be a part of 
what, of the California exemption, they go to the State of 
California, and the State of California is able to regulate, 
first of all, the clean air emissions requirements, and also to 
address CO\2\ emissions. Is that right? Yes or no.
    Mr. Meyers. The State of California has issued regulations 
on greenhouse gas emissions from motor vehicles.
    Chairman Dingell. OK. Now, those greenhouse gas emissions 
are not only CO\2\. They can be releases also from the air 
conditioner, and things of that kind.
    Mr. Meyers. That is correct.
    Chairman Dingell. Now, that leaves us, then, in this 
wonderful position where they have two agencies that they have 
to choose from, where they are going to go to the Federal 
agencies or the States. Now, there is a strong possibility of 
having conflict between DOT and EPA with regard to the levels 
that are going to be committed, and we are going to have a 
major problem of coordinating between them, are we not?
    Mr. Meyers. We have not decided our reaction on----
    Chairman Dingell. No, but there is a potential here. Let us 
not complicate our business here. There is a potential for 
significant conflict between two agencies at the Federal level.
    Mr. Meyers. There is a potential, if EPA acted under the 
Clean Air Act.
    Chairman Dingell. All right. Now, we have also the problem 
that there will be conflicts between the Federal Government and 
the States, and inside the States, there is the possibility of 
conflict between at least two State agencies, the State Clean 
Air Agency and the State Energy Agency. Is that not so? Yes or 
no.
    Mr. Meyers. I would have to get back for the record. I am 
not sure a State Clean Air----
    Chairman Dingell. It is not illogical to expect that, 
though, is it? Just yes or no.
    Mr. Meyers. I would like to submit that for the record. I 
am not sure I fully understand the question.
    Chairman Dingell. All right. Well, apparently, you are 
having as much trouble understanding this as I am, perhaps even 
a little more. I am happy I am on this side of the witness 
table.
    Now, having said that, so we have a potential, then, for as 
many as 36 agencies regulating the levels of emissions of 
pollutants and CO\2\, and we have also the fuel efficiency 
requirements that would have to be met. Can either of you good 
gentlemen tell me how your agencies, EPA, or the Department of 
Transportation, or the Department of Energy, are going to 
address this problem?
    Would you like to submit a monograph on that for the 
record?
    Mr. Meyers. Sir, I think----
    Chairman Dingell. My time is expired 2 minutes ago. 
Gentlemen, please submit to us, for the record, a statement 
about how you folks are going to do the job of administering 
this wonderful array of conflicts that this Supreme Court 
decision has placed in your lap.
    And I will ask, Mr. Chairman, also that the Department of 
Transportation be requested to make a similar submission. I ask 
that they be included in the record, and I thank you, Mr. 
Chairman.
    Mr. Matheson. Thank you. We have gone through a round of 
questioning for everyone. I ask unanimous consent that the 
ranking member, Mr. Barton, be recognized for another 4 
minutes.
    Mr. Barton. And I will try to be very quick. And I want you 
to give quick answers, if you can. I am going to follow up in a 
similar vein of what Chairman Dingell just asked about, this 
Supreme Court decision in Massachusetts v. EPA.
    What that decision said was, is that the Court ruled 5-4 
that the EPA does have the authority to regulate CO\2\ in 
automobile tailpipe emissions, where previously, EPA had said 
that they weren't sure they had the authority. Isn't that 
correct?
    Mr. Meyers. Yes, sir. Our legal position prior to the case 
was we did not have the authority.
    Mr. Barton. So, now we know, on a 5-4 decision, that the 
EPA does have the authority. It could decide not to do 
anything, but it definitely has the authority to do something 
if it chooses to do so. Is that correct?
    Mr. Meyers. I think you have accurately said the holding of 
the case, yes.
    Mr. Barton. All right. Now, if we are going to regulate 
CO\2\ out of tailpipes, and I am not sold that that needs to be 
done, but if we are going to do it, surely, we should agree 
with Mr. Dingell and Mr. Boucher and the discussion draft that 
it ought to be done at the Federal level, so that you have one 
standard. Isn't that correct? We don't want 50 standards. We 
want, if we are going to do it, let us have one standard. That 
is the whole purpose of the Clean Air Act. We preempt State 
law.
    Mr. Meyers. Well----
    Mr. Barton. Now, don't tell me the Bush administration 
wants 50 State standards.
    Mr. Meyers. We are currently assessing that question in an 
interagency process.
    Mr. Barton. Bullcorn. I sat in on some of those meetings. 
Unless the Bush administration has changed its position, we 
want one--if we decide to set a standard, Congress has the 
ability to do it, and it should be one standard. We don't want 
to give the great State of California, as great as it is, or 
the great State of Massachusetts, the Commonwealth of 
Massachusetts, as great as it is, or Vermont, or even Texas the 
right to unilaterally set different standards. Almost everybody 
who testifies at that panel routinely says if you are going to 
regulate us, do it with one uniform standard.
    Now, if you all need to go through your interagency 
process, God bless you, but I would hope before we move to 
markup that we can get an administration position, you don't 
have to take the position on whether there should be a 
standard, but if it is going to be one, let us let there be one 
national standard.
    With that, I yield back, Mr. Chairman.
    Mr. Matheson. Thank you. A number of unanimous consent 
requests were made during the course of the hearing for items 
to be included in the record.
    All of those will be included in the record.
     With that, we thank the witnesses for their participation 
today, and this hearing is adjourned.
    [Whereupon, at 3:15 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    [GRAPHIC] [TIFF OMITTED] 42440.050
    
    [GRAPHIC] [TIFF OMITTED] 42440.051
    
    [GRAPHIC] [TIFF OMITTED] 42440.052
    
    [GRAPHIC] [TIFF OMITTED] 42440.053
    
    [GRAPHIC] [TIFF OMITTED] 42440.054
    
    [GRAPHIC] [TIFF OMITTED] 42440.055
    
    [GRAPHIC] [TIFF OMITTED] 42440.056
    
    [GRAPHIC] [TIFF OMITTED] 42440.057
    
    [GRAPHIC] [TIFF OMITTED] 42440.058
    
    [GRAPHIC] [TIFF OMITTED] 42440.059
    
    [GRAPHIC] [TIFF OMITTED] 42440.060
    
    [GRAPHIC] [TIFF OMITTED] 42440.061
    
    [GRAPHIC] [TIFF OMITTED] 42440.062
    
    [GRAPHIC] [TIFF OMITTED] 42440.063
    
    [GRAPHIC] [TIFF OMITTED] 42440.064
    
    [GRAPHIC] [TIFF OMITTED] 42440.065
    
    [GRAPHIC] [TIFF OMITTED] 42440.066
    
    [GRAPHIC] [TIFF OMITTED] 42440.067
    
    [GRAPHIC] [TIFF OMITTED] 42440.068
    
    [GRAPHIC] [TIFF OMITTED] 42440.069
    
    [GRAPHIC] [TIFF OMITTED] 42440.070
    
    [GRAPHIC] [TIFF OMITTED] 42440.071
    
    [GRAPHIC] [TIFF OMITTED] 42440.072
    
    [GRAPHIC] [TIFF OMITTED] 42440.073
    
    [GRAPHIC] [TIFF OMITTED] 42440.074
    
    [GRAPHIC] [TIFF OMITTED] 42440.075
    
    [GRAPHIC] [TIFF OMITTED] 42440.076
    
    [GRAPHIC] [TIFF OMITTED] 42440.077
    
    [GRAPHIC] [TIFF OMITTED] 42440.078
    
    [GRAPHIC] [TIFF OMITTED] 42440.079
    
    [GRAPHIC] [TIFF OMITTED] 42440.080
    
    [GRAPHIC] [TIFF OMITTED] 42440.081
    
    [GRAPHIC] [TIFF OMITTED] 42440.082
    
    [GRAPHIC] [TIFF OMITTED] 42440.083
    
    [GRAPHIC] [TIFF OMITTED] 42440.084
    
    [GRAPHIC] [TIFF OMITTED] 42440.085
    
    [GRAPHIC] [TIFF OMITTED] 42440.086
    
    [GRAPHIC] [TIFF OMITTED] 42440.087
    
    [GRAPHIC] [TIFF OMITTED] 42440.088
    
    [GRAPHIC] [TIFF OMITTED] 42440.089
    
    [GRAPHIC] [TIFF OMITTED] 42440.090
    
    [GRAPHIC] [TIFF OMITTED] 42440.091
    
    [GRAPHIC] [TIFF OMITTED] 42440.092
    
    [GRAPHIC] [TIFF OMITTED] 42440.093
    
    [GRAPHIC] [TIFF OMITTED] 42440.094
    
    [GRAPHIC] [TIFF OMITTED] 42440.095
    
    [GRAPHIC] [TIFF OMITTED] 42440.096
    
    [GRAPHIC] [TIFF OMITTED] 42440.097
    
    [GRAPHIC] [TIFF OMITTED] 42440.098
    
    [GRAPHIC] [TIFF OMITTED] 42440.099
    
    [GRAPHIC] [TIFF OMITTED] 42440.100
    
    [GRAPHIC] [TIFF OMITTED] 42440.101
    
    [GRAPHIC] [TIFF OMITTED] 42440.102
    
    [GRAPHIC] [TIFF OMITTED] 42440.103
    
    [GRAPHIC] [TIFF OMITTED] 42440.104
    
    [GRAPHIC] [TIFF OMITTED] 42440.105
    
    [GRAPHIC] [TIFF OMITTED] 42440.106
    
    [GRAPHIC] [TIFF OMITTED] 42440.107
    
    [GRAPHIC] [TIFF OMITTED] 42440.108
    
    [GRAPHIC] [TIFF OMITTED] 42440.109
    
    [GRAPHIC] [TIFF OMITTED] 42440.110
    
    [GRAPHIC] [TIFF OMITTED] 42440.111
    
    [GRAPHIC] [TIFF OMITTED] 42440.112
    
    [GRAPHIC] [TIFF OMITTED] 42440.113
    
    [GRAPHIC] [TIFF OMITTED] 42440.114
    
    [GRAPHIC] [TIFF OMITTED] 42440.115
    
    [GRAPHIC] [TIFF OMITTED] 42440.116
    
    [GRAPHIC] [TIFF OMITTED] 42440.117
    
    [GRAPHIC] [TIFF OMITTED] 42440.118
    
    [GRAPHIC] [TIFF OMITTED] 42440.119
    
    [GRAPHIC] [TIFF OMITTED] 42440.120
    
    [GRAPHIC] [TIFF OMITTED] 42440.121
    
    [GRAPHIC] [TIFF OMITTED] 42440.122
    
    [GRAPHIC] [TIFF OMITTED] 42440.123
    
    [GRAPHIC] [TIFF OMITTED] 42440.124
    
    [GRAPHIC] [TIFF OMITTED] 42440.125
    
    [GRAPHIC] [TIFF OMITTED] 42440.126
    
    [GRAPHIC] [TIFF OMITTED] 42440.127
    
    [GRAPHIC] [TIFF OMITTED] 42440.128
    
    [GRAPHIC] [TIFF OMITTED] 42440.129
    
    [GRAPHIC] [TIFF OMITTED] 42440.130
    
    [GRAPHIC] [TIFF OMITTED] 42440.131
    
    [GRAPHIC] [TIFF OMITTED] 42440.132
    
    [GRAPHIC] [TIFF OMITTED] 42440.133
    
    [GRAPHIC] [TIFF OMITTED] 42440.134
    
    [GRAPHIC] [TIFF OMITTED] 42440.135
    
    [GRAPHIC] [TIFF OMITTED] 42440.136
    
    [GRAPHIC] [TIFF OMITTED] 42440.137
    
    [GRAPHIC] [TIFF OMITTED] 42440.138
    
    [GRAPHIC] [TIFF OMITTED] 42440.139
    
    [GRAPHIC] [TIFF OMITTED] 42440.140
    
    [GRAPHIC] [TIFF OMITTED] 42440.141
    
    [GRAPHIC] [TIFF OMITTED] 42440.142
    
    [GRAPHIC] [TIFF OMITTED] 42440.143
    
    [GRAPHIC] [TIFF OMITTED] 42440.144
    
    [GRAPHIC] [TIFF OMITTED] 42440.145
    
    [GRAPHIC] [TIFF OMITTED] 42440.146
    
    [GRAPHIC] [TIFF OMITTED] 42440.147
    
    [GRAPHIC] [TIFF OMITTED] 42440.148
    
    [GRAPHIC] [TIFF OMITTED] 42440.149
    
    [GRAPHIC] [TIFF OMITTED] 42440.150
    
    [GRAPHIC] [TIFF OMITTED] 42440.151
    
    [GRAPHIC] [TIFF OMITTED] 42440.152
    
    [GRAPHIC] [TIFF OMITTED] 42440.153
    
    [GRAPHIC] [TIFF OMITTED] 42440.154
    
    [GRAPHIC] [TIFF OMITTED] 42440.155
    
    [GRAPHIC] [TIFF OMITTED] 42440.156
    
    [GRAPHIC] [TIFF OMITTED] 42440.157
    
    [GRAPHIC] [TIFF OMITTED] 42440.158
    
    [GRAPHIC] [TIFF OMITTED] 42440.159
    
    [GRAPHIC] [TIFF OMITTED] 42440.160
    
    [GRAPHIC] [TIFF OMITTED] 42440.161
    
    [GRAPHIC] [TIFF OMITTED] 42440.162
    
    [GRAPHIC] [TIFF OMITTED] 42440.163
    
    [GRAPHIC] [TIFF OMITTED] 42440.164
    
